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EQS Group
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=== Cash flow dominated by M&A === With the emphasis on recurring revenues, the underlying cash requirements of the business are relatively modest and the broad spread of clients with relatively small contract values minimises the credit risk. The comparatively low level of operating cash flow is really just a reflection of the concentration of resource into investing to build out the medium and longer-term prospects. This is clearly shown in the aggregation exercise below where Edison Investment Research has looked at the sources and uses of cash for the five years FY17β21, where the scale of the M&A is apparent. As indicated above, Business Keeper was the largest acquisition to date by some margin, at a cost of β¬95m, of which β¬80m was paid in FY21 with the balance due in FY22.'''<br />Exhibit 15: Sources and uses of cash FY17β21<ref name=":2" />''' [[File:Image12-56506b266e95c68bcdcd599486ef4408.png|600x600px]] During FY21, the group raised β¬43.9m in three capital raises, in February, July and December. These were for β¬13.6m at β¬38.00 per share, β¬22.4m at β¬38.00 and β¬7.7m at β¬41.00. During Q122, the group carried out a further fund-raise of β¬45m gross, in part to facilitate the requirements of a new prospective cornerstone investor, Gerlin NVβs Teslin fund. To satisfy this, the deal was structured to be underwritten by other key investors, which only subscribed to the extent that, with a rump placing, they would end up where they wanted to be, thereby avoiding dilution. So, although visually a take up of 9.7% looks poor, this does not represent the underlying degree of support from existing shareholders. Gerlin took 42% of the issue and now has a 6.1% holding in the enlarged equity. The other advantage of the transaction was that it did not require the major input of investment bankers, saving β¬2β3m on the deal. An additional element of the rationale for this latest placing was to contribute to the funding of the potential proposed acquisition of a German firm (DFGE) in the ESG reporting space. This deal did not come to fruition due to differing expectations of the two parties (the then target has more of a consulting ethos), but future collaboration remains on the cards. The funds originally earmarked for this have been reallocated to the ongoing investment in whistleblowing plus the internal development of the ESG offering.
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