Administer Plc planning an initial public offering and listing of its shares on Nasdaq First North Growth Market Finland marketplace

Administer Plc (“Administer” or the “Company”), a Finnish digital financial and payroll services provider and developer, is planning an initial public offering (the “Offering”) and listing of its shares on the Nasdaq First North Growth Market Finland (“First North”), a multilateral marketplace maintained by Nasdaq Helsinki Oy (“Nasdaq Helsinki”) (the “Listing”).

The aim of the planned Listing and Offering is to enhance Administer’s ability to implement its growth strategy both organically and through acquisitions as well as to increase financial flexibility for business development by increasing solvency. The Listing would also enable Administer to expand its ownership base with new institutional and other investors, which in turn would improve Administer’s funding base. Further, the aim of the Listing is to commit and incentivise Administer’s personnel.

Administer aims to raise approximately EUR 11 million in gross proceeds through the Offering, which will be used primarily to implement and support Administer’s growth strategy. The planned Offering consists of new shares issued by the Company, in addition to which the Company’s current shareholder private equity fund Bocap SME Achievers Fund II Ky would offer the Company’s existing shares for purchase in connection with the Listing.

Certain cornerstone investors have each, subject to certain conditions, undertaken to participate in the Offering and subscribe for shares at the final subscription price.

Administer in brief

Administer is a group that provides financial management and payroll administration services, consulting services and software services. Administer’s goal is to reform the market for financial management services by developing new technology and new solutions. According to its management, Administer is one of the Finland’s largest providers of financial administration services in terms of net sales and the largest provider of HR and payroll administration services in Finland in terms of the number of pay slips.

Administer was founded in 1985 by Onni Aho as a one-person accounting company. The development and sales of financial management software, which are crucial for Administer’s business, were part of the Company’s operations from the very beginning. The Company’s current CEO and member of the Board of Directors Peter Aho has served in the Company’s management since 1994.

Administer’s current group structure began to take shape in 2017, when Administer acquired Enfo Partner Oy (currently Adner Oy) and acquired Silta Oy as part of the Group in 2018. In addition, Administer acquired a stake in Kuntalaskenta Oy in 2018. The latest significant business acquisition of Administer was executed in August 2021, when Administer acquired Emce Solution Partner Oy.

In the future, Administer aims to develop an international SaaS business model for small and medium-sized businesses using Administer’s digital platform. In addition, Administer aims to utilize the HR and payroll related data that it collects in its business in order to offer the related technological and data analytics potential as a service to its clients. Administer also aims to strengthen scalability through the development of artificial intelligence (“AI”), which automates basic operations and thus improves operational efficiency.

More information about Administer can be found on the Company’s website at www.administergroup.com.

Administer’s strategy and strengths

Administer’s mission is to ensure smooth and efficient financial management and payroll administration for its customers. Administer’s vision is to provide a customer experience exceeding the expectations of its customers and Administer wants to be the best player in its industry with the customer experience and innovative mindset as well as with its comprehensive service offering and technological solutions.

In the view of Administer’s management, the Company’s technical advantage over its competitors helps the Company to win new customers, and the successful customer experience facilitates customer retention.¹⁾ The management believes that Administer can provide a comprehensive service offering, which, among other things, enables the success of its customers in their own business operations.

Administer’s own sales of services and solutions are the most important enabler of growth. Professional and active sales activities create the foundations for the increase in net sales, which is supported with business acquisitions. Administer will also invest more in the public sector in the future. Administer is also strongly focused on the competence and well-being of its personnel. Administer aims to create an attractive position in a difficult labour market that is of interest to relevant applicants.

1) Management’s estimate on the technical advantage is based on information derived from public sources concerning among others the use of AI, automation and ERP in Administer’s operations in comparison to its competitors.

Administer’s management considers the following factors to be Administer’s key strengths:

Administer offers its customers outsourcing services for business-critical functions

Administer’s service offering consists of outsourcing services for business-critical functions, and for this reason, Administer plays a key role in its customers’ business. The deep cooperation with customers forms the foundation for long customer relationships and the opportunity to grow with the customers.

