TIDMADT
RNS Number : 1261P
AdEPT Telecom plc
15 November 2016
AdEPT Telecom plc
("AdEPT" or the "Company")
Interim results for the 6 months ended 30 September 2016
AdEPT, one of the UK's leading independent communications
integrator and managed service providers, announces its unaudited
results for the 6 months ended 30 September 2016.
Highlights
Revenue and EBITDA
-- Total revenue increased by 19% to GBP16.5 million (2015: GBP13.9 million)
-- EBITDA increased by 20% to GBP3.5 million (2015: GBP2.9 million)
-- EBITDA margin increased to 21.4% (2015: 21.1%)
-- Managed service revenue accounted for 53% of total revenue (2015: 41%)
-- Managed services revenue increased by 53% to GBP8.8 million (2015: GBP5.7 million)
EPS and Dividends
-- Adjusted EPS increased by 12% to 11.1p (2015: 9.9p)
-- Interim dividend increased by 25% to 3.75p per share (2015: 3.00p)
Cash Flow and Debt
-- Operating cash flow before tax of GBP3.2 million (2015: GBP2.5 million)
-- Reported EBITDA to pre-tax cash from operating activities 98.9% (2015: 89.8%)
-- Net debt of GBP10.8 million (2015: GBP7.6 million), after
GBP6.6 million acquisition payments
Acquisitions
-- Acquisition of Comms Group UK Limited completed in May 2016
-- Comms Groups UK Limited 5 month revenue contribution equating to 12% of revenue increase
-- Acquisition of CAT Communications Limited completed post period end in November 2016
Business review
Total revenue increased by 19% to GBP16.5 million with the
increase being a reflection of the 5 month revenue contribution
from Comms Group UK Limited ("Comms") following the completion of
the acquisition in May 2016. Comms is a UK based specialist
provider of unified communications, Avaya IP telephony, hosted IP
solutions, IT and managed services, which is an increasing
requisite for AdEPT's existing and targeted enterprise and public
sector customer base. Comm's technical skills and product set
complement and enhance AdEPT's existing services, particularly in
the Fleet office. Comms is an Avaya specialist and the acquisition
has enabled AdEPT to offer a complete suite of unified
communications products and services to customers of all sizes,
from small retail through to large enterprise customers. Comms
contributed 12% of the revenue increase in the interim period,
which is in line with the expectation set at the date of
acquisition.
AdEPT has had continued success in the public sector and
healthcare space during the period, winning a number of new
contracts with councils and other public sector bodies. Over the
last 36 months, AdEPT has been successful in gaining new contracts
with public sector and healthcare organisations as a result of its
various framework agreements. This has seen an increase in
contracts with 40 councils at the end of the interim period from 28
as at 30 September 2015. The acquisition of Centrix provided a
complementary customer focus both in terms of size and sector. The
Comms customer base was primarily small enterprise customers;
however the continued targeting of larger contracts at Fleet and
Tunbridge Wells has maintained the Premier Customer division
(customers spending more than GBP5,000 per annum) proportion across
the Group. The Premier Customer division accounted for 72% of total
recurring revenue at 30 September 2016 which is in line with the
prior period (September 2015: 70%). The contract success through
AdEPT's frameworks resulted in the public and healthcare sector
customer base being extended and accounted for 29% of total revenue
at 30 September 2016 (September 2015: 24%).
AdEPT continues to transition successfully from a traditional
fixed line service provider to a complete communications integrator
offering best of breed products from all major UK networks. Revenue
from managed services, including data connectivity, hardware and
cloud-based contact centre solutions, increased by 53% to GBP8.8
million and accounted for 53% of total revenue for the six months
ended 30 September 2016 (September 2015: 41%).
Financing and cash flow
Cash generated from operating activities before tax increased by
39.5% to GBP3.2 million (September 2015: GBP2.3 million), which
equates to a 98.9% reported EBITDA conversion (after GBP0.3 million
acquisition fees). This increase is driven by the improved profit
before tax whilst maintaining working capital terms and therefore
driving high cash flow conversion.
