Westend ICT Plc Stock Exchange Release December 3, 2010, at 08:55 Finnish time
WESTEND ICT PLC AND INNOFACTOR OY TO MERGE
Westend ICT Plc and the shareholders of Innofactor Oy have today signed an
agreement on the merger of the companies. The name of the company will be
Innofactor Plc (the companies together are later referred to as "Innofactor").
Form of the merger
The merger will be implemented as an exchange of shares (later referred to as
"Arrangement"). Westend ICT Plc will direct to the shareholders of Innofactor Oy
a share issue with stipulation concerning subscription in kind. In this issue,
409,665,891 new shares will be offered in the subscription price of EUR 0.04.
The subscription price will be paid by handing over the minimum of over 90% of
Innofactor Oy shares. The ownership of the new company will be distributed as
follows: the current shareowners of Westend ICT Plc will own 30% of the shares
and the Innofactor Oy shareowners who are parties in the transaction will own
70% of the shares. The total number of shares in the company will be
585,236,987.
Innofactor group
Innofactor offers its customers comprehensive solutions in the Microsoft
environment. The solutions are based on the latest web-based technologies.
Innofactor has grown strongly since year 2000. During the fiscal years 2007-2009
the average yearly growth has been about 30 %. The estimated net sales for 2010
are about EUR 10 million. In spite of the remarkable annual growth, Innofactor's
business operations have been profitable.
Innofactor group's annual accounts have been prepared according to the Finnish
accounting standards (FAS). Financial figures presented here are according to
FAS.
Innofactor group's result development and financial position
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| Innofactor group (€1,000) | 2007 | 2008 | 2009 |
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| Net sales | 4,220 | 5,461 | 6,920 |
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| Operating profit | 656 | 1,218 | 1,097 |
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| Result before taxes | 647 | 1,225 | 1,114 |
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Innofactor group's balance sheet
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| Innofactor group (€1,000) | 2007 | 2008 | 2009 |
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| Fixed assets | 751 | 616 | 1,044 |
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| Current assets | 1,359 | 2,880 | 4,212 |
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| Total assets | 2,110 | 3,496 | 5,256 |
--------------------------------------------------------------------------------
| Shareholders' equity | 883 | 1,720 | 2,534 |
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| Long-term liabilities | 52 | 0 | 0 |
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| Current liabilities | 1,227 | 1,776 | 2,722 |
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| Total liabilities | 2,110 | 3,496 | 5,256 |
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Annual report for 2009 is in Appendix 1.
Annual report for 2008 is in Appendix 2.
Significant events during the fiscal year in Innofactor group
On June 3, 2010, Innofactor Oy acquired the entire share capital of Visual
Management Oy. Visual Management deliveres Microsoft Business Intelligence
solutions. In 2009, the net sales of Visual Management Oy were approximately EUR
1.9 million (approx. EUR 2.1 million in 2008), business profit was EUR 0.066
million (EUR 0.012 million in 2008) and the result before taxes was EUR 0.013
million (EUR 0.07 million in 2008). At the end of 2009, the company employed 20
persons. The acquisition strengthened Innofactor's know-how in solutions for
electronic data management and data processing.
The company to be formed
The combined net sales of Innofactor Oy and Westend ICT Plc for 2010 will be
approximately EUR 14,5 million and the combined estimated profit before taxes
will be about EUR 1 million.
The reporting of the Westend ICT Plc group for the financial period of 1
January-31 December 2010 will not include the figures for the new company, but
the group's reporting for the financial period of 2010 will be done according to
the current group structure of Westend ICT Plc. Reporting in accordance with the
merged business operations will start as of January 1, 2011.
The company that will be formed in the merger will have about 170 employees at
the end of 2010. The head office will be located in Espoo and branch offices in
Tampere, Turku, Oulu, Lahti, Kuopio and Kajaani.
The products, customer relationships and operations of Innofactor Oy and Westend
ICT Plc and its subsidiary Documenta Oy will provide plenty of synergy benefits
that can be utilized in the new company. The merger will strengthen
significantly the prerequisites of growth in both parties' business operations.
For Innofactor Oy, listing in the stock exchange will give a new financing
possibility, which can help it to continue growth in Finland and possibly also
internationally in the future. Innofactor Oy has been growing the whole time it
has been in operation. During fiscal years 2007- 2009, the growth was in average
30 % annually. Innofactor Oy has regularly been on Deloitte's Technology Fast
50/500 list of growing companies. Innofactor's growth has taken place both
organically and through acquisitions. Innofactor Oy has acquired the parish
business operations of Tieto in 2004, the electronic business unit of Enfo in
2007, Software Innovation Finland Oy in 2009, and Visual Management Oy in 2010.
Documenta Oy's leading knowledge in customer projects for document and case
management implemented in SharePoint environments and its knowledge of IBM Lotus
Notes, Domino and DB2 Content Manager solutions will have a central part in
implementing the new Innofactor's strategy based on Microsoft solutions.
Documenta Oy's customer relationships combined with Innofactor Oy's customer
relationships will ensure that after the merger, the companies will have a
significant position as an information systems provider for public
administration and largest companies in Finland.
The merged Innofactor will become one of Finland's leading providers of
comprehensive Microsoft solutions. The product range will include central
Microsoft solutions, for example, web services, solutions for electronic
transactions, web stores, electronic desktops, solutions for multichannel
communication and document and case management, quality management solutions,
and solutions for Business Intelligence and Enterprise Search, enterprise
resource planning and customer relationship management. Technically, the
solutions are based, for example, on the use of Microsoft SharePoint Server and
Dynamics CRM and on own software and components implemented in .NET and Azure
environments. These include INNOFACTOR® Prime™, INNOFACTOR® Dynasty™ and
INNOFACTOR® Quality First™ product families. The last two of these have been
Documenta Oy's trademarks.
