RNS Number : 4503S

AdEPT Technology Group PLC

16 November 2021

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

16 November 2021

AdEPT Technology Group plc

("AdEPT" or the "Company", together with its subsidiaries the "Group")

Interim results for the six months ended 30 September 2021

AdEPT (AIM: ADT), one of the UK's leading independent providers of managed services for IT, unified communications, connectivity, voice and cloud services, is pleased to announce its unaudited results for the six months ended 30 September 2021 ("H1 FY22" or the "Period").


Revenue and EBITDA

 --   Group revenue increased by 20% to GBP34.3 million (H1 
       FY21: GBP28.5 million), despite deferral of c.GBP0.9 million 
       into H2 FY22 due to global supply chain issues and customer 
       resource allocation 
 --   Strong organic growth of 6% in Cloud Centric Strategic 
       Services revenue - up 19% to GBP14.6 million 
 --   Managed service revenue grew organically by 4% and increased 
       to 87% of revenue (H1 FY21: 82%), as the Group continues 
       its strategic move away from Traditional Telephony 
 --   Underlying EBITDA(1) increased 16% to GBP5.7 million (H1 
       FY21: GBP4.9 million) 
 --   Underlying EBITDA(1) margin 17% (H1 FY21: 17%) 


 --   Adjusted profit after tax(2) increased 16% to GBP3.5 million 
       (H1 FY21: GBP2.8 million) 
 --   Adjusted fully diluted EPS increased 30% to 13.2p (H1 
       FY21: 10.2p) 

Cash Flow and Debt

 --    Net senior debt at the Period end at GBP31.2m (31 Mar 
        FY21: GBP25.6 million), with GBP9.0 million of cash used 
        to fund strategic acquisition of Datrix in April 2021 
 --    Reported EBITDA conversion to post-tax cash from operating 
        activities at 82% (H1 FY21: 152%) after the payment of 
        deferred VAT (re Covid-19) - 124% if adjusted for this 
 --    Customer debt collection improved to 39 days (H1 FY21: 
        45 days) 
 --    Low capital expenditure maintained at 2% of revenue (H1 
        FY21: 2%) 


 --    Winner of 'Managed Service Provider of the Year' at the 
        Comms Business Awards 2021 
 --    Datrix performing ahead of management expectations 
 --   Successful integration of Datrix, now operating fully 
       on the One AdEPT platform, with expected cost synergies 
       achieved, a cross-sell project secured, and a significant 
       contract win with Public Health England 
 --   AdEPT Nebula revenue increased 26% to GBP1.5 million (H1 
       FY21: GBP1.2 million) with 635 customers now using the 
       Group's cloud platform 
 --   Voice over IP ("VoIP") revenues increased 54% to GBP1.9 
       million (H1 FY21: GBP1.2 million), demonstrating the success 
       of the 8x8 proposition and the Group's ability to help 
       customers transition from Traditional Telephony, which 
       now comprises only 13% of total revenue 
 --   Presence in education sector strengthened further with 
       the launch of a new software product, AdEPT Nimbus, helping 
       schools to address synchronisation issues as they continue 
       to transition to cloud services 
 --   Revenue generated from public sector and healthcare customers 
       in H1 FY22 increased to 48% (H1 FY21: 45%) 
 --   Project Fusion, integrating all AdEPT businesses to the 
       One AdEPT platform, nearing 100% of the Group utilising 
       the CRM and Service Management platform - providing greater 
       efficiency, business insight and cross-selling opportunities 
 --   Launch of ESG initiative with a clear 17 point plan of 
 (1)   Earnings before interest, tax, depreciation, amortisation 
        and excluding one off furlough grants, acquisition and restructuring 
        costs and share based payments 
 (2)   Profit after tax adding back one-off acquisition and restructuring 
        costs, amortisation and share based payments, excluding 
        revaluation of deferred consideration 

Commenting on the results and outlook for the Group, Chairman, Ian Fishwick, said:

"I am delighted with the Group's strong performance in the Period, as activity continued to normalise in our sector, albeit somewhat tempered by the aftershocks of Covid-19.

We continued to deliver successfully on our strategic objectives, completing the strategic acquisition of Datrix, which strengthened our core competencies in cloud services and next generation technologies. One AdEPT, which lies at the heart of the Group's growth strategy, providing high levels of operational visibility and a scalable platform for cross-selling, is nearing 100% utilisation.

Our focus in H2 is on the continued delivery of our stated objectives with an emphasis on the achievement of further organic growth, using the Group's strong cash generation to reduce net senior debt, as we capitalise on the macro shift to cloud centric solutions.

AdEPT is on track to achieve management expectations for FY22, with GBP0.9 million of revenue and its associated margin, deferred from H1 due to supply chain issues and customer resource allocation, underpinning the Board's confidence. The Group's strategic progress, coupled with a strong pipeline of opportunities across the public and private sectors, driven by macro technology market trends, ensure that the prospects for AdEPT are stronger than ever."


  AdEPT Technology Group Plc 
   Ian Fishwick, Chairman                   07720 555 050 
   Phil Race, Chief Executive               07798 575 338 
   John Swaite, Finance Director            01892 550 243 
  Singer Capital Markets 
   Nominated Adviser & Broker 
   Shaun Dobson / Rachel Hayes / Will 
   Goode                                    020 7496 3000 
  Belvedere Communications 
   Cat Valentine                            07715 769 078 
   Keeley Clarke                            07967 816 525 

This announcement has been released by John Swaite, Finance Director, on behalf of the Company.

About AdEPT Technology Group plc:

AdEPT Technology Group plc is one of the UK's leading independent providers of managed services for IT, unified communications, connectivity and voice solutions. AdEPT's tailored services are used by thousands of customers across the UK and are brought together through the strategic relationships with tier-1 suppliers such as Openreach, Vodafone, Virgin Media, Avaya, Microsoft, Dell and Apple.

AdEPT is listed on the London Stock Exchange (Ticker: ADT). For further information please visit: www.adept.co.uk


Confidence is gradually returning in AdEPT's customer community with cloud technology solutions being instrumental in addressing the many challenges and consequences of the Covid-19 pandemic. AdEPT continues to adapt to the morphing demands of customers and to capitalise on the opportunity this presents, as organisations move to a hybrid model of working on a permanent basis and seek to engage effectively with their staff and clients digitally.

The Group's strategic focus on growth in Cloud Centric Services is progressing well. Having achieved 6% organic growth in the Period, these now comprise 43% of Group revenue. Managed Services revenue has grown organically 4% in the Period, with total managed services revenue representing 87% of Group revenue, up from 82% in H1 FY21. Traditional Telephony continued to decline as anticipated, with customers choosing alternative solutions. This is in line with the Board's stated strategy and this segment of the business has now reduced to 13% of Group revenue from 19% in H1 FY21.

