REG - AdvancedAdvT Limited - Half-year Report
28/03/2024 07:00
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RNS Number : 6024I AdvancedAdvT Limited 28 March 2024
AdvancedAdvT Limited
Interim Results for six months to 31 December 2023
AdvancedAdvT Limited (LSE: ADVT, "AdvT", the "Group"), the international
software solutions provider for the business solutions, healthcare compliance,
and human capital management sectors, has published its unaudited Interim
Results for the six months to 31 December 2023. The Group's four operating
units have been part of AdvT for five months, since 31 July 2023.
As previously announced, AdvT has changed its financial year to the end of
February.
Six months to 31 December 2023 - financial performance
· Revenue from continuing operations of £15.1m. Total revenue from all
activities of £16.1m which includes revenue from Synaptic Software Ltd which
was disposed post period end.
· Recurring revenue represented 76% of total revenues.
· Adjusted EBITDA from continuing operations of £3.7m ahead of
management expectations.
· Pre-tax profit of £3.3m (2022: loss £0.1m).
· Reported EPS of 2p.
· Cash of £78.7m as at 31 December 2023 (June 2023: £104.7m).
Operational highlights
· Acquired core platform asset for £27m net cash outflow after sale of
Synaptic Software.
· Identified operational improvements within acquired businesses with
implementation of these well progressed.
· Refreshed the go-market strategy following the significant investment
in SaaS and Cloud product offerings prior to our acquisition.
· Completed sale of non-core asset Synaptic Software for £3.5m in
January 2024.
· Transfer to trading on AIM completed in January 2024.
Current trading and outlook
The Group has made a good start to the new financial year following strong
progress on the initial foundations laid following the completion of the
acquisitions on 31 July 2023. We have secured a number of substantial
contracts and renewals which means that performance for the 12 months ending
28 February 2025 is expected to be ahead of Board expectations.
Vin Murria, AdvancedAdvT's Executive Chairperson, said
"In the short time since we acquired the Capita businesses, we have made very
good progress with their operational performance which has improved
markedly.
"We have now established a core software platform for developing the Group and
identified a number of potential acquisition opportunities.
"After changing the financial year end to February, we concluded the remaining
two months of the year and have started the new financial year well, securing
a number of multi-million pound contracts.
"We remain optimistic about the opportunities for organic and acquisitive
growth ahead."
Enquiries:
AdvancedAdvT Limited
Vin Murria, Chairperson c/o Meare Consulting
Gavin Hugill, Chief Financial Officer
Singer Capital Markets (Nominated Adviser and Broker) Tel: 020 7496 3000
Philip Davies / Asha Chotai / Sam Butcher
KK Advisory (Investor Relations) Tel: 020 7039 1901
Kam Bansil
Meare Consulting
Adrian Duffield Tel: 07990 858548
Note to Editors
AdvancedAdvT Limited (AdvT) provides software solutions and platforms across
two business transformational areas: business solutions & healthcare
compliance, and human capital management.
The Group's operations are IBSS (financial management software), CHKS (AI
based healthcare intelligence compliance and accreditation software), Retain
(global resource planning and talent management software) and WFM (workforce
management software provider).
AdvT is an agent for change. The Group enables the delivery of Artificial
Intelligence ("AI"), data analytics and business intelligence, all of which
are key future drivers for growth in these sectors where long term
digitisation trends are set to transform the workplace for professionals.
AdvT is developing both organically and through acquisitions, by expanding its
presence across adjacent markets, geographical boundaries and digital sectors.
Strategic overview
The acquisition of the Capita businesses provide a core platform for AdvT to
execute on its strategy, which is centred around backing sectors characterised
by long term digitisation trends, that are in early stages of adoption and set
to transform the workplace for professionals for the next few decades.
In the five months since the Group acquired the Capita businesses, it has made
good progress. Our initiatives have encompassed a concerted effort towards
standardisation and simplification, aimed at harnessing best practices to
optimise go-to-market strategies and operational activities.
These initiatives were reinforced by the introduction of new systems across
critical functions, including Customer Relationship Management (CRM), Human
Resources (HR), payroll, benefits administration, financial management, and
professional services. By implementing these foundational frameworks, we are
poised to streamline processes, enhance operational agility, and drive
sustainable growth.
