march 14 results presentation final
DESCRIPTION
Adept Telecom March 14 ResultsTRANSCRIPT
Page 1 Page 1
AdEPT Telecom plc Full year results & corporate update for the year ended
31 March 2014
AdEPT Telecom – March 2014 results July 2014
Page 2 Page 2
Financial highlights Trading results and earnings
(0.8%) revenue reduction to £20.9m (2013:£21m) Reduced call volumes and prices
8.4% increase in EBITDA to £4.04m 11th consecutive EBITDA increase to £4.04m (2013: £3.73m) 1.7% increase in EBITDA margin to 19.4% (2013: 17.7%)
13% increase to PBT PBT increased by £0.2m to £1.8m (2013: £1.6m)
35% increase to PAT PAT increased by £0.3m to £1.3m (2013: £1.0m)
18% increase to Adjusted Earnings Per Share Increased to 14.99p (2013: 12.70p )
AdEPT Telecom – March 2014 results July 2014
£0.3m gross margin increase to 36.4% Gross margin % increase to 36.4% (2013: 34.5%)
Page 3 Page 3
Financial highlights Free cash, finance costs and dividends
3
£2.6m Free cash flow After interest free cash flow £2.6m (2013: £3.0m) Double corporation tax impact £0.5m – adjusted free cash flow £3.1m
30% reduction in finance costs Finance costs reduced to £0.26m (2013: £0.37m)
100% increase to dividends to 3.0p Interim 1.50p, final 1.50p (2013: 1.50p)
Page 3
£2.2m spent on acquisition consideration Bluebell Telecom acquisition completed and fully integrated in August 2013
Post year end acquisition of Bluecherry Telecom Bluecherry Telecom acquisition completed and fully integrated in April 2014
AdEPT Telecom – March 2014 results July 2014
Net debt down £0.3m to £3.0m Despite acquisition and double tax bill
Page 4 Page 4
Financial highlights EBITDA growth
4
11th consecutive year of EBITDA growth EBITDA increased to £4.04m (2013: £3.73m)
Our business model based on recurring revenue and low capex has been very resilient throughout the recession
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14
999
1,86
4
2,49
0
3,28
0
3,51
7
3,61
2
3,62
4
3,65
1
3,73
2 4,04
3
EBITDA (£'000s)
Page 4 AdEPT Telecom – March 2014 results
July 2014
Acquisitions: 4 4 4 2 2 1 1
Page 5
Financial highlights Low level of debt
Net debt : EBITDA ratio 0.73x £0.3m net debt reduction Net debt reduced to £3.0m (2013: £3.3m) After £2.2m acquisition consideration payments
Cash interest cover 8.6x Operating cash flow : Cash interest paid
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Mar 08 Jun 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14
11,2
95
12,2
67 10,8
43 9,21
4
7,39
5
5,33
9
3,27
0
2,96
3
Net debt (£'000s)
AdEPT Telecom – March 2014 results July 2014
Page 6 Page 6
AdEPT Telecom plc
AdEPT Telecom strategy update for investors
AdEPT Telecom – March 2014 results July 2014
Page 7 Page 7
Residential
competitors
The residential and business markets are very different:
Business
competitors
Industry Overview
5-10 700+
c25 700+
Under £2m pa sales Over £20m pa sales
The business market is highly fragmented with few large competitors:
AdEPT Telecom – March 2014 results July 2014
Page 8 Page 8
What makes AdEPT different?
Industry average
£250k
Top quartile
£444k
AdEPT Telecom
£168k
INDUSTRY LEADING SALES PER EMPLOYEE • Achieved by system automation • All based in Tunbridge Wells
AdEPT Telecom – March 2014 results July 2014
Page 9 Page 9
Revenue split March 2014
AdEPT Telecom – March 2014 results July 2014
Revenue %
Calls
Lines
Network Solutions
CALLS 27% of revenue
LINES Originally to carry calls Now … • Broadband • IP-CCTV • Alarms • PDQ machines • Faxes • Largest part of
Public Sector
NETWORK SOLUTIONS • Data connections
and networks • Inbound
Page 10 Page 10
FOCUS ON DATA NETWORKS
Network Solutions Increased data connectivity and inbound services
26.9% increase to data connectivity revenue £3.3m revenue (2013: £2.6m) 15.8% of total revenue (2013: 12.8%)
Data, mobile and inbound services £5.15m pa 24.7% of total revenue (2013: 20.2%)
AdEPT Telecom – March 2014 results July 2014
Page 11 Page 11
Corporate strategy …
£460k One AdEPT One Building One Service centre One Billing System One Contact Management System One Management team
Larger “Premier” customers
Small Business
customers
Organic Internal direct and indirect sales channels Larger premier customers Focus on public sector Leveraging frameworks
Acquisition Small business customers Bolt on customers High margin conversion to EBITDA Part in-fill for small business customer churn
AdEPT Telecom – March 2014 results
July 2014
Page 12 Page 12
Customer Service strategy …
50 : 50 Revenue split
Larger “Premier” customers
Small Business
customers
PREMIER CUSTOMER SERVICE Personal account management for large and public sector customers 1,000 customers spending £5,000+ per annum
SMALL BUSINESS CUSTOMER SERVICE Managed via the call centre 19,000 customers
AdEPT Telecom – March 2014 results July 2014