With its over 200 customers, the merged Innofactor will become one of Finland's
leading providers of case management, document management and portal solutions
for municipalities, towns and municipal federations. Also, combined customers
from the state administration form one of Finland's most significant clienteles.
Innofactor Oy has delivered to the State Treasury the solution for citizen's
account for public services. By connecting it as a part of the customers'
existing electronic services, the transfer to electronic public services can be
significantly accelerated in Finland. The Finnish Defense Administration and
especially the Defense Forces have been the largest single customer group for
Documenta Oy for almost 20 years. In the parish sector, Innofactor Oy has been a
clear market leader and organizations also have a major role in the company's
clientele.
Together with Microsoft, Innofactor can provide a solution based on
comprehensive knowledge for those companies and organizations that want to
transfer their IBM-based solutions into Microsoft solutions. In addition
Innofactor can offer high-quality specialist services and maintenance in
IBM-based solutions.
Innofactor's plans for future growth are strongly based on utilizing Microsoft's
cloud solutions. When they are ready, components implemented in a cloud
environment will offer Innofactor new kinds of possibilities in international
markets.
Business name
The business name of the company in the future will be Innofactor Plc.
CEO and Board of Directors
Innofactor Oyj will be led by the current majority owner and CEO of Innofactor
Oy, Sami Ensio. Sami has 15 years of experience in the ICT field in Finland. For
the last 11 years, he has been the CEO of Innofactor Oy, which he has also
founded. Sami is M.Sc. (Eng.) in technical physics and studied in the Helsinki
University of Technology (current Aalto University). He is 39 years old.
The current CEO of Westend ICT Plc, Hannu Jokela, will continue in his current
position and as the CEO of the subsidiary, Documenta Oy, until December 27,
2010. After this, he will transfer into special tasks assigned by the Board of
Directors and will report to CEO Ensio. Westend ICT Plc wishes to thank Hannu
for his focused work for the company in the past five years, which has in part
made this merger possible.
A new Board of Directors, comprising of four persons, will be selected for the
company and the persons who are proposed to be selected are: Sami Ensio, Pekka
Puolakka, Mikko Salminen and Ilpo Santala. Ensio, Puolakka and Santala are
currently in the Board of Directors of Innofactor Oy (Santala is the Chairman of
the Board) and Salminen is the Chairman of the Board for the Westend ICT Plc's
Board of Directors.
Ownership of the company
After the Arrangement, the five largest shareowners will own a total of over 50%
of the company's shares and votes. Based on the shares of ownership at the time
of the release, the shares of ownership will be as follows:
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| Shareowner | Share of ownership % |
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| Sami Ensio and children* | approx. 25.0-28.5% |
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| Tuomo Tilman and his controlling interest | approx. 9.9% |
| company Mpire Capital Oy | |
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| Jyrki Salminen | approx. 9.4% |
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| Rami Laiho* | approx. 5.0-5.6% |
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| R. Linturi Oyj and Risto Linturi directly* | approx. 4.7-5.3% |
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* The final shares of ownership will depend on how many shares will be
subscribed before the merger, using Innofactor Oy warrants, and also on how many
of the Innofactor Oy owners will be parties in the transaction (90% at the
minimum).
Approval of the general meeting
Prerequisites for the Arrangement becoming valid are that the Westend ICT Plc's
Extraordinary General Meeting on December 27, 2010, will accept the Arrangement
and that the minimum of 90% of Innofactor shares will be subject to the exchange
of shares.
The notice to the extraordinary general meeting concerning the Arrangement will
be published today(3.12.2010).
Handling the acquisition in the bookkeeping
After the Arrangement, the current shareowners of the company will own 30% of
the company's shares and votes and the Innofactor Oy shareowners selling their
shares will own 70% of the company's shares and votes. According to the IFRS
regulations applied (IFRS 3), the Arrangement is a reverse acquisition as the
organization issuing stocks (the judicial buyer, i.e. Westend ICT Plc) is named
as the target of the acquisition from the point of view of bookkeeping based on
the IFRS regulations. Correspondingly, the organization whose shares are
acquired (judicial target of the acquisition, i.e. Innofactor Oy) is the buyer
from the point of view of bookkeeping.
Rules of the stock exchange
According to the rules of the Nasdaq OMX Helsinki stock exchange, the
Arrangement means that a significant change (reverse takeover) has taken place
concerning Westend ICT Plc. Thus, the fulfilling of listing criteria must be
re-evaluated. For the company, this means that a new listing application needs
to be submitted to the stock exchange and it will be handled in the listing
committee. The listing committee will re-evaluate the prerequisites of listing
for the new company that will be formed in the Arrangement. Should it happen
that the new company is not accepted to be listed and the new shares not
admitted to public trading, the parties will have the right to dissolve the
Arrangement.
Trading with the new shares
In the Arrangement, the company will issue an amount of new shares that will
require 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 will happen around March-April
2011.
Espoo, 3 December 2010
WESTEND ICT PLC
Board of Directors
Additional information:
Sami Ensio, CEO of Innofactor Oy
Tel. +358 (0) 50 5842029
Mikko Salminen, Chairman of the Board of Westend ICT Plc
Tel. +358 (0) 40 7439382
Distribution:
NASDAQ OMX Helsinki
Main media
www.westendict.com
