Acquisition of RapidSwitch Li

RNS Number : 0688S

Iomart Group PLC

12 May 2009

 

IOMART GROUP PLC

('iomart' or the 'Group')

Acquisition of RapidSwitch Limited ('RapidSwitch')

iomart Group plc (AIM:IOM), the managed hosting services company, is pleased to announce the acquisition of the entire issued share capital of RapidSwitch Limited for a total cash consideration of £5.25 million.

As a successful and profitable managed hosting company, RapidSwitch is an ideal fit for iomart. The acquisition is in line with iomart's strategy of becoming the UK's foremost hosting company, focused on the delivery of managed hosting environments and solutions, be they virtual, dedicated, cloud or SaaS.

RapidSwitch is focused on delivering highly reliable managed hosted solutions for its clients. RapidSwitch currently manages over 4,000 servers on behalf of 1600 clients ranging from SMEs through to large corporates. It has achieved strong organic growth, via a high rate of repeat business and referrals, through its well deserved reputation for excellent customer service.

RapidSwitch is delivering substantial revenue growth, having been recognised as the 10th fastest growing technology company in the UK by Deloitte. Revenues of £1.48 million for the year to March 2007 grew to £2.6 million for the year to March 2008. A similar level of revenue growth has been achieved in the year to March 2009. 

The purchase of RapidSwitch provides iomart with a fifth data centre to add to its existing portfolio of four operational datacentres. RapidSwitch's data centre, which is located in Maidenhead, Berkshire, is newly commissioned and operational. When all phases of the build-out are completed it will give iomart the capacity to accommodate a further 600 racks, as well as mitigating substantial existing costs currently carried by RapidSwitch. 

iomart expects the acquisition to be immediately earnings enhancing. The acquisition of RapidSwitch is in line with iomart's strategic objective to expand its presence and capability in hosting and the Board of iomart believe that the acquisition of RapidSwitch offers many benefits and opportunities including: 

• The acquisition of a well established, profitable business with strong growth prospects;

• An immediate enhancement to earnings per share;

• An increased presence in hosting;

• A stand alone business with a strong brand; and

• Additional sales and profits with minimal increase in central and divisional costs.

Of the total consideration of £5.25 million, £4.3 million was paid on completion and a further £0.95 million is payable on 31 March 2010.

At 31 March 2008 the net assets of RapidSwitch were £530,012, EBITDA of £761,418 and post-tax profits of £350,544. In addition RapidSwitch currently has net debt of approximately £800,000.

Angus MacSween, CEO of iomart Group plc, stated: 'iomart's strong balance sheet is the direct result of our recent disposal of a non-core directory business to BT, which released cash to make strategic acquisitions. The market reaction to our focus on the provision of managed hosting and data centre services has been very encouraging to date, and we are convinced that our acquisition of RapidSwitch at this stage in iomart's evolution will accelerate growth opportunities and profits for the Group.'

For further information: 

iomart Group plc	Tel. [phone]
Angus MacSween, Chief Executive
Ian Ritchie, Non-executive Chairman
Bruce Hall, Company Secretary
KBC Peel Hunt	Tel. [phone]
Richard Kauffer
Daniel Harris
ICIS	Tel. [phone]
Tom Moriarty
Bob Huxford

About iomart Group plc

iomart Group is a managed hosting business owning its own carrier neutral datacentre capacity to allow the delivery of the full set of vertical components from domain names through space power and bandwidth to complex application hosting. 

The Group has developed a portfolio of managed services for SMEs as part of the Easyspace brand. iomart now has over 210,000 SME customers to whom it sells domain name services, web hosting, dedicated and virtual servers and other web based services.

At the enterprise level, the ownership of the datacentres enables the provision of a range of services from the straightforward provision of space and power to the more complex managed hosting solutions.

For further information about the Group, please visit www.iomartgroup.com

Notes:

This statement is not intended to constitute a profit forecast for current financial period or for any future period. In addition, this statement should not be taken to mean that the earnings per share of iomart will necessarily match or exceed the historic reported earnings per share of iomart.   

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