TIDMAPTD
RNS Number : 5402A
Aptitude Software Group PLC
30 May 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT
JURISDICTION.
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No 596/2014 (the
"Market Abuse Regulation").
30 May 2019
Aptitude Software Group plc
("Aptitude", the "Group" or the "Company")
Proposed sale of Microgen Financial Systems Limited
for cash consideration of GBP51.0 million
Aptitude Software Group plc (LSE: APTD), a leading provider of
business-critical software and services, today announces that it
has entered into an agreement to sell the entire issued share
capital of its wholly-owned subsidiary, Microgen Financial Systems
Limited ("MFS"), to Moscow Bidco Limited, a newly incorporated
private limited company controlled by funds advised by Silverfleet
Capital Partners LLP ("Silverfleet"), for an aggregate cash
consideration of GBP51.0 million (the "Disposal").
The Disposal is conditional only upon the approval of Aptitude's
shareholders at a general meeting.
Highlights
-- The Disposal is a major milestone in the Group's long term
strategy of creating two independent software businesses which
benefit from recurring revenues, and represents the start of a new
era which sees the Aptitude Software business become the total
focus of the Group.
-- On 25 March 2019, Aptitude announced that it had concluded
that a demerger of MFS on to AIM would enhance the Group's ability
to allocate capital and management attention on the higher growth
Aptitude business, whilst also providing MFS with the ownership
environment for it to successfully pursue its own independent
growth strategy focusing on its specialist target market and
servicing its international customer base. The Aptitude Board
considers that the benefits to Aptitude of a demerger also apply to
Aptitude in the case of the Disposal.
-- Following the announcement on 25 March 2019, discussions have
been held with Silverfleet in respect of the potential acquisition
of MFS and the Board of Aptitude is now pleased to announce the
Disposal.
-- The Board of Aptitude believes that the aggregate cash
consideration of GBP51.0 million represents a fair value for the
business, which recognises MFS' market position, track record of
organic growth and positive cash characteristics. Furthermore, the
Board of Aptitude believes that the Disposal provides certainty
over the crystallisation of the value of MFS without the longer
timeframe and risk associated with the previously announced
demerger process.
-- Assuming Completion on 30 June 2019, the Net Cash Proceeds
arising from the Disposal are expected to be approximately GBP48.4
million.
-- The Aptitude Board intends that the Company will return a
significant majority of the Net Cash Proceeds to shareholders,
unless more value creating opportunities arise and subject to
prevailing market conditions.
o In determining the optimal route to return a significant
majority of the Net Cash Proceeds and the timescale to do so, the
Board will consider a number of factors, including the scale of the
proceeds to be returned and the balance of shareholder
preference.
-- Aptitude's strategy is, and following the Disposal will be,
to continue to drive growth in revenues from its suite of
specialised applications which enable finance functions to comply
with complex regulations and/or provide financial insight and
control to their organisations.
-- Due to its size, the Disposal constitutes a Class 1
transaction under the Listing Rules and is therefore subject to the
approval of shareholders. A circular containing further details of
the proposed Disposal and containing the notice convening a general
meeting to consider a resolution to approve the Disposal (the
"Circular"), will be sent to Aptitude shareholders as soon as
practicable.
-- Subject to the approval of shareholders, Completion of the
Disposal is expected to take place in late June 2019.
-- In the financial year ended 31 December 2018, MFS generated
revenue of GBP18.0 million, Adjusted Operating Profit of GBP7.0
million, profit before taxation of GBP9.1 million (benefitting from
a GBP3.2 million gain on the disposal of the small non-core
Payments business) and, as at 31 December 2018, had gross assets of
GBP41.1 million.
Commenting on the Disposal, Ivan Martin, Chairman of Aptitude,
said:
"I am pleased to announce today the sale of Microgen Financial
Systems. The Disposal represents a significant milestone in the
strategic development of the Group and, as was the case with the
previously announced proposed demerger, the Board strongly believes
that the Disposal enhances the long-term prospects of both
businesses and will benefit clients and employees.
