LONDON (ShareCast) - (Sharecast News) - Software, cloud technology and managed services company K3 Business Technology announced the sale of its managed services unit Starcom Technologies on Friday, to UK-based infrastructure and services provider Node4, which is backed by private equity investment firm Bowmark Capital.
The AIM-traded firm said total consideration for the disposal was £14.7m, including £0.5m cash on the balance sheet, paid entirely in cash on completion.

It said the transaction generated a "significant" profit on disposal of more than £10m, which would be accounted for as an exceptional contribution to results in the current financial year ending 30 November.

In the unaudited results of the financial year ended 30 November 2020, Starcom generated £10.2m in revenues and pre-tax profits of £1.2m.

Its group net assets at year-end stood at £2.5 million.

The management team and staff of Starcom transferred with the sale of the business, together with its 280 customers.

Under the terms of a transitional services agreement, Starcom would continue to provide K3 and its customers with managed services for at least three years.

The disposal proceeds "significantly" strengthened K3's balance sheet, the board said, eliminating its net debt.

As at 30 November 2020, net debt, including shareholder loans of £3.0m, stood at £2.3m, reflecting a seasonal low point following strong cash receipts from annual renewals between September and the financial year end.

It also benefited from HMRC deferrals of £2m in 2020, which would unwind in 2021.

"Node4 is an excellent new home for Starcom with its focus exclusively on managed services, and the deal enables us to accelerate our strategy of growing own IP product revenue," said chief executive officer Adalsteinn Valdimarsson.

"We wish Starcom great success for the future."

K3 said results for the year ended 30 November would be released on 30 March.

At 1242 GMT, shares in K3 Business Technology Group were up 25.48% at 165p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE