ADT.L Regulatory News (ADT)

AdEPT Telecom Plc

("AdEPT" or the "Company")

£7.3m BGF funding and Atomwide acquisition

NEW CONVERTIBLE LOAN INSTRUMENT

· £7.3m investment from BGF via convertible loan instrument

· Conversion price £3.93 per ordinary share

Proceeds of BGF investment, plus existing bank facility to be used to acquire Atomwide Limited

AdEPT Telecom, one of the UK's leading independent providers of unified communications and IT managed services, today announces that it has signed a £7.3 million convertible loan instrument with Business Growth Fund plc ("BGF").

The proceeds from the convertible loan instrument, plus £4.7 million of the existing bank facility, will be used by the Company to fund the acquisition of Atomwide Limited ("Atomwide").

The loan instrument is convertible into ordinary 10p shares in the Company at a price of £3.93.

Roger Wilson, Chairman of AdEPT, commented:

"Following their initial equity investment in AdEPT during 2016 we are delighted to have obtained further support from the team at BGF to work alongside our existing debt providers, Barclays and The Royal Bank of Scotland, and provide funding for the acquisition of Atomwide. This gives us the market leading position in IT for education in London."

ACQUISITION OF ATOMWIDE LIMITED

The Board of AdEPT also announces that it has signed an agreement with effect from 1 August 2017 to acquire the entire issued share capital of Atomwide a well-established UK based specialist provider of IT services to the education sector ("the Acquisition").

Acquisition highlights

· Initial consideration of £12 million plus surplus cash of Atomwide at 31 July 2017

· Expected to be earnings enhancing from completion

· AdEPT group revenue run rate anticipated to increase by approximately 19%

· Long term relationship and key technology partner for London Grid for Learning

· Customers include 4,000+ schools with over 2 million users

· Highly complementary product set for telecommunication and IT convergence

· Atomwide own the IPR for their education applications which are hosted on-site at its data centre in Orpington

· Highly experienced senior management team to remain with Atomwide

Strategic rationale

The acquisition of Atomwide positions AdEPT as the leading IT provider to schools across London, supporting around 2 million users of Atomwide's products and services. Since 1987 Atomwide has provided IT solutions for approximately 4,000 UK schools, Local Authorities and Regional Broadband Consortia as well as a range of other establishments nationwide. Atomwide has more than 50 experienced staff, including an in-house software development team.

Atomwide offers its clients outsourced managed IT and telecoms solutions focused on the education sector. The acquisition of Atomwide further extends AdEPT's ability to provide a full suite of specialised IT and telecoms products to public sector customers.

AdEPT and Atomwide have both focused on recurring revenue and capital asset light strategies which are highly cash generative. Nearly 80% of Atomwide revenues and gross margin are from recurring products and services.

Information on Atomwide

Atomwide, founded in 1987, is a highly accredited IT services provider with over 30 years experience, offering highly specialised IT support services and technology solutions to approximately 2 million users in over 4,000 schools.

Atomwide is the chief technology partner for London Grid for Learning, supplying IT services to around 3,000 schools in London. All of the bespoke services have been created by the in-house development team and are supported by the highly experienced team of IT professionals based at Atomwide's premises in Orpington, Kent.

All of the senior management team which are responsible for the strategic direction, technical development and the day-to-day operations of Atomwide are to be retained within the business post-acquisition.

The statutory accounts of Atomwide for the year ended 31 March 2017 reported turnover, operating profit and profit before tax of £7.5 million, £1.9 million and £1.9m respectively. Capital expenditure in the year ended 31 March 2017 was £0.1 million. Net and gross assets at that date were £6.8 million and £8.8 million respectively.

Consideration

Initial consideration for the Acquisition is £12 million plus the surplus cash of Atomwide at 31 July 2017 (estimated to be £6.2 million). The initial consideration will be funded out of the proceeds of AdEPT's new convertible loan from BGF and the existing bank facility. This retains headroom in the existing bank facility to support further acquisitive growth. Further consideration of up to £8 million may be payable in cash dependent upon the trading performance of Atomwide in the 12 months post-acquisition.

Ian Fishwick, Chief Executive of AdEPT, commented:

"We are delighted to have acquired such a high quality, well-run and profitable business with a strong management team. Atomwide is an excellent fit because it gives us a strong market position in IT for education, particularly in London. This complements our acquisition of OurIT in February 2017 which is focused on London and South East commercial customers. After the Atomwide acquisition approximately two thirds of AdEPT revenue will be generated from managed services. The acquisition is expected to be earnings enhancing from completion."

This announcement contains inside information.

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About AdEPT Telecom plc:

AdEPT Telecom plc is one of the UK's leading independent providers of unified communications and IT solutions. The Company provides a complete communications portfolio of unified communications, IP telephony, equipment installation, managed services, IT services, Wi-Fi, IT and communications hardware and data connectivity products. AdEPT's 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 BT Openreach, Vodafone, Virgin Media, Avaya, Microsoft, Dell and Apple.

AdEPT is listed on the London Stock Exchange (Ticker: ADT). For further information please visit: www.adept-telecom.co.uk