MELBOURNE, AUSTRALIA: SOCO Corporation (ASX:SOC) has entered into a binding agreement for the acquisition of Axsym Technology Pty Ltd, a Canberra-based information technology consultancy with a federal government focus, with clients including Defence, Foreign Affairs, and National Security agencies.

AxSym also brings success in the New South Wales state government sector, delivering services to the NSW Rural Fire Service.

AxSym also brings with them a deep talent pool of Microsoft specialists that complements SOCO’s team, as well as a growing practice based on ServiceNow. ServiceNow is a cloud-based platform that delivers digital workflow automation across service management, operations, and business functions.

SOCO CEO, Simon Forth said, “As a people business great cultural fit is a mandatory component of our M&A strategy, and AxSym absolutely delivers. We are delighted to welcome the AxSym team into the SOCO family, and towiden our service offerings in Canberra and across the nation.”

The purchase price includes $4.3m in cash funded from the Company’s available cash on hand, and $3.2m in SOCO ordinary shares (10,714,753 shares to be issued at 29.8 cents per share, based on the 20-day weighted average trading price to 20 October 2023) (Consideration Shares).

In addition, there is also the potential for the sellers to receive an earn out payment of up to $3.4m, payable over a two-year period, if certain profit growth targets are achieved, therefore the maximum purchase price is $10.9m. SOCO intends to fund the earn out payments at the relevant time from cash on hand.

The transaction is expected to be earnings per share accretive in FY24 and complete in November 2023. AxSym will rebrand to SOCO.

AxSym Managing Director Adam Granquist said “The AxSym team are all thrilled to join the SOCO movement. We are excited about the new capabilities and services that we can offer because of the acquisition, and we are very much looking forward to growing our incredibly strong Canberra client base – shoulder to shoulder with our new colleagues as a united team.”

Excluding the AxSym acquisition, the financial year has started slower than the previous year, with delays experienced with several larger clients.

This is primarily a timing issue, and the Company still expects revenue for the full year to be marginally higher than the previous year. The second half of each financial year traditionally delivers a seasonally stronger profit result.

In FY24,the profit seasonality is expected to be more pronounced and consequently the first half is expected to deliver an Operating EBITDA2 below that of the first half of FY23. In all other respects the business has solid momentum and has expanded its sales capability to drive long-term organic growth.

In addition to the acquisition of AxSym, the Company anticipates organic growth and team expansion in the second half of the financial year, and SOCO continues to target new client opportunities particularly in the Sydney, Melbourne, and Perth regions.

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