Moving forward, our business performance will be measured through a set of
core financial metrics, including recurring revenue, adjusted EBITDA, and free
cash flow. These indicators will serve as benchmarks in gauging our progress,
ensuring alignment with our overarching strategic objectives and commitment to
delivering sustainable value to our stakeholders.
The Group continues to hold a 9.8% stake in M&C Saatchi plc.
Operational review
Our business solutions and healthcare compliance operations, IBSS and CHKS,
have strategically realigned to place a heightened emphasis on the customer
and their evolving needs and to deliver value-driven software and digital
solutions. This pivot has helped secure a number of new compliance clients.
Within the human capital management operations, Retain and WFM, the Group
successfully onboarded several new customers onto its SaaS platform.
Additionally, the Group has also began investing in new product offerings,
roadmap features and functionality.
As anticipated, the Group is observing positive digitalisation trends across
both business solutions and healthcare compliance operations. The recently
launched automated clinical coding solution has been adopted by the Group's
first customer, with a pipeline of further opportunities being developed.
Moreover, there is an increasing demand for digital services and solutions out
of the Ireland-based operations.
Similarly, human capital management operations are experiencing positive
digitalisation trends. New and existing clients are embracing the cloud-based
resourcing SaaS platform, enabling simplification and best practice processes,
alongside the uptake of AI functionality in our resource suitability engine
introduced in the latest releases.
The Group has begun investing in system enhancements to bolster its growth
strategy. Under the agreement with Capita plc for the acquired businesses, the
Group engaged in a transitional services arrangement. The Group is currently
advancing well-defined plans and executing actions to transition these
services and systems onto the Group's new platforms.
M&A continues to be a core part of the Group's strategy and there has been
a notable increase in inbound opportunities. The Board will continue to
evaluate these against its acquisition criteria.
Financial review
For the six months ended 31 December 2023, during which the businesses were
owned for approximately five months, revenue from continuing operations
amounted to £15.1 million from the four acquired businesses. Recurring
revenues from continuing operations as a proportion of total revenue was 76%
during the period.
Revenue from Synaptic Software Limited, which was sold on 26 January 2024,
contributed sales of £1.0 million during its five months of ownership and net
profit of less than £0.1 million for the same period. This has been presented
as discontinued operations in the condensed consolidated statement of
comprehensive income.
Adjusted EBITDA from continuing operations, which is a key underlying
measurement of the Group, was £3.7 million for the period. The table below
reconciles to the Condensed Consolidated Statement of Comprehensive Income.
Summary results from continuing operations for the six months to 31 December £000s
2023
Revenue 15,147
EBITDA 1,797
Acquisition expenses, stamp duties and relisting expenses 1,848
Share based payment expense 54
Adjusted EBITDA 3,699
Share based payment expense (54)
Depreciation (57)
Adjusted operating profit 3,588
Amortisation of acquired intangible assets (1,134)
Acquisition expenses, stamp duties and relisting expenses (1,848)
Fair value gain on Financial Assets 960
Operating profit 1,566
As we continue to standardise, optimise and integrate the acquisition
businesses we believe this will lead to improved margins, albeit initially
offset by the activities and costs of decoupling from the Capita plc systems
and services.
Net cash was £78.7 million at December 31, 2023 (June 30, 2023 £104.7m prior
net cash outflow of £30.4 million for the acquisitions).
Adjusted Operating cashflow was £4.3 million representing 116% cash
conversion of adjusted EBITDA.
Free cash flow, as presented below, from continuing activities was £4.4
million.
Free cashflow from continuing activities £000s
Operating profit 1,566
Fair value gain on Financial Asset (960)
Depreciation 57
Acquisition expenses, stamp duties and relisting expenses 1,848
Amortisation and impairment of intangible assets 1,134
Share based payment expense 54
Adjusted EBITDA 3,699
Unrealised exchange losses (1)
Decrease/(increase) in working capital 1,357
Capital expenditure (775)
Adjusted operating cashflow 4,280
Cash Conversion 116%
Acquisition expenses, stamp duties and relisting expenses (1,848)
Interest income 1,994
Free cashflow 4,426
The group has an investment in M&C Saatchi plc. This asset is held at fair
value through profit or loss (FVTPL) and was valued at £19.2 million at 31
December 2023 (£18.2 million at 30 June 2023). An increase of £0.96 million
in fair value was recognised in the Consolidated Statement of Comprehensive
Income during the period.