Measured by net sales, Administer is one of the leading providers of financial management and payroll administration outsourcing services in Finland

The financial management and payroll administration market is undergoing a digital transformation, and the use of technology in business operations has become one of the key competitive advantages. Large operators have an advantage over smaller players because of their more extensive resources for developing their own technology and software that offers economies of scale in the market. As one of the leading players, Administer has a strong position in the rapidly developing market.

Administer offers its customers the opportunity to procure a wide range of continuous outsourcing services and supplementary consultancy services from the same company

Administer’s core business is based on the provision of continuous financial management and payroll administration services, in addition to which Administer is able to offer its customers a wide range of additional services according to their needs.

Investments in the digital service model and own software

Administer is investing heavily in the digital service model which is based on its own software. Administer continuously develops its own software to maintain its competitiveness in a rapidly changing market. Lately Administer has developed, for example, the use of AI as part of its service offering, and as at the date of the contemplated Listing, AI is used, for example, in the processing of purchase invoices and in accounting.

Administer’s broad customer base offers the opportunity to grow in many different customer segments

Administer’s customer base ranges from small one-person businesses to large, listed companies, as well as public entities such as municipalities and cities. Administer’s customer companies are diversified over several sectors, the largest of which, measured by net sales, are the financial sector, the energy sector and the travel industry. Through Kuntalaskenta Oy, Administer offers its services to public sector operators. The broad customer base also evens out the impact of cyclical fluctuations on Administer’s business, which is focused on customers of various types and sizes in several different industries.

The capability to serve customers locally

Administer has a network of business locations covering all of Finland, which enables Administer to serve customers locally. Administer has a total of 21 offices in Finland and one office both in Stockholm, Sweden and Tallinn, Estonia. The extensive office network gives Administer the capability to take local viewpoints and practices into consideration, which in the view of Administer’s management raises Administer’s profile on a regional level.

Administer’s financial targets, dividend policy and profit forecast

Administer’s strategic period 2022 – 2024 is a time of growth, where Administer is seeking a significant share of the domestic financial and payroll management market. Administer also aims to expand its operations in Sweden. Administer strives to bring new products and services to the market and is actively looking or suitable acquisition targets for its business. The Company has invested heavily for future growth and built a strong foundation for taking the next growth leap.

Administer’s financial targets for the strategy period are described below:

• Administer achieves net sales of EUR 84 million in 2024; and
• Administer achieves EBITDA margin of 24 percent in 2024.

According to the dividend policy approved by the Board of Directors of the Company, the Company aims to distribute as dividends at least 30 percent of its goodwill amortization adjusted profit annually.

During the year 2022, Administer aims to continue its growth investments as well as organic and inorganic growth. The Company aims to complete 5–10 acquisitions during the year 2022. The Company’s financial targets for the year 2022 are:

• Achieve net sales of at least EUR 51 million; and
• achieve an EBITDA margin of at least 8 percent.

Administer estimates that the net sales and profit for the financial period ending 31 December 2021 will be lower than for the financial period ended 31 December 2020.

The profit forecast takes into account that the profitability in 2021 will be affected by investments made in line with the growth strategy, especially due to the development of technology and the strengthening of the sales organization and the group's administration, as well as non-recurring costs and integration costs related to completed acquisitions. The profit forecast also takes into account that the decrease in customer transaction volumes due to the coronavirus pandemic and the loss of revenue due to a strategic NetSuite system overhaul by Adner Oy will also have a negative impact on net sales and earnings in 2021.

