Growth at domain name manager and web hosting concern Group NBT is set to quicken following the January acquisition of rival Ascio, a deal that has turned the company into a veritable European market-leader.

Group NBT joined AIM during the boom in 1999 as the profitable NetBenefit and saw its valuation soar during its first year on AIM from £25 million to more than £100 million. Then the bubble burst, reducing the market capitalisation to less than £5 million by 2001, with losses following as domain names lost their lustre.

Fast forward to 2004 when the company became revitalised as energetic chief executive Geoff Wicks re-focused efforts on a domain name management service known as ‘Platinum’ – where large companies can secure and renew all internet domains for their many brands – as well as managed hosting for small to medium-sized businesses under the NetNames and NetBenefit brands. Profits have ensued, and the 2004 acquisition of consumer-focused peer Easily and managed hosting specilaist Exalia this year helped the company corner further niches in the market.

Known as Group NBT since 2005, the group has enthused investors with steady organic growth, with Wicks scouring the sector for suitable add-on acquisitions. This leads us to Ascio, a Copenhagen-based domain names services venture turning over £12 million a year, on which Wicks pounced in January.

Wicks, who paid £18.3 million for Ascio in cash, shares and options, had eyed his target for some time, and argues the company provides ‘a great geographical and product fit with Group NBT’. The acquisition has added offices in Denmark, Germany, Switzerland and Norway to the London-based group’s operations in the UK, the USA, France and Spain.

In terms of products, he explains: ‘We do some things they don’t do and they do some things we don’t.’ Ascio’s SpeedNames service has near-doubled the size of the group’s domain name management business, and since Ascio doesn’t provide managed hosting nor much in the way of shared hosting, Group NBT can sell in a large range of new products to the Danish company’s customers.

Furthermore, Ascio is a partner-reseller for more than 300 telecoms companies and internet service providers, a service that Wicks plans to introduce into Group NBT’s UK and US markets.

Group NBT itself is going great guns, with Netnames Platinum having won a lucrative deal with Anglo-Dutch giant Unilever, the owner of a colossal 6,300-plus online domains. ‘We’re continuing to do very well,’ assures Wicks, who says trading for the half to December was ‘slightly ahead of expectations’.

For the year, house broker Brewin Dolphin envisages a rise in adjusted pre-tax profits from £2.8 million to £3.7 million, although EPS is expected to remain flat at 11.9p, with the Ascio effect constraining earnings before enhancing them next year. Indeed, 2008 earnings look set to spiral 44 per cent higher to 17.1p, with profits leaping more than 50 per cent north to £5.6 million.

Although Group NBT trades on a relatively high 21.3 times earnings for the current year, the multiple drops to less than 15 for 2008. Furthermore, Wicks, who is scouting for deals in the US, is confident that the combination of Group NBT and Ascio ‘will drive sales at a faster pace’, leaving the possibility of upgrades once integration issues are settled. Buy.

Group NBT	AIM	£47.29m	185.00p	0.00p
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