The Group's profit before taxation was £3.3m (31 December 2022: loss £0.1m).
The Directors are not currently recommending a dividend. The Board intends to
evaluate the Group's dividend policy following significant deployment of the
raised capital and will only commence the payment of dividends when it becomes
commercially prudent to do so.
Condensed Consolidated Statement of Comprehensive Income
Six months Six months
ended
ended
31 December 31 December
2023 2022
Unaudited Unaudited
£000s £000s
Revenue 15,147 -
Cost of sales (6,065) -
Gross Profit 9,082
Administrative expenses (7,285) (167)
Depreciation (57)
Amortisation of acquired intangibles (1,134)
Fair Value on Financial Assets 960 (1,080)
Operating profit/(loss) 1,566 (1,247)
Net Finance Income 1,754 1,134
Profit/(loss) before tax for continuing operations 3,320 (113)
Taxation (284) -
Profit/(loss) for the period from continuing operations 3,036 (113)
Discontinued Operations
Profit for period from discontinued operations 48 -
Total comprehensive profit/(loss) for the period attributable to owners of the
parent
3,084 (113)
Profit/(Loss) per ordinary share (£)
Basic 0.02 (0.00)
Diluted 0.02 (0.00)
Condensed Consolidated Statement of Financial Position
As at As at
31 December 30 June
2023 2023
Unaudited Audited
Non-current assets £000s £000s
Intangible assets 19,212 -
Goodwill 23,175 -
Property, plant and equipment 70 -
Contract fulfilment assets 892 -
Deferred tax 1,407 -
Financial asset at fair value through profit or loss 19,200 18,240
Non-current assets held for sale 471 -
64,427 18,240
Current assets
Trade and other receivables 7,794 1,011
Current Assets held for sale 455 -
Cash and cash equivalents 78,738 104,696
Total current assets 86,987 105,707
Total assets 151,414 123,947
Equity and liabilities
Sponsor shares - -
Ordinary shares 131,166 131,166
Warrant reserve 98 98
Warrant cancellation reserve 350 350
Share-based payment reserve 455 401
Accumulated losses (5,745) (8,829)
Total equity 126,324 123,186
Liabilities
Current liabilities
Trade and other payables 10,400 761
Contractual liabilities 10,859 -
Current Liabilities held for sale 796 -
Total current liabilities 22,055 761
As at As at
31 December 30 June
2023 2023
Unaudited Audited
£000s £000s
Non-current Liabilities
Contractual liabilities 993 -
Provisions 2,042 -
Total non-current liabilities 3,035 761
Total equity and liabilities 151,414 123,947
Condensed Consolidated Statement of Changes in Equity
Sponsor share Ordinary shares Warrant reserves Warrant cancellation Reserve Share based payment reserve Accumulated losses Total equity
£000s £000s £000s £000s £000s £000s £000s
Balance as at 30 June 2022 (Audited) - 131,166 98 350 305 (10,261) 121,658
Total comprehensive loss for the period - - - - - (113) (113)
Share-based payment expense - - - - 48 - 48
Balance as at 31 December 2022 (Unaudited) - 131,166 98 350 353 (10,374) 121,593
Total comprehensive profit for the period - - - - - 1,545 1,545
Share-based payment expense - - - - 48 - 48
Balance as at 30 June 2023 (Audited) - 131,166 98 350 401 (8,829) 123,186
Total comprehensive profit for the period - - - - - 3,084 3,084
Share-based payment expense - - - - 54 - 54
Balance as at 31 December 2023 (Unaudited) - 131,166 98 350 455 (5,745) 126,324
Condensed Consolidated Statement of Cash Flows
Six months Six months
ended ended
31 December 31 December
2023 2022
Unaudited Unaudited
Cashflow from operating activities £000s £000s
Profit/(loss) before taxation for the period 3,368 (113)
Adjustments for:
Depreciation 57 -
Amortisation 1,134 -
Interest income (1,752) (1,134)
Fair Value adjustment on Investment (960) 1,080
Unrealised exchange (losses) (1) -
Add back share-based payment expense 54 48
Working capital adjustments:
(Increase) in trade and other receivables and Prepayments (665) (288)
(Increase) in contractual fulfilment assets (74) -
Increase/(decrease) in trade and other payables 2,223 (1,608)
Net cash flows from operating activities 3,384 (2,015)
Cash flow used in investing activities
Purchase of property, plant and equipment (5) -
Development of intangible assets (886) -
Acquisition of subsidiaries, net of cash acquired (30,443) -
Net cash flow used in investing activities (31,334) -
Financing activities
Interest income 1,992 861
Net cash flows from financing activities 1,992 861
Net (decrease) in cash and cash equivalents (25,958) (1,154)
