Half-year Report

AdvancedAdvT Limited
28 March 2024
 

AdvancedAdvT Limited

 

Interim Results for six months to 31 December 2023

 

 

AdvancedAdvT Limited (LSE: ADVT, "AdvT", the "Group"), the international software solutions provider for the business solutions, healthcare compliance, and human capital management sectors, has published its unaudited Interim Results for the six months to 31 December 2023.  The Group's four operating units have been part of AdvT for five months, since 31 July 2023.

 

As previously announced, AdvT has changed its financial year to the end of February.

 

Six months to 31 December 2023 - financial performance

·    Revenue from continuing operations of £15.1m. Total revenue from all activities of £16.1m which includes revenue from Synaptic Software Ltd which was disposed post period end.

·    Recurring revenue represented 76% of total revenues.

·    Adjusted EBITDA from continuing operations of £3.7m ahead of management expectations.

·    Pre-tax profit of £3.3m (2022: loss £0.1m).

·    Reported EPS of 2p.

·    Cash of £78.7m as at 31 December 2023 (June 2023: £104.7m).

 

Operational highlights

·    Acquired core platform asset for £27m net cash outflow after sale of Synaptic Software.

·    Identified operational improvements within acquired businesses with implementation of these well progressed.

·    Refreshed the go-market strategy following the significant investment in SaaS and Cloud product offerings prior to our acquisition.

·    Completed sale of non-core asset Synaptic Software for £3.5m in January 2024.

·    Transfer to trading on AIM completed in January 2024.

 

Current trading and outlook

The Group has made a good start to the new financial year following strong progress on the initial foundations laid following the completion of the acquisitions on 31 July 2023. We have secured a number of substantial contracts and renewals which means that performance for the 12 months ending 28 February 2025 is expected to be ahead of Board expectations.

 

Vin Murria, AdvancedAdvT's Executive Chairperson, said

"In the short time since we acquired the Capita businesses, we have made very good progress with their operational performance which has improved markedly. 

 

"We have now established a core software platform for developing the Group and identified a number of potential acquisition opportunities.

 

"After changing the financial year end to February, we concluded the remaining two months of the year and have started the new financial year well, securing a number of multi-million pound contracts.

 

"We remain optimistic about the opportunities for organic and acquisitive growth ahead."

 

Enquiries:

 

AdvancedAdvT Limited


Vin Murria, Chairperson

Gavin Hugill, Chief Financial Officer

c/o Meare Consulting



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.

 

Strategic overview

The acquisition of the Capita businesses provide a core platform for AdvT to execute on its strategy, which is centred around backing sectors characterised by long term digitisation trends, that are in early stages of adoption and set to transform the workplace for professionals for the next few decades.

 

In the five months since the Group acquired the Capita businesses, it has made good progress. Our initiatives have encompassed a concerted effort towards standardisation and simplification, aimed at harnessing best practices to optimise go-to-market strategies and operational activities.

These initiatives were reinforced by the introduction of new systems across critical functions, including Customer Relationship Management (CRM), Human Resources (HR), payroll, benefits administration, financial management, and professional services. By implementing these foundational frameworks, we are poised to streamline processes, enhance operational agility, and drive sustainable growth.

Moving forward, our business performance will be measured through a set of core financial metrics, including recurring revenue, adjusted EBITDA, and free cash flow. These indicators will serve as benchmarks in gauging our progress, ensuring alignment with our overarching strategic objectives and commitment to delivering sustainable value to our stakeholders.

The Group continues to hold a 9.8% stake in M&C Saatchi plc.

Operational review

Our business solutions and healthcare compliance operations, IBSS and CHKS, have strategically realigned to place a heightened emphasis on the customer and their evolving needs and to deliver value-driven software and digital solutions. This pivot has helped secure a number of new compliance clients.

 

Within the human capital management operations, Retain and WFM, the Group successfully onboarded several new customers onto its SaaS platform. Additionally, the Group has also began investing in new product offerings, roadmap features and functionality.

