AdEPT Telecom plc has issued a trading update for the year ended 31 March 2010 ahead of Final results which are expected to be announced on 6th July 2010.
The Company is pleased to announce that, despite the challenging economic conditions in the UK over the past 12 months, underlying EBITDA will be ahead of the previous year, and above analysts’ forecasts. Net debt will be below market expectations and revenue will be in line with market expectations.
Since its’ inception in 2003, AdEPT has increased underlying EBITDA for seven consecutive years.
Our focus of concentrating on larger customers has been beneficial. AdEPT has c60,000 lines, and our Premier Customer division, comprising our 200 largest customers, now accounts for one-third of our revenue. Average contract length has been enhanced through an increased focus on providing multi-product solutions. At March 2010, customers taking 3 or more of our products now account for 22% of monthly revenue [15% in March 2009].
AdEPT has broadened its product range particularly with regard to data connectivity and mobile, both of which have seen greater than 60% year-on-year revenue growth. Data contracts totaling over £0.5m were signed in the year.
During the financial year the Company signed a partnership agreement with Callstream, one of the UK’s leading suppliers of 21st century network-based inbound call handling solutions. Complex inbound solutions have been the catalyst for signing over £1.5m of multi-year, multi-product contracts with larger customers.
AdEPT is increasingly seen as one of the UK’s leading suppliers to multi-site customers and we now have over 700 multi-site customers ranging in size from 2 sites to c2,500. A national auto chain was a major contract win in the year with over 200 sites and an estimated contract value exceeding £0.5m.
Our previous reliance on call revenues has been much reduced with call revenue providing only 47% of revenue in March 2010 [56% in March 2009].
The Company has seen a significant reduction in underlying operating costs in the year ended 31 March 2010 due to the operational efficiencies associated with managing larger customers, together with savings derived from the restructuring undertaken towards the end of the 2009 financial year.
A key strength of AdEPT is its consistent, proven ability to generate strong cash flows. As a result of the Company’s focus on underlying profitability and cash conversion, net debt has been reduced from a peak of more than £12m in November 2007 to £9.2m at 31 March 2010. Free cash flow of £5.8m has been generated since we acquired Telecom Direct in November 2007 and in addition to the debt reduction of £2.8m a further £3m has been paid in restructuring costs largely associated with the assimilation of Telecom Direct’s business. This strong level of cash generation is expected to continue.
We continue to monitor closely customer payments, and we are pleased to report thatdebtor periods have not been extended during the year, despite the economic backdrop.
Roger Wilson, Non-Executive Chairman of AdEPT Telecom, said: “The proven strong cash flow generation of AdEPT has demonstrated the resilience of the Company’s business model in a tough economic environment. The broadening of the product offering will ensure that the Company continues to maximize opportunities and provide complete communication solutions for customers.”
Ian Fishwik, Managing Director of Adept Telecom stated, “Seven consecutive years of increased profitability is a record we feel justifiably proud of and I particularly want to congratulate our staff. They have worked incredibly hard against a background of the worst recession in decades; results like this come from pure hard work. It is also nice to see that despite not doing an acquisition for two years, profitability is still rising: I think that says a lot about the state of the business.”