Admicom Oyj: Admicom strengthens its software suite by acquiring Kotopro, a pioneering document management company

Admicom Oyj: Admicom strengthens its software suite by acquiring Kotopro, a pioneering document management company

Unofficial translation of the stock exchange release on June 17, 2022 at 9 am EET. In case the document differs from the original, the Finnish version prevails.

Admicom acquires the entire share capital of Kotopro Oy, which specializes in document management software solutions. With the transaction, Admicom's software portfolio, market potential and strategic position will be further strengthened as the company can offer its customers not only market-leading cost-calculation system, the most versatile project management functions, and the most powerful financial management tools, but also the industry's most advanced document management software solutions.

Kotopro Oy, founded in 2010, develops browser-based documentation and information management software specifically aimed at the construction and real estate sector, which facilitates the everyday life of the construction site and improves the flow of information between the parties. Kotopro's software can be used to make comprehensive documentation or reports, certificates and other important notes directly from the worksite, which creates efficiency in the business and enables real-time visibility into projects.

Kotopro Oy's revenue for 2021 were approximately EUR 1.9 million and EBITDA approximately EUR 0.1 million. In 2021, the company's revenue from recurring software revenues accounted for approximately 96% of net sales, increasing by approximately 22% from the comparison period. The day before the transaction was signed, the contract base of the company's recurring software revenues, adjusted to an annual level (ARR), was approximately EUR 2.2 million.

Kotopro's software is used by approximately 1,000 customers. Kotopro's service has already created over 2 million documents and more than 15,000 images are stored in the service every day. The company's software has also been piloted on the international market.

Structure of the arrangement and key terms of the deal

In the arrangement, Admicom Oyj acquires the entire share capital of Kotopro Oy’s parent company Kotopro Holding Oy from the Suomala family and in addition all shares held by the other shareholders of Kotopro Oy. After the transaction, both Kotopro Holding Oy and Kotopro Oy will be wholly owned by Admicom Oyj. Ownership and control of the shares of Kotopro Holding Oy and Kotopro Oy will be transferred to Admicom Oyj on 17 June 2022.

The total valuation of the arrangement is EUR 15.3 million and is paid at cash consideration. 80% of the purchase price, or EUR 12.25 million, will be paid to the sellers at the time of signature of the deed. The remainder (the "Additional Purchase Price") will be paid to the sellers 37 months after the transaction and will be tied to the development of Kotopro Oy's recurring revenue growth (MRR) and profitability in the 36-month period following the transaction. The Additional purchase price is EUR 0.0-3.1 million.

In order to finance the transaction, Admicom Oyj has agreed on a loan financing of EUR 13.0 million maturing in 2025 with Nordea Bank Plc. The financing is secured by business mortgages of Admicom Oyj. The financing agreement includes a covenant measuring the ratio of net debt to EBITDA.

Admicom's interim CEO Petri Aho:

"It is a pleasure to announce to you the Kotopro acquisition, which is excellently suited to our company's strategy and forerunner vision. With the acquisition, we will strengthen our expertise and software solutions in the area of document management and information sharing, which our customers have indicated as one of the most important functionalities and development areas in their everyday lives. We see that the increase in the amount of regulation, the development of construction quality standards and the growing need for documentation during the life cycle of buildings will further highlight the needs of our customers in this segment. Kotopro's advanced tools bring us an important piece of our puzzle as a comprehensive ERP solution provider, enabling us to build a more versatile and easy-to-use software for our customers. Our customers are able to choose the most suitable tools for them or take advantage of the integrations between our software that further promote our high level of automation and data management capabilities. We welcome Kotopro staff to Admicommunity."

Kotopro’s CEO Mikko Järvi

"With the acquisition, we will have a genuine opportunity to grow our business more rapidly and broader shoulders to further develop our pioneering products, which we have longed for as a small software company. Our software has already been piloted on the international market in the past, and I see that the acquisition will also offer significant further steps in the future on the road to internationalisation."