 

As anticipated, the Group is observing positive digitalisation trends across both business solutions and healthcare compliance operations. The recently launched automated clinical coding solution has been adopted by the Group's first customer, with a pipeline of further opportunities being developed. Moreover, there is an increasing demand for digital services and solutions out of the Ireland-based operations.

 

Similarly, human capital management operations are experiencing positive digitalisation trends. New and existing clients are embracing the cloud-based resourcing SaaS platform, enabling simplification and best practice processes, alongside the uptake of AI functionality in our resource suitability engine introduced in the latest releases.

 

The Group has begun investing in system enhancements to bolster its growth strategy. Under the agreement with Capita plc for the acquired businesses, the Group engaged in a transitional services arrangement. The Group is currently advancing well-defined plans and executing actions to transition these services and systems onto the Group's new platforms.

 

M&A continues to be a core part of the Group's strategy and there has been a notable increase in inbound opportunities. The Board will continue to evaluate these against its acquisition criteria.

 

Financial review

For the six months ended 31 December 2023, during which the businesses were owned for approximately five months, revenue from continuing operations amounted to £15.1 million from the four acquired businesses. Recurring revenues from continuing operations as a proportion of total revenue was 76% during the period.

Revenue from Synaptic Software Limited, which was sold on 26 January 2024, contributed sales of £1.0 million during its five months of ownership and net profit of less than £0.1 million for the same period. This has been presented as discontinued operations in the condensed consolidated statement of comprehensive income.

Adjusted EBITDA from continuing operations, which is a key underlying measurement of the Group, was £3.7 million for the period. The table below reconciles to the Condensed Consolidated Statement of Comprehensive Income.

Summary results from continuing operations for the six months to 31 December 2023

£000s

 

 

Revenue

15,147


 

EBITDA

1,797

Acquisition expenses, stamp duties and relisting expenses

1,848

Share based payment expense

54

Adjusted EBITDA

3,699

Share based payment expense

(54)

Depreciation

(57)

Adjusted operating profit

3,588

Amortisation of acquired intangible assets

(1,134)

Acquisition expenses, stamp duties and relisting expenses

(1,848)

Fair value gain on Financial Assets

960

Operating profit

1,566

 

As we continue to standardise, optimise and integrate the acquisition businesses we believe this will lead to improved margins, albeit initially offset by the activities and costs of decoupling from the Capita plc systems and services.

Net cash was £78.7 million at December 31, 2023 (June 30, 2023 £104.7m prior net cash outflow of £30.4 million for the acquisitions).

Adjusted Operating cashflow was £4.3 million representing 116% cash conversion of adjusted EBITDA.

Free cash flow, as presented below, from continuing activities was £4.4 million.

Free cashflow from continuing activities

£000s



Operating profit

1,566

Fair value gain on Financial Asset

(960)

Depreciation

57

Acquisition expenses, stamp duties and relisting expenses

1,848

Amortisation and impairment of intangible assets

1,134

Share based payment expense

54

Adjusted EBITDA

3,699

Unrealised exchange losses

(1)

Decrease/(increase) in working capital

1,357

Capital expenditure

(775)

Adjusted operating cashflow

4,280

Cash Conversion

116%

Acquisition expenses, stamp duties and relisting expenses

(1,848)

Interest income

1,994

Free cashflow

4,426

 

The group has an investment in M&C Saatchi plc. This asset is held at fair value through profit or loss (FVTPL) and was valued at £19.2 million at 31 December 2023 (£18.2 million at 30 June 2023). An increase of £0.96 million in fair value was recognised in the Consolidated Statement of Comprehensive Income during the period.

The Group's profit before taxation was £3.3m (31 December 2022: loss £0.1m).

The Directors are not currently recommending a dividend. The Board intends to evaluate the Group's dividend policy following significant deployment of the raised capital and will only commence the payment of dividends when it becomes commercially prudent to do so.

