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Acquisition of RapidSwitch Limited

12th May 2009 · Investor News

iomart Group plc (AIM:IOM), the managed hosting services company, is pleased to

announce the acquisition of the entire issued share capital of RapidSwitch

Limited for a total cash consideration of GBP5.25 million.

As a successful and profitable managed hosting company, RapidSwitch is an ideal

fit for iomart. The acquisition is in line with iomart’s strategy of becoming

the UK’s foremost hosting company, focused on the delivery of managed hosting

environments and solutions, be they virtual, dedicated, cloud or SaaS.

RapidSwitch is focused on delivering highly reliable managed hosted solutions

for its clients. RapidSwitch currently manages over 4,000 servers on behalf of

1600 clients ranging from SMEs through to large corporates. It has achieved

strong organic growth, via a high rate of repeat business and referrals, through

its well deserved reputation for excellent customer service.

RapidSwitch is delivering substantial revenue growth, having been recognised as

the 10th fastest growing technology company in the UK by Deloitte. Revenues of

GBP1.48 million for the year to March 2007 grew to GBP2.6 million for the year

to March 2008. A similar level of revenue growth has been achieved in the year

to March 2009.

The purchase of RapidSwitch provides iomart with a fifth data centre to add to

its existing portfolio of four operational datacentres. RapidSwitch’s data

centre, which is located in Maidenhead, Berkshire, is newly commissioned and

operational. When all phases of the build-out are completed it will give iomart

the capacity to accommodate a further 600 racks, as well as mitigating

substantial existing costs currently carried by RapidSwitch.

iomart expects the acquisition to be immediately earnings enhancing. The

acquisition of RapidSwitch is in line with iomart’s strategic objective to

expand its presence and capability in hosting and the Board of iomart believe

that the acquisition of RapidSwitch offers many benefits and opportunities

including:

* The acquisition of a well established, profitable business with strong growth

prospects

* An immediate enhancement to earnings per share; 

* An increased presence in hosting; 

*  A stand alone business with a strong brand; and 

* Additional sales and profits with minimal increase in central and divisional

costs.

Of the total consideration of GBP5.25 million, GBP4.3 million was paid on

completion and a further GBP0.95 million is payable on 31 March 2010.

At 31 March 2008 the net assets of RapidSwitch were GBP530,012, EBITDA of

GBP761,418 and post-tax profits of GBP350,544. In addition RapidSwitch currently

has net debt of approximately GBP800,000.

Angus MacSween, CEO of iomart Group plc, stated: "iomart’s strong balance sheet

is the direct result of our recent disposal of a non-core directory business to

BT, which released cash to make strategic acquisitions. The market reaction to

our focus on the provision of managed hosting and data centre services has been

very encouraging to date, and we are convinced that our acquisition of

RapidSwitch at this stage in iomart’s evolution will accelerate growth

opportunities and profits for the Group."

For further information: 

iomart Group plc | Tel. 0141 931 6400  

Angus MacSween, Chief Executive  

Ian Ritchie, Non-executive Chairman

KBC Peel Hunt | Tel. 020 7418 8900 

Richard Kauffer  

Daniel Harris 

ICIS | Tel. 020 7651 8688

Tom Moriarty 

Bob Huxford

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