"In line with my comments on 25 March 2019, we believe that the
Disposal will simplify the Group, allowing the higher growth
Aptitude Software business with its specialised financial
management software applications to be the sole focus going
forwards whilst Microgen Financial Systems looks forward positively
to its future as a focused independent software business based on
its leading product, Microgen 5Series.
"The Disposal process provides certainty over the
crystallisation of the value of MFS for Aptitude shareholders,
without the longer timeframe and risk associated with a demerger
process and we will evaluate, in consultation with our
shareholders, how best to deploy the net proceeds of the Disposal
for the benefit of shareholders over the coming months."
Enquiries:
Aptitude Software Group plc 020 3880 7100
Ivan Martin, Chairman
Philip Wood, Chief Financial Officer
Investec Bank plc 020 7597 5970
(Sponsor, Financial Adviser and Broker to Aptitude)
Henry Reast
Junya Iwamoto
Alex Wright
FTI Consulting 020 3727 1063
(Financial PR adviser to Aptitude)
Darius Alexander
The person responsible for arranging the release of this
announcement on behalf of Aptitude Software Group plc is Georgina
Sharley, Group Company Secretary.
ADDITIONAL INFORMATION
Background to and reasons for the Disposal
Aptitude is a leading provider of business-critical software and
services in a number of sectors including banking, insurance,
telecommunications, and wealth management. Aptitude has continued
to develop the Group's activities as two separate business
units:
-- the Aptitude Software business with its suite of specialised
applications which enable finance functions to comply with complex
regulations and/or provide financial insight and control to their
organisations; and
-- the Microgen Financial Systems business, which provides
software and services primarily focused across the financial
services industry:
- Microgen 5Series, its key product in the Trust & Fund
Administration ("T&FA") sector, addresses the core operational
and regulatory requirements of a number of organisations including
trust administrators, fiduciary companies, corporate services
providers and fund administrators; and
- Application Management, covering a range of MFS Group-owned
and third party systems principally focused on the financial
services industry.
Historically both businesses benefitted from the combined
financial and organisational scale of the Group. The Aptitude
Software business leveraged the more established corporate
credentials of the wider Group when securing new business contracts
with prospects for whom the corporate strength of a key supplier is
a material consideration. With the growth experienced by Aptitude
Software in recent years this benefit has reduced materially as
demonstrated by Aptitude Software's 2018 revenue of GBP52.3 million
being significantly ahead of the Group's total revenue in earlier
years (for example, in 2013 the Group's revenue was GBP29.8 million
of which Aptitude Software represented GBP14.7 million). The second
key historical benefit from the combined financial and
organisational scale of the Group were the operational synergies
focused principally on back office administration.
In recent years these synergies have largely been reduced as the
finance, legal and human resources functions have been embedded
into each business unit separately, to provide greater and more
tailored support for their growth.
Aptitude announced on 25 March 2019 that it had concluded that a
demerger of the Microgen Financial Systems business on to AIM will
enhance the Group's ability to allocate capital and management
attention on the higher growth Aptitude Software business, whilst
also providing the Microgen Financial Systems business with the
ownership environment for it to successfully pursue its own
independent growth strategy focusing on its specialist target
market and servicing its international customer base. The Aptitude
Board considers that the benefits to Aptitude of a demerger also
apply to Aptitude in the case of the Disposal.
Following the announcement on 25 March 2019, discussions have
been held with Silverfleet in respect of the potential acquisition
of Microgen Financial Systems. The Board believes that this is a
fair value for the business, which recognises Microgen Financial
Systems' market position, track record of organic growth and
positive cash characteristics. Furthermore, the Board of Aptitude
believes that the Disposal provides certainty over the
crystallisation of the value of MFS without the longer timeframe
and risk associate with the previously announced demerger
process.
Key terms of the Disposal
The Disposal is conditional upon the passing of the Resolution
by shareholders at the General Meeting and the Disposal will not
proceed unless the Resolution is passed.
The Disposal Agreement between Aptitude and Silverfleet was
entered into on 29 May 2019.
