MTI's CEO says he is "very keen" to make an acquisition in the next 12 months after overseeing a rise in revenue and underlying profit during an action-packed first year in charge.
Haddow (pictured) said the "latent value in MTI that hadn't really been capitalised on" mirrored the starting point of his previous Endless-backed venture, Trustmarque, but added that MTI is "much further down the services path".
We've spent about £2.5m more in the last 12 months compared with the previous 12. There was pretty much nothing that wasn't changed in each geography at some point
"The Trustmarque business was highly focused on software reselling and we had to build out a services business over a period of six to eight years, with some small bolt-on acquisitions along the way," he told CRN.
"Services is about 35 per cent of MTI's turnover and more than 35 per cent of its profitability, so it was a very different proposition."
But Haddow revealed that MTI has undergone an "enormous" restructuring drive during his tenure and has also invested £2.5m more year on year in the business to bolster its services offerings.
The numbers are in
One of a handful of Dell EMC Titanium Black partners in EMEA, MTI recently published its first consolidated group accounts offering a panoramic view of its operations in Germany and France, as well as the UK.
Revenues for the 15-month period to 31 March 2018 hit £94.6m, which MTI claims is a 12.4 per cent hike when compared with the previous 12 months on a like-for-like basis.
Thanks to one-off exceptional costs of £7.7m - including £1.3m of staff restructuring costs - MTI slipped to a group net loss of £8.2m for the 15-month period, according to accounts filed by ultimate parent Malta Topco.
However, the datacentre and security specialist was quick to point out that underlying EBITDA for the period hit £2.1m, and that operating profit was up on a like-for-like basis.
Haddow billed it as "a very good year given everything that went on".
"If we take the same 12-month period [as the previous year], operating profit was up about 2.5 per cent," he said. "On the face of it, that's not enormous. But bear in mind it was a year of enormous restructuring going on in every geography, from the main board all the way through. There was a lot of investment in our services lines and into our security business and professional services. We've spent about £2.5m more in the last 12 months compared with the previous 12. There was pretty much nothing that wasn't changed in each geography at some point."
Although larger than France and Germany combined, the UK grew the slowest of the three arms, with like-for-like revenues up 4.8 per cent to £50.8m over the 15 months. Its German and French operations grew like-for-like revenues by 19.7 and 25.6 per cent to £19.4m and £24.4m, respectively.
"The UK business probably needed the most restructuring and refocusing during the period," Haddow said. "But we've seen some fantastic customer engagement and success stories from bringing our security and datacentre businesses together, and have seen circa 20 per cent [UK] growth in professional services, so there's significant growth in all the right areas, in the UK specifically, but also Germany and France."
Haddow said the £8.2m net loss is not reflective of underlying trading.
"We've got £2.2m in exceptionals that aren't operating costs and also [£7m] in purchase price adjustments, which is essentially goodwill that doesn't have to be paid anyway," he said.
"The true picture of the business in that year is us doing £2.2m in EBTIDA. That's the column we measure as it throws off the cash."
Haddow reiterated his M&A ambitions, confessing that he is "very keen to make an acquisition in the next 12 months".
"That said, if we don't [make an acquisition] given the caveats we've put on the table, we are very confident we can have a super success story from MTI over the coming year on an organic basis. There is enough growth for us in our emerging markets and from the investment we've put into our services business in the UK, France and Germany," he said.
As for exit strategies, Haddow said it is too early in the deal cycle to contemplate.
"Endless have some stuff in their portfolio they've held for seven, eight, nine years, and some other things they've turned a lot more quickly, but we are certainly not having any exit conversations with them," he said. "In fact, it's the polar opposite: it's about how we can put more capital to work."
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