Dividends paid in the period absorbed GBP0.7 million of funds
(September 2015: GBP0.5 million), which is a reflection of the
progressive dividend policy of the Board. The Company operates a
capex-light model and therefore capital expenditure was low at 0.6%
of revenue.
GBP3.6 million of available funds (net of cash acquired) was
used to fund the initial cash consideration for the acquisition of
the entire issued share capital of Comms on 1 May 2016. The interim
results for the current period include a 5 month contribution from
Comms, further details of which are included in Note 6. Deferred
consideration of GBP3.0 million in respect of the Centrix
acquisition (in May 2015) was paid during the period, with no
further amounts due.
Net borrowings have increased to GBP10.8 million at 30 September
2016, largely as a result of the GBP6.5 million acquisition
payments. Net Debt:EBITDA (annualised) ratio remained low at 1.5x
at 30 September 2016.
Post-balance sheet events
On 1 November 2016 the Company acquired the entire issued share
capital of CAT Communications Limited and Progressive
Communications Limited (together referred to as 'CAT') for an
initial consideration of GBP1.05m less the net debt of CAT at
completion (approximately GBP0.07m), payable in cash. Further
contingent consideration of between GBP0.2m and GBP0.95m will be
payable, also in cash, dependent upon the performance of CAT
post-acquisition.
CAT, based in Pewsey, Wiltshire, is a well-established UK-based
specialist provider of unified communications, Avaya IP telephony,
hosted IP solutions and managed services. CAT offers the delivery
of complex unified communications, managed service solutions and
specialist inbound call centre management to its customer base
across the UK, and further supporting customers with global
deployment planning and solutionsin Europe. The support function of
the CAT customer base is to be transferred and integrated into
AdEPT's existing site in Fleet. CAT has a high level of recurring
revenue and offers a well-developed customer base with which it
enjoys long term relationships. The Board believes that the CAT
technical skills and product set, particularly in relation to Avaya
Aura, will complement and enhance AdEPT's existing services already
being provided from the Fleet office. The acquisition is expected
to be earnings accretive from completion.
The last filed accounts of CAT for the year ended 31 March 2015
reported turnover, operating profit and profit before tax of
GBP1.3m, GBP0.3m and GBP0.3m respectively. Capital expenditure in
the year ended 31 March 2015 was insignificant. Net and gross
assets at that date were GBP0.2m and GBP0.7m respectively.
Acquisition related costs of approximately GBP0.1m will be
recognised as an expense in the statement of comprehensive income
for the year ending 31 March 2017.
Profit before and after tax and earnings per share
Reported profit before tax increased by 26% to GBP1.5 million
(2015: GBP1.2 million) and reported profit after tax increased by
23% to GBP1.0 million (2015: GBP0.8 million). Both of these
increases are a reflection of the improved operating profit over
the prior period, less the movement in interest charges and tax
liability respectively.
Adjusted (basic) earnings per share has increased 12% to 11.1p
for the six months ended 30 September 2016 (September 2015: 9.9p)
as a result of the GBP0.6 million increase to underlying EBITDA,
less the additional tax liability.
Dividends
The Directors have declared an interim dividend of 3.75p per
Ordinary Share in respect of the period ended 30 September 2016, an
increase of 25% over the interim dividend for the comparative
period (September 2015: 3.00p). This will absorb approximately
GBP0.8 million of shareholders' funds (September 2015: GBP0.5
million). It is proposed by the Directors that this dividend will
be paid on 7 April 2017 to shareholders who are on the register of
members on the record date of 17 March 2017. Subject to the audited
results for the year ending 31 March 2017, it is the intention of
the Board to propose a final dividend with the March 2017 final
results.
Dividend cover for the interim period was 3.0x (September 2015:
3.3x). Strong free cash flow generation has continued since the end
of the period, and there continues to be considerable scope for the
Board to continue its progressive dividend policy.
