FD Technologies plc (LON:FDP) announces an update on its restructuring review, which looked at the optimal organizational structure and capital allocation to best deliver shareholder value.
The Board of Directors has unanimously concluded that the separation of its three businesses is in the best interest of all shareholders.
As a first step towards this goal, the Group announces that it has agreed to an all-share merger of its MRP business with CONTENTgine, a provider of B2B technology buyer insights and lead generation.
The Board will take a measured approach to the separation of KX and the First Derivative, particularly with regard to the timing of any transaction, taking into account market conditions to ensure that the disposal of the First Derivative reflects its value.
For the financial year ended 28 February 2023, MRP generated revenue of £41.5m and adjusted EBITDA of £1.4m, while for the six months ended 31 August 2023 it generated revenue of £15.7m and an adjusted loss EBITDA £0.2m In the second half of the financial year MRP continued to show losses. The combined entity is expected to be profitable from the first quarter and generate EBITDA of £5m by the end of calendar 2024.
Although not expected to be used, the Group has committed a credit facility of $5 million over the next 12 months to the combined business.
FD Technologies will own 49% of the combined entity, which will be reflected as an associate investment rather than consolidated in the Group’s financial statements. The net asset value of MRP at the date of the transaction was approximately £19 million.
Donna Troy, president of FD Technologies, said:
“FD Technologies has an exciting collection of assets, and at this stage in the development of these businesses and relative to their current market valuation, it is the right decision to take transformative steps to spin them off and create shareholder value. I am confident that we can address some of the recent near-term trading issues with the actions we have announced today in the trading statement and with the focus and input of our management and board we will ensure that we maximize the potential across the portfolio.”
Seamus Keating, CEO of FD Technologies, said:
“The conclusion of the structure review provides a clear path to create shareholder value. As a first step, we are pleased to announce the merger of MRP with CONTENTgine to create a market leader in demand generation services. This transaction creates a strong, attractive business as the industry consolidates. We will now focus on the separation of KX and First Derivative and will update shareholders as the process progresses.”