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After the close of business on Friday 29 May 2015, Impact Applications was acquired by AIM listed Castleton Technologies Plc for £5m. The purchase was as a mixture of shares and cash. OT4 VCT has received £1.585m in cash and shares in Castleton, valued at the date of the transaction at approximately £1.09m. The total investment by OT4 VCT in Impact Applications since the start was £651,000, but some loans were repaid, so that the net investment at the date of the transaction, ignoring interest on loans was £486,000. So the multiple is c 5.5 x the net cost of investment.
OT4 VCT first invested in Impact Applications when the company was a near start-up in 2005. Impact has developed software which enables local authorities and Housing Associations to manage the repair and maintenance of their housing stock more effectively. Sales were £2.0m and profit before tax of £0.3m in the year to 31 August 2014. Gross assets as at 31 August 2014 were £1.3 million. Sales are expected to be £2.8m with EBITDA of £0.8m for the year to 31 August 2015.
Castleton offers a range of software and infrastructure services to the public and not-for-profit sectors, providing its customers with significant improvements in service, performance and insight. Impact supplies c. 22 customers. Castleton supplies some 500, so there are significant opportunities for cross-selling.
OT4 would like to congratulate Martin Taylor, the founder and managing director of Impact Applications on having built his business so successfully and now for having sold it to a company which should be able to significantly increase the rate of sales. Martin will remain as MD.
The Board of OT4 expects to announce the year end numbers at the end of June, and expects to announce a dividend soon after this.
Lucius Cary, Oxford Technology Management
Martin Taylor, Impact Applications
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