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IMImobile M&A lifts debt

The group drew down new facilities to fund a major acquisition
November 26, 2019

IMImobile’s (IMO) gross profits for the six months to September 2019 rose by 21 per cent to £35.2m – giving a five-year compound annual growth rate of 21 per cent. This reflected improvements across all geographies, and a strong top-line performance – buoyed by an 18 per cent uptick in organic revenues.

IC TIP: Hold at 314p

True, the cloud communications software group increased considerably from £7.5m to £21.8m. But this reflected the $53.2m (£41m) acquisition of US cloud-based mobile customer engagement platform 3Cinteractive, announced in July. Along with the drawdown of new debt facilities, the deal was funded via a $20m placing.

The group maintains that 3Cinteractive has strengthened IMImobile’s presence in North America, and enabled it to become the world leader in ‘rich communications services' (‘RCS’) business messaging – a market that, by one estimate, could reach £16.2bn in size in 2023. Chief executive Jay Patel notes that IMImobile’s team in North America now comprises around 150 people – “a sufficient size of workforce in that market to make a success of it”. The group doesn’t see the need to buy in this market any more, although it will continue to look at acquisitions. To that point, post-period-end, the group bought Rostrvm – a UK-based-contact-centre software provider – for up to £3.5m.

House broker Investec expects EPS of 3.9p for FY2020, up from 2.6p in FY2019.

IMIMOBILE (IMO)   
ORD PRICE:314pMARKET VALUE:£233m
TOUCH:310-317p12-MONTH HIGH:340pLOW: 203p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:106p*NET DEBT**:27%
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201867.21.16-0.20nil
201983.01.301.00nil
% change+24+12--
Ex-div:na   
Payment:na   
*Includes intangible assets of £123m, or 166p a share