25 May 2012

Sold down AdEPT fails to fizz

08/12/2006 James Crux

Despite announcing a 50 per cent push in first half profits and lauding the success of acquisition Fizz, AdEPT Telecom remained mired at a lowly 55.5p today, with investors still piqued by last month’s shock profits warning.

For the half to September, the AIM-quoted communications consolidator, which provides landline calls, line rental and broadband services, reported a rise in pre-tax profits from £275,000 to £418,000, as turnover dialled up by 97 per cent to £9.5 million. Earnings, adjusted for amortisation, rose from 2.9p to 3.6p, although the dividend was skipped.

During the half, the highly acquisitive group bought 10,000 small business customers from Fizz Telecom in an earnings-enhancing deal.  They were swiftly integrated into AdEPT’s back-office systems, and there’s a strong pipeline of deals to go after in a highly fragmented fixed line reseller market.

Chairman Roger Wilson also flagged up a burgeoning proportion of sales won from business customers, which provide more stability and less ‘churn’ than residential clients. Small and medium sized business customers now account for 86 per cent of total revenues, versus only 55 per cent in 2005.

Shares in AdEPT, which debuted on AIM at 140p in February, suffered a dramatic fall last month after the group warned it wouldn’t meet original full year forecasts due to a tougher telecommunications market. Free broadband offers and the packaging of fixed line with mobile, have prompted churn, slowing profit growth short term.

Dialling as high as 212.5p following its IPO, AdEPT is valued at £11.7 million, reduced dramatically from the £29.5 million debut price tag.

Sector: Fixed Line Telecommunications

Companies: Adept Telecom

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