25 May 2012

Accumuli swings into black

15/11/2011 Miles Nolan

With its first 'clean' reporting period under its belt, IT security services specialist Accumuli (ACM) has pleased investors with a shift to profitability.

The AIM listed company is the vehicle of IT entrepreneur Ian Smith, and plans to expand further in the security services space - a market worth $20 billion globally last year. Recent take-over activity has left no obvious medium sized player, so Accumuli plans to remedy this.

Formerly Netservices, it has acquired three businesses and is on the trail for more. It has considered six targets in recent months, but is keen to ensure it finds the right fit. Accumuli has existing cash of £500,000, but existing shareholders are aware it may raise further funds (if not too dilutive). It also has a strong relationship with HSBC, so the banking giant could well provide future backing.

In the six months to September it achieved sales of £5.5 million (7 months to 2010: £2.4 million) which led to a pre-tax profit of £213,929 (2010: loss of £724,454). Accumuli has been busy integrating and restructuring, moves which should lead to annual savings of at least £300,000.

One blot on the copybook was the acquisition of Boxing Orange, due to the understatement of deferred income and accruals, it has been forced to lower the future earnout payable to the vendors to no more than £400,000. All three acquisitions have been rebranded as: Accumuli Security - Advanced Security Solutions. Recurring revenue is a solid 50 per cent, providing a solid base for the business.

Speaking to Growth Company Investor, Ian Smith said 'we remain on the lookout for acquisitions in what is a fragmented space, but with our blue chip client base there are also plenty of opportunities for cross-selling.' House broker finnCap sees the growth trajectory continuing: for 2012 it predicts sale of £12.5 million, pre-tax profits of £1.7 million and EPS of 1p.

Accumuli is operating in a sweet spot, which is made topical by daily news reports of security breaches and the need to protect information. At 8.5p, the intention remains to build the group to a size whereby it would be of interest to a large player in the space. Interesting.

Tags: Acquisitions, AIM market, Growth company, Ian Smith, Penny shares

Sector: Software & Computer Services

Companies: Accumuli

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