Administer’s key financial figures

Reported financial information

(TEUR)	1–9/2021	1–9/2020	1–12/2020	1–12/2019	1–12/2018
	(Unaudited, unless otherwise indicated)
Net sales	29,981	32,518	43,6781)	45,2851)	36,9711)
EBITDA	1,352	2,857	4,449	2,957	1,888
EBITDA, %	4.5%	8.8%	10.2%	6.5%	5.1%
Operating profit adjusted by amortization of goodwill	789	2,440	3,850	1,858	1,091
Operating profit adjusted by amortization of goodwill, %	2.6 %	7.5 %	8.8 %	4.1 %	3.0 %
Operating profit / loss	-133	1,718	2,8901)	8821)	4761)
Operating profit / loss, %	-0.4%	5.3%	6.6%	1.9%	1.3%
Profit before appropriations and tax	-323	1,506	2,6121)	5731)	2391)
Profit/loss for the period	-462	1,001	1,9551)	4291)	-51)
Profit adjusted by amortization of goodwill	460	1,723	2,915	1,405	610
Profit adjusted by amortization of goodwill, %	1.5 %	5.3 %	6.7 %	3.1 %	1.6 %
Return on equity, % (ROE)	-3.4%	13.7%	23.1%	6.1%	-0.1%
Equity ratio	55.2 %	35.0 %	38.3 %	29.1 %	26.4 %
Debt-to-equity ratio, %	29.9%	84.0%	65.1%	109.7%	143.6%
Increase in net sales	-7.8%	-	-3.5%	22.5%	82.7%
Number of personnel	590	573	594	645	514
Net sales per employee	50.8	56.8	73.5	70.2	71.9
Personnel expenses per employee	35.1	36.7	47.0	45.7	45.9
Ratio of personnel expenses to net sales	69.1%	64.6%	63.9%	65.0%	63.9%

 1)       Audited

Pro Forma financial information

The following unaudited Pro Forma financial information are presented for illustrative purposes only to illustrate the effects of the Administer Plc’s acquisition on 15 August 2021 of Emce Solution Partner Group on the group’s consolidated income statement as if it had occurred on 1 January 2020.

(TEUR)	1-9/2021 Pro Forma	1-12/2020 Pro Forma
	(Unaudited)
Net Sales	34,590	51,445
EBITDA	1,866	5,115
EBITDA, %	5.4 %	9.9 %
Operating profit adjusted by amortization of goodwill	1,185	4,475
Operating profit adjusted by amortization of goodwill, %	3.4 %	8.7 %
Operating profit	-340	2,480
Operating profit, %	-1.0 %	4.8 %
Profit before appropriations and tax	-530	2,295
Profit before appropriations and tax, %	-1.5 %	4.5 %
Profit/loss for the period	-766	1,474
Profit adjusted by amortization of goodwill	759	3,469
Profit adjusted by amortization of goodwill, %	2.2 %	6.7 %

 

Peter Aho, the CEO, comments:

“During almost thirty years, I have been involved in building Administer from the accounting firm founded by my father into one of Finland’s largest financial management service providers measured by net sales. Measured by number of pay slips, we are the biggest provider of HR and payroll services. Our goal is to reform the entire industry by developing new technologies and solutions, which requires significant investments in research and development also in the future. In addition to organic growth, corporate acquisitions are an integral part of our growth strategy. The aim of the planned public listing is to support our growth strategy and offer new shareholders the opportunity to be part of this journey.”

Information on the Offering

The planned Offering consists of new shares issued by the Company, in addition to which the Company’s current shareholder private equity fund Bocap SME Achievers Fund II Ky would offer the Company’s existing shares for purchase in connection with the Listing. Bocap SME Achievers Fund II Ky’s ownership in the Company before the Offering is 16.8 per cent. In the Offering the shares are offered to Administer’s personnel and to the public in Finland as well as to qualified and institutional investors internationally (excluding United States). All offers of shares outside the United States will be made in compliance with Regulation S under the U.S. Securities Act (as amended).

Ilmarinen Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company, Aurator Asset Management Ltd and certain other professional investors have each, subject to certain conditions, undertaken to participate in the Offering and subscribe for shares with an aggregate amount of EUR 12.6 million provided that the total equity value of the Company before the Offering proceeds is EUR 55 million in maximum.

