AdEPT Telecom plc Acquisition of Shift F7 (2072Y)
August 20 2018 - 2:00AM
UK Regulatory
TIDMADT
RNS Number : 2072Y
AdEPT Telecom plc
20 August 2018
AdEPT Telecom Plc
("AdEPT" or the "Company")
Acquisition of Shift F7 Group Limited
AdEPT (AIM: ADT), a leading UK independent provider of
award-winning managed services for IT, unified communications,
connectivity and voice solutions, is pleased to announce that it
has signed an agreement to acquire the entire issued share capital
of Shift F7 Group Limited ("Shift F7") and its subsidiaries Shift
F7 Limited and Greencorn Limited, a well-established UK based
specialist provider of IT services to the commercial sector ("the
Acquisition").
Acquisition highlights
-- Initial cash consideration of GBP5 million less net debt and
tax liabilities of Shift F7 at 31 July 2018
-- Expected to be earnings enhancing from completion
-- Approximately 75% of Shift F7's gross margin is from recurring revenue streams
-- Highly complementary product set for telecommunication and IT convergence
-- Shift F7's customer focus on London and South East
-- Highly experienced senior management team that will remain with Shift F7
-- Pre-existing commercial relationship of more than 10 years between AdEPT and Shift F7
-- AdEPT annualised group revenue run rate anticipated to increase by approximately 10%
Strategic rationale
The acquisition of Shift F7 fits perfectly into the Company's
acquisition strategy as it further expands the commercial IT
capability and customer base of AdEPT, whilst providing the Company
with continued geographical focus on London and the South East.
Shift F7 is a vendor-independent managed service provider which
offers its clients outsourced managed IT and telecoms solutions,
including IT support, hosted IT, cyber-security, data connectivity
and next generation IP telephony services. The products and
services of Shift F7 are highly complementary to those of the
existing IT service divisions in the AdEPT Group. In addition, the
teams at Shift F7 and AdEPT have been working together for more
than 10 years in relation to the supply of telecom and data
connectivity services.
AdEPT and Shift F7 have both focused on recurring margin and
capital asset light strategies which are highly cash generative.
Approximately 75% of Shift F7's gross margin is generated from
recurring products and services.
Information on Shift F7
Shift F7, founded in 1995, is a highly accredited IT services
provider with over 20 years' experience, offering highly
specialised IT support services and technology solutions to more
than 200 commercial mid-market customers.
Shift F7 has security accredited dedicated hosted platform
environments in London Docklands and Heathrow. Key suppliers
include Citrix, Microsoft, HP, Cisco, Ericsson LG and VMWare.
All services provided by Shift F7 are supported by a highly
experienced team of IT professionals based at Shift F7's premises
in Dorking, Surrey, which will be retained post-acquisition. The
senior management team responsible for the strategic direction,
technical development and the day-to-day operations of Shift F7 are
to be retained within the business post-acquisition.
The unaudited management accounts for Shift F7 and its wholly
owned subsidiaries for the year ended 31 May 2018 show turnover and
EBITDA on a proforma combined basis of GBP5.0 million and GBP0.7
million respectively. Capital expenditure in the year ended 31 May
2018 was GBP0.2 million. The consolidated net and gross assets of
Shift F7 and its subsidiaries at 31 May 2018 were GBP2.3 million
and GBP3.6 million respectively.
Consideration
Initial consideration for the Acquisition is GBP5.0 million in
cash less the net debt and tax liabilities of Shift F7 at 31 July
2018 (estimated to be GBP0.5 million). Pursuant to the terms of the
acquisition agreement, the Acquisition is deemed to have been
effective from 1 August 2018 and therefore AdEPT will also receive
the trading contribution of Shift F7 from that date. The initial
consideration will be funded out of the drawdown of AdEPT's
existing bank revolving credit facility. Further consideration of
up to GBP2.9 million may be payable in cash dependent upon the
trading performance of Shift F7 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. Shift F7 is
an excellent fit because it enhances our market position in IT,
particularly in London. Shift F7 complements our acquisition of
OurIT in February 2017 which is also focused on London and South
East commercial customers. After the Shift F7 acquisition, more
than 70% of AdEPT revenue will be generated from managed services
including IT support, unified communications and data networks. The
Acquisition is expected to be earnings enhancing from
completion."
For more information please contact:
AdEPT Telecom Plc
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Chief Executive 01892 550 225
John Swaite, Finance Director 01892 550 243
Northland Capital Partners Limited
Nominated Adviser
Tom Price/Edward Hutton
Broking
Rob Rees 020 3861 6625
About AdEPT Telecom plc:
AdEPT Telecom plc is one of the UK's leading independent
providers of managed services for IT, unified communications,
connectivity and voice solutions. The Company provides a complete
communications portfolio of IT services, unified communications, IP
telephony equipment installation, managed 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 Openreach, BT Wholesale, Virgin Media,
Avaya, Microsoft, Dell and Apple.
AdEPT is listed on the London Stock Exchange (Ticker: ADT). For
further information please visit: www.adept.co.uk
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END
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