Innofactor Plc Stock Exchange Release June 7, 2013, at 7:45 Finnish time
With an agreement signed last night, Innofactor has acquired the entire share capital of the Finnish company atBusiness Oy. The figures of atBusiness Oy will be consolidated into the Innofactor group as of June 1, 2013. Integration of atBusiness and Innofactor operations will start immediately and the goal is to implement significant parts of it during the summer 2013. The name of atBusiness Oy will be changed to Innofactor Business Solutions Oy and, in the future, atBusiness services will be offer under the Innofactor brand.
The sellers are the acting management of atBusiness (20.0%), Sentica Kasvurahasto II Ky managed by Sentica Partners Oy (60.1%), and Trainers’ House Kasvusysteemiosakeyhtiö, a subsidiary of Trainers House Oyj, (19.9%). The purchase price is about EUR 6.3-7.6 million and the Enterprise Value (EV) about EUR 14.4–15.7 million. Of the purchase price, a minimum of 45% will be paid in cash and a maximum of 55% in Innofactor shares. Innofactor will take bank loans of EUR 11.5 million in total for paying the cash portion of the purchase price and for rearranging the target company's loans of about EUR 8.7 million. At the same time, atBusiness' current checking account with an overdraft limit of EUR 1.5 million will be replaced with a new limit of an equal size. After the arrangement, Innofactor's solvency will remain at a good level.
Along with Innofactor, atBusiness is one of Finland's leading providers of Microsoft technology solutions to commercial and public sector clients. The merger is about a union of two strong Microsoft actors and will result in one of the most important providers of Microsoft solutions in the Nordic Countries. Through the merger, Innofactor's offering of Microsoft-based solutions will expand even further and will in practice cover all of Microsoft's central solutions for commercial and public organizations. New areas added to Innofactor's offering are Enterprise Resource Planning (ERP) and Human Resources Management systems (HRM).
The net sales of atBusiness in 2012 were EUR 17.4 million and it has been operating profitably. About 80 percent of the net sales came from commercial clients and about 20 percent from government and third sector clients. From year 2012 net sales about 82 percent was derived from delivery projects, consultation and maintenance work, 16 percent from recurring service contracts and 2 percent from licenses. In 2012, operating margin (EBITDA) was EUR 2.7 million (15.3 percent of the net sales). The net sales of atBusiness on the last four quarters (April 1, 2012–March 31, 2013) were EUR 17.3 million and EBITDA was EUR 2.6 million (15.0 percent of the net sales). The figures for atBusiness have been reported in accordance with the Finnish accounting standard (FAS).
The net sales of Innofactor in 2012 were EUR 18.8 million and the operation was profitable. In 2012, operating margin (EBITDA) was EUR 1.2 million (6.5 percent of the net sales). The net sales of Innofactor on the last four quarters (April 1, 2012–March 31, 2013) were EUR 20.4 million and EBITDA was EUR 2.0 million (9.8 percent of the net sales). Innofactor's figures have been reported in accordance with IFRS.
The new size will give Innofactor improved conditions to operate as a public limited company, implement its growth strategy in the Nordic Countries and to offer its own software products and services to its customers through its own channel. The arrangement will bring significant growth in 2013 and 2014 and will create an excellent base for growth also in the future. The arrangement is believed to result in synergy benefits. Innofactor estimates that it will gain increased profitability and higher earnings per share (EPS) in the future.
Innofactor's founder, CEO and main owner Sami Ensio sees this arrangement as one of the most significant steps in Innofactor's history: "Our vision is to be #1 provider of Microsoft solutions for commercial and public organizations in the Nordic Countries and #1 provider of value-added components for Microsoft's business platforms globally. The strategies of Innofactor and atBusiness are almost the same. The merger will give us good customer relationships, knowledgeable personnel, top managers, great new partners, and significant new investors. We are one step closer to the goals we have set. This is one of the finest moments in my career as an entrepreneur."
