Aptitude Regulatory News (APTD)

11 October 2021

Aptitude Software Group plc

("Aptitude Software" or the "Group")

 Acquisition of MPP Global Solutions Limited

Highly complementary product offering and global customer base

Aptitude Software, the specialist provider of finance transformation and automation software, is pleased to announce the acquisition of MPP Global Solutions Limited ("MPP Global"), an international provider of cloud-based subscription management and billing technology ("eSuite") for a total enterprise value of £37.1 million (the "Acquisition").

Acquisition highlights

· MPP Global provides a modular, cloud-based, end-to-end SaaS solution to large, international, enterprise customers across the media and publishing sector and a growing number of other verticals

· MPP Global's Annual Recurring Revenue ('ARR') at 30 June 2021 is £8.0 million across approximately 40 clients

· MPP Global's eSuite platform is focused on the subscription economy and provides identity management, CRM, automated billing, payment processing, and churn management capabilities

· Strong strategic acquisition rationale, in-line with Aptitude Software's stated strategy, with the Acquisition accelerating the Group's product roadmap and competitive positioning in end-to-end revenue automation

· MPP Global has a high proportion of recurring revenue, increasing Aptitude Software's overall recurring revenue proportion to 62% on a pro forma basis1

· Highly complementary product offering and global client base presenting a number of cross sell opportunities in both businesses, including adding strength in new sectors

· MPP Global brings c. 100 new employees to the Group, most based in northern England. The business's North West England headquarters is set to become a second long-term innovation centre for the Group, with c. 60 team members in the MPP Global Software and Technology teams

· MPP Global's founding directors will support the initial integration into the Group

Information on MPP Global

MPP Global's eSuite platform, focused on the subscription economy, offers a modular, cloud-based, end-to-end SaaS solution to large enterprise customers, enabling identity management, CRM, automated billing, and payment processing. MPP Global's customers are largely located in the European and North American media and publishing sector alongside a growing number of other verticals.

MPP Global has significantly broadened the applicability of its eSuite platform to take advantage of these growing verticals. eSuite's ability to manage both physical and digital subscriptions means it is well positioned to expand Aptitude Software's revenue management offering into an end-to-end subscription, billing, and revenue automation solution and is expected to provide further opportunities for automation and growth to Aptitude Software's existing customer base.

MPP Global's Annual Recurring Revenue ('ARR') at 30 June 2021 was £8.0 million across approximately 40 clients. MPP Global's revenue for the year ended 30 June 2021 was £10.4 million with a profit before tax for the year ended 30 June 2021 of £0.1 million. MPP Global's gross assets as at 30 June 2021 were £5.1 million, principally made up of cash and trade receivables.

Strategic rationale for the Acquisition

The Acquisition reflects Aptitude Software's stated strategy of acquiring businesses which accelerate the Group's product strategy, expand on its capabilities to automate complex finance functions, and support its continued global growth across a broad range of sectors.

The Acquisition is also supported by positive global market tailwinds as dynamics continue to shift towards a subscription-based economy, observed by Aptitude Software through its Aptitude Revenue Management client base in medical technology, advanced manufacturing, and other sectors. The Acquisition will enable the Group to provide full, end-to-end solutions which automate the revenue lifecycle of the subscription economy, from subscriber acquisition and billing through to Aptitude Software's existing revenue management and recognition capabilities.

The Acquisition will strengthen Aptitude Software's presence in global technology, media, and telecom verticals where businesses are increasingly adopting subscription models. Aptitude Software and MPP Global together support robust product functionality with deep expertise across multiple industries, and we envision continued adoption across these verticals for the Group's wider product suite.

MPP Global has a high proportion of recurring revenue, increasing Aptitude Software's overall recurring revenue proportion to 62% on a pro forma basis1. Following the Acquisition, the combined group will be providing revenue automation focused solutions to over 75 organisations, representing approximately 46% of the Group's Annual Recurring Revenue. It is anticipated there will be a number of cross sell opportunities within this combined client base with MPP Global's eSuite clients also potential users of the Group's finance transformation products, including the Revenue Management solution & Aptitude Accounting Hub. Aptitude Software's clients are potential users of eSuite as subscription-based business models continue to gain traction in the Group's target industries.