AdEPT was strengthened significantly at the start of the Period with the game changing acquisition of Datrix. We are delighted by the contribution of the business in its first six months and the attitude of this new team, particularly in the manner in which they have embraced our strategic operating platform, One AdEPT. Datrix has secured critical renewals since acquisition and, notably, significant new contracts with customers including Public Health England and Yesss Electrical and we are seeing cross sell opportunities appearing.

We have also delivered revenue growth in our hybrid cloud platform, AdEPT Nebula, with Microsoft 365 seats and Cloud Communication deployments advancing significantly. Crucially, we have remained agile, adapting our product portfolio to address the constantly changing requirements of our market.

Industry research by consultancy EY indicates that service quality is a key criterion for customers when choosing a Managed Service Provider ("MSP"). We are, therefore, delighted to report that an independent survey of our customers, conducted by EY, revealed a Net Promoter Score of +19, with an outstanding score of +59 from our top customers. This may well have contributed to AdEPT winning the 'Managed Service Provider of the Year' at the 2021 prestigious Comms Business Awards. These achievements demonstrate our strategic progress and stand us in good stead for the future.

Operational Overview

While the Group performed well in the Period, as our market continued to rebound, activity was somewhat tempered by the aftershocks of Covid-19. The global chip shortage caused some supply chain issues towards the end of the Period, as flagged in our AGM Statement, deferring GBP0.5 million revenue and its associated margin into H2 FY22. In addition, customer resource constraints have meant that GBP0.4 million of revenue and gross margin in relation to orders for professional services and software development work has been delayed and is expected to be delivered in H2 FY22. Despite these issues, we are pleased with the performance of the Group and the first full six-month contribution from Datrix.

AdEPT Nebula, our hybrid cloud platform, continues to play an important role in the growth of our Cloud Centric Services. Nebula's overall revenue contribution grew by 26% in the Period, with significant growth in Microsoft 365 Seats, cloud backup and cloud communication. The number of customers now using the platform is 635.

I am pleased to report that our partnership with 8x8 is continuing to deliver good results, playing an important role in the increase in Voice over IP ("VoIP") deployments, as we continue to migrate customers away from Traditional Telephony products to new VoIP-based solutions. This transition has been accelerated by the demands for flexible and remote working during the Covid lockdowns.

Cybersecurity is an increasingly critical aspect of our customers' IT landscape and, to ensure we are able to meet this growing demand, we have appointed a Head of Security to work as part of the AdEPT Consulting Team.

We have extended our Education Suite with the addition of AdEPT Nimbus, a software product to synchronise School Management Information Systems with their cloud platforms. This software, which addresses a synchronising issue as schools migrate to the cloud, has already been sold to over 20 schools since its launch at the end of the summer.

It is vitally important that we continue to evaluate our existing product offerings to ensure we maintain our leading position in the markets we serve and remain relevant. As an example, AdEPT has an extensive presence across hundreds of Doctor's surgeries. Through a process of review and feedback, we identified a clear set of needs; a) to remotely triage patients using video conferencing tools alongside telephony, and b) seamlessly integrate to the Patient Administration Systems. As a result of these identified needs, we have partnered with provider X-ON to launch a cloud centric communications solution called 'Surgery Connect' - for which we have already contracted our first Doctor's practice.

Datrix Acquisition Update

Datrix is an award-winning supplier of advanced cloud-based networking, communications, and cyber security solutions business, which the Group acquired in April 2021 for an initial cash consideration of GBP9.0 million (on a cash and debt free basis). Its expertise in next-generation technologies broadens AdEPT's core competencies in cloud services and enables a more end-to-end service.

Considerable progress has been achieved since acquisition. Datrix has been successfully migrated onto One AdEPT, the Group's core operating system, ahead of schedule. The rapid integration of Datrix onto the platform demonstrates the Group's ability to integrate acquisitions quickly, supporting its strategy to consolidate this fragmented market.

Since acquisition, Datrix has secured key contract renewals and extensions with several major customers, including Public Health England, Yesss Electrical, Community Housing Partnership and South Hook LNG, and has received positive client feedback about the benefits of being part of a larger organisation. It is particularly pleasing to report that AdEPT has, during the Period, recently secured a new project with an existing Datrix customer, a clear demonstration of our cross-selling strategy in action.

Progress on FY22 Objectives

At the start of FY22, we set ourselves a number of targets to help us achieve our organic growth ambitions. These are set out below, with an interim update against each:

--            Integrate Datrix effectively, to ensure that we obtain the benefit 
               of Project Fusion across all elements of our business; 
              This objective is complete with Datrix on the One AdEPT operating 
               platform. We will be transitioning away from the Datrix brand over 
               the balance of the year. 
--            Capture opportunity, by helping our customers benefit from the full 
               portfolio of AdEPT offerings, including the enhanced offerings brought 
               by the Datrix team; 
              This objective is ongoing. A number of cross-sell engagements are 
               in progress and we have already secured a cross sell project for 
               AdEPT capability with an existing significant Datrix customer. 
--            Market effectively to key sectors, ensuring our offerings are fine 
               tuned to reflect the specific needs of our target markets; 
              We maintain our strong presence across the education sector and have 
               won a number of contracts with new Multi Academy Trusts (MATs). We 
               are exploring the creation of a Health & Social Care vertical, given 
               our increasing success in developing this marketplace. 
--            Invest wisely, so that our AdEPT Intellectual Property, be that know-how, 
               AdEPT Nebula, or the Education Suite all capture greater market share; 
              We have continued to upgrade Nebula and we have successfully launched 
               another component if the Education Suite with the release of AdEPT 
--            Manage our portfolio, by working with our existing (and potentially 
               new) partners to ensure that market needs are matched carefully to 
               our partner offerings, and high growth propositions; 
              In respect of this, we have engaged X-ON and Telco Switch to adapt 
               our solutions for the Doctor's surgery and flexible office markets 
               respectively. We continue to make progress in deploying Microsoft 
               solutions (Teams and Office 365) and have grown our Cloud Centric 
               business by 6% organically Year on Year (YoY). 
--            Explore further accretive acquisition opportunities, to continue 
               our consolidation journey. 
              We continue to explore suitable candidates against our strict acquisition 
               criteria of: a) strong recurring margins; b) cloud centric product 
               focus; c) operating in an appropriate geography; d) adding relevant 
               capability; e) consolidating a vertical market; or bringing new strategic 
               product partnerships. There remains no shortage of potential options. 

The progress we have made against our declared objectives is encouraging and underpins our confidence in the long term growth of the business.

Vertical markets and frameworks

AdEPT continued to be successful in gaining further traction in the public sector space through leveraging its approved status on various frameworks. AdEPT is an approved supplier on 13 public sector frameworks. Some are Crown Commercial Service frameworks, and others are wider public sector procurement agencies. The proportion of total revenue generated from public sector and healthcare customers in H1 FY22 has increased to 48% (H1 FY21: 45%), which partly arises due to the organic customer contract awards, particularly under the various frameworks on which AdEPT is accredited but is also a reflection of the Datrix customer base including a higher proportion of public sector and healthcare clients.

