Adept Technology Share Discussion Threads

[value viper] 30/10/2022 19:37

Thanks Red for the Vox markets link

[red ninja] 28/10/2022 19:53

Judith Mackenzie (Downing) on Adept Tech on Vox Markets : minute 33.07

[red ninja] 22/10/2022 11:59

A bit more detail on the Canon - Adept deal. It sounds promising.



Canon UK forms strategic alliance with award-winning IT managed service provider AdEPT Technology PLC
United Kingdom, 17th October 2022 – Canon UK is proud to announce it will be launching a new offering which will deliver exceptional quality Managed IT Services to its customers in partnership with AdEPT.


This exciting alliance will combine Canon’s renowned portfolio of print, imaging and software solutions with AdEPT’s award-winning managed IT services and technical knowledge. The partnership will allow Canon customers to have access to a wealth of different IT services as well as expertise around digital strategy, unified communications, print, and IT infrastructure management.

Initially, services offered will include IT health checks, cyber security assessments, cloud readiness and network evaluations as well as wider IT audits. A full portfolio of IT solutions as well as counsel on meeting compliance standards, effective hybrid working practices, process optimisation and supplier consolidation will follow in 2023.

The offering will be delivered through an alliance with AdEPT Technology PLC (AdEPT), one of the UK's leading independent providers of managed services for IT, cloud-services, unified communications, connectivity, and voice solutions working with organisations across a wide range of sectors.

Craig Leverington, Canon Business Services Director, Canon UK & Ireland said: “With cloud adoption and digitisation now commonplace across almost every organisation and sector, it’s vital our customers are fully supported on their digital journey. With many years’ experience working with large organisations to optimise IT infrastructure, we’re excited to have formed a partnership with AdEPT on this new venture.”

Phil Race, CEO, AdEPT Technology PLC said: “Technology systems have so many moving parts, and many organisations are seeking out counsel on how to rationalise, optimise and reduce complexity, and in turn reduce cost. We’re thrilled to be partnering with Canon to offer its customers expert support, and the best technology solutions to drive success for the future.”

Canon IT Services, powered by AdEPT will be available for select Canon customers from October 2022, before being expanded to its wider customer base in the coming months.

[red ninja] 07/10/2022 13:35

Bluster,

Agree that would help to point out that they are serious about deleveraging.

[red ninja] 07/10/2022 13:30

Major shareholders from hxxps://www.adept-technology-group.co.uk/

Christopher Kingsman 5,300,000 21.2
Downing 2,252,817 9.0
Business Growth Fund 1,645,612 6.6
Shelley Rosen 1,372,787 5.5
Keenan Fishwick 1,051,209 4.2
Ryan Fishwick 1,051,209 4.2
Rowan Dartington 883,845 3.5
Octopus Investments 786,921 3.1
Liontrust 755,403 3.0
Ian Fishwick 747,811 3.0

[blusteradjuster] 07/10/2022 13:26

Excerpt below from the AGM statement.

If the final Datrix payment marks ‘peak debt’ for them, then I think they should, when announcing, in November, results to end-Sept, point out:

- How much debt they had after paying out for Datrix

- How much debt they had on 30th September.

- How much debt they expect to pay down in future periods along with resultant net debt.

Fishwick has likened them to an ATM/cash-machine with their capex light model, it’s time to remind the market to get the re-rating going.


"I am pleased to report that 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. In July 2022, the Group's strong cash flows were used to fund the final deferred consideration payment for the acquisition of Datrix Limited, amounting to GBP4.3m, with no further amounts outstanding.“

[red ninja] 07/10/2022 13:17

It's an illiquid share so sometimes it can be in short supply.

[value viper] 07/10/2022 13:07

Can only buy 1000 shares max online at 114p atm

[value viper] 07/10/2022 13:02

Thanks Red for this.

[red ninja] 07/10/2022 12:58

Research Tree Summary

hxxps://www.research-tree.com/companies/uk/it-services/adept-technology-group-plc/research/singer-capital-markets/agm-strong-cash-generation-prompts-dividend-hike/2e2193ce-120c-4f62-89f4-b762f0a860bf

"The strong organic cash flow of FYMar22 has continued into the first half of FY23. With the last of the earn-outs paid out in July and with a high recurring revenue profile (74%/sales) AdEPT is hiking its dividend. We now forecast 5.0p for FY23 from 3.0p, which is a yield of c. 4.5%. The increased pay-out remains consistent with the programme to deleverage the balance sheet. AdEPT still expects net debt/EBITDA to fall below 2x within 12 months and remains well within its covenants. Management talks of “resilientR21; trading YTD while flagging continued headwinds from chip shortages and cost pressures. Helping offset the latter, backlog is up, contract wins/renewals continue and new initiatives are expected to contribute positively over the coming months. Other than the dividend, we make no changes to forecasts but remind that AdEPT trades on a levered FCF yield of approaching 20% and a P/E of just over 4x."