"The merger with Innofactor creates the best possible ensemble for use and reflects the strategic path we have followed since 2006," rejoices atBusiness (in future, Innofactor Business Solutions) CEO Juha Rokkanen. "Of course we knew all the time that a company owned by a capital investor would be sold at some point. The strategies, operation, cultures and organization structures of atBusiness and Innofactor are very similar, which will help the integration significantly. We can continue the same operations, but with better resources. This offers our personnel really great opportunities for development."
The Vice President responsible for Innofactor's acquisitions and international business, Janne Martola, thinks that this arrangement also supports the growth of international business. "Larger size, strong and very profitable business operations in Finland, and many significant and internationally known commercial clients gained in the acquisition form a good basis also for international expansion and acquisitions."
"Sentica acquired atBusiness seven years ago and after that, the company's net sales have grown from a few million euros to the level of almost 20 million euros. While in our ownership, the company decided to focus strongly on Microsoft technology and its know-how and customer base have been strengthened with several strategic acquisitions. The merger with Innofactor is a logical end to the development done by Sentica. We believe that the strong entity that is now emerging will create an excellent basis for realizing Innofactor's ambitious growth strategy," says Pentti Tuunala from Sentica Partners.
"The merger of Innofactor and atBusiness supports the success of the Microsoft ecosystem in Finland," analyses Ari Rahkonen, CEO of Microsoft Oy. "We need also actors that have extensive know-how in large Microsoft-based solutions. In its new size, Innofactor can be more competitive in offering its Microsoft-based solutions to customers of all sizes. I believe that this arrangement will also further Innofactor's globalization. It is great that know-how of Microsoft-based solutions can be exported from Finland to other countries."
atBusiness represents leading Finnish Microsoft know-how and it has a strong track record of profitable growth and strong cash flow. atBusiness is an IT service company, which produces solutions necessary for its customers' success. A position as a strategic partner relies on deep trust, innovativeness, agility, high quality, and sustainable growth. The most significant customers of atBusiness include, for example, Fortum, Etera, Harjavalta, Kemira, Oriola, Rautaruukki, RAY, and Suomen Messut. In 2012, the net sales were EUR 17.4 million and operating margin (EBITDA) was about EUR 2.7 million (15.3 percent). In atBusiness, customers are served by almost 200 specialists in Espoo, Kuopio, Lappeenranta, Turku, and St. Petersburg. The management and all employees of the company will be transferred into the Innofactor group as existing employees.
The net sales, operating margin and operating profit of atBusiness Oy were formed in accordance with the Finnish accounting standard (FAS) on financial periods of January 1–December 31, 2012, and January 1–December 31, 2011, and July 28, 2010–December 31, 2011, as follows (EUR thousand):
January 1 –December 31, 2012
January 1–December 31, 2011*
July 28, 2010–December 31, 2011 (17 months)
Operating margin (EBITDA)
Operating profit (EBIT)
atBusiness Oy’s balance sheets on December 31, 2012, and December 31, 2011, were as follows (thousand euros):
December 31, 2012
December 31, 2011
Receivables and current assets
-of which capital loans given by shareholders
* The audited financial period for the company in 2011 was July 28, 2010–December 31, 2011. The company's figures for the calendar year January 1–December 31, 2012, have not been audited.
atBusiness Oy and its financial information will be consolidated into the Innofactor group as of June 1, 2013. The annual report and financial statement of atBusiness Oy for 2012 in their entirety are attached as an appendix to this release.
The purchase price will be determined by the realized profit margin (EBITDA) of the Innofactor group for the 12 months following the acquisition (June 1, 2013–May 31, 2014). Of the purchase price, a minimum of 45% will be paid in cash and a maximum of 55% in Innofactor shares. The minimum purchase price is about EUR 6.3 million and the maximum about EUR 7.6 million. Enterprise Value (EV) is EUR 14.4–15.7 million. Innofactor estimates that the purchase price will be about EUR 7.0 million, which is also the average for the purchase price range.
