Notes to the Financial Statements continued for the year ended 31 May 2021
35 Post-Balance Sheet events Acquisition of IPM business
On 1 June 2021, shareholder approval was passed for the acquisition of the IPM business of Iron Mountain, comprising substantially all of the assets of Iron Mountain Intellectual Property Management, Inc. together with certain other assets of affiliates of Iron Mountain exclusively related to the IPM business. The primary reasons for the business combination are to: • Scale up the Group’s core business to create a global business and platform for further growth • Generate revenue synergies through allowing the enlarged division to offer NCC’s broader suite of established verification services as well as the newer Escrow-as-a-Service (EaaS) cloud offering to the IPM business’s existing customer base • Present an exciting new opportunity to sell NCC’s cyber security services from its Assurance division into the IPM business’s broad and blue-chip customer base in the medium term • Be accretive to earnings per share from completion, even without factoring in revenue synergies • Result in greater strategic strength for the future Management considers shareholder approval of the transaction constitutes a change in control and therefore the date of shareholder approval is considered to be the acquisition date for the transaction. Shareholder approval was granted on 1 June 2021 and the IPM Software Resilience business will be consolidated into the Group results from that date (see Note 2). Details of assets acquired that are subject to provisional fair value adjustments will be reported for the year ended 31 May 2022. The acquisition for a total consideration of $220m was funded through an equity gross placing of £72.6m (see Note 27) on 17 May 2021 combined with a new three year $70m term loan (see Note 24) and the remaining $98.2m funded via existing cash balances and our revolving credit facility. The term loan was entered into on 12 May 2021 but not drawn down until 2 June 2021. Costs directly attributable to the acquisition of the IPM business totalling £7.6m have been expensed during the year (see Note 5). Issue costs of £2.4m were incurred as part of the equity placing and have been credited to the share premium account (see Note 27).
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NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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