Pursuant to the Disposal Agreement, the Company has agreed to
dispose of Microgen Financial Systems to Silverfleet for total
consideration of GBP51.0 million, plus an additional agreed profit
ticker amount to compensate the Company for the profits of MFS
generated between the date of the Disposal Agreement and
Completion, the entirety of which will be paid in cash at
Completion.
In addition, as is customary for transactions of this nature,
the Company will be required to compensate Silverfleet for any
unauthorised leakage of value from the MFS Group which has taken
place during the period between 31 December 2018 and the date of
Completion. Furthermore, the Disposal Agreement contains certain
warranties, indemnities and a tax covenant given by the Company
which are customary for a transaction of this nature.
In the event that the Disposal Agreement terminates due to
shareholder approval not being received by 31 July 2019 or becoming
incapable of being satisfied before then, the Company has agreed to
pay Silverfleet an amount equal to its costs and expenses incurred
in connection with the Disposal up to a maximum sum of GBP0.75
million (excluding VAT).
As part of the Disposal, Aptitude and Microgen Financial Systems
have agreed the scope of services that will be provided following
Completion by (i) Aptitude Group to Microgen Financial Systems (the
"TSA Services") and (ii) Microgen Financial Systems to the Aptitude
Group (the "RTSA Services") (together comprising the "TSA"). The
TSA Services shall include tax services, financial reporting
services, IT transition project services, company secretarial
services, continued access to certain software of the Aptitude
Group which contains historic information in respect of the MFS
Group and use of London office space by a certain number of
Microgen Financial Systems' employees. The RTSA Services include
co-operation regarding withholding of tax and payment of proceeds
to employees following exercise of share options in Aptitude Group
and access to accounts for the purpose of preparation of the audit
for the year ending 31 December 2019. Charges associated with the
TSA will be specified in each of the service schedules contained in
the TSA. The various TSA Services will have different
pre-determined initial service terms of either up to 31 December
2019, 30 June 2020 or the one year anniversary of the Company
entering into the TSA. The RTSA Services will have an initial term
of up to 30 June 2020.
The liability of each party in connection with the TSA will be,
subject to certain limited exceptions, limited in aggregate to
GBP0.25 million. Breach by the parties subject to the TSA of
intellectual property, employee transfer and confidentiality
provisions, or in relation to matters requiring third party consent
when such consent is not obtained or complied with, are not
included in the GBP0.25 million cap in addition to certain
customary exclusions, and are therefore uncapped.
Further details of the Disposal Agreement and the TSA will be
set out in the Circular.
Information on Microgen Financial Systems
Microgen Financial Systems' key product in the T&FA sector
is Microgen 5Series, which addresses the core operational and
regulatory requirements of a number of organisations including
trust administrators, fiduciary companies, corporate services
providers and fund administrators. In addition to Microgen
Financial Systems' T&FA operations, revenue is generated from
the Application Management business covering a range of MFS
Group-owned and third party systems principally focused on the
financial services industry.
Revenues are generated through a combination of software licence
fees (primarily annual recurring licences), software
maintenance/support fees and professional services.
In the financial year ended 31 December 2018, Microgen Financial
Systems generated revenues of GBP18.0 million (or, adjusting for
the disposal of the Payments business, GBP17.3 million) and
Adjusted Operating Profit of GBP7.0 million (or, adjusting for the
disposal of the Payments business, GBP6.5 million) and statutory
profit before taxation of GBP9.1 million (benefitting from a GBP3.2
million gain on the disposal of the Payments business). As at 31
December 2018, Microgen Financial Systems had gross assets of
GBP41.1 million.
Robert Browning (Chief Operating officer of MFS), Eileen Jackson
(Finance Director of MFS) and Joe Sefton-Jenkins (Chief Technology
Officer of MFS) are deemed key to the operation of MFS and will
transfer with MFS on Completion.
Information on the Aptitude Group
Following Completion, the Aptitude Group will consist of the
Aptitude Software business with its suite of specialised
applications which enable finance functions to comply with complex
regulations and/or provide financial insight and control to their
organisations.