Condensed Consolidated Statement of Comprehensive Income

 

 

Six months
ended

Six months
ended

 

 

31 December

31 December

 

 

2023

2022

 

 

Unaudited

Unaudited

 

 

£000s

£000s

 

 

 


Revenue


15,147

-



 


Cost of sales


(6,065)

-



 


Gross Profit


9,082




 


Administrative expenses


(7,285)

(167)

Depreciation


(57)


Amortisation of acquired intangibles


(1,134)


Fair Value on Financial Assets


960

(1,080)



 


Operating profit/(loss)


1,566

(1,247)



 


Net Finance Income


1,754

1,134



 


Profit/(loss) before tax for continuing operations

 

3,320

(113)



 


Taxation


(284)

-



 


Profit/(loss) for the period from continuing operations


3,036

(113)

 

 

 


Discontinued Operations

 

 


Profit for period from discontinued operations


48

-

 

 

 


Total comprehensive profit/(loss) for the period attributable to owners of the parent

 

 

3,084

 

(113)


 

 


Profit/(Loss) per ordinary share (£)

 

 


Basic


0.02

(0.00)

Diluted


0.02

(0.00)

 



Condensed Consolidated Statement of Financial Position


 

As at

31 December

2023

As at

30 June

2023


 

Unaudited

Audited

Non-current assets


£000s                      

£000s                      

Intangible assets


19,212

-

Goodwill


23,175

-

Property, plant and equipment


70

-

Contract fulfilment assets


892

-

Deferred tax


1,407

-

Financial asset at fair value through profit or loss


19,200

18,240

Non-current assets held for sale


471

-

 


64,427

18,240

Current assets


 


Trade and other receivables


7,794

1,011

Current Assets held for sale


455

-

Cash and cash equivalents


78,738

104,696

Total current assets

 

86,987

105,707



 


Total assets

 

151,414

123,947



 


Equity and liabilities


 


Sponsor shares


-

-

Ordinary shares


131,166

131,166

Warrant reserve


98

98

Warrant cancellation reserve


350

350

Share-based payment reserve


455

401

Accumulated losses


(5,745)

(8,829)

Total equity

 

126,324

123,186

 


 


Liabilities


 


Current liabilities


 


Trade and other payables


10,400

761

Contractual liabilities


10,859

-

Current Liabilities held for sale


796

-

Total current liabilities

 

22,055

761

 

 

 




 

 

 

As at

31 December

2023

As at

30 June

2023

 

 

Unaudited

Audited

 

 

£000s                      

£000s                      

Non-current Liabilities

 

 

 

Contractual liabilities


993

-

Provisions

 

2,042

-

Total non-current liabilities

 

3,035

761

 

 

 


Total equity and liabilities

 

151,414

123,947

 



Condensed Consolidated Statement of Changes in Equity

 

Sponsor share

£000s

Ordinary shares

£000s

Warrant reserves

£000s

Warrant cancellation Reserve

£000s

Share based payment reserve

£000s

Accumulated losses

£000s

Total equity

£000s

Balance as at 30 June 2022 (Audited)

 - 

131,166

 98 

350

 305 

(10,261)

121,658 

Total comprehensive loss for the period

 -  

 -  

 -  

-

 -  

(113)

(113)

Share-based payment expense

 -  

 -  

 -  

-

 48 

                - 

 48 

Balance as at 31 December 2022 (Unaudited)

 - 

131,166 

 98 

350

 353 

(10,374)

121,593 

Total comprehensive profit for the period

 -  

 -  

 -  

-

 -  

1,545

1,545

Share-based payment expense

 -  

 -  

 -  

-

 48 

                - 

 48 

Balance as at 30 June 2023 (Audited)

 - 

131,166 

 98 

350

 401 

(8,829)

123,186 

Total comprehensive profit for the period

 -  

 -  

 -  

-

 -  

3,084

3,084

Share-based payment expense

 -  

 -  

 -  

-

 54 

                - 

 54 

Balance as at 31 December 2023 (Unaudited)

 - 

131,166 

 98 

350

 455 

(5,745)

126,324 

 

Condensed Consolidated Statement of Cash Flows



Six months

ended

31 December

2023

Six months

ended

31 December

2022


 

Unaudited

Unaudited

Cashflow from operating activities 

 

£000s

£000s

Profit/(loss) before taxation for the period


3,368

(113)

Adjustments for:


 


Depreciation


57

-

Amortisation


1,134

-

Interest income


(1,752)