In connection with the planned Listing, Administer will prepare a prospectus which will contain the terms and conditions of the Offering and instructions related to participating in the Offering. If the Company decides to proceed with the Offering, the prospectus will be published on the Company’s website at www.administergroup.com.

Evli Bank Plc has been appointed to act as the lead manager for the Offering. Bird & Bird Attorneys Ltd acts as the Company’s legal advisor in connection with the Listing. Hill and Knowlton Finland Ltd acts as the Company’s communication advisor.

Further information

Peter Aho

CEO

Administer Plc

Tel: +358 40 501 3661

peter.aho@administer.fi

Information on Administer

Administer is a Finnish group established in 1985 offering financial management and payroll administration services, consultancy services and software services. Administer provides a diverse range of services enabling Administer to offer its customers both financial management services as well as HR and payroll administration services. Administer’s aim is to make financial management and payroll administration of its customers efficient and smooth and to provide its customers with a customer experience that exceeds expectations.

Administer’s main business areas are financial management services and HR and payroll administration services in addition to which Administer is able to offer its customers a wide range of additional services according to their needs. Administer’s service offering consists of outsourcing services for business-critical functions, and for this reason, Administer plays a key role in its customers’ business. Administer’s strategy is to provide a high-quality customer experience with an innovative mindset as well as a comprehensive service offering and technological solutions. The management believes that Administer can provide a comprehensive service offering, which enables the success of its customers in their own business operations.

Administer’s net sales for the financial period ended 31 December 2020 was EUR 43.7 million and operating profit EUR 2.9 million.

Disclaimer

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. The information in this announcement is subject to change. This announcement is not an offer to sell or a solicitation of any offer to buy any securities potentially issued by Administer Plc (the ”Company”) in any jurisdiction where such offer or sale would be unlawful. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. In any EEA Member State, other than Finland, this announcement is only addressed to and is only directed at qualified investors in that Member State within the meaning of Regulation (EU) 2017/1129 (“Prospectus Regulation”). Any potential offering of the securities referred to in this announcement will be made by means of a prospectus. This announcement is not a prospectus as set out in the Prospectus Regulation. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information contained in the aforementioned prospectus. This announcement and the information contained herein are not for distribution in or into the United States. This announcement does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. In the United Kingdom, this announcement and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this announcement relates is available only to, and will be engaged in only with, “qualified investors” (as defined in section 86(7) of the Financial Services and Markets Act 2000) and who are (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Persons who are not relevant persons should not take any action on the basis of this announcement and should not act or rely on it. This announcement is for information purposes only and under no circumstances shall constitute an offer or invitation, or form the basis for a decision, to invest in any securities of the Company. Evli Bank Plc (the "Lead Manager") is acting exclusively for the Company and no-one else in connection with the potential offering. It will not regard any other person as their respective clients in relation to the potential offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the potential offering, the contents of this announcement or any transaction, arrangement or other matter referred to herein. The contents of this announcement have been prepared by, and are the sole responsibility of, the Company. The Lead Manager or any of its respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

Forward-looking statements

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this announcement are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialise or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this announcement by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. Undue reliance should not be placed on the forward-looking statements in this announcement. The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

Information for distributors

For the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) Chapter 5 of the Finnish Financial Supervisory Authority’s regulations regarding investment services and activities, FFFS 2017:2, (together the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares have been subject to a product approval process, where the target market for shares in the Company are: (i) retail investors and (ii) investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II (the “target market”). Notwithstanding the assessment of the target market, distributors should note that: the price of the shares may decline and investors could lose all or part of their investment; the shares offer no guaranteed income and no capital protection; and an investment in the shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The target market assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the offering. For the avoidance of doubt, the target market assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in the Company. Each distributor is responsible for undertaking its own target market assessment in respect of the shares in the Company and determining appropriate distribution channels.