REG - AdvancedAdvT Limited - Acquisition and Year-End Trading Update

AdvancedAdvTAnnouncement

07/05/2024 07:15

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RNS Number : 3313N  AdvancedAdvT Limited  07 May 2024

7 May 2024

 

AdvancedAdvT Limited

 

Acquisition of Celaton and year-end trading update

 

AdvancedAdvT Limited (AIM: ADVT, "AdvT", "the Group"), the international
software solutions provider for the business solutions, healthcare compliance,
and human capital management sectors has agreed to acquire Celaton Ltd
("Celaton"), the operator of an intelligent document processing platform
inSTREAM (the "Acquisition"), for cash consideration of £5.0 million net of
cash acquired of £1.5m(1).

 

The Group has also published a year-end trading update for the eight months to
29 February 2024(2).

 

Acquisition highlights

·      Acquisition of the entire share capital of Celaton for cash
consideration of £5.0 million net of cash acquired, funded from the Group's
existing cash resources.

·    Celaton is a machine-learning AI based intelligent process automation
(IPA) platform (inSTREAM). Functionality provides intelligent document
processing (IDP) with automatic data recognition, classification, validation
and enrichment, continual process automation with machine-learning AI
algorithms and analytics.

·      Celaton is highly complementary to AdvT's existing business:

o  IBSS(3) clients are expected to be the primary beneficiaries of the
acquisition.

o  IBSS clients working within end-to-end business processing, accounts
payables and sales order processing automation will benefit from InSTREAM's
improved efficiency, throughput, and enhanced compliance - providing mutual
benefits to both the customer and supplier relationship.

o  Opportunity for both revenue and efficiency synergies across the Group.

·      In the two years prior to this acquisition, Celaton invested
£2.3m in product development, targeted at platform AI capabilities, web user
interface and multi-language support - now aligned to support the growth of
the product into adjacent markets.

·      Customers consist of multi-national well-known enterprises with
high volume e-invoicing and document process needs including Talk Talk, Currys
and Capgemini.

In the 12 months ended 30 June 2023, Celaton recorded revenue of £3.3m, (80%
recurring subscription/transactional) with EBITDA(4) before development costs
of £1.2m(5). As at 30 June 2023, Celaton had net assets of £1.5m.

 

Completion of the Acquisition is subject to and conditional upon National
Security and Investment Act approval and a further announcement will be made
in due course.

 

Year-end trading update

The Group expects to report good progress against key financial metrics,
providing a strong platform for further growth, based on the unaudited
financial results for the eight months to 29 February 2024.

Revenues and Adjusted EBITDA(6) continued to perform well, ahead of
pre-acquisition trading benefitting from the actions outlined at the time of
the Group's interim results announced 28 March 2024. Recurring revenues remain
at approximately 77% of continuing revenues.

Profit before tax will benefit from the gain on the sale of Synaptic Limited
in the order of £2.6 million, increase in fair value of investment in M&C
Saatchi plc in the order of £2.5 million and Interest income in the order of
£2.2 million.

Net cash and investments held as at 29 February 2024 totalled £102.9m. Net
cash was £82.1m with a further £20.8m held as an investment in M&C
Saatchi plc.

Vin Murria, AdvancedAdvT's Executive Chairperson, said

"Celaton operates within a market experiencing significant rising demand for
AI, automation and efficiencies. It will be immediately beneficial to the
wider AdvT client base, with its e-invoicing, AI, document processing IP
centric product. This is especially timely considering the recent notice that
a material alternative supplier intends to withdraw from the market, creating
further immediate opportunities.

"This is a highly complementary, earning enhancing addition to the Group,
which will benefit from being part of a larger business."

Related party transaction

The Acquisition
(https://file.perfectinfo.com/document/304400856/15/304400856.html?caption=Light+Science+Technologies+Holdings+PLC%3a+Acquisition+of+Injecta+Fire+Barrier+Trade+%26+Assets&userId=278127&costCode=CostcodeAcc&hitWords=%22insofar+as+shareholders+are+concerned%22+AND+acquisition+AND+strand&scrypt=85d39b0d8e5fdf4f7b5981ad62fabfb1&prodId=300#hit8)
constitutes a related party transaction for the purposes of the AIM Rules for
Companies.  Vin Murria, a Director and substantial shareholder of AdvT, and
BGF Investment Management, a substantial shareholder of AdvT, each own
approximately 45% of Celaton. In addition, Karen Chandler, a Director of AdvT,
is Chief Operating Officer and a minority shareholder of Celaton.

The Directors independent of the Acquisition
(https://file.perfectinfo.com/document/304400856/15/304400856.html?caption=Light+Science+Technologies+Holdings+PLC%3a+Acquisition+of+Injecta+Fire+Barrier+Trade+%26+Assets&userId=278127&costCode=CostcodeAcc&hitWords=%22insofar+as+shareholders+are+concerned%22+AND+acquisition+AND+strand&scrypt=85d39b0d8e5fdf4f7b5981ad62fabfb1&prodId=300#hit9)
(Gavin Hugill, Mark Bangstrup Watts, Paul Gibson and Barbara Firth) having
consulted with the Group's nominated adviser, Singer Capital Markets,
consider that the terms of the Acquisition to be fair and
reasonable insofar as shareholders are concerned.

 

1 Cash as at 30 April 2024.

2 The Group, as previously announced, has changed its financial year to the
end of February.

3 Integrated Business Software and Solutions Limited and IB Software and
Solutions (Ireland) Limited, together "IBSS".

4 "EBITDA" defined as Earnings before Interest, Tax and Amortisation.

5 Under IFRS, the treatment of development costs are subject to
capitalisation.

6 Adjusted EBITDA as defined in the Interim financial statements, excluding
non-trading costs such as Acquisition and AIM admission costs.

 

Enquiries:

 

 AdvancedAdvT Limited
 Vin Murria, Chairperson                                c/o Meare Consulting

 Gavin Hugill, Chief Financial Officer

 Singer Capital Markets (Nominated Adviser and Broker)  Tel: 020 7496 3000
 Philip Davies / Asha Chotai / Sam Butcher

 KK Advisory (Investor Relations)                       Tel: 020 7039 1901
 Kam Bansil

 

 Meare Consulting
 Adrian Duffield     Tel: 07990 858548

 

Note to Editors

 

AdvancedAdvT Limited (AdvT) provides software solutions and platforms across
two business transformational areas: business solutions & healthcare
compliance, and human capital management.

The Group's operations are IBSS (financial management software), CHKS (AI
based healthcare intelligence compliance and accreditation software), Retain
(global resource planning and talent management software) and WFM (workforce
management software provider).

AdvT is an agent for change. The Group enables the delivery of Artificial
Intelligence ("AI"), data analytics and business intelligence, all of which
are key future drivers for growth in these sectors where long term
digitisation trends are set to transform the workplace for professionals.

AdvT is developing both organically and through acquisitions, by expanding its
presence across adjacent markets, geographical boundaries and digital sectors.

 

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