Key products include:
Product Description
Aptitude Insurance Calculation AICE allows insurers to address the
Engine ("AICE") requirements of IFRS 17, an accounting
standard focused on insurance contracts
effective for accounting periods commencing
on or after 1 January 2022.
---------------------------------------------
Aptitude Lease Accounting ALAE addresses the requirements of
Engine ("ALAE") IFRS 16 / ASC 842, the leasing accounting
standards effective for accounting
periods commencing on or after 1 January
2019.
---------------------------------------------
Aptitude Revenue Recognition ARRE addresses the requirements of
Engine ("ARRE") IFRS 15 / ASC 606 the revenue accounting
standards first effective for accounting
periods commencing on or after 1 January
2018.
---------------------------------------------
Aptitude RevStream Aptitude RevStream is a cloud-enabled
application that provides broad revenue
management capability including regulatory
compliance.
---------------------------------------------
Aptitude Accounting Hub AAH is a high volume operational accounting
("AAH") platform and subledger that centralises
control, improves reporting and generates
a rich foundation of contract level
finance and accounting data.
---------------------------------------------
Aptitude generates revenue from its software through a
combination of licence fees (primarily annual recurring licences),
software maintenance/support, software subscriptions for its
cloud-based offerings and implementation and other support
services.
Development continues to be performed principally at the
Aptitude Technology Centre in Poland with sales, support and
implementation services provided from Aptitude Software's London
headquarters in addition to the North American and Singaporean
offices.
Aptitude's strategy is, and following the Disposal will be, to
continue to drive growth in revenues from its suite of specialised
applications which enable finance functions to comply with complex
regulations and/or provide financial insight and control to their
organisations. Aptitude's particular focus for 2019 is the
continuing opportunity for the Aptitude Insurance Calculation
Engine.
Following Completion of the Disposal, Philip Wood (currently
Chief Financial Officer of Aptitude and Acting Chief Executive
Officer of Microgen Financial Systems) will remain with the
Aptitude Group and his role will revert to that of Chief Financial
Officer. The board of directors of Aptitude will be unchanged
following the Disposal.
Use of Proceeds and Financial effects of the Disposal on the
Aptitude Group
Use of proceeds
The Net Cash Proceeds arising from the Disposal are expected to
be approximately GBP48.4 million (assuming a 30 June 2019
Completion and the deduction of fees associated with the Disposal
and the demerger process (which has been run in parallel with the
Disposal in order to fulfil Aptitude's commitment to the
demerger)).
The Board intends that the Company will return a significant
majority of the Net Cash Proceeds to shareholders, unless more
value creating opportunities arise and subject to prevailing market
conditions.
In determining the optimal route to return a significant
majority of the Net Cash Proceeds and the timescale to do so, the
Board will consider a number of factors, including the scale of the
proceeds to be returned and the balance of shareholder
preference.
Discussions with the Company's relevant stakeholders will be
conducted and it is envisaged that, shortly following Completion,
full details of the proposed return of proceeds will be made
available to shareholders and, if necessary, a general meeting will
be convened to seek shareholder approval for the return of
proceeds.
Financial effects of the Disposal on the Aptitude Group
In the financial year ended 31 December 2018, Microgen Financial
Systems contributed revenue of GBP18.0 million to the Group's
revenue of GBP70.3 million and Adjusted Operating Profit of GBP7.0
million to the Group's Adjusted Operating Profit of GBP15.7
million. Microgen Financial Systems' ongoing contribution will be
lost following Completion of the Disposal. Furthermore, cash held
within MFS Group at 30 April 2019, after adjustment for expected
transfers within the current Group prior to Completion, was GBP2.6
million.
In addition, in the financial year ended 31 December 2018,
Aptitude incurred GBP1.6 million of 'group costs' (before
non-underlying items), these costs are separately disclosed within
Aptitude's audited consolidated financial information and not
allocated to either Aptitude Software or Microgen Financial Systems
("Group Costs"). Group Costs include expenditure in relation to a
number of the Directors and other costs associated with a publicly
listed group of companies. Following the Completion of the
Disposal, Group Costs will be solely borne by the Aptitude Group,
with minimal cost savings resulting from the Disposal. Furthermore,
following the Completion of the Disposal it is anticipated that
there will be a non-material increase in the operating costs of
Aptitude Software following the loss of synergies currently
benefitting the Aptitude Group, principally in relation to the
provision of information technology.