About a total of EUR 6.3 million of the purchase price will be paid at the time of closing the deal. Of this, about EUR 2.9 million will be paid in cash and about EUR 3.4 million in new Innofactor shares in accordance with the authorizations granted to the Board of Directors. The subscription price of the shares will be the volume weighted average price of the Innofactor share on the period of January 2, 2013–June 5, 2013, which is about EUR 0.6739 per share. In order to pay the purchase price, about 5.0 million new shares will be issued.
Innofactor has the right, but not the obligation, to buy back about 4.7 million new shares from the sellers of atBusiness at the subscription price, EUR 0.6739 per share, before December 31, 2013, and at a 3 percent higher share price EUR 0.6941 before March 31, 2014.
The rest of the purchase price, EUR 0–1.3 million, will be determined by the realized profit margin (EBITDA) of the Innofactor group during the 12 months following the closing of the deal (June 1, 2013–May 31, 2014). Of the rest of the purchase price, 45% is intended to be paid in cash and 55% in Innofactor shares. The subscription price of the shares will be the volume weighted average share price on April 30–May 30, 2014. The number of new shares will depend on the average price of the share and the trading volume of the share on the said period. The company may also pay these shares in cash, either entirely or partially, if it so chooses.
Innofactor will take bank loans of EUR 11.5 million in total for paying the cash portion of the purchase price and for rearranging the target company's loans of about EUR 8.7 million. The bank loans will be paid off evenly in five years during years 2014–2018. More detailed information about the bank loans will be published in connection with the Innofactor's interim report for the second quarter of 2013.
The CEO of atBusiness Oy, Juha Rokkanen, will become Innofactor's country manager in Finland and also the CEO of the group's company running system integration business in Finland. He will report to the group's CEO, Sami Ensio. His deputy will be Mikko Lampi.
Previously, the tasks of the Finnish country manager have been handled by the Innofactor group's CEO, Sami Ensio, in addition to his own tasks. The arrangement will free his time for strategic work and global expansion.
In the arrangement, the company will issue an amount of new shares that requires drawing up a new prospectus and having it accepted by the Financial Supervisory Authority. After the acceptance, the stock exchange will decide on admitting the new shares to public trading. This is estimated to happen in July–August 2013.
Espoo, June 7, 2013
Board of Directors
Sami Ensio, CEO
Tel. +358 50 584 2029
On June 7, 2013, at 8:15 Finnish time, Innofactor will hold a briefing concerning the acquisition in Finnish for the media, investors and analysts at Aalto University DIPOLI meeting and congress services, Otakaari 24, 02150 Espoo. The acquisition and its effects will be presented by Innofactor's CEO Sami Ensio, Innofactor's country manager in Finland Juha Rokkanen, Innofactor's CFO Mikko Karvinen, the Vice President responsible for Innofactor's acquisitions and international business Janne Martola and CEO of Microsoft Oy Ari Rahkonen. The presentations of the briefing will be available on Innofactor's web site after the briefing. Admission is free.
Innofactor will also hold a conference call in English for analysts, media and investors on June 7, 2013, at 15:00 Finnish time. Registrations to firstname.lastname@example.org at least one hour before the event.
NASDAQ OMX Helsinki
Innofactor is one of the leading software providers focused on Microsoft solutions in the Nordic Countries. Innofactor delivers to its customers IT projects as a system integrator and develops its own software products and services. The focus area in its own product development is Microsoft Azure-based cloud solutions. Innofactor's customers include about 1,700 companies and government organizations in Finland, Denmark and elsewhere in Europe. In its operation, Innofactor strives for long-term customer relationships. After the merger, Innofactor will have about 400 motivated and skilled employees in seven locations in Finland, Denmark and Russia. The five year growth of Innofactor's net sales in 2008–2012 has been about 35 percent annually. Innofactor is the fastest growing technology company in the Finnish stock exchange. The Innofactor Plc share is listed in the technology section of the main list of NASDAQ OMX Helsinki Oy stock exchange.
Attachment: atBusiness Oy:n Julkinen tilinpäätös 2012