March 14 results presentation final

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AdEPT Telecom plc Full year results & corporate update for the year ended

31 March 2014

AdEPT Telecom – March 2014 results July 2014

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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 )


£0.3m gross margin increase to 36.4% Gross margin % increase to 36.4% (2013: 34.5%)

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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)

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£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


Net debt down £0.3m to £3.0m Despite acquisition and double tax bill

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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

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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)


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AdEPT Telecom plc

AdEPT Telecom strategy update for investors


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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:


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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


http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&docid=DuWcb6ZJaHRdtM&tbnid=KhEqcoDn94F2BM:&ved=0CAUQjRw&url=http%3A%2F%2Fbestclipartblog.com%2F26-person-clip-art.html%2Fperson-clipart-4&ei=sY6xU57ZMuaz0QX83oCAAQ&bvm=bv.69837884,d.ZWU&psig=AFQjCNHbtb1iX3VE1eb3U78Nd41cLOEWrA&ust=1404231673928657



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Revenue split March 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

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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%)


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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



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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




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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


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Some of our COMMERCIAL customers …

Inbound Solutions National Brands Multi-site

400 sites

130 sites

300 sites

350 sites

60 sites


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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


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Public sector contract wins Focus on Local Government

H1 Sept 2013

H2 March 2014

Post year-end


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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:


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Some of our PUBLIC SECTOR customers …

Local

Government

Probation

Services


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Some of our UNIVERSITY customers …

Universities


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Public sector revenue Increasing public sector customers


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

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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


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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 )


Dividend cover 5.0x at March 2014 Dividend cover 5.0x (2013: 4.2x on March 2014 DPS )

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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*


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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]


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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.


Investor Relations

March 14 results presentation final