Beeks Financial Cloud acquires Commercial Network Services for $1.4m

Maria Nikolova

Under the terms of the deal, $1.3 million will be settled in cash on completion, with $0.1 million held as retention subject to satisfactory completion of warranties.

Cloud computing and connectivity provider for financial markets Beeks Financial Cloud Group PLC (LON:BKS) has earlier today announced the acquisition of the assets of Commercial Network Services (CNS), a US-based online service provider, for a total consideration of up to $1.4 million.

Under the terms of the deal, $1.3 million will be settled in cash on completion, with $0.1 million held as retention subject to satisfactory completion of warranties. The initial consideration and the contingent consideration will be financed out of Beeks’s existing cash balance and banking facilities.

CNS specialises in hosting low latency algorithmic trading systems, virtual private networks and streaming media from data centres in London, New York and Los Angeles. CNS has annualised recurring revenue of approximately $1 million and delivered a profit before tax of $0.17 million in the year to end-December 2018.

The deal is set to bring additional customers and datacentre locations to Beeks’ retail offering and is expected to deliver cost synergies. It is also expected to be earnings enhancing within the first full year of Beeks’ ownership.

The acquisition is in line with Beeks’s stated strategy to grow both organically and through tactical and strategic acquisitions.

Let’s recall that Beeks has posted a set of robust metrics for the first half of FY 2019, that is for the six months to end-December 2018. Group revenues grew 36% year on year to £3.5 million (H1 2018: £2.57m), on the back of continued organic growth.

Gross profit earned increased 43% to £1.7 million (H1 2018: £1.20m) and the Group saw an increase in gross margins from 47% to 49% as a result of the previous investments made in capacity now becoming revenue generating. Earnings before interest, tax, depreciation, amortisation and exceptional costs (EBITDA) increased by 49% to £0.94 million in H1 FY 2019 (H1 2018: £0.63m) with underlying EBITDA margins increasing to 27% (H1 2018: 25%).

Reported profit before tax increased to £0.34 million (H1 2018: loss £0.11m) as a result of increased sales and improved margins as well as no exceptional costs during the period.

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