Advancedadvt Regulatory News (ADVT)

7 May 2024

AdvancedAdvT Limited

Acquisition of Celaton and year-end trading update

AdvancedAdvT Limited (AIM: ADVT, "AdvT", "the Group"), the international software solutions provider for the business solutions, healthcare compliance, and human capital management sectors has agreed to acquire Celaton Ltd ("Celaton"), the operator of an intelligent document processing platform inSTREAM (the "Acquisition"), for cash consideration of £5.0 million net of cash acquired of £1.5m1.

The Group has also published a year-end trading update for the eight months to 29 February 20242.

Acquisition highlights

· Acquisition of the entire share capital of Celaton for cash consideration of £5.0 million net of cash acquired, funded from the Group's existing cash resources.

· Celaton is a machine-learning AI based intelligent process automation (IPA) platform (inSTREAM). Functionality provides intelligent document processing (IDP) with automatic data recognition, classification, validation and enrichment, continual process automation with machine-learning AI algorithms and analytics. 

· Celaton is highly complementary to AdvT's existing business:

o  IBSS3 clients are expected to be the primary beneficiaries of the acquisition.

o  IBSS clients working within end-to-end business processing, accounts payables and sales order processing automation will benefit from InSTREAM's improved efficiency, throughput, and enhanced compliance - providing mutual benefits to both the customer and supplier relationship.

o  Opportunity for both revenue and efficiency synergies across the Group. 

· In the two years prior to this acquisition, Celaton invested £2.3m in product development, targeted at platform AI capabilities, web user interface and multi-language support - now aligned to support the growth of the product into adjacent markets.

· Customers consist of multi-national well-known enterprises with high volume e-invoicing and document process needs including Talk Talk, Currys and Capgemini.

In the 12 months ended 30 June 2023, Celaton recorded revenue of £3.3m, (80% recurring subscription/transactional) with EBITDA4 before development costs of £1.2m5. As at 30 June 2023, Celaton had net assets of £1.5m.

Completion of the Acquisition is subject to and conditional upon National Security and Investment Act approval and a further announcement will be made in due course.

Year-end trading update

The Group expects to report good progress against key financial metrics, providing a strong platform for further growth, based on the unaudited financial results for the eight months to 29 February 2024.

Revenues and Adjusted EBITDA6 continued to perform well, ahead of pre-acquisition trading benefitting from the actions outlined at the time of the Group's interim results announced 28 March 2024. Recurring revenues remain at approximately 77% of continuing revenues.

Profit before tax will benefit from the gain on the sale of Synaptic Limited in the order of £2.6 million, increase in fair value of investment in M&C Saatchi plc in the order of £2.5 million and Interest income in the order of £2.2 million.

Net cash and investments held as at 29 February 2024 totalled £102.9m. Net cash was £82.1m with a further £20.8m held as an investment in M&C Saatchi plc.

Vin Murria, AdvancedAdvT's Executive Chairperson, said

"Celaton operates within a market experiencing significant rising demand for AI, automation and efficiencies. It will be immediately beneficial to the wider AdvT client base, with its e-invoicing, AI, document processing IP centric product. This is especially timely considering the recent notice that a material alternative supplier intends to withdraw from the market, creating further immediate opportunities.

"This is a highly complementary, earning enhancing addition to the Group, which will benefit from being part of a larger business."

Related party transaction

The Acquisition constitutes a related party transaction for the purposes of the AIM Rules for Companies. Vin Murria, a Director and substantial shareholder of AdvT, and BGF Investment Management, a substantial shareholder of AdvT, each own approximately 45% of Celaton. In addition, Karen Chandler, a Director of AdvT, is Chief Operating Officer and a minority shareholder of Celaton.

The Directors independent of the Acquisition (Gavin Hugill, Mark Bangstrup Watts, Paul Gibson and Barbara Firth) having consulted with the Group's nominated adviser, Singer Capital Markets, consider that the terms of the Acquisition to be fair and reasonable insofar as shareholders are concerned.

1 Cash as at 30 April 2024.

2 The Group, as previously announced, has changed its financial year to the end of February.

3 Integrated Business Software and Solutions Limited and IB Software and Solutions (Ireland) Limited, together "IBSS".

4 "EBITDA" defined as Earnings before Interest, Tax and Amortisation.

5 Under IFRS, the treatment of development costs are subject to capitalisation.

6 Adjusted EBITDA as defined in the Interim financial statements, excluding non-trading costs such as Acquisition and AIM admission costs.

Enquiries:

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.