Cash and cash equivalents at the beginning of the period 104,696 104,170
Cash and cash equivalents at the end of the period 78,738 103,016
Notes to the Condensed Consolidated Financial Statements
1. GENERAL INFORMATION
AdvancedAdvT Limited was incorporated on 31 July 2020 in the British Virgin
Islands ("BVI") as a BVI business company (registered number 2040954) under
the BVI Business Company Act, 2004. The Company was admitted on the AIM Market
of the London Stock Exchange on 10 January 2024 and has its registered address
at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British
Virgin Islands VG1110 and UK establishment at 11 Buckingham Street, London
WC2N 6DF.
The Company acquired five software and services businesses from Capita plc on
31 July 2023 (the "Acquisitions"). The Group provides software solutions and
platforms across two business transformational areas: business solutions &
healthcare compliance, and human capital management. The Group's operations
are IBSS (financial management software), CHKS (AI based healthcare
intelligence compliance and accreditation software), Retain (global resource
planning and talent management software) and WFM (workforce management
software provider). The Company is an agent for change, enabling the delivery
of Artificial Intelligence ("AI"), data analytics and business intelligence,
all of which are key future drivers for growth in these sectors where long
term digitisation trends are set to transform the workplace for
professionals.
The Group is developing both organically and through acquisitions, by
expanding its presence across adjacent markets, geographical boundaries and
digital sectors. The Company's wholly-owned subsidiaries, together with the
Company, the "Group".
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Financial Statements under IFRS requires the Directors
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results may differ
from these estimates.
Key sources of estimation uncertainty
Identifiable assets acquired and liabilities assumed
As required by IFRS 3, we have measured the assets acquired and liabilities
assumed on the acquisitions in the period at their fair value on acquisition.
The fair values of contract liabilities at acquisition dates were estimated to
obtain a price that would be paid to transfer the liability in an orderly
transaction between market participants. The approach used was based on a
market participant's estimate of the costs that will be incurred to fulfil the
obligation plus a normal profit margin, based on the overall cost profile over
the life of the contract.
The determination of the fair value of assets and liabilities including
goodwill arising on the acquisition of businesses, the acquisition of
branding, customer relationships and intellectual property, whether arising
from separate purchases or from the acquisition as part of business
combinations, and development expenditure which is expected to generate future
economic benefits, are based, to a considerable extent, on management's
estimations.
The fair value of these assets is determined by discounting estimated future
net cash flows generated by the asset
where no active market for the assets exists. The use of different assumptions
for the expectations of future cash
flows and the discount rate would change the valuation of the intangible
assets.
Whilst the accounting for business combinations is substantially complete,
certain acquisition fair value estimates are in the process of being
finalised. Management have engaged with specialists in this regard and at
the date of this report do not expect any differences to have a material
effect on the numbers as reported in these Consolidated Interim Financial
Statements.
Critical accounting judgements
Revenue Recognition
There are a number of areas where judgement has been applied in respect of
revenue recognition. A description of the way in which revenue and
associated assets are recognised is detailed in the notes to the Financial
Statements.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences only
if the consolidated entity considers it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Provisions
Onerous contract provisions are recognised where the unavoidable costs under a
contract reflect the least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation or penalties arising
from failure to fulfil it.