(1,134)

Fair Value adjustment on Investment


(960)

1,080

Unrealised exchange (losses)


(1)

-

Add back share-based payment expense


54

48

 


 


Working capital adjustments:


 


(Increase) in trade and other receivables and Prepayments


(665)

(288)

(Increase) in contractual fulfilment assets


(74)

-

 Increase/(decrease) in trade and other payables


2,223

(1,608)

Net cash flows from operating activities


3,384

(2,015)



 


Cash flow used in investing activities


 


Purchase of property, plant and equipment


(5)

-

Development of intangible assets


(886)

-

Acquisition of subsidiaries, net of cash acquired


(30,443)

-

Net cash flow used in investing activities


(31,334)

-

 


 


Financing activities


 


Interest income

 

1,992

861

Net cash flows from financing activities

 

1,992

861



 


Net (decrease) in cash and cash equivalents


(25,958)

(1,154)

Cash and cash equivalents at the beginning of the period


104,696

104,170

Cash and cash equivalents at the end of the period


78,738

103,016

 

 

Notes to the Condensed Consolidated Financial Statements

1.   GENERAL INFORMATION

AdvancedAdvT Limited was incorporated on 31 July 2020 in the British Virgin Islands ("BVI") as a BVI business company (registered number 2040954) under the BVI Business Company Act, 2004. The Company was admitted on the AIM Market of the London Stock Exchange on 10 January 2024 and has its registered address at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands VG1110 and UK establishment at 11 Buckingham Street, London WC2N 6DF.

The Company acquired five software and services businesses from Capita plc on 31 July 2023 (the "Acquisitions"). The Group 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). The Company is an agent for change, enabling 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. 

The Group is developing both organically and through acquisitions, by expanding its presence across adjacent markets, geographical boundaries and digital sectors. The Company's wholly-owned subsidiaries, together with the Company, the "Group".

2.   CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The preparation of the Financial Statements under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Key sources of estimation uncertainty

Identifiable assets acquired and liabilities assumed

As required by IFRS 3, we have measured the assets acquired and liabilities assumed on the acquisitions in the period at their fair value on acquisition. The fair values of contract liabilities at acquisition dates were estimated to obtain a price that would be paid to transfer the liability in an orderly transaction between market participants. The approach used was based on a market participant's estimate of the costs that will be incurred to fulfil the obligation plus a normal profit margin, based on the overall cost profile over the life of the contract.

The determination of the fair value of assets and liabilities including goodwill arising on the acquisition of businesses, the acquisition of branding, customer relationships and intellectual property, whether arising from separate purchases or from the acquisition as part of business combinations, and development expenditure which is expected to generate future economic benefits, are based, to a considerable extent, on management's estimations.

The fair value of these assets is determined by discounting estimated future net cash flows generated by the asset

where no active market for the assets exists. The use of different assumptions for the expectations of future cash

flows and the discount rate would change the valuation of the intangible assets.

Whilst the accounting for business combinations is substantially complete, certain acquisition fair value estimates are in the process of being finalised.  Management have engaged with specialists in this regard and at the date of this report do not expect any differences to have a material effect on the numbers as reported in these Consolidated Interim Financial Statements.

Critical accounting judgements

Revenue Recognition

There are a number of areas where judgement has been applied in respect of revenue recognition.  A description of the way in which revenue and associated assets are recognised is detailed in the notes to the Financial Statements.

Recovery of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Provisions

Onerous contract provisions are recognised where the unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.

 

3.   ALTERNATIVE PERFORMANCE MEASURES

In reporting financial information, the Group presents alternative performance measures ("APMs") which are not defined or specified under the requirements of IFRS. The Group believes that these APMs, which are not considered to be a substitute for IFRS measures, provide stakeholders with additional useful information on the underlying trends, performance and position of the Group and are consistent with how business performance is measured internally. The alternative performance measures are not defined by IFRS and therefore may not be directly comparable with other companies' alternative performance measures. The key APMs that the Group uses are outlined below.


