REG - Software Circle PLC - Acquisition of Be The Brand Experience Limited

Software CircleAnnouncement

30/05/2024 07:00

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RNS Number : 4239Q  Software Circle PLC  30 May 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.

 

30 May 2024

Software Circle plc

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

 

Acquisition of Be The Brand Experience Limited ("Be The Brand")

 

Software Circle plc (AIM: SFT) is pleased to announce that it has acquired the
entire issued share capital of Be The Brand Experience Limited, based in
Hackney, London. Be The Brand is a provider of marketing compliance and
digital asset management workflow solutions for businesses providing financial
services.

 

The total consideration of £3.5m 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.

 

Initial consideration of £2.8m was paid on completion and a further £0.7m of
deferred consideration will be paid on the first anniversary of completion.

 

About Be The Brand Experience Limited

 

Be The Brand's integrated and configurable SaaS solution offers clients
providing regulated UK financial services a workflow and digital asset
management system that helps maintain compliance and audit trails for the
marketing of those financial services.

 

The business has been in operation for over two decades and has high client
satisfaction rates and low churn. Over 90% of revenues arise from annual
recurring fees from its clients.

 

Adam Hainsworth, Managing Director and a shareholder, will remain with the
business for 12 months to oversee the transition. The other two shareholders,
Guy Hainsworth and Jes Ongley, have entered into new employment contracts and
will continue to lead the team of thirteen staff.

 

The unaudited financial statements for Be The Brand for the year ended 31
March 2023 reported revenue of £1.6m, EBIT of £0.68m and closing net assets
of £0.43m.

 

Gavin Cockerill, CEO said: "The acquisition of Be The Brand is the second in
our Professional Services vertical, focussed within the finance sector. It
meets our acquisition criteria very well and we're delighted to welcome the
team to the group. We're very much looking forward to working with them and
driving the business forward."

 

Adam Hainsworth commented: "Having developed and grown the business over 20
years alongside Guy and Jes, it was crucial to find the right owners once I
had decided to step back. We spoke with Software Circle over an extended
period, getting to know their culture and modus operandi. We're confident
we've found the right home for Guy, Jes and the rest of the team to thrive in
and continue to develop our best in class solution for our clients."

 

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. That pipeline remains
healthy. The Group is undertaking due diligence on acquisition targets and is
in ongoing discussions with a number of additional targets that could see the
capital we raised via the equity issue in September 2023 fully deployed. By
that point, we'd expect annualised sales to reach approximately £25m with an
EBITDA run rate goal of 15-20% of sales, after central costs.

 

Looking ahead, the next phase will require the Group to establish appropriate
debt facilities to invest alongside equity raised in a prudent mix. The
existing bond facilities played a vital role in the early stages of our
development, but the terms of them restrict the Group's ability to access
wider bank lending facilities.

 

Therefore, later this year, the Group intends to undertake a further equity
issue to restructure its balance sheet and finance the redemption of the
remaining £6.7m of bonds at par. This will enhance the Group's ability to
access ongoing institutional debt funding, reducing the cost of capital for
M&A opportunities in the future.

 

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

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