AdEPT Technology Group – Capital Markets Day could help highlight investment attractions

The lockdowns of the last year have proved to be a massive inconvenience for millions of the UK population.

The emphasis has been very much upon ‘work from home’, with services like Zoom absolutely exploding in volume, while businesses have switched to ‘managed service providers’ to help them continue operations remotely.

AdEPT Technology Group (LON: ADT) is one of the UK’s leading independent providers of managed services for IT, unified communications, connectivity and voice solutions.

Its services are wide and varied

The group employs over 300 members of staff across 10 locations with its head office in Tunbridge Wells, Kent. Established nearly 18 years ago the group has expanded not only by organic growth but also through having made some 26 acquisitions over the years.

Its 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, BT Wholesale, GTT, Gamma, VMware, Cogent, Vodafone, Virgin Media, Fujitsu, Avaya, Amazon Web Services, TalkTalk Business, Microsoft, Cisco, Dell, Fortinet and Apple.

For its clients the group provides a variety of services such as data networking, Cloud services, Business Continuity, Managed IT, Voice Services and collaboration, professional services, Governance, Compliance and Security.

Thousands of clients

The company empowers thousands of companies across the UK by applying unified technology. Today the group has over 12,000 customers, 100 of whom are Local Councils, it aids 30 NHS trusts, it has some 400 sites connected using the Health and Social Care Network.

It supports over 4,000 schools, 25 Universities, and has about 2.2m users of its education apps. Interesting to note is the fact that each day its MailProtect service scans around 2m education emails.

It supports over 1m Office 365 users, which is purportedly Europe’s biggest single deployment. The group has over 200,000 MicroSoft Exchange users, which is one of the largest such services in Europe. Each day over 1bn access requests are filtered by its WebScreen service.

It hosts around 2,000 desktop users and it backs up over 2,500 servers every day. It stores over 27 PetaBytes of data for its clients (a petabyte is a measure of data storage capacity, while a single petabyte of storage could hold 223,101 DVD-quality movies). 

Amongst its thousands of clients, it also works for Parliament, The Cabinet Office, Central Government, the Crown Commercial Service and various Offices of State.

The range of clients also include, amongst so many others, Serco, Citrix, Rexel, ASOS, Coca-Cola, Sabre Insurance, Fidessa, Halfords, Sothebys, Marstons, Opus Energy, NextPharma, talkSPORT, Ardmore, Redrow Homes and Volker.

A very high NPS

Importantly for the growth of the group’s business it rates very highly in its NPS. Created by management experts Bain & Co, the ‘Net Promoter Score’ reflects the willingness of existing customers of any business to recommend a company’s products or services to others.

The index ranges from -100 to 100, with 0 considered good, above 20 is favourable, above 50 is excellent and above 80 is ‘world class’. AdEPT’s NPS is 80! As an example, Amazon rates 69, Apple is 72, Berkshire Hathaway is -6, Walmart is -4, NetFlix is 68, while staggeringly Tesla is 96.

Even so at 80 I think AdEPT has an impressive NPS – which shows quite clearly that it is interested in its customers and providing them with a good and worthwhile service for whatever their needs.

Current year’s trading

The group is expected to have made £57m of sales revenues in the year to the end of March 2021, just £4.7m lower than previously, while adjusted pre-tax profits are likely to fall £1.6m to £6.3m, generating a lower earnings figure of 22.7p against 28.1p last time.

Analyst Kevin Ashton at brokers N+1 Singer estimates that the coming year will see £59m of sales, £7m of profits, and 23.7p of earnings – there is no guidance for dividend payments just yet. However, that lack of guidance may well change before the current trading year closes on 31 March.

Good news on its way?

There could well be good news ready to be imparted by the group, when it holds a Capital Markets Day for investors and analysts on Tuesday 9 March.

Then more good news could flow with a Trading Update in early April.

Shares performing

Last night the group’s shares closed at 261p, unchanged on the day, however I believe that AdEPT is making strong in-roads into its massive marketplace and it will reap major rewards over the next couple of years or so.

The shares were as high as 410p just 30 months ago and that was at a level not too far away from being attained again.

Modestly I now fix my Target Price at 325p.