Given the direct adjacency and advanced technical design of the products, we envision the integration of Aptitude Software and MPP Global to be completed in H2 2022, paving the way for new and sustained growth of a best-in-breed solution for end-to-end revenue automation.

MPP Global brings c. 100 new employees to the Group, most based in northern England. The business's North West headquarters is set to become a second long-term innovation centre for the Group, with c. 60 team members in the MPP Global Software and Technology teams.

Terms and financial effects of the Acquisition

Consideration for the entire issued and to be issued share capital of MPP Global is £38.7 million, which includes £1.6 million of net cash in MPP Global (the "Consideration"). Of the Consideration, £35.4 million is payable in cash at completion and will be satisfied using Aptitude Software's existing cash resources. The balance of the Consideration will be satisfied by the issue of 492,537 new ordinary shares at an issue price of 670 pence each, being the average mid-market closing price for an ordinary Aptitude Software share for the 5 business days preceding 8 October 2021 (the "New Ordinary Shares"). These New Ordinary Shares will be subject to a twelve-month lock-in. It is expected that a loan facility will shortly be agreed which will provide the Group with the capability for further well-targeted acquisitions in the future.

The majority shareholders of MPP Global include Grafton Capital and AlbionVC, alongside founders Paul Johnson and Chris Cheney (the "Founders") and their families. The Founders will support the initial integration of MPP Global into the Group before exiting the business.

With organisational and product integration costs expected to be incurred in the first two years of the Group's ownership, the acquisition of MPP Global is expected to be break even for the Group by 2023 and earnings enhancing the following year. This statement is not meant or intended to be a profit forecast and should not be interpreted to mean that the earnings per share of Aptitude Software following completion of the Acquisition will necessarily be above or below the historical published earnings per share.

The Acquisition is unconditional and has now completed.

Admission of the New Ordinary Shares and total voting rights

Application has been made by the Group to the Financial Conduct Authority and to the London Stock Exchange for the New Ordinary Shares, which will rank pari passu with all existing ordinary shares, to be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities ("Admission"). It is expected that Admission will become effective and dealings will commence on or around 12 October 2021.

On Admission, Aptitude Software's issued share capital will comprise 57,103,795 ordinary shares of 7 1/3 pence each with voting rights ("Ordinary Shares"). No Ordinary Shares are held in treasury. The voting rights of all of the Ordinary Shares are identical. The figure above may be used by shareholders as the denominator for the calculation by which they will determine whether they are required to notify their interest in, or a change to their interest in, Ordinary Shares in Aptitude Software Group plc under the FCA's Disclosure Guidance and Transparency Rules.

Jeremy Suddards, Chief Executive Officer of Aptitude Software, said:

"I am delighted to welcome the MPP Global team and customers into the Group, expanding both our current offering and future innovation capabilities. We believe MPP Global is a strong strategic fit, with both businesses positioned to capitalise on the growth in Subscription offerings, and we are excited for the new opportunities the acquisition will bring."

For more information, please contact:

Notes

1 Calculated on a pro-forma basis using 12 months revenue up to 30 June 2021 for both Aptitude Software and MPP Global

About Aptitude Software

Aptitude Software's innovative solutions address the growing trend for finance automation, whether part of a broad digital finance transformation by a client or to address specific regulatory requirements. Our various products take data from complex systems, typically with multiple siloed data sources across multiple business entities, automate complex accounting calculations and create a unified view of finance. This allows our clients to reap numerous benefits including significant efficiencies, business insights, enhanced control, and regulatory compliance. Our clients include some of the world's largest companies, typically organisations with complex financial data and technology landscapes. Development, together with a growing number of other services, continues to be performed at the Aptitude Innovation Centre in Poland with sales, support and implementation services provided from Aptitude Software's offices in London, North America, and Singapore.

www.aptitudesoftware.com