REG - Software Circle PLC - Sale of printing.com domain and update re. WML

Software CircleAnnouncement

02/04/2024 07:00

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RNS Number : 8064I  Software Circle PLC  02 April 2024

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.

 

2 April 2024

Software Circle plc

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

 

Sale of printing.com ("PDC") Domain and update regarding sale of Works
Manchester Limited ("WML")

 

 

Sale of printing.com ("PDC") Domain

Software Circle plc (AIM:SFT) announces the sale of the domain name
printing.com to JAL Equity Corp, an owner and operator of marketing, printing,
signage, and promotion businesses in the USA, for $2.27m (£1.8m).

 

The consideration will be satisfied in cash payable in two instalments, one of
$0.23m on completion with the balance of $2.04m payable on or before 31 July
2024. The sale proceeds will be applied to potential acquisitions and
supporting the Group's working capital requirements.

 

The PDC domain has formed part of our Nettl Systems business for two decades.
It has a special place in our hearts for many reasons. It is, after all, where
it all began.

 

But things evolve. Eight years ago Nettl was born. Extending the offering to
existing and new partners alike. Over that time more and more printing.com
partners have upgraded to Nettl, taking advantage of the additional features
that help future proof their business. Moving away from the PDC domain.

 

That's meant fewer and fewer PDC partners over those years and more and more
Nettl partners. As that trend and focus continues, we find ourselves saying a
very fond farewell to printing.com. Thanks for the good times, old friend.
It's been emotional.

 

For the few remaining partners that utilise the PDC domain, there'll be time
for transition. We've already had those conversations and have been preparing
for a move away from its use. We'll provide support for partners to enable a
smooth transition. We expect the majority will upgrade and become Nettl
partners. Those who don't, can continue using the software platform to run
their business as a white label partner.

 

Update regarding sale of Works Manchester Limited

The sale of WML to Rymack Sign Solutions Limited ("Rymack") was first
announced on 19 May 2022.

 

On 1 June 2023, the Company announced it hadn't received the first instalment
of deferred consideration from Rymack which was due on 31 May 2023.

 

We reported in the Company's interim results on 27 November 2023 that, due to
our reduced confidence of receiving payment of any deferred consideration, the
carrying value of the £2.81m due under the sale and purchase agreement had
been reduced to £0.35m.

 

Our confidence in receiving any deferred consideration further reduced
following notification that WML had filed a notice of intention to appoint
administrators in December 2023. The remaining deferred consideration has now
been written down which, together with outstanding charges due from WML and
net of trading balances due to Rymack's group that the Company has set off,
results in a net charge of £0.24m.

 

In addition to this, as a consequence of WML's administrator vacating the hub
in Trafford Park, the Company, as a guarantor of the lease, became liable for
unpaid rent arrears, ongoing rent for the remainder of the lease term and
dilapidations. The Company has agreed a full and final settlement of this
liability with the landlord for £0.62m.

 

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. The Group is currently
in exclusive discussions with two acquisition targets with a collective
turnover of approximately £3.0m and an adjusted EBITDA of £0.9m. We will
provide a trading update during April.

 

For further information:

Software Circle plc

Gavin Cockerill (CEO)
 
07968 510 662

 

Allenby Capital Limited (Nominated Adviser and Broker)

David Hart / Piers Shimwell (Corporate Finance)
                             0203 328 5656

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.

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