# Pennant International acquires UK Rail Services Business Track Access Productions

- Link: https://www.directorstalkinterviews.com/pennant-international-acquires-uk-rail-services-business-track-access-productions/4121114368
- Published: 2023-04-13T07:07:02+01:00
- Author: Jacob Brown

_Significantly enhances existing Rail offering, adds recurring revenues and further
diversifies Group business lines_

**[Pennant International Group plc](https://www.directorstalkinterviews.com/company/pennant-international-group-plc/pen.l)**(
[LON:PEN](https://www.directorstalkinterviews.com/company/pennant-international-group-plc/pen.l)),
a leading global provider of training technology and integrated product support 
solutions, has announced that it has acquired the entire issued share capital of
Track Access Productions Limited.

**About TAP**

·    Based in Bedfordshire, TAP was established in 2001 and provides driver training,
route mapping and route familiarisation services to the UK rail industry. Clients
comprise train operating companies, freight operating companies, engineering prime
contractors and infrastructure providers.

·    Revenues are generated through a subscription-based web portal and through 
project-specific route mapping services.

·       For the financial year ended 31 March 2023 (“**FY23**“), TAP’s management
accounts indicate:

o revenues of circa £600,000 (FY22: £481,000) of which 50% is recurring, relating
to portal subscriptions; and

o  profit before tax (“**PBT**“) of circa £200,000 (FY22: PBT of £180,821).

·     The vendors, Ian and Jill Heys, the founders and owner/managers of TAP, will
work a short transitional period to ensure a smooth handover. The rest of TAP’s 
employees and consultants are expected to remain with the business.

**Summary of the key terms of the Acquisition**

·      The consideration payable in respect of the Acquisition comprises an enterprise
value of £585,000, plus an amount of circa £389,000 in respect of TAP’s ‘free cash’
after allowing for normalised working capital and repayment of debt (“**Cash Free,
Debt Free Adjustment**“).

·      The initial consideration payable is circa £798,500 (being 70% of the enterprise
value, i.e. £409,500, plus the Cash Free, Debt Free Adjustment).

·       A completion payment of £638,610 has been settled, based on verified estimates
of the Cash Free, Debt Free Adjustment, with a balancing payment of circa £160,000
within the next two months following the production of completion accounts (to allow
for any correction of estimates).

·    The balance of the overall consideration, comprising a deferred payment of 
£175,500 (being the remaining 30% of the enterprise value) is due 12 months after
completion.

·     The acquisition agreement contains customary warranties and indemnities in
respect of title, tax and various commercial matters as well as buyer protections
in the form of restrictions on the future activities of the vendors and rights of
setoff.

·       The Acquisition is being funded entirely from the Group’s existing cash 
resources.

**Benefits of the Acquisition**

·       TAP’s business aligns closely with Pennant’s existing Track Access business
unit and the Acquisition will consolidate the Group’s presence in this market. The
combined unit is expected to generate revenues for 2023 in the region of £850,000
and will be able to provide an enhanced offering to a broader customer base.

·       The Acquisition also aligns with the Company’s strategy, in particular it
enhances the Group’s recurring revenues, further diversifying into civilian markets,
whilst bolstering the Group’s ‘third pillar’ of rail products and services, complementing
the Group’s traditional core of IPS software and training technology.

> **Phil Walker, Pennant International** **Group CEO**, commented: “I am delighted
> to confirm the acquisition and to welcome the TAP team into the Pennant Group.
> TAP is an excellent business with a long-standing, trusted reputation in the UK
> rail market and we look forward to working together to integrate TAP into Pennant’s
> growing rail offering.”

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