3. ALTERNATIVE PERFORMANCE MEASURES
In reporting financial information, the Group presents alternative performance
measures ("APMs") which are not defined or specified under the requirements of
IFRS. The Group believes that these APMs, which are not considered to be a
substitute for IFRS measures, provide stakeholders with additional useful
information on the underlying trends, performance and position of the Group
and are consistent with how business performance is measured internally. The
alternative performance measures are not defined by IFRS and therefore may not
be directly comparable with other companies' alternative performance measures.
The key APMs that the Group uses are outlined below.
Closest equivalent IFRS measure Reconciling items to IFRS measure Definition and purpose
Income Statement Measures
Adjusted EBITDA OR PBT Operating Profit OR Profit before Tax Adjusting items Adjusted Operating profit/Profit before tax excludes adjusting items.
Adjusting items None Refer to definition Items which are not considered part of the normal operating costs of the
business, are separately disclosed because of their size, nature or incidence
are treated as adjusting. The Group believes the separate disclosure of these
items provides additional useful information to users of the financial
statements to enable a better understanding of the Group's underlying
financial performance. These may include the financial effect of adjusting
items such as, inter alia, restructuring costs, impairment charges,
amortisation of acquired intangibles, costs relating to business combinations,
one-off foreign exchange gains or losses, integration costs,
acquisition-related expenses, share-based payment charges, contingent
consideration and earn-outs, cloud computing configuration and customisation
costs, and right-of-use asset disposal gains or losses.
Recurring Revenue Revenue Refer to segmentation Recurring revenues are defined as the revenue streams of the Group that are
recurring in nature.
Transactional Revenue Revenue Refer to segmentation Transactional revenue is defined as the streams of the Group that arise from
one-off fees and service engagements.
Balance Sheet Measures
Net cash or debt None Refer to definition Net cash debt is defined as Cash and cash equivalents and short-term deposits,
less Bank overdrafts and other current and non-current borrowings.
Cash Flow Measures
Cash conversion None Refer to definition Adjusted operating cash flow as a percentage of Adjusted EBITDA.
Free cash flow None Refer to definition Cash flow in the period after accounting for operating activities, investing
activities, lease payments, interest and tax.
4. SEGMENT INFORMATION
Revenue from continuing operations
Six months Six months
ended 31
ended 31
December December
2023 2022
Unaudited Unaudited
£000s £000s
Recurring Revenues 11,575 -
Transactional Revenues 3,572 -
15,147 -
Revenue is recognised for each category as follows:
• Recurring Revenues: income occurring continuously and repeatedly.
• Transactional Revenues: recognised at the point of transfer (delivery) to
a customer
Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Group that are regularly reviewed by the chief
operating decision makers to allocate resources to the segments and to assess
their performance.
The chief operating decision makers have been identified as the Executive
Directors. The Group revenue is derived from the sale and subscription of
recurring and transactional revenue engagements with its customers.
Consequently, the Executive Directors review the two revenue streams, but as
the costs are not recorded in the same way, the information on costs is
presented as one segment and as such the information included below is
presented in line with management information.
Six months Six months
ended
ended
31 December 31 December
2023 2022
Unaudited Unaudited
£000s £000s
Revenue 15,147 -
EBITDA 1,797 (167)
Acquisition expenses, stamp duties and relisting expenses 1,848 (104)
Share based payment expense 54 48
Adjusted EBITDA 3,699 (223)
Share based payment expense (54) (48)
Depreciation (57) -
Adjusted operating profit 3,588 (271)
Amortisation of acquired intangible assets (1,134) -
Acquisition expenses, stamp duties and relisting expenses (1,848) 104
Fair Value gain on Financial Assets 960 (1,080)
Operating profit 1,566 (1,247)
5. EMPLOYEES AND DIRECTORS
(a) Employment costs for the Group during the period:
Six months Six months
ended 31
ended 31
December December
2023 2022
Unaudited Unaudited
£000s £000s
Wages and salaries 6,758 96
Pension contributions 179 4
Social security costs 638 12
Total employment costs expense 7,575 112
(b) Key management compensation
The Board considers the Directors of the Company, to be the key management
personnel of the Group.
During the six months ended 31 December 2023, the Company had the following
executive directors: Vin Murria, Gavin Hugill and Karen Chandler. The roles
and responsibilities and salaries of all directors changed following the
completion of the Acquisitions and subsequent re-listing.
