ITN Mark a completely debt free company: Core Projects

4570 Investors following Core Projects &. Share this News with them.

0

Like this story, share it with millions of investors on M3

ITN Mark a completely debt free company: Core Projects

Core Projects & Technologies is set to acquire a UK-based educational consulting service ITN Mark worth USD 25 million. Nikhil Morsawala, Director Finance of Core Projects & Technologies, in an interview with CNBC-TV18’s Latha Venkatesh and Anuj Singhal, spoke on what he feels about the deal and how will that benefit the company going forward.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Core Projects & See previous management interviews See what other Experts & Brokerages are saying about Core Projects & CORE Education BSE | NSE 31/05/12 Are Mutual Funds betting on CORE Education?

Core Projects & Technologies is set to acquire a UK-based educational consulting service ITN Mark worth USD 25 million. Nikhil Morsawala, Director Finance of Core Projects & Technologies, in an interview with CNBC-TV18's Latha Venkatesh and Anuj Singhal, spoke on what he feels about the deal and how will that benefit the company going forward.

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: Could you tell us at what stage is this deal presently? When does the deal get done? What will it mean to your own bottomline? What does it bring by sales to your company?

A: We completed the deal late last night at London time. We are now officially the owners of a company ITN Education Mark Limited. It is one of the largest players in United Kingdom (UK) in teacher supply and teacher training field.

It deals with about 1600 schools across England and Wales from 16 locations. It is headquartered in Manchester and has realationship with about 5000 teachers. It has a 5% market share and is ranked number 8 in UK.

The key rationale behind this acquisition is that we get access to 1600 more schools in England and Wales. We have a very robust and established product called TALMOS in UK, which we can now cross-sell into these 1600 schools.

The synergy from this acquisition with our UK business is that we will be extremely strong and will lead to a higher growth rate than what we have seen in that territory in the past.

Q: Could you tell us more about ITN Mark? It had a topline of about USD 33-35 million. If that is the case, how are you paying USD 25 million? Is it a loss making company?

A: No. It's been profit making for the last seven-eight years. It has been on a steady EBITDA margin of roughly 12-13%. The standard prevailing in the European markets for the acquisition of this kind is five to seven times multiple of EBITDA.

We have got in at the lower level of that range at the five multiple and plus the net assets of the company. We have negotiated a good price. It's a very healthy and cash flow positive company.

It has received the Best Public Sector Recruitment Company Award two months back. It has been recognised by the UK Government. It has got a qualification certificate from the Department of Education of UK.

Q: Could you tell us more about the company? Does it have debt? Will you be taking on board a part or whole of that debt?

A: The company comes in absolutely debt free. They had some bank borrowing pre-acquisition. The deal envisaged taking over the company after they liquidated the debt. Right now, the company is without any debt whatsoever in the books.

Q: The company has margins of 12-15%. You own margins are about 35-40%. Going forward, what kind of combined margins are you looking at?

A: The whole rationale behind all our acquisitions in the past have been that we have looked at companies which have 9-16% margins. Our effort has always been to bump up those margins between 20-28%.

A lot of the work that happens in this high cost economies gets transferred to our offshore development centre in India. We will be able to leverage our Indian position and improve the margins.

We have been able to cross sell the existing products into the new customer base that we get. This also leads to an increase in the margins of the acquired company.

On a blended basis, while there is a margin dilution at every acquisition; within a period of 24 months, the blended EBITDAs normally would work out between 29-35% depending on which territory you are operating in.

Our effort will be to ensure that cross selling happens immediately and we bring down the administrative costs of running this company which will positively impact the EBITDA.