REG - Software Circle PLC - Acquisition of Link Maker Systems Limited

Software CircleAnnouncement

26/07/2024 07:00

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RNS Number : 9282X  Software Circle PLC  26 July 2024

Prior to publication, the information contained within this announcement was
deemed by the Company to constitute inside information as stipulated under the
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information is now considered to be in the public domain.

 

26 July 2024

Software Circle plc

("Software Circle", the "Company" or the "Group")

 

Acquisition of Link Maker Systems Limited ("Link Maker")

 

Software Circle plc (AIM: SFT) is pleased to announce that it has acquired the
entire issued share capital of Link Maker Systems Limited. Link Maker's
adoption platform joins-up children's social care across the UK to increase
placement choice for children, and to improve use of data and collaboration
between local authorities and adoption agencies.

 

The total consideration of £4.5m 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.

 

The initial consideration paid at completion was £3.0m. Up to a further
£1.5m is payable contingent upon the achievement of certain targets relating
to the future financial performance of Link Maker (the "Contingent
Consideration"). Further information on the terms of the acquisition is set
out below.

 

About Link Maker

 

Link Maker's platform increases placement choice for children awaiting
adoption, creating a UK-wide pool of available adopters, and improving the use
of data and collaboration between all adoption agencies nationwide, covering
England, Scotland, and Wales.

 

The business has been in operation for over a decade and provides mission
critical services for adoption agencies and local authorities. Over 95% of
revenues arise from annual recurring fees from its clients.

 

The three shareholders, Craig Rigby-Wilson (Co-CEO), Andy Leary-May (Co-CEO)
and Linda Hill (Operations Director) have entered into new employment
contracts and will continue to lead the team of six staff.

 

The unaudited financial statements for Link Maker for the year ended 31 March
2024 reported revenue of £1.56m, EBIT of £0.89m and closing net assets of
£0.46m. After adjustments our valuation is based upon a lower expected EBIT
of approximately £0.7m.

 

Terms of the Acquisition

 

The £3.0m initial consideration was funded from existing Software Circle cash
reserves.

 

The Contingent Consideration is dependent on Link Maker achieving certain
annual recurring revenue targets and may be achieved in full or in part by
exceeding those targets in the year commencing July 2025.

 

Gavin Cockerill, CEO said: "What Link Maker do really matters and we are
extremely proud to have the team join us as the second business in our Health
and Social Care segment. Together, we believe we can make children's social
care more efficient, more secure and more child focussed. We're looking
forward to helping Andy, Craig, Linda and the team achieve the future aims of
the business."

 

Craig Rigby-Wilson commented: "As Andy looks to take more of a step back from
the business, it was important for us to find a new owner that understood the
social aims of the business. Supporting us in the development and rollout of
new modules like Letter Swap, created to facilitate post-adoption contact
between adopters and birth families. We're excited to see what Software Circle
and Link Maker can achieve together."

 

Outlook

Having added Arc Technology Limited ("Arc") in February 2024, the first within
our Ed Tech segment, Be The Brand Experience Limited ("Bethebrand") which
completed in May 2024, and now Link Maker, we're now well on the way to
deploying the capital we raised in September 2023.

 

We intend to deploy the remaining capital. Focussing on quality, irrespective
of pace. Our strategy remains focused on identifying and acquiring businesses
that align with our criteria. Further strengthening our portfolio and driving
sustainable growth. We are committed to maintaining our disciplined approach
to acquisitions, ensuring that each addition is aligned with our culture,
enhances our overall value proposition, supports our long-term objectives and
maximises Operating Cash Flow Per Share.

 

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 (http://www.softwarecircle.com)
www.softwarecircle.com (http://www.softwarecircle.com) .

 

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