Updates

XKO - Sells its ERP division for Â£15m

November 2006

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

XKO has sold its non-core software division for £15m on a cash and debt free basis. XKO will receive £13m upfront with £2m based on levels of recurring maintenance revenues and certain sales targets. The cash will be used to pay down debt, which currently stands at £9.6m plus repayment of a £4.5m loan note which is due for payment in 18 months time. The disposal values the business on only 6.25x last year’s pretax profit and is therefore eps diluting but leaves XKO entirely focused on UBM, its debt collection for the utility markets, a much more cash generative and higher margin business. Bridgewell has therefore reduced this year’s eps forecast for the year to 31 March from 12.5p to 8.4 ...

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