1PM (OPM) Share Price 65.5p July 28th 2015 Spread (63p - 68p)
(NB I do not hold any position in this company)
1pm’s first acquisition has come so soon after the final year results release on July 24th. I hardly had time to catch my breath! 1pm had strictly grown organically forever. Predictable EPS growth targets each year. Now suddenly a burst of additional external growth. 1pm is acquiring Academy at a cost of £12 million.
According to 1pm's press release.
“Academy is a provider of equipment finance and an equipment and vehicles broker to the SME market. It has two principal activities being the provision of:
· finance either via its own loan book or brokered-on facilities; and
· vehicle supply and fleet management services.
For the year ended 31 March 2015, own book and brokered-on revenue accounted for approximately 80%, and vehicle supply revenue 20%. of Academy's total revenue.”
In its audited results for the year ended 31 March 2015, Alchemy Academy(otherwise MH Holdings Ltd) recorded revenues of £5.15 million , and profit before tax, amortisation and directors' dividends of £1.87 million. As at 31 March 2015 Academy had net assets of £3.1 million.
I presume 1pm through this acquisition can very readily add more customers and hence more profitability through the brokered on facilities that Academy was not taking on to it's on loan book of 16 million.
The £12 million acquisition is being by paid by a share placing and open offer to raise 6.5million. The balance of 5.5 million is being paid by issuing around 7.5 million 1p.m shares some on completion of the deal and the balance as deferred consideration depending on Academy performance. The vendors also received 1 million loan notes. The deal is subject to 1pm shareholders approval, but I doubt there will be any resistance as it seems an excellent fit.
Academy is being valued at 12 million for 1.8m of profits where as 1pm is valued currently at 25 million for almost the same operating profit figure. 37 million valuation for 3.6…
