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Hostech buys D2K Townsville customers for $90,000

Hostech buys D2K Townsville customers for $90,000

The Group has reduced head count from 290 to 230 and seeks more regional reseller acquisitions

ASX-listed reseller Hostech (ASX:HTC) has acquired D2K’s customer base in Townsville for a cash consideration of $90,000.

The buyout aims to enhance Hostech’s existing Townsville operation and should have a positive impact on its earnings for this financial year. The cash component has been funded by operational cash flow and will also issue 1.1 million Hostech shares.

Principal of D2K, Matthew Drane, will be retained to oversee the integration of customers into Hostech’s Anittel branded business.

Hostech chairman, Peter Kazacos, said it aimed to be the preferred provider of IT and telecommunication services.

"Townsville is a large region and D2k had some good customers providing managed services," Kazacos said. "One of the issues of being able to provide the right level of service at the right price is having a certain number of clients."

Hostech’s FY10 results indicated it had $1.7 million net loss, which was an improvement on its 2009 loss of $7.9m.

Its revenue grew 310 per cent to $21.8m.

In April, Hostech acquired a number of regional resellers including Axxis in Dubbo, WA-based Accord Technologies, Aspirence and Anittel.

The four acquisitions expanded headcount to 290 staff across 15 locations. Kazacos said employee numbers had been brought down to about 230. He had previously not ruled out cutting staff and consolidating offices across the country.

"There was no reduction in technical staff, we're obviously growing that business, but we didn't need that many back office people," he said.

The Board is anticipating FY11 revenues will reach $70m-$90m and earnings before tax in the range of $7m-$9m.

It expects to achieve this result through more acquisitions, organic growth in recurring services revenues and improved processes and cost management.

Kazacos said more acquisitions were still on the cards.

"We need increase our geographical base. There are parts of Australia where we don't have much reach," he said. "We've previously invested in regional NSW and there are other states where we probably need to invest in more growth."


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Tags D2KAccord TechnologiesAnnitelAspirenceAxxisAnittelHostech

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