ETTEPLAN EXTENDS ITS SERVICE CONCEPT INTO INDUSTRIAL INTERNET SOLUTIONS WITH TWO ACQUISITIONS. FINANCIAL GUIDANCE FOR 2016 RAISES – BOARD OF DIRECTORS PLANS RIGHTS ISSUE.

ETTEPLAN OYJ, STOCK EXCHANGE RELEASE, MARCH 15, 2016 AT 10.00

ETTEPLAN EXTENDS ITS SERVICE CONCEPT INTO INDUSTRIAL INTERNET SOLUTIONS WITH TWO ACQUISITIONS.  FINANCIAL GUIDANCE FOR 2016 RAISES – BOARD OF DIRECTORS PLANS RIGHTS ISSUE.

In order to meet its customers’ needs in digitalization Etteplan strengthens its expertise in embedded systems and industrial internet solutions. Etteplan acquires in two separate transactions the total share capital of Espotel Oy and Soikea Solutions Oy and strengthens its position as a leading engineering services provider. By widening its strong engineering expertise into digital data management and embedded systems, Etteplan continues as a forerunner of innovative engineering services. The transaction combines intelligent devices, documentation and industrial internet applications into a unique service concept in the engineering services industry. By extending its service concept into industrial internet applications, Etteplan provides new value-added to its customers especially in the development of their service and maintenance business.

– Etteplan Oyj acquires the total share capital of Espotel Oy (Espotel) and Soikea Solutions Oy (Soikea).
– The combined revenue of the companies to be acquired totaled in 2015 at approximately EUR 29 million. The acquisitions have a positive impact on the operating profit (EBIT) in 2016.
– The financial guidance 2016 is updated as follows: “We expect the revenue and operating profit for the full year 2016 to grow significantly compared to 2015.” The financial guidance as given in the financial statement release on February 11, 2016: “We expect the revenue and operating profit for the year 2016 to grow clearly compared to 2015.”
– Etteplan’s long-term financial targets remain unchanged.
– The value of the transaction (Enterprise Value, EV) is approximately EUR 29 million. In addition there is an earn-out element which is subject to achieving certain financial result related milestones.
– Etteplan’s Board of Directors is planning a rights issue of approximately EUR 14 million to finance the acquisitions.
– Ingman Group Oy Ab, Etteplan’s largest shareholder, grants to Etteplan a bridge financing of approximaterly EUR 10 million, which will be converged to shares in the planned rights issue.
– Etteplan will transfer a total of 221, 365 treasury shares to key private owners of Espotel and Soikea.
– Etteplan shall also take a bank loan to finance the acquisitions as well as use other available financing facilities.
– The acquisitions are estimated to be completed by April 4, 2016.
– The run-rate of the synergies from the transaction are estimated to be approximately EUR 0.4 million and expected to materialize starting from the beginning of 2017.

Etteplan has today agreed to acquire the total share capital of Espotel Oy and Soikea Solutions Oy from their key personnel and private equity investment companies. Espotel is one the leading engineering services companies in the Nordics specializing in embedded systems, production testing solutions and IoT (Internet of Things) solutions for industrial purposes. Soikea is a specialist in digital data transfer and management, whose multichannel solutions produce the right information to the right place at the right time. The comprehensive product and service solutions of Espotel and Soikea meet well the demands for digitalization in the industrial sector. The experts of the companies have extensive experience ranging from the design of CPU based equipment to digital systems.

The companies employ together some 330 professionals, who will continue in Etteplan Group. Espotel and Soikea have operations in Finland, Sweden and Poland.

Industrial internet, which is also said to be the third industrial revolution, is one of the most important transitions both in Finland and globally. Intelligent and connected products enable industrial equipment manufacturers to expand their business from manufacturing of traditional products to management of comprehensive product systems. The transaction, which was announced today, combines industrial internet and digital data transfer and management with Etteplan’s extensive machine and equipment design engineering and technical documentation expertise and creates new growth opportunities in the fast growing market of industrial internet applications.

Preliminary combined financial information

Below preliminary combined financial information that has been produced for this release and is based on 2015 figures:

* EBIT excluding acquisition related items such as amortization on PPA allocations and earn out revaluations

The combined revenue in 2015 for embedded systems and industrial internet solutions was approximately EUR 40 million.

The acquisitions will have a positive impact on the operating profit (EBIT) in 2016.

The run-rate of the synergies from the transaction are estimated to be about EUR 0.4 million and expected to materialize starting from the beginning of 2017.

After the transaction Etteplan’s preliminary total assets are approximately EUR 135 million. The transaction will raise Etteplan’s preliminary goodwill by approximately EUR 17 million.

Updated financial guidance due to transaction

Financial guidance for 2016 is updated as follows: “We expect the revenue and operating profit for the full year 2016 to grow significantly compared to 2015.” The financial guidance as given in the financial statements release on February 11, 2016: “We expect the revenue and operating profit for the year 2016 to grow clearly compared to 2015.”

