Iomart Regulatory News (IOM)

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

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:

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