Outlook
This has been another excellent 6 months with completion of an
earnings enhancing acquisition during the period. Improved results
in all key areas have been achieved from the underlying business
combined with a positive contribution from the Comms acquisition
completed in the period. Since the end of the interim period, the
completion of the CAT Communications acquisition is expected to be
earnings accretive from the date of completion and complements the
existing skill set of the Fleet office to support enterprise
customers. We continue to be highly cash generative with adequate
debt facilities in place to enable the Board to continue to
identify earnings-enhancing acquisitions whilst retaining scope for
a progressive dividend policy.
Roger Wilson
Chairman
14 November 2016
This announcement contains inside information for the purposes
of Article 7 of EU Market Abuse Regulation 596/2014.
Enquiries:
AdEPT Telecom
Roger Wilson, Chairman 07786 111535
Ian Fishwick, Chief Executive 01892 550225
John Swaite, Finance Director 01892 550243
Northland Capital Partners Limited 0203 861 6625
Nominated Adviser
Edward Hutton/Gerry Beaney
Broking
John Howes/Abigail Wayne
UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months ended
30 September 30 September
2016 2015
Note GBP'000 GBP'000
------------------------------------- ----- ------------- -------------
REVENUE 16,533 13,908
Cost of sales (9,831) (8,326)
------------------------------------- ----- ------------- -------------
GROSS PROFIT 6,702 5,582
Administrative expenses (4,862) (4,185)
------------------------------------- ----- ------------- -------------
OPERATING PROFIT 1,840 1,397
Total operating profit - analysed:
Operating profit before acquisition
fees, share-based payments,
depreciation and amortisation 3,532 2,940
Share-based payments (12) -
Acquisition fees (292) (390)
Depreciation of tangible fixed
assets (149) (64)
Amortisation of intangible fixed
assets (1,239) (1,089)
------------------------------------- ----- ------------- -------------
Total operating profit 1,840 1,397
------------------------------------- ----- ------------- -------------
Finance costs (367) (230)
Finance income - 1
------------------------------------- ----- ------------- -------------
PROFIT BEFORE INCOME TAX 1,472 1,168
Income tax expense (457) (345)
------------------------------------- ----- ------------- -------------
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 1,016 823
------------------------------------- ----- ------------- -------------
Attributable to:
Equity holders 1,016 823
Earnings per share
Basic earnings per share (pence) 3 4.5p 3.7p
Diluted earnings per share (pence) 3 4.3p 3.5p
Adjusted earnings per share, after
adding back amortisation
Basic earnings per share (pence) 3 11.1p 9.9p
Diluted earnings per share (pence) 3 10.5p 9.3p
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
------------------------------- ------------- ------------- ---------
ASSETS
Non-current assets
Intangible assets 28,499 23,599 23,263
Property, plant and equipment 566 212 524
Deferred income tax 67 107 56
-------------------------------- ------------- ------------- ---------
29,132 23,918 23,843
Current assets
Inventories 184 63 48
Trade and other receivables 4,721 4,034 4,360
Cash and cash equivalents 1,579 1,470 6,166
-------------------------------- ------------- ------------- ---------
6,484 5,567 10,574
Total assets 35,616 29,485 34,417
LIABILITIES
Current liabilities
Trade and other payables 9,359 7,799 8,753
Income tax 356 39 335
Short term borrowings - 1,189 -
------------------------------- ------------- ------------- ---------
9,715 9,027 9,088
Non-current liabilities
Long term borrowings 12,367 7,911 12,148
-------------------------------- ------------- ------------- ---------
Total liabilities 22,082 16,938 21,236
--------------------------------
Net assets 13,534 12,547 13,181
SHAREHOLDERS' EQUITY
Share capital 2,248 2,230 2,248
Share premium 429 335 429
Capital redemption reserve 16 12 16
Retained earnings 10,841 9,970 10,488
-------------------------------- ------------- ------------- ---------
Total equity 13,534 12,547 13,181
