LONDON: The Panoply Holdings PLC, the technology-enabled services group focused on digital transformation, announced the acquisition of the entire issued share capital of Difrent Ltd., a digital transformation consultancy focused on the Healthcare sector.
Newcastle-upon-Tyne-based Difrent uses a partnership approach to help its clients to achieve their digital transformation goals. The company’s proposition includes strategic consultancy, user centered design, business analysis, business change, procurement, and front and back end development.
The company is led by Rachel Murphy who was recently awarded CEO of the Year 2020 for Health and Social Care by CEO Monthly magazine and who is also a CHIME certified Healthcare CIO. Difrent also specialises in remote-first delivery, enabling organisations to deliver positive outcomes entirely remotely. Given the current evolution of working practices, the Board believe that this is a highly relevant and valuable offering.
Approximately 75% of Difrent’s revenues are currently generated from the health and social care sectors and this acquisition therefore represents a significant expansion of the Group’s reach into those sectors. Difrent’s clients include NHSX, Department of Health and Social Care, NHS Business Services Authority, Public Health England, World Health Organisation, DEFRA and Department of Work and Pensions.
The acquisition is profitable and immediately earnings enhancing for The Panoply. Difrent has experienced significant growth in its consulting revenue over the last three years, and most recently reported unaudited revenues in its consulting division at £5.7m (2019: £3.2m) and unaudited EBITDA of £0.7m (2019: £0.1) for the year to 31 March 2020 (an increase of 78% and 600% respectively). Including its recruitment division Difrent delivered total unaudited revenue for the year to 31 March 2020 at £7.4m (2019: £4.3m) with unaudited EBITDA of £0.9m (2019: £0.2m) and unaudited profit after tax of £0.7m. Upon completion of the acquisition, Difrent will work closely with the Group’s existing companies during the earn-out period with the potential of joining one of its full-stack brands in the future.
The acquisition is in line with The Panoply’s stated three year commercial vision to use a mixture of positive cash flow and shares to make earnings enhancing acquisitions to add more than £35m of revenue to the Group.
The Panoply is paying a total initial consideration of £8.8 million with £4.0 million in cash and £4.8 million in shares with £0.4 million of the cash element to be withheld pending the determination of completion accounts.
The cash portion will be funded through an extension of the Group’s revolving credit facility with HSBC to £7 million with the balance funded from the Group’s own cash reserves. HSBC has also agreed to extend the term of the loan by an additional 12 months to 11 June 2023, and provide an accordion facility to increase the loan by a further £3 million to £10 million subject to continued financial performance conditions and due diligence on further acquisitions. Following the Acquisition, the Group remains in a strong cash position with cash at the end of August less the consideration payment in relation to the Acquisition of £4 million and a net debt position of £3 million.
Neal Gandhi, Chief Executive Officer of The Panoply, said: “Difrent’s focus on health and social care presents an immense opportunity for us as a Group building upon the success FutureGov had already achieved in those sectors and at a time when there has never been more focus on radically transforming the way we deliver healthcare services.
“This acquisition is immediately earnings-enhancing for the Group, and clear evidence of our continued momentum against our three-year commercial vision, following on from the acquisitions of Arthurly in June 2020 and Ameo in the last financial year.
“As a disruptive, purposeful and forward-thinking company, the Difrent acquisition perfectly complements our strategy of acquiring best-in-class in companies who share the values and deep sense of purpose that runs through the Group.”
Rachel Murphy, CEO of Difrent, said: “For the past three years we’ve been delivering disruptive, purposeful digital change to organisations in the sector, enabled by our team of passionate digital and change specialists. By joining with The Panoply, we recognise the ability for us to expand our reach and opportunities, while maintaining our core focus on delivering public good.
“All of the team here at Difrent greatly look forward to collaborating with The Panoply’s other Group businesses to win new business and, ultimately, deliver digital transformation programmes of the highest quality to our clients and by definition create better services for citizens, patients and service users.”
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