• Wed. Sep 21st, 2022

AdEPT Technology Group PLC says it will return to interim dividend payments – Proactive Investors UK


Sep 21, 2022

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“While the macro-economic landscape remains uncertain, we are on a journey back to normality,” AdEPT chairman, Ian Fishwick said
AdEPT Technology Group PLC (AIM:ADT) will return to paying interim dividends even as chip shortages and inflationary pressures weigh on current trading.
In an update ahead of the company’s AGM being held on Tuesday, AdEPT said it will pay a dividend of 2.50p per share for the six months ended September 30, an increase of 150% over the final dividend of 1.00p for the year ended March 31, 2022.
“While the macro-economic landscape remains uncertain, we are on a journey back to normality,” chairman, Ian Fishwick said:  “Our reinstatement of interim dividends reflects this change in circumstance and remains conservative.” 
Fishwick noted that AdEPT’s cash generation for the year to date is in line with management expectations and the group is making progress on its strategy to strengthen the balance sheet.
The chairman highlighted two specific initiatives that are expected to have a positive impact on the group in the coming months, noting the board’s confidence in a strengthening performance in the second half pf the current year.
Firstly, he pointed out, the group has entered a strategic alliance with Canon (UK) Ltd, with AdEPT’s IT Services being promoted alongside Canon’s capabilities into their UK accounts. This will be taken to market as ‘Canon IT Services, powered by AdEPT’ and the company anticipates will open up significant new opportunities for it over the coming months.
The second is the announcement in March 2022 by the then Education Secretary Nadhim Zahawi of a ‘Connect the Classroom’ initiative, supported by a £150mln fund to facilitate the introduction of faster and more reliable connectivity for schools, Fishwick noted. This presents an additional opportunity for AdEPT to help schools, a sector in which it has a particularly strong market presence, with around 4,500 schools as customers.
The chairman said the company’s focus is on securing recurring customer contracts continues, with these currently representing around 74% of total revenue and a further significant percentage being generated from re-occurring one-off revenues from existing customers. The strong underlying recurring revenue and margin stream, combined with continued operational efficiency, has generated strong organic cash flow, he added.
Looking at the company’s new dividend strategy, Fishwick noted that, pre-pandemic, AdEPT’s dividend policy was to return 30% of its adjusted earnings per share to shareholders in dividends. However, as a result of the significant uncertainty surrounding COVID-19 lockdowns, dividend payments were suspended.
The chairman said the firm now anticipates returning approximately 20% of its earnings per share in the financial year ending March 31, 2023. This leaves considerable scope for the board to execute on its progressive dividend policy over the coming years, he added.
The planned dividend will absorb approximately £0.6mln of shareholders’ funds and it is proposed by the directors that the interim dividend will be paid in early April 2023.
Considering the new dividend policy and its assumptions on forecast rises in interest rates, the company anticipates the group’s EBITDA:Senior net debt ratio to be less than 2 times within 12 months and, therefore, in line with its declared strategy to reduce leverage.
Looking at current trading, Fishwick said the group’s resilience has been demonstrated under the challenging macro conditions of the first few months of FY23, and it has grown its project backlog and continues to win new business and secure contract renewals and extensions.
However, he added, the anticipated growth of the business is being hindered by global chip shortages for certain types of hardware, which continue to impact the whole of its sector. Lead-time issues on such products delay the delivery of client projects, as previously reported, as well as some service contracts and related recurring support agreements, the chairman noted
In addition, inflationary pressures are expected to increase product and operational costs in FY23, he said. The group is working closely with its partners to mitigate the supply chain delays and to pass on cost increases, where possible, in particular those linked to connectivity and telephony charges, which cushions the business, to some extent, from the inflationary pressures within its supplier base, Fishwick added.
Underlying demand for digitisation and cloud-based services remains strong, as businesses and government continue to seek efficiency benefits, the chairman concluded, and the company expects growth in its markets to return to anticipated levels as the supply chain blockages ease and the economy returns to more normal trading conditions.
AdEPT said it intends to announce its half-year results for the six months to September 30, 2022, in mid-November 2022.
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The above has been published by Proactive Investors Limited (the “Company”) on its website and is made available subject to the terms and conditions of use of its website (see T&C ). …
AdEPT Technology Group PLC (AIM:ADT) founder and chairman Ian Fishwick and chief executive officer Phil Race present its full-year results to Proactive.  They highlight a restored dividend after a year of growth in which revenues and earnings both grew as they continue to see strong trading…
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