Adept Technology reports 'resilient' full-year performance

Managed IT and communications services provider Adept Technology reported a “resilient” performance under challenging trading conditions in its final result on Wednesday, with revenue slipping to £57.9m, from £61.7m in the prior year.

The AIM-traded firm said its gross profit for the year ended 31 March totalled £27.6m, down from £30.2m, while its underlying EBITDA came in at £9.8m, falling from £11.7m in the 2020 financial year.

Its underlying EBITDA margin narrowed to 17%, from 19% a year earlier.

Adjusted fully diluted earnings per share totalled 22.4p, compared to 28p, and cash generation from operating activities after tax came in at £7.4m, compared to £7.6m in the corresponding prior period.

Cash at year-end grew to £13.2m from £11.8m at the end of 2020, while conversion of reported EBITDA to operating cash flow before tax was 89%, up from 82%.

Year-end net senior debt was reduced to £25.6m from £27.9m, and the company’s capital expenditure remained stable, at 2% of revenue.

On a divisional basis, Adept said revenue from public sector and healthcare increased to 55.5% from 44.7%, while cloud centric strategic services revenues were up 9% year-on-year to £25.1m.

Traditional telephony as a percentage of revenues reduced to 19% from 21%, and managed services accounted for 81% of both total revenue and EBITDA, up from 79% in 2020.

The company secured a new, enlarged £50m banking facility during the year, to support investment in its growth.

Since the year ended, Adept had made the strategic acquisition of Datrix in April, which it said would enhance its core capabilities, and strengthen its presence in the NHS vertical market, with integration on track thus far.

Looking at its current trading, Adept reported that the strong momentum from the fourth quarter of 2021 had continued into the new financial year.

Sales and margin achievement were in line with market expectations for the year-to-date, with the board saying it viewed the company’s future opportunities with confidence.

“While the pandemic temporarily interrupted the trajectory of our growth, the board is pleased with the progress achieved under challenging circumstances,” said chief executive officer Phil Race.

“Given our strategic focus on cloud-centric strategic services, the organic growth of 9% in this aspect of our business is particularly pleasing.

“We are confident that the opportunities for the group remain strong, in a vibrant technology market, with demand for effective ICT services at an all-time high and likely to remain so.”

Race said the momentum gained by the group in the fourth quarter had continued into the first three months of the current year, with sales and margins in the new financial year to date “firmly in line” with market expectations.

“Our focus remains on the delivery of strong organic growth, whilst seeking further opportunities to consolidate the fragmented market, through complementary acquisitions which generate strong levels of recurring revenue and margin.

“Our new integrated operating system, ‘ONE AdEPT’, lies at the heart of our plans, providing the group with a scalable platform for growth.

“The business is in great shape, and the board views the prospects for the group in the year ahead and beyond with confidence.”

At 1024 BST, shares in Adept Technology Group were down 6.89% at 284p.