Acquisition of Topfloor Systems Limited
17/02/2023 12:35
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RNS Number : 3299Q Grafenia plc 17 February 2023
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17 February 2023
Grafenia plc
("Grafenia", the "Company" or the "Group")
Acquisition of Topfloor Systems Limited ("Topfloor")
Grafenia plc (AIM: GRA) is pleased to announce that it has acquired the entire
issued share capital of Topfloor Systems Limited, a provider of property
management software services, based in Dublin, Ireland, on a debt free/cash
free basis.
The total consideration of up to €6.20m will be satisfied in cash. The
acquisition is expected to be cash flow generative and earnings enhancing in
the first year after acquisition.
The initial consideration paid at completion was €3.84m, with deferred
consideration of €0.96m to be paid on the first anniversary of completion.
Up to a further €1.40m is payable contingent upon the achievement of certain
targets relating to the future financial performance of Topfloor (the
"Earn-out"). Further information on the terms of the acquisition is set out
below.
About Topfloor Systems Limited
Topfloor is an established supplier of software services for the property
sector with a strong reputation for its cloud based SaaS solutions Blockman
and Letman used by property agents, property owners, landlords and tenants.
Blockman is a service charge, ground rent, client accounting and
administration tool providing advanced report and document generation for
apartment block and estate managing agents.
Letman is a tenancy administration and client rent accounting tool for
property management agents involved in the letting and management of
residential properties.
Topfloor has high client retention rates and in excess of 95% of revenues
arise from annual recurring fees from its circa 300 clients across Ireland and
the United Kingdom.
Niall Wrafter (CEO) and Cathal Browne (CTO), both shareholders of Topfloor,
will remain with the business, entering into new employment contracts and will
continue to lead the team of eight staff located in Ireland. Founding
shareholder George Murphy is leaving.
The unaudited financial statements for Topfloor for the year ended 31 August
2022 reported revenue of €1.59m, EBIT of €0.37m and closing net assets of
€0.98m. The reduction in operating costs associated with the departure of
George Murphy and the new, normalised, contractual arrangements for Niall
Wrafter and Cathal Browne will lead to an immediate increase to the
profitability of Topfloor.
Acquisition Rationale
The addition of Topfloor further extends Grafenia's range of vertical market
niche SaaS software companies that generate revenues of a recurring nature.
Terms of the Acquisition
The €3.84m initial consideration was funded from existing Grafenia cash
reserves and the proceeds of the bonds issued by the Company announced on 20
January 2023.
The €0.96m deferred consideration and Earn‐out, if payable, of up to
€1.40m, will be satisfied in cash.
The Earn-out is dependent on Topfloor achieving certain annual recurring
revenue targets and may be achieved in full or in part by exceeding those
targets in any of the three financial years commencing 1 September 2023
("Earn-out Period").
Gavin Cockerill, Acting CEO of Grafenia said: "We're delighted to announce our
fourth acquisition of the financial year, adding Topfloor to the growing
stable of Vertical Market Software businesses in Grafenia's portfolio.
Meeting our acquisition criteria extremely well, Topfloor is a great example
of the kind of business our Software Circle team are actively searching for.
We have been very impressed with Niall and Cathal from the outset and are
excited to work with them and the Topfloor team in the years ahead."
Niall Wrafter commented: "Having been a shareholder of Topfloor for many
years, George was ready to exit whilst Cathal and I have ambitious plans for
the business. Grafenia can help us achieve those aims and is the ideal home
for Topfloor moving forward. We are enthused and energised at the prospect of
growing the business and taking it to the next level under Grafenia's
ownership."
For further information:
Grafenia plc
Gavin Cockerill (Acting CEO)
07968 510 662
Allenby Capital Limited (Nominated Adviser and broker)
0203 328 5656
David Hart / Piers Shimwell
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