-------------------------------- ------------- ------------- ---------
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
of parent
Share Capital
Share Share capital redemption Retained Total
to
capital premium be issued reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- ---------- ----------- --------- --------
Equity at 1 April
2015 2,230 335 58 12 9,640 12,275
Profit for 6 months
ended 30 September
2015 - - - - 823 823
Share based payments - - 1 - - 1
Dividend - - - - (552) (552)
Balance at 30 September
2015 2,230 335 59 12 9,911 12,547
Profit for 6 months
ended 31 March 2016 - - - - 1,141 1,141
Dividend - - - - (507) (507)
Deferred tax asset
adjustment - - - - (23) (23)
Share based payments - - (3) - - (3)
Issue of share capital 22 94 - - - 116
Shares repurchased
and cancelled (4) - - 4 (90) (90)
Balance at 31 March
2016 2,248 429 56 16 10,432 13,181
Profit for 6 months
ended 30 September
2016 - - - - 1,016 1,016
Share based payments - - 12 - - 12
Dividend - - - - (675) (675)
Balance at 30 September
2016 2,248 429 68 16 10,773 13,534
------------------------- -------- -------- ---------- ----------- --------- --------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended Year
ended
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- ---------
Cash flows from operating activities
Profit before income tax 1,473 1,168 2,750
Depreciation and amortisation 1,388 1,153 2,403
Profit on sale of fixed asset - - (2)
Share based payments 12 - (2)
Net finance costs 367 229 612
Decrease in inventories 9 - 14
Decrease/(increase) in trade
and other receivables 256 (485) (803)
Increase/(decrease) in trade
and other payables (311) 225 666
--------------------------------------- ------------- ------------- ---------
Cash generated from operations 3,194 2,290 5,638
Income taxes paid (448) (603) (855)
--------------------------------------- ------------- ------------- ---------
Net cash from operating activities 2,746 1,687 4,783
--------------------------------------- ------------- ------------- ---------
Cash flows from investing activities
Interest paid (190) (160) (318)
Acquisition of trade and assets (6,576) (6,990) (7,058)
Purchase of intangible assets (23) (164) (194)
Sale of property, plant and
equipment - - 14
Purchase of property, plant
and equipment (108) (84) (532)
--------------------------------------- ------------- ------------- ---------
Net cash used in investing
activities (6,897) (7,398) (8,088)
Cash flows from financing activities
Dividends paid (674) (502) (1,059)
Payments made for share repurchases - - (90)
Share capital issued - - 114
Repayment of borrowings - - (9,988)
Increase in bank loan 238 5,589 18,400
Net cash (used in)/from financing
activities (436) 5,087 7,377
--------------------------------------- ------------- ------------- ---------
Net increase/(decrease) in
cash and cash equivalents (4,587) (624) 4,072
Cash and cash equivalents at
beginning of period/year 6,166 2,094 2,094
Cash and cash equivalents at
end of period/year 1,579 1,470 6,166
--------------------------------------- ------------- ------------- ---------
Cash at bank and in hand 1,579 1,470 6,166
Bank overdrafts - - -
-------------------------------------- ------------- ------------- ---------
Cash and cash equivalents 1,579 1,470 6,166
--------------------------------------- ------------- ------------- ---------
ACCOUNTING POLICIES
1 Basis of preparation
The financial information set out in this interim report, which
has not been audited, does not constitute statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The Company's
statutory financial statements for the year ended 31 March 2016,
prepared under International Financial Reporting Standards, were
approved by the board of directors on 4 July 2016 and have been
filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified, did not contain any
emphasis of matter paragraph and did not contain any statement
under Section 498 of the Companies Act 2006.
The interim financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting", as adopted by
the EU. Comparatives for the year ended 31 March 2016 have been
extracted from the audited statutory accounts.