Current trading, financial position and future prospects of the
Group
On 21 May 2019, the date of its annual general meeting, the
Company announced the following update to its current trading and
prospects:
"The Board is pleased to confirm that the Group, with its two
software businesses (Aptitude Software and Microgen Financial
Systems), has made good progress since the start of the year.
Aptitude Software continues to enjoy new business success with
its suite of specialised applications which enable finance
functions to comply with complex regulations and/or provide
financial insight and control to their organisations. Highlights in
the first half of the year include further sales of the Aptitude
Insurance Calculation Engine, the largest Aptitude RevStream
subscription to date and further progress with the Aptitude Lease
Accounting Engine. Particularly pleasing are the new business
successes with the Aptitude Accounting Hub ('AAH') since the start
of 2019. AAH is frequently sold in conjunction with one of Aptitude
Software's regulatory focused applications, however, there is a
growing opportunity for this application on a standalone basis to
provide centralised and granular control generating detailed
insights as large enterprises undertake a transformation of their
finance organisation to a more agile and forward-looking function
(often referred to as 'Digital Finance').
Microgen Financial Systems is well progressed with a number of
material opportunities for Microgen 5Series, an application focused
on the Trust & Fund Administration sector. Investment in the
organisation continues as planned in order to accelerate Microgen
Financial Systems' growth."
Dividend policy
The absolute value of the 2019 interim and final dividend is
expected to be reduced consistent with the reduction in the profits
of the Aptitude Group as a result of the Disposal. Thereafter a
progressive dividend policy will be followed by Aptitude.
Steps to completion
The Disposal constitutes a Class 1 transaction for the Company,
and therefore, under the UK Listing Rules, will require approval by
the Company's shareholders. Aptitude will, in due course, send a
circular to its shareholders convening a meeting to approve the
Disposal. The Aptitude Board is unanimous in its recommendation of
the Disposal.
DEFINITIONS
Adjusted Operating Profit statutory operating profit excluding
non-underlying operating items
Aptitude Technology Centre the principal development centre
for Aptitude Software located
in Wroclaw, Poland
----------------------------------------
Aptitude Group Aptitude and its subsidiaries
and subsidiary undertakings
excluding those companies which
form part of the MFS Group
----------------------------------------
Aptitude Software the division of Aptitude which
will be part of the Aptitude
Group following Completion of
the Disposal
----------------------------------------
Application Management or Application the part of the Microgen Financial
Management business Systems business which provides
software and services to a range
of Microgen Financial Systems
owned and third party systems
principally focused on the financial
services industry
----------------------------------------
Completion completion of the Disposal on
the terms of the Disposal Agreement
----------------------------------------
Disposal Agreement the agreement to sell the entire
issued share capital of its
wholly-owned subsidiary, Microgen
Financial Systems Limited, including
the Microgen brand, to Silverfleet
----------------------------------------
Microgen Financial Systems Microgen Financial Systems Limited,
a private limited company incorporated
under the laws of England and
Wales with registered number
03188002
----------------------------------------
MFS Group the companies operating the
MFS Business from time to time
which includes Microgen Financial
Systems and its subsidiaries
and subsidiary undertakings
----------------------------------------
MFS Business the business of providing software
and services primarily focused
across the financial services
industry which is currently
carried on within the Group
by Microgen Financial Systems
Limited and its
subsidiaries and subsidiary
undertakings and which is proposed
to be sold in accordance with
the Disposal Agreement with
effect from Completion
----------------------------------------
Net Cash Proceeds the estimated aggregate cash
consideration due to the Company
under the Disposal Agreement
assuming Completion on 30 June
2019 less estimated fees associated
with the Disposal and the previously
announced demerger process
----------------------------------------
Payments business the business sold by Microgen
Financial Systems on 2 July
2018
----------------------------------------
Market Abuse Regulation
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation. Upon the publication of this
announcement via a regulatory information service, this inside
information is now considered to be in the public domain.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
ADDITIONAL INFORMATION FOR SHAREHOLDERS
This announcement (including the information incorporated by
reference into this announcement) includes statements that are, or
may be deemed to be, "forward looking statements". In some cases,
these forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "plans", "predicts", "projects", "anticipates",
"targets", "risk", "aims", "assumes", "positioned", "continues",
"expects", "intends", "hopes", "may", "will", "shall", "would",
"could" or "should" or, in each case, their negative or other
variations or comparable terminology that are predictions of or
indicate future events and/or future trends or identify
forward-looking statements.
