AdEPT Technology Group PLC (AIM:ADT) confirmed it is restarting interim dividend payments after generating strong cashflows despite supply chain challenges in the six months to the end of September.
The provider of managed IT and telecoms services said revenue remained broadly flat at £34.2mln in the period versus £34.3mln a year ago.
Total managed services revenue – all recurring revenue – grew by £0.8mln or 3% to offset the continued structural decline in traditional telephony, which reduced by £0.8mln, such that total managed services revenue represented 89% of group revenue, up from 87% a year earlier.
Within that, the focus on cloud-centric services saw 3% organic growth, with these services now representing 44% of group revenue.
Strong underlying recurring revenue and margin stream from securing ongoing customer contracts, combined with continued operational efficiency, generated strong organic cash flow, the AIM-listed company said.
As a result, some of this cash was used to fund the £4.3mln final deferred consideration payment for the April 2021 acquisition of Datrix.
And the board also confirmed the return to interim dividend payments first flagged in September, with a payout of 2.5p per share in respect of the first half, up from zero a year ago and also representing an increase of 150% over the final dividend of 1p paid for the year ended 31 March 2022, with dividend cover of 4.8x.
“Pre-pandemic, our dividend policy was to return 30% of our adjusted earnings per share to shareholders in dividends and while the macro-economic landscape remains uncertain, we are on a journey back to 'normality'. Our reinstatement of interim dividends reflects this change in circumstance and remains conservative,” said chief executive Phil Race.
On the outlook, he noted revenue generation improved by 15% in the second quarter over the first, as supply chain issues began to ease off and the group benefitted from seasonal demand in the education sector.
“The growth in recurring managed services revenue is expected to continue to offset the structural decline in traditional telephony,” he said, though inflationary pressures are expected to increase product and operational costs, predominantly wage inflation, recruitment and energy costs in the full year.
“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. This cushions the business to some extent from the inflationary pressures within its supplier base.”