RedstoneConnect PLC Acquisition (4029P)

TIDMREDS

RNS Number : 4029P

RedstoneConnect PLC

17 November 2016

17 November 2016

RedstoneConnect Plc

("RedstoneConnect" or the "Group")

Acquisition of Commensus for GBP2.4 million

RedstoneConnect (AIM: REDS), a leading provider of technology and services for smart buildings and commercial spaces, is pleased to announce the acquisition of the entire issued share capital of Commensus Plc ("Commensus") for a total consideration of GBP2.4 million (the "Acquisition").

Commensus is a leading provider of fully managed IT support services internationally with a product offering that is highly complementary to RedstoneConnect's existing IT services and software offerings.

Highlights

-- Expected to be earnings enhancing in its first full year of ownership - in the financial year ended 31 December 2015, Commensus generated revenues of GBP3.2 million and EBITDA of GBP338,000

-- Established, profitable and scalable managed services business platform currently servicing 72 customers globally

   --     Highly experienced management team and staff comprising of 19 employees who will support RedstoneConnect's existing managed services capabilities 

-- Broadens RedstoneConnect's existing suite of managed IT solution services, providing further opportunity to cross-sell to RedstoneConnect's existing clients

Acquisition rationale

Strategic acquisitions are a core part of RedstoneConnect's growth strategy and the acquisition of Commensus broadens the Group's product and service set as well as providing a complementary fit to both of the Group's key existing trading divisions - Redstone and Connect IB.

Commensus is a well-established IT end-to-end managed services provider, servicing 72 clients globally, providing 24-hour network support, infrastructure and communications. The Acquisition will enable the Group to offer a cloud-hosted IT services solution alongside Redstone's existing 'on-the-ground' managed IT services, providing both new and existing clients with broader and more flexible solutions.

Commensus will also support Connect IB's software offering as it will allow Connect IB to host the software solutions delivered to its clients through the Commensus platform as well as enabling Connect IB's digital platform, Connect, to be hosted on Commensus. This is expected to accelerate the Group's ability to offer a complete end-to-end software service suite without the need to engage third parties.

The acquisition of Commensus is directly in-line with RedstoneConnect's ambition of developing greater levels of contracted recurring revenues to deliver a stronger mix of business, incorporating higher margin recurring revenues and greater visibility of earnings.

Terms of the Acquisition

The total consideration payable for Commensus is GBP2.4 million of which GBP2,252,290 is payable in cash, funded from our own resources and bank debt, and GBP147,710 is to be satisfied by the allotment and issue of 11,976,487 ordinary shares in RedstoneConnect to Kevin London and Alex Parker, both senior management of Commensus ("Consideration Shares"), on completion. The Consideration Shares being issued will be subject to lock up and orderly market arrangements for 24 months.

Mark Braund, CEO of RedstoneConnect, commented:

"This earnings enhancing acquisition is directly in-line with our strategy to broaden our managed services solutions and to accelerate the Group's transition to high-margin recurring annuity based revenues. Commensus will enable us address a gap in our existing services offering in our RedstoneConnect business.

"RedstoneConnect has undertaken a significant shift in both strategic and operational direction over the last 12 months and the acquisition of Commensus is further evidence of our ambitions to deliver compelling service solutions across our client base."

Application has been made for the Consideration Shares to be admitted to trading on AIM ("Admission") and it is expected that Admission will become effective on 22 November 2016.

Following the issue of the Consideration Shares, there will be 1,645,146,151 ordinary shares in issue. The Group does not hold any ordinary shares in treasury and therefore 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 Group under the Financial Conduct Authority's Disclosure and Transparency Rules.

Enquiries

 
 RedstoneConnect Plc                      via Vigo Communications 
  Mark Braund (CEO) 
  Spencer Dredge (CFO) 
 Cantor Fitzgerald Europe (Nominated 
  Adviser & Joint Broker) 
  Marc Milmo/Phil Davies/Catherine        [phone] 
  Leftley/Callum Butterfield               7000 
 Whitman Howard Limited (Joint Broker)    [phone] 
  Nick Lovering                            1234 
 Vigo Communications (Financial 
  Public Relations) 
  Jeremy Garcia / Ben Simons / Antonia 
  Pollock                                 [phone] 
  [e-mail]                       9700 
 

About RedstoneConnect Plc

RedstoneConnect is focused on technologies that make real estate more efficient and businesses more effective. Its businesses, Redstone and Connect IB, provide the infrastructure capabilities and the software applications to deliver smart building and smart workspace solutions for commercial businesses, public sector organisations, real estate owners and managers. Visit our website at www.redstoneconnectplc.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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November 17, 2016 02:01 ET (07:01 GMT)