Kotopro’s founder Samuli Suomala:

"I am delighted that with this acquisition, documentation on the field will be integrated into ERP. This serves the interests of our customers even better. Our customers already make offers, hourly registrations, job approvals and payment receipts mobile in the field, and now this information is being made part of a larger solution. As a pioneer in mobile documentation Kotopro will receive more resources for product development and internationalisation "

Strategic objectives of the acquisition:

• The acquisition will broadly strengthen Admicom's product offering and increase technological expertise, especially in the areas of document management, information sharing and mobile user interfaces.
• The arrangement will significantly increase Admicom's customer base and target market, thus opening up new opportunities for organic growth, new services, the development of sales and distribution channels and the expansion of the ecosystem. According to our preliminary estimate, the Kotopro arrangement will increase the size of our target market (TAM) by approximately EUR 20-30 million.
• Kotopro enhances the internationalisation potential of Admicom's product offering.
• Acquisitions support Admicom in achieving the financial targets for the current strategy period and in long term. Admicom's financial target for the 2021-2023 strategy period is, on average, a growth of more than 20% in net sales and a profitability of 40-50% measured by EBITDA.

Financial and business impacts of the acquisition:

The acquisition is expected to have a clear positive impact on Admicom's revenue growth and a slightly positive impact on EBITDA in the second half of 2022, but it will have no impact on the company's guidance for 2022. In line with the Group’s financial targets for the 2021-2023 strategy period, the Company guides for the 2022 financial year over 20% revenue growth and profitability to be 40-50% in terms of EBITDA.

Kotopro Oy's business and services will continue as before with the transaction, and we see excellent growth opportunities for the next few years with the company's software solution. After the transaction, we will start close cooperation between Kotopro and Admicom Group companies, which aims to broadly strengthen the value creation potential of our product portfolio and to take full advantage of the cross-selling opportunities created by the transaction. In order to streamline the administrative and legal structure, we will start planning after the transaction to merge Kotopro Holding Oy into Admicom Oyj during 2022.

Key indicators of the profit and loss account and balance sheet of Kotopro Oy and Kotopro Holding Oy for the years 2020-2021

Kotopro Oy

EUR 1,000	2021	2020
Revenue	1,871	1,755
EBITDA	91	248
Operating result	22	195
Equity ratio %	43.0	50.4
Total Equity	256	265
Balance sheet total	715	604

Kotopro Holding Oy

EUR 1,000	2021	2020
Revenues	85	109
Operating profit	-67	22
Equity ratio %	74.6	87.5
Total Equity	150	252
Balance sheet total	201	288

Admicom Oyj
BOARD OF DIRECTORS

Additional information:

Petri Aho
Interim CEO, CFO
petri.aho@admicom.fi
+358 44 724 1767

Approved advisor:

Oaklins Merasco Oy
+358 09 612 9670

Admicom Oyj

Admicom, established in 2004, is a Finnish forerunner and provider of cloud-based ERP solutions especially for small and medium-sized construction, building services engineering and manufacturing companies. Admicom's cloud-based ERP system Adminet efficiently automates the customer company's routines from site and production functions to office processes. Admicom also provides training, consulting, and accounting services.

Our subsidiary Tocoman Oy's software is one of the leading software solutions especially in the construction industry. Tocoman's cost calculation and production management software has a long history and a solid position on the market. By combining the strengths of Tocoman's software with the strengths of Adminet, the end result is clearly the most extensive cloud-based solution for the construction industry.

Our subsidiary Aitio Finland Oy provides its customers and Admicom Oyj with software solution development services, as well as related integration and maintenance services, mobile applications and cloud solutions. The subsidiary Hillava Oy develops and markets a cloud-based ERP system especially for field work planning and management.

Admicom Oyj employs over 200 professionals in Jyväskylä, Helsinki, Tampere, Oulu, Seinäjoki and Turku. Further information: https://investors.admicom.fi/