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Netcall, the call centre and business process automation software provider, is back on the acquisition trail, and expanding into the UK public sector via the acquisition of document management player Serengeti Systems. Netcall is paying a potential £2.9m in cash and shares (£2m cash upfront), or 1.8x Serengeti’s most recent sales of £1.6m.
It sounds expensive, but Serengeti should be earnings enhancing for Netcall at current course and speed. Profit before tax for the year ended 30 November was £300k (giving Serengeti a PBT margin of 19%). Netcall’s PBT margin for the year to 30 June, also just in, was 14%, up from just 4% last time. So we would expect margins to continue heading northwards as the integration kicks in. Netcall’s revenue for the year meanwhile, was up 7% to £14.6m. Teasing out the organic growth is difficult. But we learnt from management at half time that it was running at 2-3% (see here).
Netcall said it will be looking to cross-sell both product sets into their respective public sector customer bases. Bury St Edmunds-based Serengeti has 40 customers including the University of Cambridge, Trafford Council, Forestry Commission and Metropolitan Housing Partnership, meanwhile Netcall has customers across local government, education, Police and the NHS – apparently 67% of NHS Trusts use its technology. Investors were certainly pleased with the news, sending Netcall’s shares up c11%. They are now up c85% year to date.
We are speaking with Netcall’s management this morning, and will provide more colour and movement for TechMarketView subscribers later in UKHotViews Extra.
