Daily Mail, London, investment column

Source: Daily Mail, LondonJuly 27--ADEPT Telecom's share price has enjoyed a spectacular run since paying a maiden dividend in April last year.儲存It might have been a nominal payout, but its impact was significant in alerting the market to the company's rude financial health.Its debts, which peaked in 2008 at pounds sterling 12.3m, are now just under pounds sterling 3.3m, or less than one times earnings before interest, tax and depreciation.Not only does this reveal a very disciplined approach to paying off those liabilities, but it underlines the business' ability to generate significant cash.An interesting fact emerges from the group's recent results presentation regarding the debt. The amount saved in interest payments last year (pounds sterling 240,000) allowed it to increase the dividend 200pc (at a cost of pounds sterling 210,000)."For a lot of time the market hasn't understood we are in very safe territory so far as the debt is concerned," said chief executive Ian Fishwick."We paid a maiden dividend of half a penny last year and this was to say to the market, 'Are you listening?'"Judging from the share price, we were the fastest rising tel-co last year and this."In the last 15 months the shares have gone orbital, shifting from 35p in April 2012 to over pounds sterling 1.But even at these levels this still puts the group on a fairly reasonable price-to-earnings ratio -- which is at the lower rung of the valuation scale of this particular industry.And there is an argument that it should be on multiples closer to the sector leader. To understand why this may be the case, you need to know a little more about Adept.It provides the full gamut of telecoms services from fixed line, mobile, data connectivity and cloud-based services. But it does so without owning infrastructure -- so it sources the best solutions at the lowest costs from existing providers, mixing up a cocktail of different services from competing suppliers.If this sounds like an administrative and organisational nightmare, then it's not the way Adept does it.Project management is at the heart of its offering (juggling the right balls and not dropping th新蒲崗迷你倉m, Fishwick describes it). Often it is a case of flicking a virtual switch to turn a service on, or at worst hiring BT's Openreach to make the connection.Automation, meanwhile, is also a key element that ensures its sales staff are the highest earning per head in the industry -- pounds sterling 489,000 per employee, compared with a sector average of pounds sterling 168,000.This translates into industry-leading margins that are six percentage points higher than Adept's nearest rivals.Two impressive facts emerge from the company's recent prelims -- first is that underlying profitability has grown for the last decade, as have those profit margins.Organic growth will be driven by those opportunities to cross-sell, while the public sector presents a huge potential market. In fact the group has gained significant early traction with local authorities, landing three contracts in the early months of this framework.Its cash generation means the group can return to the acquisition trail, albeit at a modest level. The business telecoms market is made up of 700 small firms, so at pounds sterling 20m Adept is one of the larger players.As chairman Roger Wilson points out, there are always opportunities to acquire companies. "At any one time there is always someone retiring or getting divorced that presents an opportunity."Of course it is then about doing these deals at the right price. So there is plenty of scope to grow the business -- and that share price."If we want to increase the dividend further there is still enough money to do that and do some small acquisitions," Fishwick said.OUR VERDICT: The share price has advanced significantly in the past 15 months. Adept is still only at a relatively modest 9.3m-times next year's earnings. Value enhancing bolt-on acquisitions and solid underlying growth should maintain the momentum.The ability to crank up the dividend at will provides a welcome income stream and is a novelty for AIM. I would set a stop-loss at around 85p.Copyright: ___ (c)2013 Daily Mail (London, ) Visit the Daily Mail (London, ) at .dailymail.co.uk/home/index.html Distributed by MCT Information Servicesmini storage