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Horizon shares rocket on takeover talks

by Stuart Wilson, Thursday 13 March 2008

Shares in integrator and distributor Horizon Technology rocketed this morning after the company revealed that it had received a takeover approach from an unnamed suitor that values the company at a price of €1.18 per ordinary share. Horizon, which operates in the UK and Ireland, works with a number of major vendors including Sun Microsystems, Juniper, F5, Nortel, Tandberg, EMC and Oracle.

Horizon also revealed its full year preliminary results for 2007 with sales climbing 12% to €288.3m and after tax profits jumping 6% year-on-year to €5.89m. During 2007 Horizon increased its focus on higher margin services and broadened its vendor portfolio. The company claims that it has now become ‘the number one channel development partner for EMC and Oracle in the UK following the establishment of these businesses in the second half of 2006.’

Horizon also extended its relationship with IBM into the Irish market and established a new corporate governance consulting division. The distributor attributed its lacklustre profit growth to its investment in building up its services capability and infrastructure to support growth – particularly in respect to the EMC, IBM and Oracle business units in the UK. The UK now contributes 82% of total sales for Horizon.

Gary Coburn, Horizon’s CEO, commented: “Horizon continues to develop as a valued and capable outsourcing partner for major global IT vendors. During 2007, we strengthened our position with existing partners and made significant progress with new partners such as Oracle, EMC and IBM. In addition, we continued to deliver both acquisition and organic growth during 2007 - both of which remain a focus for growth into 2008. Despite a challenging second half in 2007, Horizon has very strong businesses with key market positions, providing significant benefits to customers while ensuring resilient profitability, strong cash flow and superior returns to shareholders.”

Cathal O’Caoimh, Horizon’s CFO, added: “Strong financial focus on working capital management and cash flow has driven a significant improvement in the group’s balance sheet. Cash flow from operations was €12.6m, 118% of EBITDA and return on invested capital increased 610 basis points to 28.5%. Horizon ended 2007 with net cash of €4 million against net debt of €7 million at the end of 2006. Horizon is well positioned to deliver earnings growth and shareholder value in 2008 and beyond.”

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