The Group is continuing to focus its organic sales efforts on selling a wider portfolio to existing customers, adding and retaining larger customers whilst complementing this with an acquisitive strategy. AdEPT is managing the customer risk with a wide spread of business sectors and low customer concentration, with no customer accounting for more than 5% of the total.

Focus on Service Excellence

We continue to invest carefully in our own capability. Project Fusion delivering our One AdEPT programme - the deployment of a suite of integrated operational systems for use by all employees designed to improve efficiency, ensure the delivery of increasingly high levels of customer service, and provide operational insight.

Project Fusion has made excellent progress with the entire group now operating on the same Human Resource solution (Sage People) and Financial Management Solution (Sage 200), as well as 95% of employees utilising the same service management and Customer Relationship Management (CRM) platform (Autotask from Datto). Operational insight is now flowing throughout the business, utilising the Microsoft Business Intelligence solution (Power BI) accessed through an employee portal to facilitate knowledge sharing (Microsoft SharePoint).

Our People and Commitment to Diversity

As at the Period end the AdEPT team now numbers 340. This talented and diverse team, strengthened following the acquisition of Datrix, is enabling us to achieve high levels of customer satisfaction.

AdEPT is committed to ensuring diversity, equity, and inclusivity. We have a team from diverse backgrounds and genders and continue to foster balance and promote equal opportunities. This mix of skill sets, experience, and backgrounds enables us to perform better. We have recently undertaken our first Gender Pay Gap report which like many businesses in our sector highlighted the challenges of hiring women into senior roles. We use the report and work with our staff and stakeholders to shape policies that ensure an appropriate gender balance.

Environmental, Social and Governance ("ESG")

AdEPT has a social conscience, and the Board is keen to ensure that AdEPT plays its part in making the world a better place both for current generations and those of the future.

Sustainability is of interest across the full spectrum of AdEPT stakeholders: customers, employees, suppliers, shareholders, and communities and, as a result, we have set out our initiatives for engaging with this subject as a company.

The three pillars for clarity are:

 --   Environmental Responsibility - energy use, waste management, 
       and climate change; 
 --   Social Responsibility - labour relations, human rights, 
       diversity and inclusion, and product liability; and 
 --   Governance - compliance, business ethics, controls, and 

After reviewing the numerous frameworks that can be used for ESG reporting, AdEPT has adopted relevant aspects of the UN Global Compact. During the Period, we have published our inaugural ESG plan with 17 key actions to advance our position across each of the three pillars, which can be found on our website www.adept.co.uk.

The Market

A recent article by McKinsey & Company published in October 2021, entitled 'Cloud-migration opportunity: Business value grows, but missteps abound', succinctly sets the backdrop for why AdEPT is focused on Cloud Centric Strategic Services:

"By 2024, most enterprises aspire to have $8 out of every $10 for IT hosting go toward the cloud, including private cloud, infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). Achieving that aspiration will require significant effort from both enterprises and technology providers.

"The Covid-19 pandemic is one factor driving the ambitious goal, as it triggered the need to speed the pace of enterprise digitization. But the more significant catalyst is the $1 trillion in business value that cloud adoption can unlock. Some organizations, however, are leaking their share of that value instead of capturing it, with inefficiencies in orchestrating cloud migrations adding unexpected cost and delays. Approximately $100 billion of wasted migration spend is expected over the next three years, and most enterprises cite the costs around migration as a major inhibitor to adopting the cloud."

We are seeing this macro trend resonate throughout our business and continue help customers realise their ambitions to move to the cloud in a secure, cost effective, and beneficial way.



Total revenue increased by 20% to GBP34.3 million (H1 FY21: GBP28.5 million), this includes the six-month revenue contribution from Datrix of GBP6.0 million in H1 FY22. The Group delivered GBP0.9 million or 6% organic growth in recurring managed service revenue, GBP0.1 million or 1% organic growth in one-off products and services offsetting the continued structural decline in Traditional Telephony which fell by GBP1.0 million or 18%, in line with the Group's strategy to move away from Traditional Telephony.

Recurring revenues versus one off revenues

The proportion of AdEPT revenue generated from recurring products and services (being all revenue excluding one-off projects, hardware and software) remains high at 74% of total revenue (H1 FY21: 76%). The marginal reduction in the proportion of recurring revenue arises from Datrix having a slightly higher mix of one-off revenues.

Cloud Centric Strategic Services - Our strategy is to focus on Cloud Centric Strategic Services (including the AdEPT Nebula proposition, hosting services, hybrid and public cloud, Voice over IP, and Professional Services). This clear focus is delivering rewards, as Cloud Centric Strategic Services revenue increased by 19% in H1 FY22 to GBP14.6 million. The Group delivered an organic 6% increase in revenues to GBP14.6 million (H1 FY21: GBP12.3 million) with 13% of the increase from Datrix.

This growth has been achieved through organic and acquired revenue increases in data connectivity services, software and IT support. In addition, revenues from VoIP increased by 54% year on year to GBP1.9 million (H1 FY21: GBP1.2 million), which is partly as a result of our success with the new 8x8 proposition alongside our other VoIP solutions and our activity to migrate customers from Traditional Telephony products to new IP based solutions. This trend has been accelerated by the increased demands for flexible and remote working during the Covid-19 lockdowns.

Support Services - Support Services revenues increased by 45% to GBP8.7 million (H1 FY21: GBP6.0 million), with the increase driven by Datrix. During the first 12 months of the Covid-19 pandemic, some sectors' customers, notably leisure, hospitality, retail, and office groups, were unable to continue trading during the nationwide lockdowns, resulting in downwards flex in service demand which impacted the opening revenue run rate. The impact of customers reducing the scale and scope of their services in the financial year ended 31 March 2021 has been regained, resulting in underlying Support Services revenue (excluding acquired revenue) being flat against the comparative period despite the lower opening run rate entering H1 FY22.

Technology Products - The demand for capital projects has resulted in a 48% increase to hardware and software revenues to GBP6.5 million (H1 FY21: GBP4.4 million). This increase includes 37% in relation to the contribution from Datrix. Technology Products revenue increased organically 10% compared to H1 FY21. The organic increase has been achieved despite the well documented supply chain issues for equipment caused by the global chip shortage in the latter part of the interim period, which has pushed out revenue recognition for a number of projects, amounting to GBP0.5 million revenue, into H2 FY22. We continue to work closely with our partners to mitigate supply chain delays where possible.