2 Accounting policies
The same accounting policies, presentation and methods of
computation are followed in this interim report as were applied in
the preparation of the Company's annual financial statements for
the year ended 31 March 2016.
3 Earnings per share
Six months ended Year ended
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ------------- -----------
Earnings for the purposes
of basic and diluted earnings
per share
Profit for the period attributable
to equity holders of the parent 1,016 823 1,964
Amortisation 1,180 997 2,024
Acquisition fees 292 390 389
Adjusted profit attributable
to equity holders of the
parent, adding back acquisition
fees, amortisation and non-recurring
costs 2,488 2,208 4,377
Number of shares
Weighted average number of
shares used for earnings per
share 22,457,567 22,297,400 22,364,213
Dilutive effect of share plans 1,189,808 1,440,759 1,244,500
--------------------------------------- ------------- ------------- -----------
Diluted weighted average number
of shares used to
calculate fully diluted earnings
per share 23,647,375 23,738,159 23,608,713
Earnings per share
Basic earnings per share (pence) 4.5p 3.7p 8.8p
Fully diluted earnings per
share (pence) 4.3p 3.5p 8.3p
Adjusted earnings per share,
after adding back
acquisition fees, amortisation
and non-recurring costs
Adjusted basic earnings per
share (pence) 11.1p 9.9p 19.6p
Adjusted fully diluted earnings
per share (pence) 10.5p 9.3p 18.5p
Earnings per share is calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of ordinary shares in issue.
Adjusted earnings per share is calculated by dividing the profit
attributable to equity holders of the Company (after adding back
amortisation) by the weighted average number of ordinary shares in
issue.
Fully diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares by existing share
options, assuming dilution through conversion of all existing
options.
4 Segmental information
The chief operating decision maker has been identified as the
Board. The Board reviews the Group's internal reporting in order to
assess performance and allocate resources. The operating segments
are fixed line services and managed services, which incorporates
cloud-based contact centre solutions, data connectivity, mobile,
hardware and VoIP services. These are reported in a manner
consistent with the internal reporting to the Board. The Board
assesses the performance of the operating segments based on
revenue, gross profit and EBITDA.
Unaudited Unaudited (restated)
6 months ended 30 6 months ended
September 2016 30 September 2015
---------------------------------------- ----------------------------------------
Fixed Fixed
line Managed Central line Managed Central
services services costs Total services services costs Total
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Revenue 7,772 8,761 - 16,533 8,174 5,734 - 13,908
Gross profit 3,158 3,544 - 6,702 3,211 2,371 - 5,582
Gross margin
% 40.6% 40.5% - 40.5% 39.3% 41.3% - 40.2%
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
EBITDA 1,681 1,851 - 3,532 1,790 1,150 - 2,940
EBITDA % 21.6% 21.1% - 21.4% 21.9% 20.1% - 21.1%
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Amortisation - - (1,239) (1,239) - - (1,089) (1,089)
Depreciation - - (149) (149) - - (64) (64)
One-off costs - - (292) (292) - - (390) (390)
Share-based payments - - (12) (12) - - - -
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Operating profit/(loss) 1,681 1,851 (1,692) 1,840 1,790 1,150 (1,543) 1,397
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Finance costs - - (367) (367) - - (229) (229)
Income tax - - (457) (457) - - (345) (345)
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Profit after
tax 1,681 1,851 (2,516) 1,016 1,790 1,150 (2,117) 823
------------------------- --------- --------- -------- -------- --------- --------- -------- --------
Audited
Year ended 31 March
2016
----------------------------------------
Fixed
line Managed Central
services services costs Total
------------------------- --------- --------- -------- --------
Revenue 16,089 12,792 - 28,881
Gross profit 6,194 5,440 - 11,634
Gross margin % 38.5% 42.5% - 40.3%
------------------------- --------- --------- -------- --------
EBITDA 3,512 2,641 - 6,153
EBITDA % 21.8% 20.6% - 21.3%
------------------------- --------- --------- -------- --------
Amortisation - (2,216) (2,216)
Acquisition costs - - (389) (389)
Depreciation - - (188) (188)
Share-based payments - - 2 2
------------------------- --------- --------- -------- --------
Operating profit/(loss) 3,512 2,641 (2,791) 3,362
------------------------- --------- --------- -------- --------
Finance costs - - (612) (612)
Income tax - - (786) (786)
------------------------- --------- --------- -------- --------
Profit after tax 3,512 2,641 (4,189) 1,964
------------------------- --------- --------- -------- --------
The assets and liabilities relating to the above segments have
not been disclosed as they are not separately identifiable and are
not used by the chief operating decision maker to allocate
resources. All segments are in the UK and all revenue relates to
the UK. For the six months ended 30 September 2016, transactions
with the largest customer of the Group accounted for 12.5% of
revenue. The segmental analysis for the six months ended 30
September 2015 has been restated to be consistent with the overhead
cost allocations in the audited financial statements for the year
ended 31 March 2016.