Closest equivalent IFRS measure

Reconciling items to IFRS measure

Definition and purpose

Income Statement Measures

Adjusted EBITDA OR PBT

Operating Profit OR Profit before Tax

Adjusting items

Adjusted Operating profit/Profit before tax excludes adjusting items.

Adjusting items

None

Refer to definition

Items which are not considered part of the normal operating costs of the business, are separately disclosed because of their size, nature or incidence are treated as adjusting. The Group believes the separate disclosure of these items provides additional useful information to users of the financial statements to enable a better understanding of the Group's underlying financial performance. These may include the financial effect of adjusting items such as, inter alia, restructuring costs, impairment charges, amortisation of acquired intangibles, costs relating to business combinations, one-off foreign exchange gains or losses, integration costs, acquisition-related expenses, share-based payment charges, contingent consideration and earn-outs, cloud computing configuration and customisation costs, and right-of-use asset disposal gains or losses.

Recurring Revenue

Revenue

Refer to segmentation

Recurring revenues are defined as the revenue streams of the Group that are recurring in nature.

Transactional Revenue

Revenue

Refer to segmentation

Transactional revenue is defined as the streams of the Group that arise from one-off fees and service engagements.

Balance Sheet Measures

Net cash or debt

None

Refer to definition

Net cash debt is defined as Cash and cash equivalents and short-term deposits, less Bank overdrafts and other current and non-current borrowings.

Cash Flow Measures

Cash conversion

None

Refer to definition

Adjusted operating cash flow as a percentage of Adjusted EBITDA.

Free cash flow

None

Refer to definition

Cash flow in the period after accounting for operating activities, investing activities, lease payments, interest and tax.

 



 

4.   SEGMENT INFORMATION

Revenue from continuing operations


Six months
ended 31

December

2023

Unaudited

Six months
ended 31

December

2022

Unaudited


£000s

£000s

Recurring Revenues

11,575

-

Transactional Revenues

3,572

-

 

15,147

-

Revenue is recognised for each category as follows:

• Recurring Revenues: income occurring continuously and repeatedly.

• Transactional Revenues: recognised at the point of transfer (delivery) to a customer

Operating segments

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision makers to allocate resources to the segments and to assess their performance.

The chief operating decision makers have been identified as the Executive Directors. The Group revenue is derived from the sale and subscription of recurring and transactional revenue engagements with its customers. Consequently, the Executive Directors review the two revenue streams, but as the costs are not recorded in the same way, the information on costs is presented as one segment and as such the information included below is presented in line with management information.

 

Six months
ended

Six months
ended

 

31 December

31 December

 

2023

2022

 

Unaudited

Unaudited

 

£000s

£000s

 

 


Revenue

15,147

-


 


EBITDA

1,797

(167)

Acquisition expenses, stamp duties and relisting expenses

1,848

(104)

Share based payment expense

54

48

Adjusted EBITDA

3,699

(223)

Share based payment expense

(54)

(48)

Depreciation

(57)

-

Adjusted operating profit

3,588

(271)

Amortisation of acquired intangible assets

(1,134)

-

Acquisition expenses, stamp duties and relisting expenses

(1,848)

104

Fair Value gain on Financial Assets

960

(1,080)

Operating profit

1,566

(1,247)

 



 

5.   EMPLOYEES AND DIRECTORS

(a)   Employment costs for the Group during the period:


Six months
ended 31

December

2023

Unaudited

Six months
ended 31

December

2022

Unaudited


£000s

£000s

Wages and salaries

6,758

96

Pension contributions

179

4

Social security costs

638

12

Total employment costs expense

7,575

112

 

(b)   Key management compensation

The Board considers the Directors of the Company, to be the key management personnel of the Group. 

During the six months ended 31 December 2023, the Company had the following executive directors: Vin Murria, Gavin Hugill and Karen Chandler.  The roles and responsibilities and salaries of all directors changed following the completion of the Acquisitions and subsequent re-listing. 

In conjunction with the Company's admission to AIM, in addition to Mark Brangstrup Watts, two independent non-executive directors were appointed, Barbara Firth (the Senior Independent Director) and Paul Gibson.

Full details in respect of the directors' roles and remuneration are set out in the Company's prospectus dated January 8th, 2024.

