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LONDON (Alliance News) - Software services firm Gresham Technologies PLC said Wednesday it has acquired cash management and payments software firm B2 Group Sarl for up to EUR8.5 million, whilst it also expects interim revenue to be down on delayed contracts.
"We're delighted to be announcing today's acquisition of B2 Group," Gresham Chief Executive Officer Ian Manocha said. "This exciting combination creates an industry leader in multi-bank integration and control solutions for corporates, banks, insurers and asset managers, it strengthens our cloud capabilities and gives us a platform to further accelerate our growth in continental Europe."
Gresham will pay an initial EUR3.7 million comprising EUR3.4 million in cash and 134,440 newly issued shares at a price of 197.4 pence each.
The remainder payable as a deferred consideration depending on revenue and profit targets being achieved over the two-years following the completion of the acquisition. The deferred consideration will be no more than EUR4.9 million and will be paid in cash unless Gresham chooses to pay up to 50% through the issue of new shares.
B2 will add a further EUR1.4 million in annualised recurring revenue to the combined business. The deal is expected to be earnings enhancing from the first full year and complement its Clareti business.
In 2017, Gresham generated GBP3.1 million in pretax profit on revenue of GBP21.7 million.
After admission to trading of the initial consideration shares - expected next Monday - Gresham will have 67.7 million shares outstanding.
In a separate announcement, Gresham expected revenue for the six months ended June to be down by 5% compared to the year prior.
For comparison, during the six months ended June 2017, Gresham generated GBP1.1 million pretax profit on revenue of GBP9.8 million.
This was after non-Clareti revenue is expected to fall 21% due to "lower than expected" bookings from its Australian sub-contracting unit. This is expected to be offset by higher booking in the second half of the year.
Clareti revenue, however, rose 12%. This is after recurring revenue rose 17% and services revenue jumped 56%. Software revenue will be similar to the year prior due to some new contracts being delayed until the second half of the year.
Contracts delay is expected to impact interim adjusted earnings before interest, taxes, depreciation and amortisation. For the full year, adjusted Ebitda is expected to be "broadly" in line with the year prior. The firm remains confident for its full year outlook.
"We won six new Clareti contracts in the first half of 2018 and have just completed the acquisition of the B2 Group bringing a further 15 customers into the Group," Manocha added. "Our recent investments in direct sales, marketing and alliances have contributed to a strengthening Clareti pipeline and we are expecting a strong second half of the year."
Interim results are due to be released on July 24.
Shares in Gresham were 12% lower at 172.50 pence on Wednesday.