In conjunction with the Company's admission to AIM, in addition to Mark
Brangstrup Watts, two independent non-executive directors were appointed,
Barbara Firth (the Senior Independent Director) and Paul Gibson.
Full details in respect of the directors' roles and remuneration are set out
in the Company's prospectus dated January 8th, 2024.
Vin Murria, Gavin Hugill, Karen Chandler and Mark Brangstrup Watts all have a
beneficial interest in the A ordinary shares (Incentive Shares) issued by the
Company's subsidiary.
(c) Employed persons
The average monthly number of persons employed by the Group (including
Directors) during the period was as follows (persons from Acquisitions
included for five of the six months):
Six months Six months
ended 31
ended 31
December December
2023 2022
Unaudited Unaudited
number number
Leadership 9 2
Management 6 -
Technical 165 -
Sales & Marketing 18 -
Administration 11 -
209 2
6. INTANGIBLE ASSETS
Goodwill Customer relationships Brand names Software and IP on Acquisition Internal Software Development Total
£000s £000s £000s £000s £000s £000s
Cost
Additions on Acquisition 23,175 8,678 1,558 9,340 - 42,751
Additions* - - - - 770 770
At 31 December 2023 23,175 8,678 1,558 9,340 770 43,521
Accumulated amortisation
Additions on Acquisition - - - - - -
Amortisation - 362 130 642 - 1,134
At 31 December 2023 - 362 130 642 - 1,134
Carrying amount
At 31 December 2023 23,175 8,316 1,428 8,698 770 42,387
*Synaptic, an asset head for sale, added a further £116,000 of Internal
software development in the period.
7. ACQUISITIONS
In the period, the Group acquired five businesses - IBSS, CHKS, Retain, WFM
and Synaptic. Outlined below is a summary of the consideration paid, the
provisional fair value of acquired intangible assets, the provisional fair
value of other acquired assets and liabilities assumed at the acquisition date
and the resulting goodwill for each entity acquired, subject to the
finalisation of the purchase price allocation report.
On 31 July 2023, AdvancedAdvT Limited completed the acquisition of five
businesses from Capita plc for cash consideration of £44 million, funded from
the Company's cash resources. The net cash outflow as detailed below reflects
the consideration paid, net of the cash acquired. Details on each of the
entity's acquired is set out below:
• Business Solutions (IBSS): provision of financial management software
solutions and services. Innovative software solutions allows organisations to
achieve their financial and eBusiness strategies by driving transformational
changes. Its solutions can be hosted in both the private and public cloud and
are trusted by more than 150 public, health and private organisations in the
UK and Ireland. The use of AI and digitalisation are expected to be highly
valuable to these markets.
• Healthcare Compliance (CHKS): one of the leading providers of healthcare
intelligence compliance and benchmarking software to address the governance,
risk and compliance needs of its healthcare customers. Its UK based
tech-enabled solutions of accreditation, benchmarking and coding services play
a role in transforming healthcare services, knowledge sharing and best
practice to the healthcare industry globally.
• Human Capital Management (Retain): an industry leading global resource
planning and talent management software and service provider. Its solutions
integrate with leading enterprise resource planning systems and are trusted by
some of the largest global consultancies to deliver effective management and
allocation of resources; optimise utilisation and productivity, and enable
efficient cost management, financial and staff planning tasks.
• Human Capital Management (WFM): a workforce management software provider,
with well-established UK presence and embedded relationships across 300+
clients. They can handle highly complex payroll and workforce management
requirements whilst providing real-time employee tracking and tangible
efficiency benefits through it comprehensive time and attendance and access
control solutions.
• Research and Data (Synaptic): is an end-to-end research led SaaS
technology solution platform with a full suite of independent data,
compliance, risk, suitability and research tools to the UK financial advice
market. The Board concluded that it would be better for Synaptic to have a
more strategically aligned owner and on 21 November 2023 agreed to its
Disposal, which was completed on 26 January 2024.
The following table summarises the consideration paid for acquisitions, the
fair value of assets acquired and liabilities assumed at the acquisition date.