5 Share options
Details of the share options outstanding during the period are
as follows:
6 months 6 months Year ended
ended ended 31 March
30 September 30 September 2016
2016 2015
--------------------- --------------------- ---------------------
Number Weighted Number Weighted Number Weighted
of shares average of shares average of shares average
under exercise under exercise under exercise
option price option price option price
------------------ ---------- --------- ---------- --------- ---------- ---------
Outstanding at
start of period 1,469,840 49p 1,440,759 20p 1,440,759 20p
Granted during
the period - - - - 240,000 222p
Forfeited during
the period - - - - 10,789 11p
Exercised during
the period - - - - (221,708) 52p
------------------ ---------- --------- ---------- --------- ---------- ---------
Outstanding at
end of period 1,469,840 49p 1,440,759 20p 1,469,840 49p
------------------ ---------- --------- ---------- --------- ---------- ---------
The weighted average fair values have been determined using the
Black-Scholes-Merton Pricing Model with the following assumptions
and inputs:
30 September 30 September 31 March
2016 2015 2016
------------------------------ -------------- -------------- ---------
Risk free interest rate - - 2.69%
Expected volatility - - 22.0%
Expected option life (years) - - 3.0
Expected dividend yield - - 2.9%
Weighted average share
price - - 222p
Weighted average exercise
price - - 222p
Weighted average fair
value of options granted - - 30p
------------------------------ -------------- -------------- ---------
The expected average volatility was determined by reviewing the
last 260 historical fluctuations in the share price prior to the
grant date of each share instrument. An expected take up of 100%
has been applied to each share instrument. Expected dividend yield
is estimated at 2.5% which is based upon the actual dividend yield
for the period ended 30 September 2016. It does not bear any
relation to the future dividend policy of AdEPT Telecom plc.
The mid-market price of the ordinary shares on 30 September 2016
was 237.5p and the range during the period was 72.5p.
The share option expense recognised during the period in the
statement of comprehensive income was GBP12,110 (September 2015:
GBP415).
6 Business combinations
On 1 May 2016 the Company acquired the entire issued share
capital of Comms Group UK Limited ('Comms') for an initial
consideration of GBP3.6 million plus the value of the cash balance
of Comms at completion (approximately GBP1.1 million), payable in
cash. Further contingent deferred consideration of between GBP0.5
million and GBP3.5 million will be payable, also in cash, dependent
upon the performance of Comms post-acquisition. The contingent
deferred consideration will be determined by reference to the
forecast churn/growth rate for the gross margin of the acquired
business and applying the contingent deferred consideration matrix
as specified in the share purchase agreement. The fair value of
contingent deferred consideration has been determined by reference
to the growth rate for the gross margin of the acquired business
and applying the contingent deferred consideration matrix as
specified in the share purchase agreement. The contingent
consideration liability of GBP3.1 million has been discounted at
the Group's weighted average cost of capital with the value of the
discount of GBP0.25 million being included within finance costs
over the deferred consideration period as an interest charge. Total
consideration is expected to be GBP6.47 million (net of the surplus
cash acquired).
