REG - Software Circle PLC - Acquisition of Total Drive Software Limited

Software CircleAnnouncement

14/03/2025 07:00

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RNS Number : 7156A  Software Circle PLC  14 March 2025

 

14 March 2025

Software Circle plc

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

 

Acquisition of Total Drive Software Limited ("Total Drive")

 

Software Circle plc (AIM: SFT) is pleased to announce that it has acquired the
entire issued share capital of Total Drive Software Limited. Total Drive
provides an end-to-end software solution for Driving Instructors.

 

The total consideration of up to £7.5m 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 £3.5m, with deferred
consideration of £1.0m to be paid on the first anniversary of completion. Up
to a further £3.0m is payable contingent upon the achievement of certain
targets relating to the future financial performance of Total Drive (the
"Earn-out"). Further information on the terms of the acquisition is set out
below.

 

About Total Drive

 

Since its incorporation in 2020, the business has exhibited strong growth due
to the breadth of functionality offered by its award-winning software solution
and mobile app. Today Total Drive is the UK's #1 Driving Instructor app used
by circa 6,000 individual driving instructors weekly and enjoys strong
customer reviews (Trustpilot 4.5/5, Capterra 5/5). Circa 80% of revenues arise
from annual recurring subscription fees with the remainder from payment
processing and training aids and materials.

 

Founder Ross Kernick (CEO) will provide consultancy for two years post
completion with Tom Wotton (CTO) leading the business on a day-to-day basis.

 

The unaudited financial statements for Total Drive for the year ended 30
September 2024 reported revenue of £0.8m, EBIT of £0.4m and closing net
assets of £0.02m. With current run-rate revenues of approximately £1.1m,
after adjustments our valuation is based upon expected EBIT of approximately
£0.7m.

 

Terms of the Acquisition

 

The initial consideration of £3.5m was funded from existing Software Circle
cash reserves.

 

The deferred consideration of £1.0m and Earn‐out, if payable, of up to
£3.0m, will be satisfied in cash.

 

The Earn-out is dependent on Total Drive achieving certain annual recurring
revenue and payment processing revenue targets for the calendar year 2026
adjusted for any shortfall in earnings targets for calendar years 2025 and
2026.

 

Gavin Cockerill, CEO said: "We are thrilled to welcome Total Drive to Software
Circle. Another great addition to our portfolio of vertical market software
businesses. Total Drive has built a market-leading product with a strong
customer base, and we see significant potential to further accelerate its
growth by leveraging our expertise in operational scalability, technology, and
customer engagement. We look forward to working with Ross, Tom and the team to
enhance Total Drive's market position."

 

Ross Kernick commented: "Tom and I were highly impressed with Software
Circle's operating model. We believe the quality of their systems and
processes will play a crucial role in supporting our rapid growth, enhancing
our award-winning software, and elevating our customer service. This
partnership will further solidify Total Drive's position as the UK's #1
Driving Instructor software."

 

Outlook

Having established appropriate debt facilities in November last year to invest
alongside equity raised in September 2023, the Group has the resources it
needs to finance the pipeline of opportunities it has going into the next
Financial Year.

 

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.

 

The Company intends to release its full year results for the period ending 31
March 2025 during July.

 

For further information:

 

Software Circle plc

Gavin Cockerill
(CEO)
via investors@softwarecircle.com

 

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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