SurfControl Plc Announces The Acquisition Of BlackSpider Technologies Ltd And Confirms Continued Growth In The Fourth Quarter

Published 13th July 2006

Raising the Level of Protection through acquisition of leading provider of on-demand security services
London, England (July 13th, 2006) “ SurfControl plc (London:SRF), the global leader in Internet protection, today announced the completion of the acquisition of one of Europe's fastest growing on-demand security services companies, BlackSpider Technologies Ltd (BlackSpider) and provides an update on trading in the fourth quarter of FY06.

Acquisition of BlackSpider
BlackSpider is a managed security service provider and operates its award-winning MailControl and WebDefence on-demand services in the network or cloud. These services protect organisations from email and Web-based threats, such as spam, viruses, spyware, phishing/pharming attacks, and inappropriate content before reaching an organisation's in-house network. These services also allow organisations to control employee Web access and encrypt email for secure extended enterprise communications. BlackSpider delivers its on-demand services to more than 1,200 customers on a contractual subscription basis, protecting over 500,000 users worldwide. Customers include O2, LogicaCMG, Atkins, Misys, Eversheds, Johnson Matthey and Panasonic. With this acquisition, SurfControl now serves over 22,000 customers and over 14 million users worldwide.

We're delighted to announce the acquisition of BlackSpider Technologies, commented Patricia Sueltz, CEO, SurfControl. Our customers have told us that they want protection at all potential points of vulnerability. BlackSpider's on-demand security services enable us to raise the level of protection for our customers by offering comprehensive protection against Web, email and desktop-based threats in the cloud or within the customer's network. SurfControl and our partners now have a flexible, customisable security solution for all sizes of enterprise that is easy-to-implement and cost effective. We welcome the BlackSpider team and its channel partners and look forward to delighting customers with our new offerings.

The acquisition of BlackSpider aligns SurfControl with the new trends in the Security Industry. Security solutions are converging at all points in the network. The vendors who provide multi-level solutions that best address the customer's needs at the lowest total cost of ownership will take leadership positions in this new market. SurfControl is the first company to take that leadership step “ providing comprehensive Internet protection: on-demand, at the gateway (appliance or software), and at the client.

John Cheney, CEO of BlackSpider Technologies, added, Our customers already recognise that on-demand security services raise the level of protection against Internet threats as well as reduce total cost of ownership. By combining the technologies and expertise of SurfControl and BlackSpider, we will be able to offer customers industry- leading solutions, across all three methods of delivery: Software, Appliances and on-demand services. I am very excited at the leadership opportunity this presents to the newly combined business.

John Cheney will report directly to Patricia Sueltz, CEO, as General Manager, On Demand Security Services, and will be responsible for SurfControls Managed Service Security Portfolio. The BlackSpider team will operate as an on-demand security service of SurfControl plc.

Financial information regarding the acquisition
Under the terms of the acquisition, SurfControl has acquired 100% of the stock of BlackSpider Technologies Ltd. The maximum purchase consideration is ‚20m plus the assumption of ‚1.2m of short term debt. An initial consideration of ‚19.95m was satisfied in cash on completion. The initial purchase consideration is subject to an adjustment on a pound for pound basis to the extent that audited net current assets as at 30 June 2006 differs from the un-audited net current assets as at 30 June 2006. The final purchase consideration amount is expected to be determined within 90 days of completion. As at June 30, 2005 the audited accounts of BlackSpider under UK GAAP show gross assets of ‚3.1m, audited pre-tax loss of ‚3.1m and revenue for the 12 months to June 2005 of ‚1.8m.

For the year ending June 30th, 2006, the un-audited UK GAAP revenue was ‚4.0m and pre-tax loss was ‚3.3m. Through the leverage of SurfControl's existing operating infrastructure and continued expected strong growth for on-demand security services, management expect that the current pre-tax losses of BlackSpider will be reduced during FY07 to the point where the transaction will start to generate a positive contribution to operating cash flow and pro-forma profit during the fourth quarter of FY07 and beyond. Further guidance on the likely financial impact of the acquisition on FY07 trading will be given at SurfControl's Q4 results announcement scheduled for Tuesday September 12, 2006.

Trading update
The Company is pleased to report that trading in the fourth quarter FY06 has progressed well. The Company therefore expects to report that revenue and profits will be in line with previous guidance when it announces its full year results in September of this year. Billings for the fourth quarter increased 5% year over year, which is at the upper end of previous guidance on billings. The Company also reports that pre-restructuring cash flow is slightly ahead of expectations and that year end closing cash and investments were $80.9m.

Patricia Sueltz commented, I am very encouraged by the performance in the fourth quarter. In the last 12 months, we have gone through a period of significant change and reorganisation and I believe these results are a positive reflection of the actions taken. I am particularly encouraged that we have arrested the decline in billings and that our billings performance has gone from -4% this time last year to +5% during the fourth quarter of this year. We are on a much firmer footing than a year ago and are well positioned to deliver continued growth both organically and through acquisition as illustrated in today's announcement.








Company Profiles powered by ITReseller.com