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Rivington Street Holdings: Acquisition and Trading Update
14-07-2010
RIVINGTON STREET HOLDINGS PLC
PLUS: RIVP
("RSH" or “the Company”)
Acquisition
And
Trading Update
The Board of RSH, the PLUS quoted media, market research and financial services group, is pleased to announce that its Isle of Man based subsidiary Rivington Street Ventures (“RSV”) is acquiring the assets, staff and contracts of the, profitable and rapidly growing, Financial Markets division – which incorporates Blue Curve and Radica CAPS - of AIM quoted Corero Plc (“Corero”).
RSV has agreed to pay GBP 1 for the Financial Markets division and will take on GBP 2.12m, of debt. GBP 2 million of this debt has been taken on with a fixed rate of 8% repayable in 2015. The remaining GBP 127,781 is repayable in 2013.
It will roll the acquired assets into a newly formed UK company, which will be called Blue Curve Ltd. The acquisition, which is expected to be completed by 02 August 2010, is subject to the approval of Corero shareholders.
HIGHLIGHTS
- Acquisition of Blue Curve, the leading software suite for financial research - used by more than 2,500 financial analysts worldwide;
- Blue Curve is a highly successful and profitable business which is growing rapidly at an operational level, having already won five new contracts this calendar year.
- Acquisition of Radica CAPS, the leading corporate actions processing software used by a number of large investment firms;
- As a result of the strong recurring revenue base and growing international appeal this deal is expected to materially increase shareholder value; and
- Blue Curve Ltd’s CEO will be original founder Mark Robertson, who will join the RSV management team and will be instrumental in developing RSV’s acquisition plans.
Blue Curve is used in both buy-side and sell-side finance firms to automate a wide variety of complex financial content production processes. Common applications include financial research, fund marketing, fund reporting, corporate broking and corporate finance. Radica CAPS manages the entire process of corporate actions processing including data management, entitlements, elections and accounting adjustments.
Last year the Financial Markets division improved both its revenue and trading profit over 2008, with the second half being particularly strong. Revenue increased by 8.9 per cent, while trading profit increased to GBP 350,000 (2008: GBP 10,000). This represents a significant turnaround in profitability since the reported trading loss of GBP 468,000 in 2007 following the restructuring of the business to merge the Blue Curve and Radica CAPS offerings.
Further improvements are expected as Blue Curve builds on lasts year’s performance. It has already won five new contracts this calendar year – including an agreement with Standard Bank Group. Additional growth is expected as it seeks to sign multi-year agreements with the majority of revenues coming from recurring licence, support and hosting contracts. Given the potential for further growth and the fixed rate of repayable interest, this deal is expected to materially increase shareholder value.
Blue Curve Plc’s CEO will be Mark Robertson who was Managing Director of the Financial Markets division at Corero. Under his management this operation has increased profit year-on-year and moved to a recurring licence business model using SaaS principles. Mark will be integral in furthering Blue Curve’s growth as well as helping drive RSV’s acquisition programme.
Trading Update
In the nine months ending 31 May 2010, RSH recorded an unaudited underlying EBITDA equivalent to 86% of the underlying EBITDA achieved for the 12 month period ending 31 August 2009.
The Company would also like to advise that in light of the acquisition of Blue Curve, it will not be undertaking a formal tender offer for shares by the end of July 2010 as previously indicated. However, in the absence of unforeseen circumstances it will undertake a tender offer to return up to GBP 200,000 to shareholders after the publication of final results for the period ending 31 August 2010. Additionally, RSH intends to continue to buy back shares in the market when it sees such a move as adding value to shareholders.
RSH’s Chief Executive Officer Tom Winnifrith commented: “We are delighted to have agreed terms for our latest acquisition. Having completed the re-domicile of RSH to the Isle of Man, we now have the structure in place to grow our operations rapidly. This latest acquisition brings with it a strong, visible revenue stream and personnel and management of the highest calibre.
“Blue Curve has an excellent reputation and its recent performance highlights why we are so delighted to add it to our offering. We look forward to working closely with Mark, who will also work with me at RSV to roll out a number of other transactions both in the software space and other areas which will complement our exciting organic growth prospects.”
Jim Mellon, Chairman of RSH said:
“This is a great opportunity for RSH to further grow its offering. The well established nature of Blue Curve’s operations and structure of this deal mean that it should materially increase shareholder value. This is clearly an exciting time for RSH and this deal is a great illustration of why I wanted to join the Group.”
Mark Robertson added: “Moving Blue Curve into RSH will provide our business with the strong balance sheet and entrepreneurial culture we need to take it forward. This move can only provide greater benefits to our customers who value our continuous investment in R&D and our knowledge of the financial markets.”
The Directors of the issuer accept responsibility for this announcement.
-ENDS-
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