REG - Iomart Group PLC - Acquisition of Concepta

iomartAnnouncement

03/08/2022 07:15

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RNS Number : 6901U  Iomart Group PLC  03 August 2022

3 August 2022

iomart Group plc

("iomart" or the "Group" or the "Company")

 

Acquisition of Concepta

 

iomart Group plc (AIM: IOM), the cloud computing company, is pleased to
announce that it has agreed to acquire the entire issued share capital of
Concepta Capital Limited ("Concepta"), a holding company of a group of
companies which includes the ORIIUM and Pavilion IT brands, for an initial
cash consideration of £10.5m (the "Acquisition"). ORIIUM is a channel only IT
service provider specialising in data management solutions, and Pavilion IT is
a provider of cloud and hybrid infrastructure solutions and support
services.

 

Highlights

 ·         Acquisition of new complementary solution capabilities and deep technical
           expertise in line with iomart's hybrid cloud strategy
 ·         Significant new channel partner network, strengthening iomart's indirect route
           to market
 ·         Addition of new direct and indirect brands with a diverse customer base
 ·         Shared values and culture providing positive environment for future growth

 

ORIIUM, established in 2007, is a channel-only organisation working with value
added resellers and managed service providers to deliver best in class data
and application management solutions to end users. With this acquisition,
iomart gains an independent wholesale operation that understands the UK IT
channel deeply and has built trust through long-standing strategic partner
relationships.  Data management is a core element of the Group's hybrid cloud
proposition, and ORIIUM materially strengthens iomart's indirect sales channel
capabilities, while extending the Group's product and technical skills and
capabilities, with an additional 45 technical engineers joining the Group.

 

Concepta acquired Pavilion IT, a business established for over 30 years, in
2018 and in 2021 acquired P2 Technologies, a business focussed on the legal
and accounting professional services sector to add vertical specialisation.
This created a strong direct sales organisation with over 250 customers under
one unified operational delivery team offering a range of hybrid and cloud
infrastructure technology solutions plus professional services and on-going
customer support arrangements. This customer base will have access to iomart's
hybrid cloud solutions and services.

 

Concepta had revenues of c. £10m and EBITDA (pre-exceptional items) of c.
£1.6m for the year ended 31 March 2022.

 

Completion of the Acquisition is subject to written confirmation from the
Department for Business, Energy & Industrial Strategy in accordance with
section 14(8)(b)(ii) of the National Security and Investment Act 2021.  This
clearance is required as ORIIUM provides data management services to UK
government bodies. This is expected shortly.

 

Chris Kiaie who established the ORIIUM business and formed the Concepta Group
will continue to lead the ORIIUM and Pavilion IT businesses as their CEO,
supported by his highly skilled and experienced team. From a legal, financial
and governance perspective, they will be very much part of the Group.

Consideration

The maximum consideration payable for Concepta is £14.5m.

 

iomart will pay an initial cash consideration on completion of £10.5m,
subject to potential completion accounts adjustments. In addition, a deferred
contingent cash consideration of up to £4.0m will be payable dependent on the
future profit performance of the Concepta business in the year ending 30 June
2023. Concepta currently has bank debt of £1.5m which will be taken on by
iomart and settled as part of the completion process.

 

The initial consideration, debt settlement and any earn out consideration will
be financed through a combination of existing bank facilities and cash on the
Company's balance sheet.

 

The vendors of Concepta are the existing management team, with Chris Kiaie,
CEO, having a majority stake. The acquisition is expected to be immediately
earnings accretive for iomart.

 

 

Reece Donovan, CEO of iomart Group plc, commented:

 

"We are delighted to welcome the Concepta team to iomart, marking the
resumption of our M&A activity in line with our strategic plans. After
careful assessment of the market, in Concepta we found a business and team
that fits within our strategic growth plan by, extending the Group's product,
skills and capabilities, strengthening our direct and indirect routes to
market, and complementing the Group's strong financial model.

 

"ORIIUM has a long track record and strong reputation across the indirect
channel which allows us to broaden our reach whilst enhancing our expertise
within the data management service layer. Pavilion IT provides a new and
diverse customer base adding scale, technology and geographical coverage to
our existing infrastructure reselling and support activities. This is a
meaningful step as we position the Group for its next phase of growth as a
leading secure hybrid cloud business."

 

Chris Kiaie, CEO of Concepta, commented:

 

"Joining iomart marks the beginning of the next phase of growth for Concepta,
and is a very exciting time for our highly skilled, experienced and ambitious
team. It allows us to leverage joint capabilities, capitalise on our
understanding of the markets we operate in and build upon the significant
achievements to date.

 

Identifying a business that shares our culture, goals and aspirations was
incredibly important, and iomart's commitment to exceptional customer service,
team wellbeing and personal development represents our values perfectly. The
team and I are all incredibly excited to be working as part of the wider group
and look forward to being part of iomart's incredible ongoing success."

 

 

For further information:

 iomart Group plc                                                                      Tel: 0141 931 6400
 Reece Donovan, Chief Executive Officer
 Scott Cunningham, Chief Financial Officer

 Peel Hunt LLP (Nominated Adviser and Joint Broker)                                    Tel: 020 7418 8900
 Edward Knight, Paul Gillam, James Smith

 Investec Bank PLC (Joint                                                              Tel: 020 7597 4000
 Broker)
 Patrick Robb, Virginia Bull, Sebastian Lawrence

 Alma PR                                                                               Tel: 020 3405 0205
 Caroline Forde, Hilary Buchanan, Joe Pederzolli

 

About iomart Group plc

 

iomart Group plc (AIM: IOM) is a cloud computing and IT managed services
business providing hybrid cloud infrastructure, network connectivity,
security, and digital workplace capability. Our mission is simple: to make our
customers unstoppable by enabling them to connect, secure and scale anywhere,
anytime. From our portfolio of data centres we own and operate across the UK
to connected sites around the world, our 400-strong team can design and deploy
the right cloud solution for our customers.

 

For further information about the Group, please visit  www.iomart.com
(http://www.iomart.com/)

 

 

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