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  • BY: Andrew Hore |
  • POSTED: 14/05/2008 |

smartFOCUS is increasing its exposure to the US market through its latest acquisition.

The marketing and consumer relationship software company is paying up to £1.6m in cash for ASTECH InterMedia. The initial outlay is £500,000 with the rest payable over three years depending on performance.

ASTECH is a marketing services business that is focused on newspaper sector. It provides marketing services for more than 200 newspapers around the world. Its main product is based on smartFOCUS’s own software and more than one-third of its customers use this product. The two companies have worked with each other for five years.

ASTECH made an operating profit of £103,000 on sales of £1.6m in 2007 – four-fifths of those sales are recurring.

The enlarged group has more than 600 customers. There was net cash of £1.3m at the end of 2007 so this purchase will still leave it with plenty of cash. Capital expenditure is minimal.

At 14p a share, smartFOCUS is valued at £13m. The shares have risen sharply since the 2007 results were published because they were slightly better than February’s trading statement had indicated.

Prior to the acquisition smartFOCUS was expected to increase its profits from £1.7m – before non-recurring costs - to £2.21m – six months ago Arbuthnot was forecasting £3.1m profit for 2008. That puts the shares on nine times prospective earnings.

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