ReadyTech : Presentation - IT Vision Acquisition

For personal use only

16 June 2022

Acquisition of

IT Vision

Enhancing our position in the Government software sector

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Acquisition highlights

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Transaction summary

Acquisition of IT	• ReadyTech has signed an agreement to acquire IT Vision, a specialist provider of local government focused technology
•	IT Vision has more than 30 years experience in local government software, with 190 customers in Australia and 55 employees across locations in Perth, Adelaide and Melbourne
Vision	•	The transaction marks a continuation of ReadyTech's successful M&A playbook and a track record of identifying and executing on highly strategic M&A and accelerating growth in
		acquired companies
Deal structure	• Upfront consideration of $23.1 million to be paid using a combination of 50% cash and 50% scrip
•	Earnout consideration up to an additional $31.5 million (payable in cash and/or, subject to shareholder approval, ReadyTech shares)1 subject to achievement of certain revenue and
		EBITDA milestones within a four-and-a-half-year period following the completion of the transaction
Strategic rationale	• Significantly bolsters ReadyTech's position in local government software - ReadyTech becomes a major local government software provider of scale
•	Accelerates path to cloud subscription for IT Vision's significant customer set
	• Potential synergies including opportunity to cross-sell/upsell ReadyTech's broader product suite
Funding
•	Upfront cash funding requirement of $11.55 million will be funded via additional debt from existing facilities
	• IT Vision expected to generate $12.5 million of revenue and $2.5 million of EBITDA in FY222
Financial metrics	• Implied multiple for upfront consideration of 1.8x FY22F revenue and 9.2x FY22F EBITDA
•	Implied multiple for maximum consideration payable of 3.5x revenue and 10.0x EBITDA (based on achieving earnout milestones)
	• Transaction expected to be EPS accretive in FY22 on a pro-forma basis (excluding synergies and integration costs)3
Completion
•	The acquisition is expected to complete by latest 31 July 2022
FY22 guidance	• ReadyTech re-affirms its guidance of FY22 organic revenue growth in the mid-teens with full 12 months FY21 Open Office revenue being $18.3 million
•	Recent acquisitions of Open Windows, AVAXA and Phoenix HRIS expected to contribute incremental $2.4 million revenue at an EBITDA margin of 18% in FY22
re-affirmed	•	FY22 EBITDA margin is expected to be in the range of 36%-38% excluding the impact of LTIP
	• ReadyTech re-affirms FY26 organic revenue target (excluding the impact of IT Vision) of over $140 million

1. ReadyTech will seek shareholder approval at its next annual general meeting to issue redeemable preference shares to the vendors of IT Vision which will be convertible into ReadyTech shares based on the lower of the 5-day and 3-month VWAP of ReadyTech shares prior to allotment. If shareholders do not approve the issue of the redeemable preference shares, all earnout payments must be paid in cash. Completion of the acquisition of IT Vision is conditional on, amongst other matters, ASX approving the terms of the redeemable preference shares. See slide 11 for further details.
2. IT Vision FY22F based on actual results to 30 May 2022 and 1-month forecast to 30 June 2022.
3. EPS accretion on a FY22 proforma basis assumes IT Vision acquisition was under ReadyTech ownership for the full 12-month period from 1 July 202 to 30 June 2022, and excludes acquisition and integration costs of $1.5 million.

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