Page 13 Page 13
FRAMEWORKS awarded
ACQUISITIONS completed
BLUEBELL TELECOM August -
Integrated in 4 weeks
BLUE CHERRY TELECOM
April - Integrated in 4 weeks
Evolution not revolution Gradual change is our constant
H1 Sept 2013
H2 March 2014
Post year-end
APPROVALS achieved
Approved for data networks
New PRODUCTS and suppliers
Generic Ethernet
Access
PSN data product
SIP
100Gb Optical
AdEPT Telecom – March 2014 results July 2014
Page 14 Page 14
Some of our COMMERCIAL customers …
Inbound Solutions National Brands Multi-site
400 sites
130 sites
300 sites
350 sites
60 sites
AdEPT Telecom – March 2014 results July 2014
Page 15 Page 15
Hold 3 Government Frameworks Growing Public Sector revenues
ESPO Telecom Framework – Sole recommended supplier of calls, lines, broadband,
fibre broadband and SIP to Public Sector and registered charities nationwide
CCS Telephony Framework – One of 10 companies recommended on the Crown
Commercial Service RM1035 telephony services framework
JANET Framework – One of a small number of companies approved to sell
data connectivity to UK Colleges and Universities
– Renewed for 4 years in July 2014
AdEPT Telecom – March 2014 results July 2014
Page 16 Page 16
Public sector contract wins Focus on Local Government
H1 Sept 2013
H2 March 2014
Post year-end
AdEPT Telecom – March 2014 results July 2014
Page 17 Page 17
Savings for recent contract wins Local Government savings typically 30%
NEATH PORT TALBOT County
Council
CHESHIRE EAST
County Council
CARMARTH-ENSHIRE
County Council
PEMBROKE-SHIRE
County Council
CANTERBURY City
Council
CERIDIGION County Council
45.0% saving
39.3% saving
36.1% saving
25.1% saving
22.2%
saving
42.7%
saving
Saved
£176k Over 3 years
Saved
£221k Over 3 years
Saved
£433k Over 3 years
Saved
£215k Over 3 years
Saved
£58k Over 3 years
Saved
£127k Over 3 years
Example Savings:
AdEPT Telecom – March 2014 results July 2014
Page 18 Page 18
Some of our PUBLIC SECTOR customers …
Local
Government
Probation
Services
AdEPT Telecom – March 2014 results July 2014
Page 19 Page 19
Some of our UNIVERSITY customers …
Universities
AdEPT Telecom – March 2014 results July 2014
Page 20 Page 20
Public sector revenue Increasing public sector customers
AdEPT Telecom – March 2014 results July 2014
Public sector = Revenue run rate 11.9% at March 2014 (March 2013: 4.5%)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
-
50
100
150
200
250
Mar-13 Jun-13 Sep-13 Dec-13 Mar-14
% o
f to
tal r
eve
nu
e
Re
ven
ue
ru
n r
ate
(£
'00
0s)
Public sector revenue
% of total revenue Revenue run rate
Page 21 Page 21
What do we do …
Supply Chain Our supply chain – how we work with tier 1 network providers
AdEPT
PSN & non-PSN Data
Calls & lines
Broadband
SIP
One bill
One point of contact for all service issues
Let us decide who is best to supply the underlying technology
AdEPT Telecom – March 2014 results July 2014
Page 22 Page 22
Dividend Policy Progressive growth
Progressive future dividend policy Strong cash generation and reduction to debt should support a progressive policy
100% increase to dividends to 3.0p Interim 1.5p, final 1.5p (2013: interim 0.75p, final 0.75p )
18% increase to Adjusted Earnings Per Share Increased to 15.0p (2013: 12.7p )
AdEPT Telecom – March 2014 results July 2014
Dividend cover 5.0x at March 2014 Dividend cover 5.0x (2013: 4.2x on March 2014 DPS )
Page 23
AdEPT Telecom plc Share ownership
Chris Fishwick companies* 29.2% Individual
Greenwood Investments 15.2% Family office
Fiske Private Clients 10.0% Private clients
Ian Fishwick* 6.7% Individual
Allan Gauld 3.9% Individual
Octopus 3.9% VCT
Roger Wilson* 3.6% Individual
Hargreave Hale 3.2% Institution
Pat Wilson 3.1% Individual
SUB-TOTAL 78.8%
• Shareholder and management interests aligned
• Over 40% of AdEPT is owned by the Directors*
AdEPT Telecom – March 2014 results July 2014
Page 24 Page 24
AdEPT Telecom plc Contact details
Visit us at: www.adept-telecom.co.uk
Roger Wilson Chairman
Ian Fishwick Chief Executive
John Swaite Finance Director
[email protected] [email protected] [email protected]
AdEPT Telecom – March 2014 results July 2014
Page 25 Page 25
Disclaimer
No representation or warranty, express or implied, is given regarding the accuracy of the information or opinions contained in this document and no liability is accepted by AdEPT Telecom or any of its directors, members, officers, employees, agents or advisers for any such information or opinions.
This information is being supplied to you for information purposes only and not for any other purpose. This document and the information contained in it does not constitute or form any part of an offer of, or invitation or inducement to apply for, securities.
The distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction.
AdEPT Telecom – March 2014 results July 2014