FD Technologies (GYQ) Trading Update summary

Divestment of First Derivative

• Announced sale of First Derivative consulting division to EPAM Systems for £230 million enterprise value, with completion expected by year-end 2024, subject to shareholder approval and regulatory conditions.

• Net cash proceeds of approximately £205 million are expected after adjustments, with plans to repay £20 million net debt and return excess capital to shareholders; details to be provided with interim results.

• The divestment follows a strategic review to optimize group structure, including a prior combination of MRP with CONTENTgine, and will leave KX as the sole operating business.

• FD Technologies will retain a 49% stake in pharosIQ, the merged MRP business, as an associate investment.

• Sale and Purchase Agreement signed on 6 October 2024; completion is conditional on shareholder approval, transfer of key customer contracts, group reorganisation, and Irish competition clearance.

KX Business Performance and Guidance

• KX is performing in line with guidance, with a strong first half and confirmed full-year outlook.

• First half annual contract value (ACV) reached £7.4 million, within the guided range, and full-year ACV guidance of £16–18 million is reiterated.

• KX aims for ARR growth above 25% per annum from FY26–FY28 and expects to be cash EBITDA positive in FY27.

• No change to KX cash flow guidance post-divestment; proceeds will be used to pay down net debt.

• For FY24, First Derivative Business generated £169.7 million revenue and £18.0 million adjusted EBITDA; KX (Continuing Group) generated £79.1 million revenue and £5.1 million adjusted EBITDA.

Transaction Structure and Conditions

• Consideration payable at completion is expected to be £225 million after adjustments.

• Completion is conditional on shareholder approval, transfer of key customer contracts, group reorganisation, and Irish competition clearance.

• Transitional Services Agreement will be in place post-completion to support the separation.

• Irrevocable undertakings to vote in favour of the divestment have been received from shareholders holding 28.8% and directors holding 0.4% of shares.

• General Meeting to approve the transaction is expected in October 2024, with a long stop date of 28 February 2025.