IBSS CHKS Retain WFM Synaptic Total
Fair value Fair value Fair value Fair value Fair value Fair value
£000s £000s £000s £000s £000s £000s
Consideration
Cash 26,116 4,854 8,281 2,741 2,403 44,395
Cash and cash equivalents acquired 5,765 2,009 3,395 1,214 1,569 13,952
Net Cash outflow 20,351 2,845 4,886 1,527 834 30,443
Property, plant and equipment - 121 - - - 121
Trade and other receivables 3,875 1,415 1,451 321 373 7,435
Trade and other payables (668) (240) (1,010) (187) (402) (2,507)
Contractual Liabilities (7,782) (1,039) (3,472) (1,406) (187) (13,886)
Contract fulfilment assets 656 - 103 59 - 818
Tax liability on intangibles (2,766) (439) (390) (542) - (4,137)
Deferred tax assets on acquisition 544 (208) 580 643 331 1,890
Provision (2,042) - - - - (2,042)
Customer relationships identified on acquisition 5,214 1,424 1,144 896 - 8,678
Software and intellectual property identified on acquisition 6,362 238 1,501 1,239 - 9,340
Brand name identified on acquisition 717 317 417 107 - 1,558
Total identifiable net assets 4,110 1,589 324 1,130 115 7,268
Goodwill 16,241 1,256 4,562 397 719 23,175
20,351 2,845 4,886 1,527 834 30,443
Amortisation period
Customer relationships 10years 10years 10years 10years
Software and IP on acquisition 6years 5years 8years 5years
Brand name identified 5years 5years 5years 5years
Acquisition related costs of £0.8 million has been charged to the statement
of comprehensive income within administration expenses in the six months to
31(st) December, relating to the acquisition of the five businesses.
None of the goodwill is expected to be deductible for tax purposes.
The acquisitions recognised £16.1 million of revenue for the period between
the date of acquisition and the balance sheet date and £3.0 million of profit
before tax attributable to equity holders of the parent. As a preliminary
assessment, had the acquisitions been completed on the first day of the
period, as opposed to the completion date of 1 August 2023, Group revenues
from continuing activities would have been approximately £2.9 million higher
and group profit before tax attributable to equity holders of the parent would
have been approximately £0.3 million higher.
8. POST BALANCE SHEET EVENTS
On 21 November 2023 the Group conditionally agreed to sell Synaptic for an
enterprise value of £3.5m. The sale was subject to and conditional upon FCA
approval which was duly received resulting in the completion of the sale on 26
January 2024.
No other matter or circumstance has arisen since 31 December 2023 that has
significantly affected, or may significantly affect the consolidated entity's
operations, the results of those operations, or the consolidated entity's
state of affairs as at the date of this report.
9. DISCONTINUED OPERATIONS
On 21 November 2023, the Company conditionally agreed to sell Synaptic.
Synaptic has been classified as a discontinued operation within the Interim
Financial Statements.
Results of Synaptic Software Limited included in the group consolidation for
the period are presented below:
Six Months to 31 December 2023 Six Months to 31 December 2022
£000s £000s
Revenue from contracts with customers 1,009 -
Expenses (959) -
Operating Income 50 -
Finance Costs 2 -
Profit/(Loss) before tax for discontinued operations 48 -
Tax benefit/(Expense) - -
Profit/(Loss) for period from discontinued operations 48 -
The discontinued operation was not material to the calculation of earnings per
share.
The following assets and liabilities were reclassified as held for sale in
relation to the discontinued operation as at 31 December 2023:
As at 31 December 2023 As at 30
£000s June 2023
£000s
Assets classified as held for sale -
Intangible Assets 116 -
Deferred Tax 355 -
Total intangible assets held for sale 471 -
Trade and other receivables 455 -
Total assets held for sale 926 -
Liabilities classified as held for sale
Trade and other payables 661 -
Contractual liabilities 128 -
Current tax payable 7 -
Total liabilities held for sale 796 -
The discontinued operation generated the following cashflows which have been
included in the cash flow statement:
Six Months to 31 December 2023 Six Months to 31 December 2022
£000s £000s
Operating activities 176 -
Investing activities (116) -
Financing activities (2) -
Total cashflow contributed by the discontinued operation 58
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