Traditional Telephony - The structural decline in Traditional Telephony has continued at an accelerated level, with an 18% reduction to GBP4.5 million (H1 FY21: GBP5.7 million). This decline, as Openreach continues to switch off the copper telephone network ending traditional fixed line and calls services and forcing the shift to messaging and VoIP based services, is in line with our expectations and strategy to diversify revenues away from fixed line. In addition, the last 18 months has been further impacted by the substantial reductions in desk-based telephone call revenue due to multiple Covid lockdowns. Given the ending of lockdown restrictions was not felt until Q2 FY22, very little recovery of call volumes was seen in H1 FY22 and Traditional Telephony is now only 13% of Group revenues (H1 FY21: 20%)..

Gross margin

The gross profit margin for H1 FY22 was 49%, which is a marginal decrease from the 50% achieved in H1 FY21 driven from a higher proportion of revenue from lower relative margin hardware and software within one-off managed services.

Managed service gross margins have been maintained in line with the comparative period at 50% (H1 FY21: 51%), as the acquired Datrix revenue had comparable gross margins to that of the existing Group. Gross margins in fixed line services have experienced a reduction from the comparative period due to a lower proportion of higher margin call usage and attrition in the lower value but higher relative margin retail customer base.

The proportion of revenue from professional services was lower in the Period, in part because of the exceptional prior period activity to digitise schools in the face of the Covid-19 pandemic. This, combined with a higher blend of third-party project consultancy, has resulted in one-off gross margins reducing to 41% (H1 FY21: 46%). However, the previous pressure on one-off margins from low margin equipment supply for tactical solutions, such as iPads and laptops, during the onset of Covid-19 has reduced in the Period, resulting in an improvement to hardware and software margin to 27% (H1 FY21: 24%).

The supply chain issues, which have pushed out GBP0.5 million revenue recognition into the second half of FY22, impacted gross margin by GBP0.1 million, which is expected to be delivered in H2 FY22 subject to returning to a normalised supply chain environment. In addition, despite a strong pipeline of signed sales orders in H1 FY22, there were substantial orders for professional services and software development work for public sector and healthcare customers that have a delayed delivery timescale, due to resource constraints at the customer end, which has meant that a further GBP0.4 million of revenue and associated gross margin has been pushed and expected to be delivered in H2 FY22.

Underlying EBITDA

Underlying EBITDA of GBP5.7 million represents a 16% increase from the comparative period (H1 FY21: GBP4.9 million).

Covid-19 impacted H1 FY21 benefitted from several operating cost reductions compared to H1 FY22. Many of these operating cost reductions were temporary as a result of changes to working practices during the Covid-19 pandemic, such as significantly reduced recruitment, travel and reduced levels of advertising, and marketing activity. The financial impact of these provided GBP0.3 million benefit to the operating costs in H1 FY21.

These operating costs have returned to a more normalised level in H1 FY22, with the costs being incurred in advance of the anticipated returns, for example the benefit of sales order volume from increased sales and marketing activity expected in future periods. Despite this, the underlying EBITDA margin achieved was consistent at 17% (H1 FY21: 17%), demonstrating the strength of the business model, which is underpinned by a high proportion of recurring revenue (H1 FY22: 74%).

Profit/loss Before Tax and Earnings Per Share

Reported loss before tax was GBP0.9 million. The Period includes one-off costs of GBP0.6 million for acquisition related fees related to Datrix and GBP0.3 million of restructuring costs in relation to the streamlining and restructuring the headcount of Datrix post-acquisition combined with operational efficiencies delivered by Project Fusion.

There was GBP0.3 million increase in interest charges, as result of the cash outflow for the Datrix acquisition which increased average net borrowings compared to that of H1 FY21. It should be noted that the interest cost in the statement of comprehensive income of GBP1.4 million includes several non-cash items, such as discounting of the estimated contingent deferred consideration for acquisitions and the amortisation of bank facility fees, both of which have been paid in cash. The interest cost of GBP1.1 million in the cash flow statement is considered a better measure of the cash costs of financing.

Adjusted profit after tax before one off acquisition fees, restructuring costs, furlough grant receipts and amortisation was GBP3.3 million (H1 FY21: GBP2.8 million). This movement largely reflects the GBP0.8 million Underlying EBITDA increase, less the GBP0.3 million interest costs increase, arising from the higher average net debt position, combined with the discounting of deferred consideration liabilities, GBP0.3 million one-off furlough grant receipts in H1 FY21, and GBP0.2 million reduction in income tax expense from the lower profit before tax and use of brought forward accumulated tax losses in the Datrix business.

Adjusted diluted earnings per share, taking into account the share options in issue and the potential dilutive effect of the BGF convertible instrument under the treasury stock accounting method, increased by 30% to 13.2p (H1 FY21: 10.2p). The improvement in adjusted earnings per share reflects the GBP0.8 million increase in adjusted profit after tax with a virtually flat weighted average number of shares.


The Board continues to monitor the changing economic environment and, at this stage, believes it is prudent to continue using the Group's strong cash generation to pay down debt. As a result, no dividend is being declared for the Period.

Cash Flow

The Group benefits from an excellent cash-generating operating model. Low capital expenditure results in a high proportion of underlying EBITDA turning into cash. The proportion of reported EBITDA which turned into net cash from operating activities after income tax was 82% (H1 FY21: 152%). The prior period cash conversion figure was flattered by the Company deferring the Q1 VAT payments through to Q4 of the previous financial year in line with the HMRC financial support guidance under Covid-19. The VAT deferral value was GBP1.3 million, which if adjusted gives underlying post-tax operating cash conversion from reported EBITDA of 124% for H1 FY21.

H1 FY22 working capital was impacted by GBP0.2 million in inventories for the advance purchase of equipment for October half-term installations in the Education division. A further increase to working capital was anticipated with the continued transition of the Group towards growing proportion of data connectivity services increasing the level of working capital, with a further GBP0.5 million absorbed by the advance charging structure of wholesale data connectivity rentals, which are typically quarterly in advance compared to monthly in advance for the end customer. This has been partially offset by improvement to customer credit collection.

Throughout the Covid period, the Group has focused on cash management and is pleased to have reduced the potential bad-debt risk inherent in working capital since September 2020 through a reduction in collection periods to 39 days at September 2021.

In April 2021, the Group paid the initial consideration of GBP9.0 million (on a cash and debt free basis) in respect of the Datrix Limited acquisition. Following the successful migration of all Datrix operating systems to the One AdEPT operating systems, a further GBP0.3 million deferred consideration was paid in October 2021. There is a performance-based element to the deferred consideration which is dependent upon the trading results of the Datrix customer base for FY22.

Cash interest paid in the Period increased by GBP0.3 million, which reflects a higher level of average net borrowings compared to H1 FY21 following the acquisition of Datrix at the start of H1 FY22.

