Cybit buys Amatics for up to £6m; sees cost savings through synergies
Cybit Holdings Plc, one of Europe's leading online Telematics service providers, said its has acquired Amatics Ltd, a privately owned UK based telematics company for £4 million, with the possibility of an additional £2m payable as an earn out over the next 2 years.
Amatics is one of the UK's leading telematics service providers to the utility services sector and among local authorities. It currently has around 25 long-term customers, who between them have approximately 4,000 installed units.
Key customers include Scottish Water, South East Water, Monmouthshire Council, South Cambridgeshire Council and Argyll and Bute Council. Many of its customers integrate telematics data into their internal infrastructure including customized GIS applications for applications including gritting and gully emptying.
Cybit CEO Richard Horsman (pictured) said Amatics was “a high quality business with an excellent reputation for delivering quality solutions underpinned with exceptional customer service within the Utility and Local Authority markets.
"With existing customers, Cybit has quietly been building a significant installed base in this sector. We are confident that the integration Amatics with the resultant creation of a specialist team focused on this growing market segment will both grow revenues from the existing base and attract new clients from within the sector.
The Amatics management team is joining Cybit and will help drive expansion. Amatics has a committed future revenue stream of about £1.7m from existing customer contracts and the board of Cybit believes Amatics will bring a strong pipeline of future business from both existing customers and new prospects.
As a result of the acquisition, Cambridgebased Cybit will have more than 60 customers. Given the larger scale of the business, Cybit said intends to create a separate sales unit to focus on growing business in this sector.
During 2006, Amatics had revenue of £3.3m, gross profit of £1.7m, EBITDA of £1.6m and EBIT of £1.3m. As a result of the run out of a number of older contracts, revenues for the current year are expected to be below 2006 levels.
Cybit expects to achieve a significant reduction in external operating costs associated with delivering this service through increased economies of scale and group buying power.
The initial £4m will be satisfied by £3.5m in cash and the issue of 962,000 new shares in Cybit. The existing cash balance of Amatics is about £3.3m. Therefore, on completion the acquisition will be cash neutral as Cybit will effectively be paying cash for Amatics' existing cash balance.
Mr Horseman said "We are committed to growing the scale of Cybit through both acquisitions and organic growth. The market remains extremely fragmented with no clear leader. We are focused on creating a group with scale and a broad base of operations across key strategic markets. This is now our third sizeable acquisition in little over a year.
“Cybit has now reached a level of critical mass where the consolidation of similar businesses can make a significant contribution to both top line and bottom line growth."
24th August 2007
