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.
21
February 2024
Software Circle
plc
("Software Circle", the
"Company" or the "Group")
Acquisition of ARC Technology
Limited ("ARC")
Software Circle plc (AIM: SFT) is
pleased to announce that it has acquired the entire issued share
capital of ARC Technology Limited, a leading provider of software
solutions for the management of practice-based learning to higher
education institutions across the UK and the Republic of Ireland,
based in Byfleet, Surrey.
The total consideration of up to £2.0m 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 £1.1m, with deferred consideration of £0.3m to be
paid on the first anniversary of completion. Up to a further £0.6m
is payable contingent upon the achievement of certain targets
relating to the future financial performance of ARC (the
"Earn-out"). Further information on the terms of the acquisition is
set out below.
About ARC Technology Limited
ARC's solutions
offer academic institutions a powerful,
fully-integrated administrative software suite, allowing students,
tutors and departmental staff to become empowered users of academic
and institutional information.
The core platform
enables university placement teams to centrally
administer student placements, providing information about practice
environments in which students undertake practice-based
learning.
ARC has high client retention rates
and in excess of 90% of revenues arise from annual recurring fees
from its clients.
Nader Bishay, Managing Director and
50% shareholder of ARC, will remain with the business,
entering into a new employment
contract and will continue to lead the team of eight staff located
in England. Founding shareholder Soraia Bishay will
leave the business.
The unaudited financial statements
for ARC for the year ended 31 July 2023 reported revenue of
£1.1m, EBIT of
£0.34m and closing net assets of
£0.94m.
Terms of the Acquisition
The £1.1m initial consideration was
funded from existing Software Circle cash reserves.
The £0.3m deferred consideration and
Earn‐out, if payable,
of up to £0.6m, will be satisfied in cash.
The Earn-out is dependent on ARC
achieving certain annual recurring revenue targets and may be
achieved in full or in part by exceeding those targets in any of
the two years commencing 21 February 2024.
Gavin Cockerill, CEO said: "We're
delighted to announce our first acquisition since raising
additional funds in September 2023 to further our aim of becoming a
serial acquirer of Vertical Market software businesses. ARC meets
our acquisition criteria extremely well and adds to
Software Circle's growing family of niche vertical
market SaaS companies that generate revenues
of a recurring nature. We welcome Nader and
his team to the Group and look forward to
working with them to drive further growth in the years
ahead."
Nader Bishay commented: "Having
founded ARC in 1990, I am keen to remain part of the business. I
was attracted by Software Circle's operating model which allows
ARC's operations to continue and flourish in an independent
decentralised way, supporting us where we need. I look forward
to continue growing the business and
taking it to the next level under Software Circle's
ownership."
Outlook
We continually reach out to and start
conversations with potential acquisition targets that match our
criteria. The Group is currently in exclusive discussions with
three acquisition targets with a collective turnover of
approximately £4.1m and an adjusted EBITDA of £1.4m.
For
further information:
Grafenia 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.