As required under IFRS 16, the balance sheet value of tangible fixed assets includes the discounted value of the remaining operating lease rentals for any material agreements which have a lease term greater than twelve months. The net present value of any new operating leases is included in tangible fixed assets. These are not upfront cash purchases as the rentals are paid on a monthly or quarterly basis and therefore the cost is not included within capital expenditure, instead the cash outflows from the operating lease agreements are included in the cash flow statement under the heading 'Payments of lease liabilities'.

Capital Expenditure

The Group continues to operate an asset-light strategy and has low capital requirements; therefore, expenditure on fixed assets is low at 2% of revenue.

The Group used GBP0.1 million of cash on capital expenditure of tangible fixed assets for further investment in the development of the AdEPT Nebula platform to increase the data storage capacity driven by increasing customer demand. AdEPT Nebula is centered on the core data centre in Orpington which is owned by AdEPT. AdEPT Nebula allows AdEPT to provide its own cloud hosting capability and is the foundation for the following portfolio: Nebula Cloud, Nebula Security, Nebula Business Continuity and Disaster Recovery, Nebula Voice, Nebula Apps, and Nebula Network.

AdEPT Nebula revenue growth was 26% in H1 FY22 to GBP1.5 million annualised revenue (H1 FY21: GBP1.2 million annualised). AdEPT Nebula is now delivering benefits to more than 600 customers and has been developed using the in-house skills and capabilities of the AdEPT technical team. The Company will continue to review development opportunities for the addition of new products and services to AdEPT Nebula as customer demand dictates.

A further GBP0.4 million was spent in the Period on intangible assets, which is the continued investment in Project Fusion and includes the cost of third-party consultancy and some capitalisation of the salary costs of the internal development team for time dedicated to delivering the project. The progress on the Group-wide CRM has continued at a pace and it is now live in all of the AdEPT operating sites.

Following the acquisition of Datrix in April 2021, all systems were fully migrated to the AdEPT operating systems by August 2021, which is a testament to the hard work and focus of both the Project Fusion team and the Datrix team. In addition, the Group has been transitioning to a centralised finance platform which is hosted in the AdEPT Nebula network, with all divisions now live in the centralised finance system.

Net Debt and Bank Facilities

A key strength of AdEPT is its consistent, proven ability to generate strong free cash flow and therefore support net borrowings. As a result of the Group's focus on underlying profitability and cash conversion, net operating cash flow after taxes but before bank interest paid of GBP3.6 million was generated during H1 FY22 (H1 FY21: GBP7.0 million). The H1 FY21 period benefitted from the temporary deferral of GBP1.3 million of VAT payments from Q1 to Q4, the GBP2.4 million favourable working capital impact of the reversal of the March 2021 year end extended payment periods taken by customers during the initial onset of the Covid-19 pandemic and the subsequent increased focus on customer cash collection during H1 FY21. Whilst customer collection periods have been maintained since March 2021, there has been little scope for further improvement and hence there has been no further incremental working capital benefit in H1 FY22. The H1 FY22 period also includes GBP0.9 million of non-recurring costs in relation to acquisition related fees and restructuring costs.

Senior net debt at 30 September 2021 was GBP31.2 million, which is an increase of GBP5.4 million from the comparative period (H1 FY21: GBP25.8 million) and represents a senior debt leverage ratio of 2.7x adjusted EBITDA (H1 FY21: 2.4x). The prior period senior net debt was flattered by GBP1.3 million of deferred VAT payments under the Covid HMRC financial support guidance, which were paid in full in the second half of the year ended 31 March 2021. The current period net debt includes GBP9.0 million of cash outflows (on a cash and debt free basis) in relation to the consideration for the acquisition of Datrix.

In March 2021, the Company signed a new enlarged banking facility agreement with NatWest and Bank of Ireland, to support its growth ambitions. This agreement is for a three-year term, extendable by one year, and provides the Company with up to GBP70 million senior debt, comprising a GBP35 million revolving credit facility, a GBP15 million term loan, and a GBP20 million accordion facility. The commercial terms of the enlarged facility are the same as the previous existing facility.


On 12 April 2021 the Company acquired the entire issued share capital of Datrix, a well-established, award-winning supplier of advanced cloud-based networking, communications, and cyber security solutions, headquartered in London, with expertise in the growing Software Defined Wide Area Networking ("SD-WAN") market focused on the public and healthcare sector. The vendors and the senior management team responsible for the strategic direction, technical development, and day-to-day operations of Datrix have been retained within the business post-acquisition.

Initial consideration of GBP9.0 million, on a cash and debt free basis, was paid in cash and the effective date of the acquisition was 1 April 2021. Further contingent deferred consideration of up to GBP7.0 million may be payable in cash dependent upon the trading performance of Datrix in FY22. In October 2021 GBP0.3 million of the deferred consideration was paid in relation to the successful transition of Datrix onto the One AdEPT platform.

The history of AdEPT contains many examples of successful earnings enhancing acquisitions with the most recent, Datrix, demonstrating yet again the ability of the Group to identify and integrate a successful business for the benefit of the acquired team and their respective clients. AdEPT will remain a consolidator in the marketplace, and we continue to evaluate suitable targets and will continue with this successful aspect of our business strategy when the time is right.

Vision and Strategy

Our mission remains one of 'Uniting Technology, Inspiring People'. We will help our customers navigate the storm of ICT innovation, to help them make the best use of technology, so they can communicate, operate, and transform successfully. We will do this by continuing to learn, adapt, and listen, working with great partners, to deliver flawless solutions.

Our aim is to become the industry benchmark and a business with whom customers, staff and partners aspire to work, all powered by a unified platform that makes us both efficient and effective.


AdEPT is on track to achieve management expectations for FY22, with GBP0.9 million of revenue and its associated margin, deferred from H1 into H2 due to supply chain issues and customer resource allocation, a backlog that serves to underpin the Board's confidence.

Our focus in H2 FY22 is on the continued delivery of our stated objectives with an emphasis on the achievement of further organic growth, using the Group's strong cash generation to reduce net senior debt, as we capitalise on the macro shift to cloud centric solutions. The Group's strategic progress to date, coupled with a strong pipeline of opportunities across the public and private sectors aided by overarching technology market trends, ensure that the prospects for AdEPT are stronger than ever.

