Phoenix acquires ICM, releases upbeat management statement

Northampton, U.K.-based Phoenix IT Group has just issued an “‘Interim Management Statement” which gave a trading statement and detailed its financial situation following the acquisition of ICM Computer Group. The statement also provided information on the company’s largest ever business continuity contract win.

Phoenix has been on a buying spree of sorts: The completion of the acquisition of ICM Computer Groupwhich represents an expansion of the Group following its successful acquisitions of Trend (in 2004), NDR (in 2005), and Servo (in 2006). “The total consideration (excluding costs) consisted of £61.8 million in cash and the issue of 14,034,184 ordinary shares in the share capital of the Group,” the statement reads. The Group also repaid approximately £10 million of ICM bank debt. The cash element of the acquisition has been satisfied from new banking facilities with Royal Bank of Scotland, replacing all existing facilities, comprising five year term, and revolving credit facilities, which total £130 million, together with a further £10 million overdraft facility. Primarily as a result of the ICM acquisition, the Group’s net borrowings (including finance leases) increased from £27.7 million at 31 March 2007 to £103.7 million at 31 July 2007.

Including Servo (acquired on 3 November 2006) and ICM (consolidated from 1 June 2007), Group revenues for the first three months of the financial year increased by approximately 57 percent compared with the same period last year. Like for like revenues, excluding acquisitions, were approximately 5 percent ahead of last year, with a resumption of growth in the Phoenix IT Services “Partner” business, together with continued growth in the business continuity market. The company says that operating margins are in line with the Board’s expectations. Compared to June 2006, the like for like order book and annualised contract values increased by approximately 9 percent and 20 percent respectively and the Group has continued to be highly cash generative with cash generated by operations representing 135 percent of profit from operations in the period.

Now to the big contract: The new contract win highlighted in the statement was with a London-based top-ten global investment bank (we will try to find out which before the week is over) and is worth approximately £12 million over the duration of the contract term of three years. It is based around recovery services which will be provided by Phoenix’s new Farnborough business continuity center and is the second major contract won for this facility.