REG - Iomart Group PLC - Acquisition of Extrinsica

iomartAnnouncement

05/06/2023 07:00

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RNS Number : 5711B  Iomart Group PLC  05 June 2023

5 June 2023

iomart Group plc

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

 

Acquisition of Extrinsica

 Acquisition of high growth Microsoft services provider brings in-demand
expertise to iomart portfolio

 

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
Extrinsica Global Holdings Limited ("Extrinsica"), the holding company of
Extrinsica Global Limited (the "Acquisition"). Extrinsica is a Microsoft Azure
Cloud solution services provider with offerings including managed Azure Cloud,
Azure solution design and implementation services, support & optimisation
services and licencing.

 

Highlights

 

·    Acquisition of deep Microsoft Azure expertise and experience aligns
fully with iomart's secure hybrid cloud strategy

·    The enriched skills from this acquisition will be available to
existing iomart customers to support their Microsoft requirements

·    Addition of new customer base, who will now have the full iomart
product offering available to them

·    Shared values and culture providing positive environment for future
growth

 

Extrinsica was incorporated in 2010 as a Cloud services provider to micro
businesses. It was in 2017 that its current business model was established
when it was invited by Microsoft to become one of the first 25 Microsoft Azure
CSP partners worldwide.  It is now solely Azure public cloud focused.

 

The Acquisition provides iomart with deep Microsoft Azure expertise, a highly
capable team of 33 based in the UK, strong customer references and a shared
value and vision for how the Microsoft Practice in iomart should be shaped to
support acceleration of growth.

 

Simon Smith, CEO and Co-Founder of Extrinsica, will continue to lead the
business as CEO supported by his highly skilled and experienced team. From a
legal, financial and governance perspective, they will be very much part of
the iomart Group.

 

For the year ended 31 March 2023, Extrinsica generated revenues of £7.4m,
being year on year growth of c.40%, and EBITDA of £0.1m (unaudited). The
acquisition is not considered a substantial transaction as defined in AIM Rule
12.

Consideration

The initial consideration for the Acquisition is £4.0m, with a potential
further £0.3m in cash payable on the achievement of certain key customer
targets during the calendar year. Of the initial consideration, £2m will be
satisfied by the issue of 1,562,500 new ordinary shares in iomart, which under
the terms of the Sale and Purchase Agreement are subject to a 12 month "lock
in" provision and based on a fixed share price of £1.28, being the volume
weighted average price for the 90 days prior to completion. The balance of
£2.0m will be paid in cash. iomart will also repay £3.7m of debt acquired on
completion.

The Acquisition also includes a further £4.0m to £7.0m of contingent
earn-out payments which are calculated based on Extrinsica's profitability for
the 12 months ending 31 March 2024. Of any earn-out payment that becomes due,
£1.0m will be satisfied by the issue of iomart shares (the number of shares
to be issued will be based on the same share price as the initial
consideration). The amount of contingent consideration payable, based on
management's forecast, recognised at the date of the Acquisition, is expected
to be £4.0m.

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 Extrinsica include the existing management team, amongst
others. The largest shareholder is The Vale Retirement Trust with c. 25% of
all the issued share capital. This trust is an investment vehicle for a high
wealth individual who is not involved in the management of the business.

Consideration shares

iomart has applied for admission of these new ordinary shares to trading on
AIM. Admission is expected to take place at 8.00am on 8 June 2023.

The Company's total issued share capital following admission will consist of
112,136,031 ordinary shares of 1 pence each with one voting right per share.
There are 140,773 Ordinary Shares in the iomart Group plc Employee Benefit
Trust and the Company holds none of its Ordinary Shares in treasury.
Therefore, the total number of voting rights in iomart is 111,995,258

This figure may be used by shareholders as the denominator for the
calculations by which they will determine if they are required to notify their
interest in, or a change to their interest in, the share capital of the
Company under the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.

Reece Donovan, CEO of iomart Group plc, commented:

 

"We are delighted to welcome the Extrinsica team to iomart, providing a large
step forward in iomart's capabilities to support existing and new customers in
their use of Microsoft's Azure cloud platform. Simon and the team have been at
the forefront of the market developments of Azure since 2017 and have deep
skills and expertise in this in-demand area of cloud computing, which will
accelerate the initial investments we have made in our own Microsoft resources
and capabilities.

 

This is a meaningful step in our strategy as we position the Group for its
next phase of growth as a leading secure hybrid cloud business."

 

Simon Smith, CEO of Extrinsica, commented:

 

"Joining iomart marks an exciting phase for our highly skilled, experienced
and ambitious team, providing us with a strengthened platform for growth. It
allows us to leverage joint capabilities, capitalise on our understanding of
the markets we operate in and build upon our significant achievements to date.

 

iomart has a long pedigree in cloud infrastructure, an impressive customer
base and a growth strategy which I believe positions iomart well for future
success. The team and I are all incredibly excited to be working as part of
the wider group and look forward to being a key part of driving iomart's
ongoing success."

 

 

For further information:

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

 Investec Bank PLC (Nominated Adviser and                                              Tel: 020 7597 4000
 Broker)
 Patrick Robb, Virginia Bull, Nick Prowting

 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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