These forward-looking statements include all matters that are
not current or historical facts. They appear in a number of places
throughout this announcement and include, but are not limited to,
statements regarding the Directors', the Group's and/or the
Company's intentions, beliefs or current expectations concerning,
amongst other things, the Group's operational results, financial
condition, prospects, growth, dividend policy, strategies and the
industries in which the Group operates, and the financial effect of
the proposed Disposal of Microgen Financial Systems on the
Group.
Shareholders should not place undue reliance on forward-looking
statements (which speak only as of the date of this announcement)
because they involve known and unknown risks, uncertainties and
other factors that are in many cases beyond the control of the
Group. By their nature, forward-looking statements involve risk and
uncertainty because such statements relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not indicative of future
performance; the actual results of operations and financial
condition of the Group, and the development of the industries in
which the Group operates, may differ materially from those
described in or suggested by the forward-looking statements
contained in this announcement. A number of factors could cause
actual results and developments to differ materially from those
expressed or implied by the forward-looking statements, including,
without limitation: conditions in the markets; the market position
of the Group; earnings, financial position, cash flows, return on
capital and operating margins of the Group; anticipated investments
and capital expenditures of the Group; industry trends; changing
business or other market conditions; competition and changes in
business strategy; and general economic and business conditions.
These and other factors could adversely affect the outcome and
financial effects of the plans and events described herein.
The cautionary statements set out above should be considered in
connection with any subsequent written or oral forward-looking
statements that the Company, or persons acting on its behalf, may
issue.
Forward-looking statements contained in this announcement based
on past trends or activities should not be taken as a
representation that such trends or activities will continue in the
future and no forward looking statement contained in this
announcement is intended to provide any representation, assurance
or guarantee as to future events or results.
The Company will comply with its obligations to publish updated
information as acquired by the FSMA, the Listing Rules and/or the
Disclosure Guidance and Transparency Rules or otherwise by law
and/or by any regulatory authority, but assumes no further
obligation to publish additional information. Subject to any
requirement under the Listing Rules, the Disclosure Guidance and
Transparency Rules or other applicable legislation or regulation,
the Company will not (and expressly disclaims any undertaking or
obligation to) publicly release any revisions it may make to any
forward-looking statements or other information that may occur due
to any change in its expectations or to reflect events or
circumstances after the date of this announcement.
Investec Bank plc ("Investec") is authorised by the Prudential
Regulatory Authority (the "PRA") and regulated in the United
Kingdom by the PRA and the Financial Conduct Authority ("FCA") and
is acting exclusively for the Company and no one else in connection
with the Disposal or any other matters referred to in this
announcement and will not regard any other person as a client
(whether or not a recipient of this announcement) in relation to
the Disposal or any other matters referred to in this announcement
and is not, and will not be, responsible to anyone other than the
Company for providing the protections afforded to its clients or
for providing advice in relation to the Disposal or any other
matters referred to in this announcement.
Aptitude's shareholders will be able to obtain a copy of the
Circular (when available) from Aptitude's website at
www.aptitudesoftwaregroup.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DISUKAORKBAVUUR
(END) Dow Jones Newswires
May 30, 2019 02:00 ET (06:00 GMT)
Aptitude Software (LSE:APTD)
Historical Stock Chart
From Apr 2024 to May 2024
Aptitude Software (LSE:APTD)
Historical Stock Chart
From May 2023 to May 2024