2e2 Group is a provider of IT Managed Services in the UK and the Netherlands. Managed Services is the outsourcing of IT Infrastructure requirements to one or a limited number of providers at an agreed level of service at a set price.
2e2 is pleased to announce today the completion of two acquisitions, both of which will significantly increase the Group’s exposure to the Data Protection, Data Security and Data Storage markets. It has become a priority for 2e2 to address this gap and the acquisition of two businesses engaged in these activities will meet this objective, add critical mass to the business and provide further opportunities for the cross-selling of services across the Group. Following these acquisitions, 2e2’s annualised revenues are expected to be in excess of £140 million.
Acquisition of TriSys Limited (“Trisys”)
2e2 has acquired TriSys for a total consideration of up to £8.11 million, payable in cash.
TriSys is one of the UK’s leading providers of data storage and network backup solutions. Its customer list is blue chip and impressive. TriSys does not focus on specific sectors, although it does have a foothold in the public sector and local authority markets. A key strength of the business is its service-led approach to storage solutions.
TriSys was established in 1991 and has always maintained an independence from any particular vendors of storage or other data management products. Its solutions cover Data Management, Archiving, Data Protection and Storage. These are backed up by a range of support, technical, training, testing and other consultancy services.
In the year ended 28 February 2005, its last financial year, TriSys achieved sales of £14.9 million and adjusted EBIT of £1.5 million. In the previous year, revenues were £10.9 million and EBIT was £331,000. Gross margins also improved, from 38.5% to 41.1%, as a result of an increasing level of service-based business.
Acquisition of Yul Data Security B.V. (“YUL”)
2e2 has also acquired YUL for a cash consideration. YUL is one of the Netherlands’ most successful providers of Data Management, Data Security and Storage Solutions. It was founded in 2001 and has achieved an average annual increase in sales of 71% over the last two years. In 2004, YUL reported sales of €4.1 million and EBIT of €458,000, compared to sales of €2.3 million and EBIT of €287,000 in 2003. Gross margins in the business are on average 30%.
YUL exhibits a number of attractive features: it has a well established range of products and services; a strong customer base, largely consisting of medium and large enterprises with particular focus in healthcare, hospitals, central government and financial services; an extensive network of partners; and an experienced and highly capable management team.
Activities and Markets
Data Protection involves the provision of solutions to manage, secure and restore critical client data. The integrity of clients’ data is maintained to ensure consistency, accuracy and correctness; and, in the case of business disruption, continuity of access to and availability of data is also guaranteed.
Archiving of data is also seen as an increasingly important requirement for businesses of all sizes, who are waking up to the issues presented by such regulations imposed by Sarbanes-Oxley and Basel II. Such regulatory burdens, the need to store historic data for longer and the concurrent ability to access it immediately are all drivers of significant growth in this market.
Authentication of users of client data is another growing area of the market. Businesses of all sizes are recognizing that increasingly sophisticated systems need to be put in place to control the access of potential abusers of client data and that simple passwords are no longer sufficient.
Both the data storage and data security markets are expected to grow significantly over the coming years, as the above factors start to impact on the IT strategies of an increasing number of businesses. A number of independent forecasters suggest that both markets could grow by as much as 15% per year over the coming 4 years. It therefore makes excellent commercial sense for 2e2 to be acquiring two businesses which will provide it with an entry-point into these markets, as well as complementing 2e2’s existing range of managed services.
Terry Burt, CEO of 2e2 Group commented “I’m delighted to welcome these two businesses into the group. They have both established themselves as major players in their field and I’m sure they will benefit significantly from the additional impetus that being part of the group will bring. This also reinforces our capabilities in the data management, storage and security fields and allows us to provide a broader range of services to our customers.”
Financing for the transactions was provided by HSBC Bank plc and Lloyds TSB Bank plc. We are very pleased to have the continued support of HSBC and the introduction of Lloyds TSB provides additional financial strength to underpin our strategy to grow the business organically and via careful acquisition. Our banking partners have also provided increased working capital facilities as the business moves forward. Gresham LLP, the UK mid-market private equity house, is continuing to support 2e2 through its ongoing mission.
ENQUIRIES:
2e2 Group plc
Tel. 020 7509 3113
Terry Burt, Chief Executive Officer
Mark McVeigh, Chief Operating Officer
ICIS Limited
Tel. 020 7651 8688
Tom Moriarty
Archie Berens