If they can deleverage and pay a progressive dividend can't see the major holders wanting to exit at 200p, but we will be better informed at next results.

[value viper] 07/10/2022 12:47

A 200p offer would do it imvWay down from the 400p best levelsDividend credited my account today 1p per share

[red ninja] 07/10/2022 12:33

Well there is no evidence of big holders selling ie no RNSes of reduced holdings.

The company seemed upbeat in the AGM statement ie new sales opportunities in public and private sectors.

They are even proposing to raise the interim dividend :-

"As a result, the Board is pleased to announce a return to interim dividend payments, with an interim dividend of 2.50p per Ordinary Share in respect of the six months ended 30 September 2022. This represents an increase of 150% over the final dividend of 1p, proposed for the year ended 31 March 2022."

Maybe that would have been better spent bringing down the debt burden.

I can't see them wanting to sell out at this low share price assuming they can manage the debt burden,

[value viper] 24/9/2022 08:05

Fishwick holds plenty of shares not that I recall when he last boughtFrom what I can see the CEO has very few You will be right about options I am sure but it still would send a clear message if they bought in the market with the shares frankly smashed to pieces - not buying is poor imvIt crossed my mind about a takeover possibility in tandem with why they might not be buying because if there were any such talks they would not be able to buy But suspect that is not the case - at least not yetMight be wrong but they have a predictable business with good visibility and a long list of clients public sector and privateWould there not be someone in their space interested in this - NRI

[red ninja] 23/9/2022 12:19

Yes maybe Adept will be a takeover target, but I'm not holding my breath.

Added Later :-

However, with the rate the £ is falling against the $ maybe we could see a US buyer.

[red ninja] 23/9/2022 12:17

I think directors generally receive share options which are low risk.

Why buy shares in the market ?

[value viper] 23/9/2022 11:56

I am a stuck record re director deals Why haven't any directors bought shares Disappointing Is this a sitting duck for a takeover now - NRI

[red ninja] 23/9/2022 11:38

The tip site Investor's Champion has a love-hate relationship with ADT ie like the cash flow generation, but dislike the debt.

Their recent summary was :-

"Forecast earnings per share of 28.5p results in a current rating of only 4x, highlighting the market’s concern with its indebtedness and the potential impact of inflationary pressures, which are also expected to increase costs in 2023. However, notwithstanding these concerns, the valuation still looks very modest relative to its cash flow attractions."



Things appear to be going in the right direction, but the question is how long will the debt be a mill stone around the companies neck. I bought a few more at around 115p, time will tell if that was a wise purchase.

[rookieswingtrader2020] 22/9/2022 14:26

I try to remind myself why ADVFN Hot Stock Rockets suggested that I buy this stock on 20th May 2022.

[value viper] 20/9/2022 18:12

Decent AGM update to be fair but has generated zero interest So illiquid - mixed bag commentary I guess but more dividend and debt reduction ongoing which are positives Maybe it is up for sale now 400p to 100p etc

[value viper] 15/9/2022 21:07

Ta Red for that

[red ninja] 15/9/2022 20:26

Downing Strategic Micro Cap. I.T. August Investors Letter comment :-

ADEPT TECHNOLOGY GROUP is a capex light managed services business.
The quality of earnings is reflected in recurring revenues from a
customer base that includes local government, education and SME.
We have been frustrated with the malaise in the share price that does not reflect the quality of these earnings.

Deals in the sector have been executed on 10-14x EBITDA whilst this business lingersaround 6x EV/ EBITDA for the current year. We feel that this is probably due to the gearing within the business which was year-end net senior debt of £29.4 million after payment of the initial consideration for the Datrix acquisition. However, AdEPT generates strong cash conversion – 108% of EBITDA turned
into cash last year – and has historically done so, enabling a pathway to de-gear the business over the medium term.
Showing confidence in this cashflow, the company reinstated a modest dividend at 1p per share.

Organic growth has also been challenging to demonstrate. However, with the declining fixed line business now less than 10% of revenues, this will become less of an issue. A commitment to reduce debt whilst stopping any M&A activity will allow the company to prove the quality of its earnings and cash generation from its existing asset base.

[value viper] 07/9/2022 12:07

In for a few down here Very illiquid stuffDebt is the issue but they reducing and now paying a dividendRecurring income is strong enough to service (reducing) debt I am hopingThat aside, the valuation seems very low