Vin Murria, Gavin Hugill, Karen Chandler and Mark Brangstrup Watts all have a beneficial interest in the A ordinary shares (Incentive Shares) issued by the Company's subsidiary.

(c)   Employed persons

The average monthly number of persons employed by the Group (including Directors) during the period was as follows (persons from Acquisitions included for five of the six months):


Six months
ended 31

December

2023

Unaudited

Six months
ended 31

December

2022

Unaudited


number

number

Leadership

9

2

Management

6

-

Technical

165

-

Sales & Marketing

18

-

Administration

11

-


209

2

 



 

 

6.   INTANGIBLE ASSETS

 

Goodwill

Customer relationships

Brand names

Software and IP on Acquisition

Internal Software Development

Total

 

£000s

£000s

£000s

£000s

£000s

£000s

Cost

 

 

 

 

 

 

Additions on Acquisition

23,175

8,678

1,558

9,340

-

42,751

Additions*

-

-

-

-

              770 

770

At 31 December 2023

23,175

8,678

1,558

9,340

770

43,521


 

 

 

 

 

 

Accumulated amortisation

 

 

 

 

 

 

Additions on Acquisition

-

-

-

-

-

-

Amortisation

-

362

130

642

-

1,134

At 31 December 2023

-

362

130

642

-

1,134


 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

At 31 December 2023

23,175

8,316

1,428

8,698

770

42,387


 

 

 

 

 

 

 

*Synaptic, an asset head for sale, added a further £116,000 of Internal software development in the period.

 

7.   ACQUISITIONS

In the period, the Group acquired five businesses - IBSS, CHKS, Retain, WFM and Synaptic. Outlined below is a summary of the consideration paid, the provisional fair value of acquired intangible assets, the provisional fair value of other acquired assets and liabilities assumed at the acquisition date and the resulting goodwill for each entity acquired, subject to the finalisation of the purchase price allocation report.

On 31 July 2023, AdvancedAdvT Limited completed the acquisition of five businesses from Capita plc for cash consideration of £44 million, funded from the Company's cash resources. The net cash outflow as detailed below reflects the consideration paid, net of the cash acquired.  Details on each of the entity's acquired is set out below:

• Business Solutions (IBSS): provision of financial management software solutions and services. Innovative software solutions allows organisations to achieve their financial and eBusiness strategies by driving transformational changes. Its solutions can be hosted in both the private and public cloud and are trusted by more than 150 public, health and private organisations in the UK and Ireland. The use of AI and digitalisation are expected to be highly valuable to these markets.

Healthcare Compliance (CHKS): one of the leading providers of healthcare intelligence compliance and benchmarking software to address the governance, risk and compliance needs of its healthcare customers. Its UK based tech-enabled solutions of accreditation, benchmarking and coding services play a role in transforming healthcare services, knowledge sharing and best practice to the healthcare industry globally.

Human Capital Management (Retain): an industry leading global resource planning and talent management software and service provider. Its solutions integrate with leading enterprise resource planning systems and are trusted by some of the largest global consultancies to deliver effective management and allocation of resources; optimise utilisation and productivity, and enable efficient cost management, financial and staff planning tasks.

Human Capital Management (WFM): a workforce management software provider, with well-established UK presence and embedded relationships across 300+ clients. They can handle highly complex payroll and workforce management requirements whilst providing real-time employee tracking and tangible efficiency benefits through it comprehensive time and attendance and access control solutions.  

Research and Data (Synaptic): is an end-to-end research led SaaS technology solution platform with a full suite of independent data, compliance, risk, suitability and research tools to the UK financial advice market. The Board concluded that it would be better for Synaptic to have a more strategically aligned owner and on 21 November 2023 agreed to its Disposal, which was completed on 26 January 2024.

The following table summarises the consideration paid for acquisitions, the fair value of assets acquired and liabilities assumed at the acquisition date.

