Inabox Group gets $3M savings boost from Hostworks synergies

Inabox Group gets $3M savings boost from Hostworks synergies

Expects see benefits hit in FY18

Inabox Group CEO, Damian Kay

Inabox Group CEO, Damian Kay

Managed IT and cloud communications company, Inabox Group Limited (ASX:IAB), has claimed to have made strong progress following the integration of its recently acquired digital media solution business, Hostworks.

After integrating Hostworks’ operations and staff with Inabox’s core operations, the company said it has realised annualised savings of $3 million, pre-tax, from immediate rationalisation activities.

The benefits of the acquisition however, are expected to be reaped in FY18 and beyond whilst the FY17 results will be impacted by the $1 million in one-off acquisition costs.

“Even though it is early days, we’re extremely pleased with the progress made towards fully integrating the Hostworks business with Inabox,” the company’s CEO, Damian Kay, said.

“Already, the Hostworks team is enjoying being part of the larger Inabox team and we’re pleased to share a work culture which embraces common values and ideals that are customer focused.”

However, following the integration, a number of staff were let go. Kay said the double-ups in staffing roles was an "inevitable result" of the Hostworks acquisition.

"Most of these were at the senior management level, where the majority of savings were realised," he explained.

The acquisition - on 3 February 2017 - saw Inabox strengthen its existing offering by fast-tracking the Group’s cloud strategy and building on its service capabilities, which can be cross-sold to Inabox’s existing extensive managed IT and customer base.

Additionally, the deal saw Inabox leverage Hostworks' cloud infrastructure along with its existing relationships with key vendors, spanning AWS, Microsoft Azure, IBM Softlayer and Google Cloud Platform.

“We’ve been swift to execute our restructuring efforts and lock in the annualised synergies of $3 million. Although we have had to incur some upfront costs in the current financial year, the resulting on-going financial benefit will be realised from FY18 onwards,” added Kay.

In late February, Inabox raised $4 million in capital for payment of short-term debt associated with the recent acquisition of Hostworks Group, which cost $7 million, and to further the company's plans for further acquisitions.

In a statement on the ASX, the company said the $4 million was raised via a private placement.

“All acquisitions will continue to fit within our vision of being a leading managed IT, cloud and communications provider to the SME, corporate and consumer brands. This means we will look to acquire businesses in the cloud, managed IT and communications space,” Kay said at the time.

He added that potential security players and Unified Communications companies will be of interest.

In March, Inabox also announced it had snapped up Perth-based cloud managed service provider, Logic Communications, for $1.5 million.

The acquisition was expected to double the number of Inabox Group’s engineers based in Western Australia and extend Inabox’s cloud capabilities on the western seaboard.

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Tags MicrosoftazureDamian KayhostworksAWSIBM SoftlayerInabox GroupGoogle Cloud Platform

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