Ideagen PLC Acquisition of Covalent Software Ltd (4674G)
August 08 2016 - 2:00AM
UK Regulatory
TIDMIDEA
RNS Number : 4674G
Ideagen PLC
08 August 2016
8 August 2016
Ideagen PLC
("Ideagen" "the Company" or "the Group")
Acquisition of Covalent Software Ltd
Ideagen PLC (AIM: IDEA), a leading supplier of Information
Management software to highly regulated industries, is pleased to
announce the acquisition of the entire issued share capital of
Covalent Software Limited ("Covalent") for a net cash consideration
of GBP3.6m ("the Acquisition") payable from Ideagen's existing cash
reserves.
Highlights
-- Covalent is a profitable and cash generative software company
that has developed a leading Governance, Risk and Compliance
("GRC") cloud-based software platform primarily for the Public
Sector and Financial Services markets.
-- Based in Taunton, Covalent currently employs 37 staff and has
approximately 200 customers generating approximately GBP2.2m of
revenue annually of which GBP1.9m is recurring.
-- The Acquisition is in line with the Group's strategy of
acquiring complementary businesses with strong IP and recurring
revenues. Covalent has outstanding IP that can be readily
integrated with the Group's existing product set to build a broader
and more valuable GRC solution.
-- The Acquisition is expected to be immediately earnings enhancing.
-- Covalent's unaudited total revenues for the six months to 30
June 2016 were GBP1.1m which generated EBITDA of GBP0.16m.
-- Ideagen will benefit from a saving relating to outgoing
Covalent directors of approximately GBP0.18m per annum. A
proportion of this will be realised in the current financial year
following a period of handover and integration.
-- Ideagen has identified approximately GBP0.1m of further
synergies, which the Directors anticipate will be achievable during
the 12 month period ending 30 April 2018.
David Hornsby, CEO of Ideagen, commented; "Covalent will be a
valuable addition to the Group and is in line with our strategy of
acquiring business that have strong IP and healthy recurring
revenues. Covalent has established an extremely compelling value
proposition and brings to the Group a complementary cloud solution
offering, a talented workforce and long-term customer relationships
which further consolidates our position in the NHS, local
government and financial services verticals."
Enquiries:
Ideagen plc 01629 699100
David Hornsby, Chief
Executive
Graeme Spenceley, Finance
Director
finnCap Limited 020 7220 0500
Stuart Andrews/James
Thompson (Nomad)
Stephen Norcross (Corporate
Broking)
Alma PR 020 8004 4218
Hilary Buchanan
Josh Royston
Consideration
Total cash consideration payable at completion is GBP4.7 m.
Covalent has net cash reserves of GBP1.1m, giving net cash
consideration of GBP3.6m. The net consideration will be met from
Ideagen's existing cash reserves (30 April 2016: GBP6.3m).
In the year ended 31 December 2015 Covalent generated revenues
of GBP2.07m and EBITDA excluding capitalisation of development
costs of GBP0.24m.
Acquisition Rationale
The Acquisition is in line with the Group's strategy of
acquiring businesses with strong IP and recurring revenues that
supply GRC Solutions to regulated sectors. Covalent has outstanding
IP that can be readily integrated with the Group's existing product
set to build a broader and more valuable GRC solution, which will
provide significant cross selling opportunities and a strong
platform for future growth. Covalent's solutions are delivered via
its cloud-based platform and further enhances Ideagen's cloud
development strategy, which the Directors believe is an area of
significant growth area for the Group.
Covalent has a talented workforce, which will add to the
R&D, support and sales functions of Ideagen. Covalent's Finance
and Operations Director, Steve Maggs will remain with the enlarged
Group and will be appointed to the role of Director of the Covalent
Business Unit, reporting directly to Barnaby Kent, COO of Ideagen,
on completion of the Acquisition.
About Covalent
Covalent, a Taunton based software company established in 2003,
has developed and commercialised a proprietary GRC platform which
has gained significant traction in the UK Public Sector.
Covalent currently employs 37 staff and has approximately 200
customers across the NHS, Local Government, Housing Association and
Financial Services sectors.
Covalent has recently released a Cloud Based version of its
software following approximately 40 man years of development which
has driven strong growth in recurring revenues.
Covalent reported unaudited revenue of approximately GBP2.07m
and generated EBITDA excluding capitalisation of development costs
of GBP0.24m for the year ended 31 December 2015. In addition
Covalent currently has recurring revenues of approximately GBP1.9m
per annum. Covalent is debt free with current cash balances of
approximately GBP1.1m. As at 31 December 2015 Covalent had gross
assets of GBP2.0m.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
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