Inabox Group (ASX:IAB) talks Hostworks acquisition

Interviews

by Carolyn Herbert

Transcription of Finance News Network Interview with Inabox Group Limited (ASX:IAB) Managing Director and CEO, Damian Kay


Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Inabox Group Limited (ASX:IAB) is Managing Director and CEO, Damian Kay. Damian, welcome back.

Damian Kay: Thank you very much.

Carolyn Herbert: Inabox has just acquired Hostworks Pty Ltd. What were the key aspects of that deal?

Damian Kay: Hostworks is a managed cloud business that’s been in the market for over 10 years now. It’s got around about 80 staff, predominantly in their national operations centre, which runs 24 hours seven days a week in Adelaide. In its first full year, we expect Hostworks to deliver more than $3 million in EBITDA and over $1 million in earnings after tax. The key transaction details that we’ll pay $7 million for the business, $5 million will be upfront and $2 million will be over the next 18 months, on a deferred payment over the vendor.

In addition to that, we’ll realise more than $3 million worth of synergies. And to deliver those, it will cost us around about $500,000/$600,000 in order to realise those synergies, which we’ll hit in the second half of this financial year.

Carolyn Herbert: It’s been two years since the acquisition of Anittel. So how has that integration gone?

Damian Kay: It’s gone pretty well, both the Board and my team are quite pleased with how that has delivered. We said that we would deliver more than $2 million worth of profit, or EBITDA and we’ve certainly achieved that. There’s always more work to do of course, but what we’re really seeing is one of the things we also said is, we’d cross-sell the telecommunications into the Anittel base. And that has really, really gathered pace. We gave it a good start in FY16 and FY17, we should see revenues come out of that business or out of that direct communications business, into those customers of more than $2 million to $2.5 million.

Carolyn Herbert: Finally Damian, what can we look forward to seeing in the near future?

Damian Kay: We’ve got a really big focus on organic growth. As I mentioned before, we have a really healthy pipeline of opportunities, predominantly in the enablement channel and the real focus is on bringing those to market. I’d expect to see in the near future, some really positive news to come and bring you and talk about that. In addition to that, we’ll always acquire where it makes sense and we’ll continue to look for those opportunities. But we’ve got a lot of work to do to bedding down Hostworks and that for now is a really big focus for us.

Carolyn Herbert: Damian Kay, thanks for the update.

Damian Kay: Thank you very much.


Ends

Carolyn Herbert

Finance News Network
Carolyn joined FNN in August 2015 as the Head of News and also presents the Market at Midday and the Market Wrap. With more than five years of broadcast journalism experience, Carolyn has worked as a finance anchor on the Sky News Business channel and as an anchor and reporter for ABC News. She is also a qualified corporate lawyer specialising in IPOs, takeovers and mergers and acquisitions.