# INTERVIEW: How appScatter Group has strengthened its offering with Abilott acquisition

- Link: https://www.directorstalkinterviews.com/interview-how-appscatter-group-have-strengthened-its-offering-with-abilott-acquisition/412763272
- Published: 2018-12-18T09:45:52+00:00
- Author: Giles Arbor

**appScatter Group plc** (LON: APPS), the intelligent app management platform, announced
that it has signed an agreement to acquire 100 per cent. of the share capital of
Abilott Limited for an initial consideration of £1.245 million, and a potential 
further consideration of up to £1 million dependent on the attainment of specified
performance targets in the 12 months after completion.

CEO Philip Marcella caught up with DirectorsTalk to discuss the acquisition in more
detail. Philip explains how the relationship came about, what the agreement means
for company and clients, how it furthers the company’s strategy and what investors
can expect to see within the next 12 months as a result of the relationship.

**About Abilott**

Established in 2007, Abilott provides digital security solutions, specialising in
companies who are launching new products or seeking to become a gaming operator 
or expanding into new global territories. Customers include Gamesys, Paddy Power,
Betfair, Virgin Games, Bodog.

Abilott helps both established organisations and emerging clients, providing security
services for data and IT infrastructure with technologies such as Distributed Denial
of Service, Penetration testing and Zero Day Vulnerability reporting. Abilott also
provide consultancy services helping business reach compliance in a number of areas,
such as GDPR, ISO27001, PCI-DSS or regulations from the UK gaming Commission.

**Background to and reasons for the Acquisition**

The acquisition of Abilott is in line with the Company’s strategy to develop its
mobile app management platform and follows the acquisition of Priori Data GmbH in
July 2018. The Company continues to assess further opportunities to accelerate the
development of the platform.

Abilott has been working closely with appScatter for the last two years providing
Security & Regulatory Compliance for the Group and supporting appScatter threat 
analysis products for appScatter customers. The Acquisition presents appScatter 
with an opportunity to increase its current security products offered whilst increasing
margins to existing and planned customers for current products. In addition, Abilott
will assist in the building of the automated GDPR compliance app tools into the 
appScatter platform. As a result of the Acquisition the enlarged group will not 
only be able to identify security issues in customers mobile applications but also
to rectify the issues identified, thereby significantly increasing the revenue opportunities
from each Enterprise customer.

For the year ending 30 September 2017, Abilott generated revenue of £1.5 million
and a loss before tax of £170,998. Abilott had net liabilities at 30 September 2017
of £217,544.

**Principle terms of the Acquisition and Consideration**

The maximum consideration for the Acquisition is £2.245 million, comprising of £
1.245 million in the initial consideration plus up to a further £1 million payable
by the award of deferred consideration shares. appScatter is acquiring Abilott on
the basis that it holds net liabilities as at 17 December 2018 of £100,000.

The Initial Consideration for the Acquisition is £1.245 million, comprising £500,000
in cash, £245,000 in Director Loans and £500,000 by way of the issue of 1,666,666
new ordinary shares in the Company at an effective issue price of 30 pence per ordinary
share. The Cash Consideration will be satisfied from existing cash resources, of
which £200,000 is payable immediately and the further £300,000 is payable within
150 days of the completion of the transaction.

Application will be made for the Initial Consideration Shares, which will rank pari
passu with the Company’s existing Ordinary Shares, to be admitted to trading on 
AIM. Dealings in the new Ordinary Shares are expected to commence at 8.00 a.m. on
21 December 2018.

The Acquisition has been structured with a significant contingent consideration 
element, linked to challenging performance targets for Abilott, thereby allowing
both parties to share the benefits of efficiencies and growth. The Deferred Consideration
Shares are dependent on Abilott achieving revenue criteria in connection with sales
to certain customers for the year ending 31 December 2019 and would not be issued
until January 2020.

The number of Deferred Consideration Shares, which will be issued fully paid, will
depend inter alia on the performance of Abilott in the relevant period and the prevailing
shares price. The maximum number of Deferred Consideration Shares is 3,333,333.

> **Philip Marcella, appScatter group plc CEO, commented:**
> “The acquisition of Abilott is a strategic milestone for appScatter, enabling 
> us to bring our security services that we previously outsourced in house, significantly
> improving our margin. Having worked with the Abilott for some time, we are already
> aware of the benefits the Acquisition brings to our growing product base and the
> services we can provide to our customers.
> “We look forward to welcoming the Abilott team to the appScatter group. The Acquisition,
> combined with the acquisition of Priori that we completed earlier this year, significantly
> boosts the overall appScatter offering.”

**Total Voting Rights**

On Admission of the Initial Consideration Shares, the Company will have 91,016,157
ordinary shares of 5 pence each in issue. No ordinary shares are held in treasury.
The figure of 91,016,157 may be used by the Company’s shareholders as the denominator
in the calculations by which they will determine if they are required to notify 
their interest in, or a change to their interest in, the Company under the Financial
Conduct Authority’s Disclosure Guidance and Transparency Rules.

Share on: