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 | Six months |
|
| 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 December 2023 Unaudited | Six months 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 | Six months |
| 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 December 2023 Unaudited | Six months 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 December 2023 Unaudited | Six months 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 |
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|
|
|
|
|
|
Accumulated amortisation |
|
|
|
|
|
|
Additions on Acquisition | - | - | - | - | - | - |
Amortisation | - | 362 | 130 | 642 | - | 1,134 |
At 31 December 2023 | - | 362 | 130 | 642 | - | 1,134 |
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Carrying amount |
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|
|
|
|
|
At 31 December 2023 | 23,175 | 8,316 | 1,428 | 8,698 | 770 | 42,387 |
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*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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