TIDMADT
RNS Number : 1707X
AdEPT Technology Group PLC
26 April 2019
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
AdEPT Technology Group Plc
("AdEPT" or the "Company")
Acquisition of Advanced Computer Systems Group Limited
and
Extension of Bank Facility
AdEPT Technology Group plc, one of the UK's leading independent
providers of managed services for IT, connectivity, unified
communications solutions and cloud services, announces that it has
signed an agreement to acquire the entire issued share capital of
Advanced Computer Systems Group Limited and its trading subsidiary
Advanced Computed Systems Limited ("ACS"), (together referred to as
"ACS Group") a well-established UK based specialist provider of IT
services focused on the education sector.
Acquisition highlights
-- Initial consideration of GBP5.24 million less the net debt of ACS Group at 31 March 2019
-- Expected to be earnings enhancing from completion
-- AdEPT group revenue run rate anticipated to increase by approximately 9%
-- Highly complementary IT services product set with SAGE
expertise that can be cross sold into AdEPT clients
-- ACS Group further enhances the AdEPT education strategy with
approximately 200 schools and academy trust customers
-- Highly experienced vendors to remain with ACS Group
Strategic rationale
ACS Group offers its clients the delivery of IT solutions and is
focused on the education sector with complementary software support
expertise around SAGE and SIMS. The highly skilled team, together
with the well-matched customer base and product set at ACS Group
will complement AdEPT's existing IT managed services offering where
AdEPT provides services to thousands of schools and academy
trusts.
ACS Group, based in Doncaster, provides a geographical extension
to the existing education focused centre of excellence of AdEPT
based in Orpington, and offers an opportunity for cross-sell the
software and applications developed by the in-house software team
at AdEPT. Post-acquisition the Company will look to consolidate
supplier agreements and integrate various services of ACS Group
into the Orpington office of AdEPT.
ACS Group is our second acquisition in Yorkshire, following the
acquisition of ETS Communications Limited ("ETS") in November 2018.
The IT skills of ACS Group are highly complementary to the unified
communications expertise of ETS and it is anticipated that they
will work closely together.
AdEPT and ACS Group have both adopted capital asset light
strategies which are highly cash generative and are dedicated to
offering a full suite of IT services.
Further details of the acquisition are set out below.
Phil Race, Chief Executive of AdEPT, commented:
"We are delighted to have acquired such a high-quality business
with the highly experienced vendors remaining with ACS Group
post-acquisition. AdEPT has an existing education focused IT
service operation in Orpington - the acquisition of ACS Group
builds on this capability and extends the geographical reach of
AdEPT's IT services to Yorkshire. ACS Group has a well-developed
customer base with long term relationships, which builds upon
AdEPT's existing strong education presence. The acquisition is
expected to be earnings enhancing from completion."
Kevin McEwen, Managing Director of ACS, commented:
"After having operated the business for 20 years we felt the
time right to look for a new home in order to provide our clients
and prospects with a broader range of products and services. Our
education focus, providing a broad range of expertise to more than
200 educational establishments, alongside our commercial clients
means that AdEPT is an incredibly complementary home for our
business. We very much look forward to working with the team at
AdEPT on the integration and evolution of our business over the
coming years."
Extension of Bank Facility
-- Debt facility enlarged to GBP40 million
-- Increased capacity to support acquisition growth strategy
The Board of AdEPT also announces that it has signed a GBP5
million extension to its existing GBP35 million 5-year revolving
credit facility agreement, enlarging the total debt facility to
GBP40 million. The incremental GBP5 million tranche of the
revolving credit facility is available in the period through to 30
June 2020. The remaining GBP35 million of the revolving credit
facility remains available for the 5-year term to 31 January
2022.
The enlarged facility is to be provided by Barclays Bank Plc
("Barclays") and The Royal Bank of Scotland Plc ("RBS) on an equal
basis. The facility will be used by AdEPT to fund acquisition of
businesses that extend the AdEPT product set and by being part of
the AdEPT group, will benefit from economies of scale. The
commercial terms of the enlarged facility remain the same as the
existing facility.
Ian Fishwick, Chairman of AdEPT, commented:
"We are delighted to have obtained the continued support of the
teams at RBS and Barclays to provide an enlarged syndicated debt
facility. This enlarged bank facility provides the Company with
additional funding to undertake the acquisition of ACS Group as
AdEPT continues with its strategy of acquiring and integrating
earnings enhancing businesses."
Further details on the acquisition of ACS
Information on ACS Group
ACS Group, founded in 1999, is an independent IT service
provider based in Doncaster with 20 years' experience. ACS Group is
focused on providing IT services and has a strong public sector
presence, including managing and supporting the IT function of
approximately 200 schools and academy trusts.
Both of the vendors of ACS Group are to be retained in their
current capacity within the business for a period of at least 12
months post-acquisition.
The statutory accounts of ACS Group for the year ended 31
December 2018 reported turnover, operating profit and profit before
tax of GBP5.46 million, GBP0.91 million and GBP0.85 million
respectively. There was no capital expenditure in the year ended 31
December 2018. Net and gross assets at that date were GBP0.19
million and GBP1.50 million respectively.
Consideration
Initial consideration of GBP5.24 million less the net debt of
ACS Group at 31 March 2019 ("Net Debt") is payable in cash.
Pursuant to the terms of the share purchase agreement, the
effective date of the acquisition is 1 April 2019. Further
consideration of up to GBP2.26 million may be payable in cash
dependent upon the trading performance of ACS Group in the 12-month
period ending 31 March 2020.
The total consideration will be funded out of AdEPT's enlarged
bank facility, with headroom in the facility to support further
acquisitive growth and payment of outstanding deferred
consideration obligations.
For more information please contact:
AdEPT Technology Group Plc
Ian Fishwick, Chairman 07720 555 050
Phil Race, Chief Executive 07798 575 338
John Swaite, Finance Director 01892 550 243
Cantor Fitzgerald Europe
Nominated Adviser & Broker
Phil Davies/Will Goode 020 7894 7000
This announcement has been released by John Swaite, Finance
Director, on behalf of the Company.
About AdEPT Technology Group plc:
AdEPT Technology Group plc is one of the UK's leading
independent providers of managed services for IT, unified
communications, connectivity and voice solutions. 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 Openreach, BT Wholesale, Virgin Media, Avaya,
Microsoft, Dell and Apple.
AdEPT is quoted on AIM, operated by the London Stock Exchange
(Ticker: ADT). For further information please visit:
www.adept.co.uk
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END
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