 

IBSS

CHKS

Retain

WFM

Synaptic

Total

 

Fair value

Fair value

Fair value

Fair value

Fair value

Fair value

 

£000s

£000s

£000s

£000s

£000s

£000s

Consideration






 

Cash

26,116

4,854

8,281

2,741

2,403

44,395







 

Cash and cash equivalents acquired

5,765

2,009

3,395

1,214

1,569

13,952

Net Cash outflow

20,351

2,845

4,886

1,527

834

30,443








Property, plant and equipment

-

121

-

-

-

121

Trade and other receivables

3,875

1,415

1,451

321

373

7,435

Trade and other payables

(668)

(240)

(1,010)

(187)

(402)

(2,507)

Contractual Liabilities

(7,782)

(1,039)

(3,472)

(1,406)

(187)

(13,886)

Contract fulfilment assets

656

-

103

59

-

818

Tax liability on intangibles

(2,766)

(439)

(390)

(542)

-

(4,137)

Deferred tax assets on acquisition

544

(208)

580

643

331

1,890

Provision

(2,042)

-

-

-

-

(2,042)

Customer relationships identified on acquisition

5,214

1,424

1,144

896

-

8,678

Software and intellectual property identified on acquisition

6,362

238

1,501

1,239

-

9,340

Brand name identified on acquisition

717

317

417

107

-

1,558

Total identifiable net assets

4,110

1,589

324

1,130

115

7,268

Goodwill

16,241

1,256

4,562

397

719

23,175


20,351

2,845

4,886

1,527

834

30,443

 

Amortisation period






 

Customer relationships

10years

10years

10years

10years


 

Software and IP on acquisition

6years

5years

8years

5years


 

Brand name identified

5years

5years

5years

5years


 

 

Acquisition related costs of £0.8 million has been charged to the statement of comprehensive income within administration expenses in the six months to 31st December, relating to the acquisition of the five businesses.

None of the goodwill is expected to be deductible for tax purposes.

The acquisitions recognised £16.1 million of revenue for the period between the date of acquisition and the balance sheet date and £3.0 million of profit before tax attributable to equity holders of the parent. As a preliminary assessment, had the acquisitions been completed on the first day of the period, as opposed to the completion date of 1 August 2023, Group revenues from continuing activities would have been approximately £2.9 million higher and group profit before tax attributable to equity holders of the parent would have been approximately £0.3 million higher.

8.   POST BALANCE SHEET EVENTS

On 21 November 2023 the Group conditionally agreed to sell Synaptic for an enterprise value of £3.5m. The sale was subject to and conditional upon FCA approval which was duly received resulting in the completion of the sale on 26 January 2024.

No other matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs as at the date of this report.

 

9.   DISCONTINUED OPERATIONS  

On 21 November 2023, the Company conditionally agreed to sell Synaptic. Synaptic has been classified as a discontinued operation within the Interim Financial Statements.

Results of Synaptic Software Limited included in the group consolidation for the period are presented below: 


Six Months to 31 December 2023 

Six Months to 31 December 2022


£000s

£000s

Revenue from contracts with customers 

1,009 

-

Expenses 

(959) 

- 

Operating Income 

50 

- 

Finance Costs 

2 

- 

Profit/(Loss) before tax for discontinued operations 

48 

- 

Tax benefit/(Expense) 

- 

- 

Profit/(Loss) for period from discontinued operations 

48 

- 

 

The discontinued operation was not material to the calculation of earnings per share.

The following assets and liabilities were reclassified as held for sale in relation to the discontinued operation as at 31 December 2023:


As at 31 December 2023

£000s 

As at 30

June 2023

£000s

Assets classified as held for sale


-

Intangible Assets

116

- 

Deferred Tax

355

- 

Total intangible assets held for sale

Trade and other receivables

471

455

-

- 

Total assets held for sale

926

-




Liabilities classified as held for sale



Trade and other payables

661

-

Contractual liabilities

128

-

Current tax payable

7

-

Total liabilities held for sale

796

-

The discontinued operation generated the following cashflows which have been included in the cash flow statement:


Six Months to 31 December 2023

£000s

Six Months to 31 December 2022

£000s




Operating activities

176

- 

Investing activities

(116)

- 

Financing activities

(2)

-

Total cashflow contributed by the discontinued operation

58


 

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