thedocyard’s (ASX:TDY) annual financial results for the year ended 30 June 2020 showed an improvement in revenue but from a very low base. Annual receipts from customers were $846K which compares to the previous year at $529K. At these levels of revenue the company was generating significant losses and burning cash at a rapid rate. Its pivot? Buy the software company Ansarada.
Although it has reached a heads of agreement to make the acquisition, also referred to as a merger, it first needs to complete a successful capital raising of $45 million.
The plan is to retain $20 million in cash for growth and working capital.
Following completion of the Proposed Transaction and Capital Raising, the indicative pro-forma shareholdings in the combined entity are expected to be:
· Existing TDY shareholders holding approximately 18%;
· Ansarada stakeholders holding approximately 47%; and
· Investors in the Capital Raising holding approximately 35%
The announcement of the deal describes Ansarada as “a global provider of a cloud-based SaaS platform for secure end-to-end document and process management, supporting transactions and other critical business and governance outcomes for corporates throughout their lifecycle. Established in 2005, the business has grown to be one of the market leaders in the Asia Pacific region and has a growing market presence across the US, the Middle East, Africa and Europe. Ansarada’s leading workflow and Virtual Data Room solutions facilitate on-going secure information flow, collaborative execution of strategy and deliver valuable reporting and insights for decision making.”
The value of the combined entities is expected to be “approximately A$105 million, representing a multiple of approximately 3.1x FY20 unaudited, historical revenue” plus the $20 million cash reserve produces an enterprise value of $125 million.
Ansarada would therefore be generating FY20 revenue of at least $30 million although its profitability is not disclosed.