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Interim results Sep 2012

AdEPT Telecom plc (“AdEPT” or the “Company”)

Interim results for the 6 months ended 30 September 2012

 AdEPT, one of the UK’s leading independent providers of award-winning telecommunications voice and data services for fixed line, VoIP and mobile networks, announces its results for the 6 months ended 30 September 2012.


  • Profit before tax increased by 32% to £0.86 million (2011: £0.65 million)
  • Profit after tax increased by 76% to £0.52 million (2011: £0.30 million)
  • Adjusted EPS increased by 16% to 6.54p (2011: 5.64p)
  • Interim dividend increased by 50% to 0.75p per share (2011: 0.50p)
  • Free cash flow increased by 63% with £1.57 million generated in H1 (2011: £0.96 million)
  • Gearing down by 27% to 46% (2011: 73%)
  • Net debt reduced by £2.08 million in the last 12 months to £4.39 million (2011: £6.47 million)
  • Net debt reduced by £0.95 million since year end (March 2012: £5.34 million)
  • Underlying EBITDA increased by 1.2% to £1.97 million (2011: £1.95 million)
  • Underlying EBITDA margin increased by 0.5% to 18.0% (2011: 17.5%)


  • Total revenue fell by 1.5% to £10.9 million (2011: £11.1 million)
  • Data & broadband product revenues increased by 15% to £1.09 million (2011: £0.95 million)
  • Cloud-based contact centre solution revenue increased by 17% to £0.57 million ( 2011: £0.49 million)
  • Revenue from customers taking 3 or more products increased to 34% (2011: 32%)

Business review

In the 6 month period ended 30 September 2012 total revenue fell by 1.5% primarily as a result of fixed line revenues being 2.2% lower than the comparative period. However absolute gross margins for fixed line services increased by £0.2 million to £3.37 million (2011: £3.15 million).  Fixed line product margins have improved to 35.7% (2011: 32.8%). This has been achieved through management of supply contracts combined with the impact of regulatory price changes on mobile interconnect rates and ISDN30 circuit rentals.

Cloud-based contact centre solution revenue has increased by 17% in the 6 months ended 30 September 2012 compared to the prior period.  This has been achieved by new inbound customers coming on stream combined with the continued development of network and cloud-based solutions for existing customers, such as Monarch Airline and Cosmos Holidays.

Continued deployment of 21CN data connectivity products has led to data and broadband revenues increasing by 15% in the 6 months ended 30 September 2012 against the prior year comparative period and an 8% increase in absolute gross margin.  The average gross margin percentage from data connectivity products has experienced a blending down as the product mix has moved further towards the higher revenue but lower margin complex data solutions.  As the demand for faster data connectivity speeds continues AdEPT has continued to broaden its product offering, which now includes 10Gb Optical Spectrum Services (OSA and OSEA).

The on-going focus on larger customers, generally businesses with 50 to 1,000 employees, has enhanced scale efficiencies and cross selling opportunities.  Cross selling into the existing customer base continues to be successful, with revenue from customers taking 2 or more products increasing to 93% (2011: 89%) and 3 or more products increasing to 34% of total revenue (2011: 32%).


Cash generation has improved during the interim period.  During the 6 months to 30 September 2012 the Company has generated £1.57 million free cash flow, of which £0.48 million has been used to fund the initial consideration for the acquisition of certain trade and assets from Expanse (UK) Communications Limited.

Net borrowings have been reduced by £2.08 million during the last 12 months, which at 30 September 2012 were £4.39 million (September 2011: £6.47 million).

Interest costs for the 6 month period to 30 September 2012 were £0.14 million lower, a fall of 37% from the comparative period.  This improvement is a reflection of the significantly reduced net borrowings and pro-active treasury management.


Following the reduction in net borrowings and generation of £0.52 million retained earnings in the 6 month period ended 30 September 2012 gearing is down by 27% to 46% (2011: 73%).

Profit before and after tax

Profit before tax has increased by 32% to £0.86 million (2011: £0.65 million) arising from the improved operating profit combined with the reduction in interest costs.  Profit after tax has increased by 76% to £0.52 million (2011: £0.30 million).

Earnings per share

As a result of the improvement to profit after tax, adjusted (basic) earnings per share has increased 16% to 6.54p for the year ended 30 September 2012 (2011: 5.64p).


The Directors propose an interim dividend of 0.75p per Ordinary Share in respect of the results for the 6 months to 30 September 2012.  This will absorb approximately £158,006 of shareholders’ funds (2011: £105,337).  It is proposed by the Directors that this dividend will be paid on 12 April 2013 to shareholders who are on the register of members on the record date of 22 March 2013.  Subject to the financial results for the second half of the financial year, it is the intention of the Company to look to propose a final dividend with the March 2013 final results.


The Company continues to be under top line pressure in the competitive fixed line market place.  Despite this, it has increased EBITDA slightly and achieved a significant reduction in net borrowings through a focus on profitability and cash generation.  On-going regulatory changes to mobile interconnect rates and active network supplier management should continue to drive down our wholesale costs, helping to support margins despite falling retail prices.

AdEPT will continue to focus on broadening its revenue base, with particular emphasis on longer term contracts which encompass data connectivity and cloud-based contact centre solutions.

Roger Wilson

13 November 2012



AdEPT Telecom

Roger Wilson, Chairman                        07786 111535

Ian Fishwick, Chief Executive                 01892 550225

John Swaite, Finance Director                01892 550243

Northland Capital Partners Limited

Tim Metcalfe                                         020 7796 8800

Edward Hutton                                      020 7796 8800