Phil Race

Chief Executive Officer


                                                     Six months      Six months 
                                                          ended           ended 
                                                   30 September    30 September 
                                                           2021            2020 
                                           Note         GBP'000         GBP'000 
---------------------------------------  ------  --------------  -------------- 
  REVENUE                                                34,275          28,488 
  Cost of sales                                        (17,594)        (14,334) 
---------------------------------------  ------  --------------  -------------- 
  GROSS PROFIT                                           16,681          14,154 
  Administrative expenses                              (16,177)        (13,076) 
---------------------------------------  ------  --------------  -------------- 
  OPERATING PROFIT                                          504           1,078 
 Total operating profit - analysed: 
 Operating profit before acquisition 
  fees, share-based payments, 
  depreciation and amortisation                           5,719           4,934 
 Share-based payments                                      (31)            (33) 
 Acquisition fees                                         (569)               - 
 Restructuring costs                                      (322)           (480) 
 Furlough grant receipts                                      -             304 
 Depreciation of tangible fixed assets                    (714)           (741) 
 Amortisation of intangible fixed 
  assets                                                (3,579)         (2,906) 
---------------------------------------  ------  --------------  -------------- 
 Total operating profit                                     504           1,078 
---------------------------------------  ------  --------------  -------------- 
  Finance costs                                         (1,373)         (1,060) 
  Finance income                                              -               - 
---------------------------------------  ------  --------------  -------------- 
  PROFIT/(LOSS) BEFORE INCOME TAX                         (869)              18 
  Income tax expense                                      (168)           (319) 
---------------------------------------  ------  --------------  -------------- 
   PERIOD                                               (1,037)           (301) 
---------------------------------------  ------  --------------  -------------- 
  Attributable to: 
  Equity holders                                        (1,037)           (301) 
  Earnings per share 
  Basic earnings per share (pence)          3            (4.1)p          (1.2)p 
  Diluted earnings per share (pence)        3               N/a             N/a 
  Adjusted earnings per share, after 
   adding back 
  acquisition fees, amortisation and 
   non-recurring costs 
  Basic earnings per share (pence)          3             13.2p           10.2p 
  Diluted earnings per share (pence)        3             13.2p           10.2p 


                                     30 September    30 September    31 March 
                                             2021            2020        2021 
                                          GBP'000         GBP'000     GBP'000 
--------------------------------   --------------  --------------  ---------- 
  Non-current assets 
  Goodwill                                 17,408          17,408      17,408 
  Intangible assets                        47,004          39,354      36,895 
  Property, plant and equipment             2,155           2,707       2,700 
  Deferred tax asset                            -               -           - 
--------------------------------   --------------  --------------  ---------- 
                                           66,567          59,469      56,512 
  Current assets 
  Inventories                                 780             900         569 
  Contract assets                             643           1,144         978 
  Trade and other receivables              17,536          11,872      12,405 
  Cash and cash equivalents                 3,614           5,065      13,166 
---------------------------------  --------------  --------------  ---------- 
                                           22,573          18,982      27,118 
  Total assets                             89,140          78,451      83,630 
  Current liabilities 
  Trade and other payables                 21,314          13,499      10,884 
  Contract liabilities                      2,470           2,194       2,244 
  Income tax                                  301             574         357 
  Short term borrowings                        85              82          81 
---------------------------------  --------------  --------------  ---------- 
                                           24,170          16,350      13,566 
  Non-current liabilities 
  Deferred income tax                       6,507           7,473       6,700 
  Convertible loan instrument               6,623           6,429       6,524 
  Long term borrowings                     35,118          30,532      39,110 
---------------------------------  --------------  --------------  ---------- 
  Total liabilities                        72,418          60,784      65,900 
  Net assets                               16,722          17,666      17,730 
  Share capital                             2,503           2,503       2,503 
  Share premium                             4,378           4,378       4,378 
  Share capital to be issued                1,206           1,141       1,175 
  Capital redemption reserve                   18              18          18 
  Retained earnings                         8,617           9,627       9,656 
---------------------------------  --------------  --------------  ---------- 
  Total equity                             16,722          17,666      17,730 
---------------------------------  --------------  --------------  ---------- 


                                                    Attributable to equity holders of 
                                                        Share       Capital 
                                Share      Share      capital    redemption    Retained      Total 
                              capital    premium    be issued       reserve    earnings     equity 
                              GBP'000    GBP'000      GBP'000       GBP'000     GBP'000    GBP'000 
--------------------------  ---------  ---------  -----------  ------------  ----------  --------- 
  Equity at 1 April 2020        2,503      4,378        1,108            18      10,375     18,382 
  Prior year adjustment 
   (note 2)                         -          -            -             -       (449)      (449) 
  Equity at 1 April 2020 
   (restated)                   2,503      4,378        1,108            18       9,928     17,934 
  Profit for 6 months 
   ended 30 September 
   2020                             -          -            -             -       (301)      (301) 
  Share based payments              -          -           33             -           -         33 
  Balance at 30 September 
   2020 (restated)              2,503      4,378        1,141            18       9,627     17,666 
--------------------------  ---------  ---------  -----------  ------------  ----------  --------- 
  Profit for 6 months 
   ended 31 March 2021              -          -            -             -         120        120 
  Share based payments              -          -           34             -           -         34 
  Balance at 31 March 
   2021 (restated)              2,503      4,378        1,175            18       9,656     17,730 
  Profit for 6 months 
   ended 30 September 
   2021                             -          -            -             -     (1,037)    (1,037) 
  IFRS16 acquisition 
   liability reserves 
   adjustment                       -          -            -             -         (2)        (2) 
  Share based payments              -          -           31             -           -         31 
  Balance at 30 September 
   2021                         2,503      4,378        1,206            18       8,617     16,722 
--------------------------  ---------  ---------  -----------  ------------  ----------  --------- 


                                            Six months      Six months        Year 
                                                 ended           ended       ended 
                                          30 September    30 September    31 March 
                                                  2021            2020        2021 
                                               GBP'000         GBP'000     GBP'000 
-------------------------------------   --------------  --------------  ---------- 
  Cash flows from operating 
  Profit before income tax                       (869)              18       (505) 
  Depreciation and amortisation                  4,292           3,647       7,325 
  (Profit)/loss on sales of 
   fixed assets                                      -            (13)       (133) 
  Share based payments                              31              33          67 
  Net finance costs                              1,373           1,060       2,102 
  Decrease/(Increase) in inventories             (210)           (287)          43 
  Decrease/(increase) in trade 
   and other receivables                         1,107           2,655       1,643 
  Increase/(decrease) in trade 
   and other payables                          (1,787)              69     (2,566) 
--------------------------------------  --------------  --------------  ---------- 
  Cash generated from operations                 3,937           7,182       7,976 
  Income taxes paid                              (343)           (193)       (598) 
--------------------------------------  --------------  --------------  ---------- 
  Net cash from operating activities             3,594           6,989       7,378 
--------------------------------------  --------------  --------------  ---------- 
  Cash flows from investing 
  Interest paid                                (1,111)           (841)     (1,603) 
  Acquisition of subsidiaries 
   net of cash acquired                        (7,054)         (1,798)     (1,798) 
  Purchase of intangible assets                  (433)           (288)       (751) 
  Sale of property, plant and 
   equipment                                         -               -         344 
  Purchase of property, plant 
   and equipment                                 (111)           (349)       (627) 
--------------------------------------  --------------  --------------  ---------- 
  Net cash used in investing 
   activities                                  (8,709)         (3,276)     (4,435) 
  Cash flows from financing 
  Payments of lease liabilities                  (440)           (447)       (866) 
  Repayment of borrowings                      (3,997)        (10,050)       (760) 
  Net cash (used in)/from financing 
   activities                                  (4,437)        (10,497)     (1,626) 
--------------------------------------  --------------  --------------  ---------- 
  Net increase/(decrease) in 
   cash and cash equivalents                   (9,552)         (6,784)       1,317 
  Cash and cash equivalents 
   at beginning of period/year                  13,166          11,849      11,849 
--------------------------------------  --------------  --------------  ---------- 
  Cash and cash equivalents 
   at end of period/year                         3,614           5,065      13,166 
--------------------------------------  --------------  --------------  ---------- 
  Cash at bank and in hand                       3,614           5,065      13,166 
  Bank overdrafts                                    -               -           - 
-------------------------------------   --------------  --------------  ---------- 
  Cash and cash equivalents                      3,614           5,065      13,166 
--------------------------------------  --------------  --------------  ---------- 