The long-term financial goals of the Company remain unchanged:

– On average 15 per cent annual revenue growth
– 10 per cent EBIT from business operations*
– Improvement of operating cash flow
– Growth of share of high value-added services (Managed Services) to 50 per cent in 2016

* EBIT excluding acquisition related items such as amortization on PPA allocations and earn out revaluations

Summary of the transaction

The value of the transaction (Enterprise Value, EV) to be paid by Etteplan is approximately EUR 29 million. In addition there is an earn-out element which is subject to achieving certain financial result related milestones.

Etteplan’s Board of Directors plans a rights issue of approximately EUR 14 million to finance the acquisitions. The needed authorization by the shareholders is expected to be received in Etteplan’s Annual General Meeting on April 5, 2016. The invitation to the Annual General Meeting has been published on February 11, 2016.

Before the execution of the rights issue Ingman Group Oy Ab grants Etteplan a bridge financing of approximately EUR 10 million, which will be converged to shares in the planned rights issue. Ingman Goup Oy Ab is Etteplan’s largest shareholder owning 66.05 per cent of the share capital and voting rights (as of February 29, 2016).

As part of the acquisition price Etteplan tranfers a total of 221, 365 treasury shares to the key private owners of Espotel and Soikea. A three-year (3) lock-up period is associated with the share transfer.

Etteplan shall also take a bank loan to finance the acquisitions as well as use other available financing facilities.

The acquisitions are estimated to be completed by April 4, 2016 and the acquired businesses to be integrated into Etteplan’s Group reporting on April 1, 2016.

Juha Näkki, President and CEO, Etteplan Oyj:

”Etteplan wants to be a forerunner in engineering services for the manufacturing industry. With the transaction announced today, we are again expanding our expertise to meet the needs of our customers even better, when they are developing their businesses towards knowledge intensive services. The transaction combines intelligent devices, documentation and applications of industrial internet into a unique service concept in the engineering services industry, and provide us with new growth opportunities in the vigorously growing area of digitalization. By extending our service concept to industrial internet applications we can offer increased value added to our customers particularly in the development of their service and maintenance business.

The acquisitions supported by our largest shareholder Ingman Group Oy Ab strengthen Etteplan’s position as a forerunner of innovative service solutions. I would like to welcome the experts from Espotel and Soikea in the Etteplan Group and I look forward to jointly developing the industry’s leading engineering and technical documentation services.”

Kari Liuska, CEO, Espotel Oy:

”Espotel is a leading provider of product creation services for industrial internet applications, embedded systems and software in the Nordics. Our and Etteplan’s offering complement well each other and strengthen our position in common key accounts. An industrial owner offers us excellent prerequisites to internationalize our business and provides our employees interesting possibilities to develop our operations further.”

Atso Vesterinen, CEO, Soikea Solutions Oy:

”Soikea’s multichannel solutions in digital data transfer complement the unique service concept, which combines intelligent devices, documentation and applications of industrial internet in this transaction.  The merger with Etteplan and Espotel enables us to become part of an industry leader and opens up for us great growth opportunities in industrial accounts.”

Briefings concerning the acquisitions

Etteplan holds a press conference in Finnish on March 15, 2016 at 2 p.m. (EET) in Tapahtumatalo Bank, Unioninkatu 20, Helsinki. In this event, Juha Näkki, President and CEO, Etteplan Oyj and Kari Liuska, CEO, Espotel will discuss the implications of the acquisition.

In addition there will be a telephone conference and webcast in English targeted at investors and financial analysts starting at 4.30 pm (EET). You can follow the webcast at http://www.goodmood.fi/webcaster/accounts/etteplan/live/ . The webcast can we viewed later at www.etteplan.com/investors . You can participate in the telephone conference by dialing to +358 9 2319 5437, 5-10 minutes before the beginning of the event. The event password is Etteplan2016. The telephone conference and webcast are hosted by Juha Näkki, President and CEO, Etteplan Oyj

In Vantaa, on March 15, 2016

Etteplan Oyj

Board of Directors

Additional information:

Juha Näkki, President and CEO, tel. 0400 606 372
Outi-Maria Liedes, SVP, HR, Communications & Operational Development, tel. 040 756 9620

Etteplan provides engineering and technical documentation services to the world’s leading companies in the manufacturing industry. Our services are geared to improve the competitiveness of our customers’ products and engineering processes throughout the product life cycle. The results of Etteplan’s innovative engineering can be seen in numerous industrial solutions and everyday products.

In 2015, Etteplan had turnover of EUR 141.1 million. The company has about 2, 100 professionals in Finland, Sweden, the Netherlands, Germany and China. Etteplan’s shares are listed on Nasdaq Helsinki Ltd under the ETT1V ticker.

DISTRIBUTION:

Nasdaq Helsinki
Major media
www.etteplan.com