Comms, based in Northampton, is a well-established UK-based
specialist provider of unified communications, Avaya IP telephony,
hosted IP solutions, IT and managed services. Comms offers its
clients the delivery of unified communications and managed service
solutions, which is an increasing requisite for AdEPT's existing
and targeted enterprise and public sector customer base. Comms
technical skills and product set will complement and enhance
AdEPT's existing services. Comms has retained its presence and
customer service operation in Northampton. The vendors of Comms are
to be retained in their current capacity within the business for a
period of at least twelve months post-acquisition.
AdEPT and Comms have both adopted capital asset light strategies
and are dedicated to offering a full suite of flexible data and
unified communication strategies.
Fair
Book cost value
GBP'000 GBP'000
------------------------------- --------- --------
Intangible asset - 6,413
Investments 55 55
Property, plant and equipment 28 28
Inventories 145 145
Trade and other receivables 794 794
Cash and cash equivalents 1,055 1,055
Trade and other payables (965) (965)
Income tax - -
Net assets 1,112 7,525
------------------------------- --------- --------
Cash (4,637)
Contingent cash consideration (2,888)
------------------------------- --------- --------
Fair value total consideration (7,525)
------------------------------- --------- --------
Goodwill -
------------------------------- --------- --------
Comms contributed revenue and profit after tax of GBP1.6m and
GBP0.3m respectively for the six month period ended 30 September
2016 and represents a five month contribution. Acquisition related
costs of GBP0.4m have been recognised as an expense in the
statement of comprehensive income for the year ending 31 March
2016.Acquisition related costs of approximately GBP0.29 million
have been recognised as an expense in the statement of
comprehensive income for the period ended 30 September 2016.
7 Events after the balance sheet date
On 1 November 2016 the Company acquired the entire issued share
capital of CAT Communications Limited and Progressive
Communications Limited (together referred to as 'CAT') for an
initial consideration of GBP1.05m plus the value of the cash
balance of CAT at completion (approximately (GBP0.07m) debt),
payable in cash. Further contingent consideration of between
GBP0.2m and GBP0.95m will be payable, also in cash, dependent upon
the performance of CAT post-acquisition. The contingent deferred
consideration will be determined by reference to the forecast
churn/growth rate for the gross margin of the acquired business and
applying the contingent deferred consideration matrix as specified
in the share purchase agreement. The fair value of the assets and
the contingent consideration liability have not yet been identified
at the date of these interim results as the completion balance
sheet was not available and there have been no post-acquisition
period financial results.
CAT, based in Pewsey, Wiltshire, is a well-established UK-based
specialist provider of unified communications, Avaya IP telephony,
hosted IP solutions and managed services. CAT offers its clients
the delivery of complex unified communications, managed service
solutions and specialist inbound call centre management, which is
an increasing requisite for AdEPT's existing and targeted
enterprise and public sector customer base.
The support function of the CAT customer base is to be
transferred and integrated into AdEPT's existing site in Fleet. The
vendors of CAT are to be retained in their current capacity within
the business for a period of at least twelve months
post-acquisition. The CAT technical skills and product set will
complement and enhance AdEPT's existing services already being
provided from the Fleet office.
The last filed accounts of CAT for the year ended 31 March 2015
reported turnover, operating profit and profit before tax of
GBP1.3m, GBP0.3m and GBP0.3m respectively. Capital expenditure in
the year ended 31 March 2015 was insignificant. Net and gross
assets at that date were GBP0.2m and GBP0.7m respectively.
Acquisition related costs of approximately GBP0.1m will be
recognised as an expense in the statement of comprehensive income
for the year ending 31 March 2017.
This information is provided by RNS
The company news service from the London Stock Exchange
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November 15, 2016 02:00 ET (07:00 GMT)
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