1 Basis of preparation

The financial information set out in this interim report, which has not been audited, does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The Company's statutory financial statements for the year ended 31 March 2021, prepared under International Financial Reporting Standards, were approved by the board of directors on 23 July 2021 and have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified, did not contain any emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

The interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting", as adopted by the EU. Comparatives for the year ended 31 March 2021 have been extracted directly from the audited statutory accounts with the figures presented in the statement of financial position in this interim report for comparative periods restated to take account the prior year adjustment to the opening equity position, the details of which are set out in Note 2 below.

2 Accounting policies

The same accounting policies, presentation and methods of computation are followed in this interim report as were applied in the preparation of the Group's annual financial statements for the year ended 31 March 2021.

Prior year adjustment

As set out in the Company's statutory financial statements for the year ended 31 March 2021, the Group's policy in respect of revenue recognition requires that revenue is only recognised when the obligations associated with the revenue have been completed, therefore invoiced amounts in respect of charges in advance are recognised in the deferred revenue liability in the balance sheet. A prior year adjustment has been recognised in respect of deferred income which was incorrectly reported at the March 2018 and 2019 year ends. In accordance with IAS 8 the opening balance sheet position at 1 April 2018 has been restated to account correctly for the deferred income balance at that date resulting in the recognition of an additional liability of GBP70,172 at 1 April 2018.

Following a detailed review of the bad debt provision, a historic error in the calculation has been identified in the period from February 2003 to March 2014. Under IAS8, given that this is an error rather than a change to a judgement or estimate, an adjustment has been made to correct the reserves brought forward. The adjustment increases the provision for potential bad debts by GBP378,838 with a corresponding entry to the brought forward reserves at 1 April 2020, being the earliest period presented in these financial statements. There is no impact on either the income statement, the cashflow statement and the earnings per share in either the current or comparative period as a result of this correction.

   3   Earnings per share 
                                                    6 months        6 months    Year ended 
                                                       ended           ended 
                                                30 September    30 September      31 March 
                                                        2020            2019          2021 
                                                     GBP'000         GBP'000       GBP'000 
--------------------------------------------  --------------  --------------  ------------ 
  Earnings for the purposes of basic 
   and diluted earnings per share 
  Profit for the period attributable 
   to equity holders of the parent                   (1,037)           (301)         (340) 
  Add: amortisation                                    3,579           2,906         5,793 
  Less: taxation on amortisation of 
   purchased customer contracts                         (59)            (59)         (117) 
  Less: deferred tax credit on amortisation 
   charges                                             (197)           (291)         (963) 
  Add: share option charges                               31              33            67 
  Add: acquisition fees and restructuring 
   costs                                                 892             480           974 
  Less: furlough grant receipts                            -           (304)         (307) 
  Add: interest unwind on loan note 
   and deferred consideration                             99              89           184 
  Adjusted profit attributable to equity 
   holders of the 
  parent, adding back acquisition fees 
   and amortisation                                    3,308           2,554         5,291 
  Number of shares 
  Weighted average number of shares 
   used for earnings per share                    25,029,967      25,029,957    25,029,957 
  Dilutive effect of share plans                     100,320          11,437        22,180 
--------------------------------------------  --------------  --------------  ------------ 
  Diluted weighted average number of 
   shares used to 
  calculate fully diluted earnings 
   per share                                      25,130,286      25,041,394    25,052,137 
  Earnings per share 
  Basic earnings per share (pence)                    (4.1)p          (1.2)p        (1.4)p 
  Fully diluted earnings per share                       N/a             N/a           N/a 
  Adjusted earnings per share, after 
   adding back 
  acquisition fees, amortisation and 
   non-recurring costs 
  Adjusted basic earnings per share 
   (pence)                                             13.2p           10.2p         21.1p 
  Adjusted fully diluted earnings per 
   share (pence)                                       13.2p           10.2p         21.1p 

Earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue.

Adjusted earnings per share is calculated by dividing the profit attributable to equity holders of the Company (after adding back amortisation, the taxation deduction on purchased customer contracts, the deferred tax credit on amortisation charges, share option charges and acquisition costs, as all of these are purely non-cash accounting adjustments) by the weighted average number of ordinary shares in issue.

Fully diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares by existing share options, assuming dilution through conversion of all existing options.

   4   Segmental information 

The chief operating decision maker has been identified as the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. The operating segments are fixed line services and managed services, which incorporates IT services, data connectivity, mobile, hardware and VoIP services. These are reported in a manner consistent with the internal reporting to the Board. The Board assesses the performance of the operating segments based on revenue, gross profit and EBITDA.

