Prior to publication, the
information contained within this announcement was deemed by the
Company to constitute inside information as stipulated under the UK
Market Abuse Regulation. With the publication of this announcement,
this information is now considered to be in the public
domain.
30
May 2024
Software Circle
plc
("Software Circle", the
"Company" or the "Group")
Acquisition of Be The Brand
Experience Limited ("Be The Brand")
Software Circle plc (AIM: SFT) is
pleased to announce that it has acquired the entire issued share
capital of Be The Brand Experience Limited, based in
Hackney, London. Be The Brand is a provider of
marketing compliance and digital asset management workflow
solutions for businesses providing financial
services.
The total consideration of £3.5m will be
satisfied in cash and is structured on a debt
free/cash free basis. The acquisition is expected to be cash
flow generative and earnings enhancing in the first year after
acquisition.
Initial consideration of £2.8m was
paid on completion and a further £0.7m of deferred consideration
will be paid on the first anniversary of completion.
About Be The Brand Experience Limited
Be The Brand's integrated and
configurable SaaS solution offers clients providing
regulated UK financial services a workflow and digital asset
management system that helps maintain compliance and audit trails
for the marketing of those financial services.
The business has been in operation
for over two decades and has high client satisfaction rates
and low churn. Over 90% of revenues arise from annual recurring fees from its
clients.
Adam Hainsworth, Managing Director
and a shareholder, will remain with the business for 12 months to
oversee the transition. The other two
shareholders, Guy Hainsworth and Jes Ongley, have entered
into new employment contracts and will
continue to lead the team of thirteen staff.
The unaudited financial statements
for Be The Brand for the year ended 31 March 2023 reported revenue
of £1.6m, EBIT of £0.68m and closing
net assets of £0.43m.
Gavin Cockerill, CEO said:
"The acquisition of Be The Brand is the second in our
Professional Services vertical, focussed within the finance sector.
It meets our acquisition criteria very well and we're delighted to
welcome the team to the group. We're very much looking forward to
working with them and driving the business forward."
Adam Hainsworth commented:
"Having developed and grown the business over 20 years alongside
Guy and Jes, it was crucial to find
the right owners once I had decided to step back. We spoke with
Software Circle over an extended period, getting to know their
culture and modus operandi. We're confident
we've found the right home for Guy, Jes and
the rest of the team to thrive in and continue to develop our best
in class solution for our
clients."
Outlook
As part of our strategy to become a serial
acquirer of vertical market software businesses, we continually
reach out to and start conversations with potential acquisition
targets that match our criteria. That pipeline remains healthy. The
Group is undertaking due diligence on acquisition targets and is in
ongoing discussions with a number of additional targets that could
see the capital we raised via the equity issue in September 2023
fully deployed. By that point, we'd expect annualised sales to
reach approximately £25m with an EBITDA run rate goal of 15-20% of
sales, after central costs.
Looking ahead, the next phase will require the
Group to establish appropriate debt facilities to invest alongside
equity raised in a prudent mix. The existing bond facilities played
a vital role in the early stages of our development, but the terms
of them restrict the Group's ability to access wider bank lending
facilities.
Therefore, later this year, the Group intends
to undertake a further equity issue to restructure its balance
sheet and finance the redemption of the remaining £6.7m of bonds at
par. This will enhance the Group's ability to access ongoing
institutional debt funding, reducing the cost of capital for
M&A opportunities in the future.
For
further information:
Software
Circle plc
Gavin Cockerill (CEO)
07968 510 662
Allenby Capital Limited (Nominated Adviser and
broker)
0203 328 5656
David Hart / Piers Shimwell
(Corporate Finance)
Stefano Aquilino / Joscelin
Pinnington (Sales and Corporate Broking)
Notes to editors:
Software Circle plc is a UK based
acquirer of vertical market software businesses. Our aim is to help
founders find the right exit strategy, without fuss or drama.
Continuing operations in an independent, decentralised way. Keeping
the entrepreneurial spirit and culture that exists in the
businesses we acquire. Providing a permanent home for their teams,
management talent and culture. For more information visit
www.softwarecircle.com.