In a sudden burst of activity on the announcement of its interim results for the six months ended May 31, Rossendale, Lancashire-based computer products distributor P&P Plc also said it is acquiring QA Training Ltd, the open systems training and consultancy supplier for a maximum of ?18m and is making a one-for-four rights issue at 60 pence to raise about ?8.6m towards financing the acquisition, which remains subject to shareholder approval. The rights issue is fully underwritten by broker Panmure Gordon. It plans to pay ?15m as an initial consideration and the balance rests on whether and by how much QA’s pre-tax profit for the year to April 30 1995 is above the ?2.0m mark; the exact amount being six times the amount the profits exceed the figure to a maximum payment of ?3m; ?7.6m will be paid in cash and the rest will come from the issue of ?2.8m loan notes and ?2.4m of special redemption loan notes and the allotment of sellers’ shares. Cirencester, Gloucestershire headquartered QA’s year to April last saw pre-tax profit of ?1.8m on turnover of ?9.4m and had a positive start to its current fiscal year. QA is a supplier of technical training in desktop computing and particularly client-server systems. It has a staff of 100 and trains those that develop and support computer systems, as well as offering consultancy services. The firm said that QA will operate as a subsidiary to P&P and the three existing board members will enter into three year service contracts and be joined by three members from P&P.
Complementary buy
The company sees the acquisition as enabling it to provide additional training and consultancy to its client base as well as offering services to QA’s corporate client base that includes IBM Corp, Lotus Development Corp and British Telecommunications Plc. It expects to see a positive contribution to earnings from the purchase in the current financial year. As it sees QA as a complementary buy, it hopes to offer single source training throughout the UK covering application courses to client-server technical training. The acquisition arose because P&P is now experiencing profitable growth since it left the low-margin distribution sector when it sold those businesses to Merisel (UK) Ltd in April last year and its Belgian businesses to Ingram Micro Inc last July in order to re-focus on end-user sales, large corporate customers and fully integrated services. Its newly announced results saw pre-tax profits up 35% to ?2.7m on turnover that fell by 2% to ?118.9m, which it said was the result of the low-margin segment disposal last March. The group says it is experiencing strong demand for products and sevices during the first half and has maintained cash balances, which stood at ?7.5m at the six months, up from ?4m last time. Earnings per share rose by 43% to three pence this time and the dividend is up 19% to 0.95 pence. In May P&P purchased the 10-year old systems integrator Computers for Business (Scotland) Ltd to strengthen its position in Scotland (CI No 2,410) and this is said to be trading in line with expectations. As for the prospects over the next six months P&P says it is experiencing continued growth as more firms are outsourcing support and development of computer systems, and the demand for client-server products and services is notably strong.