                                            Unaudited                                     Unaudited 
                                   6 months ended 30 September                   6 months ended 30 September 
                                               2021                                          2020 
                          --------------------------------------------  -------------------------------------------- 
                               Fixed                                         Fixed 
                                line     Managed    Central                   line     Managed    Central 
                            services    services      costs      Total    services    services      costs      Total 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Revenue                      4,478      29,797          -     34,275       5,465      23,024          -     28,488 
  Gross profit                 1,730      14,951          -     16,681       2,348      11,807          -     14,154 
  Gross margin 
   %                             39%         50%          -        49%         43%         51%          -        50% 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  EBITDA                         709       5,010          -      5,719       1,138       3,796          -      4,934 
  EBITDA %                       16%         17%          -        17%         21%         17%          -        18% 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Amortisation                 (794)     (2,785)          -    (3,579)       (808)     (2,098)          -    (2,906) 
  Depreciation                     -           -      (714)      (714)           -           -      (741)      (741) 
   costs                           -           -      (569)      (569)           -           -                     - 
   costs                           -           -      (322)      (322)           -           -      (480)      (480) 
  Furlough grant 
   receipts                        -           -          -          -           -           -        304        304 
   payments                        -           -       (31)       (31)           -           -       (33)       (33) 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
   profit/(loss)                (85)       2,225    (1,636)        504         330       1,698      (950)      1,078 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Finance costs                    -           -    (1,373)    (1,373)           -           -    (1,060)    (1,060) 
  Income tax                       -           -      (168)      (168)           -           -      (319)      (319) 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
  Profit after 
   tax                          (85)       2,225    (3,177)    (1,037)         330       1,698    (2,329)      (301) 
------------------------  ----------  ----------  ---------  ---------  ----------  ----------  ---------  --------- 
                                       Year ended 31 March 2021 
                                  line     Managed    Central 
                              services    services      costs      Total 
--------------------------  ----------  ----------  ---------  --------- 
  Revenue                       10,739      47,112          -     57,851 
  Gross profit                   3,999      23,641          -     27,640 
  Gross margin %                   37%         50%          -        48% 
--------------------------  ----------  ----------  ---------  --------- 
  EBITDA                         1,880       7,643          -      9,523 
  EBITDA %                         18%         16%          -        17% 
--------------------------  ----------  ----------  ---------  --------- 
  Amortisation                 (1,741)     (4,052)          -    (5,793) 
  Depreciation                       -           -    (1,532)    (1,532) 
  Profit on sale                     -           -        133        133 
  Restructuring costs                -           -      (974)      (974) 
  Furlough grant receipts            -           -        307        307 
  Share-based payments               -           -       (67)       (67) 
--------------------------  ----------  ----------  ---------  --------- 
  Operating profit/(loss)          139       3,591    (2,133)      1,597 
--------------------------  ----------  ----------  ---------  --------- 
  Finance costs                      -           -    (2,102)    (2,102) 
  Income tax                         -           -        165        165 
--------------------------  ----------  ----------  ---------  --------- 
  Profit after tax                 139       3,591    (4,070)      (340) 
--------------------------  ----------  ----------  ---------  --------- 

The assets and liabilities relating to the above segments have not been disclosed as they are not separately identifiable and are not used by the chief operating decision maker to allocate resources. All segments are in the UK and all revenue relates to the UK. For the six months ended 30 September 2021, transactions with the largest customer of the Group accounted for 4.7% of revenue (2020: 7.6%).

   5    Share options 

Details of the share options outstanding during the period are as follows:

                          6 months ended           6 months ended             Year ended 
                            30 September             30 September            31 March 2021 
                                2021                     2020 
                     -----------------------  -----------------------  ----------------------- 
                          Number    Weighted       Number    Weighted       Number    Weighted 
                       of shares     average    of shares     average    of shares     average 
                           under    exercise        under    exercise        under    exercise 
                          option       price       option       price       option       price 
-------------------  -----------  ----------  -----------  ----------  -----------  ---------- 
  Outstanding at 
   start of period     3,244,064        355p    3,162,448        361p    3,162,446        359p 
  Granted during 
   the period                  -           -            -           -      250,298        222p 
  Forfeited during 
   the period                  -           -     (16,180)        223p    (168,680)        236p 
  Exercised during             -           -            -                        -           - 
   the period 
-------------------  -----------  ----------  -----------  ----------  -----------  ---------- 
  Outstanding at 
   end of period       3,244,064        355p    3,146,268        361p    3,244,064        355p 
-------------------  -----------  ----------  -----------  ----------  -----------  ---------- 

The weighted average fair values have been determined using the Black-Scholes-Merton Pricing Model with the following assumptions and inputs:

                                   30 September    30 September    31 March 
                                           2021            2020        2021 
-------------------------------  --------------  --------------  ---------- 
  Risk free interest rate                 1.52%           1.86%       0.81% 
  Expected volatility                     18.0%           10.0%       11.0% 
  Expected option life (years)              3.0             3.0         3.0 
  Expected dividend yield                  2.5%            2.8%        2.5% 
  Weighted average share price             220p            330p        220p 
  Weighted average exercise 
   price                                   220p            330p        220p 
  Weighted average fair value 
   of options granted                       11p             17p         11p 
-------------------------------  --------------  --------------  ---------- 

The expected average volatility was determined by reviewing the historical fluctuations in the share price prior to the grant date of each share instrument. An expected take up of 100% has been applied to each share instrument. Expected dividend yield is estimated at 2.5% which is based upon the historical dividend yield. It does not bear any relation to the future dividend policy of AdEPT Technology Group plc.

The mid-market price of the ordinary shares on 30 September 2021 was 285p and the range during the period was 90p.

The share option expense recognised during the period in the statement of comprehensive income was GBP30,841 (September 2020: GBP32,807).

6 Business combinations

On 12 April 2021 the Company acquired the entire issued share capital of Datrix Limited ('Datrix') a well-established, award-winning supplier of advanced cloud-based networking, communications, and cyber security solutions, headquartered in London, with expertise in the growing Software Defined Wide Area Networking ("SD-WAN") market focused on the public and healthcare sector.

Initial consideration of GBP9.0 million, on a debt free cash free basis, was paid in cash. Pursuant to the terms of the share purchase agreement, the effective date of the acquisition is 1 April 2021. Further contingent deferred consideration of up to GBP7.0 million may be payable in cash dependent upon the trading performance of Datrix in the twelve-month period ended 31 March 2022. The contingent deferred consideration will be determined by reference to the gross margin of the acquired business and applying the contingent deferred consideration calculation as specified in the share purchase agreement.

Details of the fair value of the assets acquired at completion and the consideration payable:

                                 Book cost     value 
                                   GBP'000   GBP'000 
-------------------------------  ---------  -------- 
Intangible assets                        -    13,280 
Property, plant and equipment          251       251 
Inventories                              -         - 
Trade and other receivables          5,867     5,867 
Cash and cash equivalents               67        67 
Trade and other payables           (6,929)   (6,938) 
Short term borrowings                (651)     (651) 
Income tax                              79        79 
Deferred tax                             -         - 
Net assets                         (1,316)    11,955 
-------------------------------  ---------  -------- 
Cash                                           6,518 
Contingent cash consideration                  5,437 
-------------------------------  ---------  -------- 
Fair value total consideration                11,955 
-------------------------------  ---------  -------- 
Goodwill                                           - 
-------------------------------  ---------  -------- 

Datrix contributed revenue and profit after tax of GBP6.0 million and GBP0.8 million respectively for the six-month period ended 30 September 2021 and represents a six month contribution. Acquisition related and restructuring costs of GBP0.6 million have been recognised as an expense in the statement of comprehensive income for the period ended 30 September 2021.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.



(END) Dow Jones Newswires

November 16, 2021 02:00 ET (07:00 GMT)

Adept Technology (LSE:ADT)
Historical Stock Chart
From May 2022 to Jun 2022 Click Here for more Adept Technology Charts.
Adept Technology (LSE:ADT)
Historical Stock Chart
From Jun 2021 to Jun 2022 Click Here for more Adept Technology Charts.