Asset management technology company, K2fly (ASX:K2F), is set to take Perth-based software company, Infoscope, in a $1.25 million deal.
K2fly, which is publicly listed on the Australian Securities Exchange (ASX) told shareholders on 10 July that it had entered into a binding share sale agreement to acquire Infoscope, which has made a name for itself thanks to its Microsoft Suite-based data collaboration platform.
Under the terms of the deal, K2fly will pay $625,000 in cash together with the issue of $275,000 worth of shares in K2fly, and the issue of $350,000 unlisted options in K2fly.
It is hoped the acquisition will allow K2fly to enter into the mining industry with Infoscope’s data collaboration platform.
K2fly’s own software enables organisations to manage and maintain its asset data. The company owns proprietary asset management applications: ADAM (Asset Data Analysis Management); asset inspection management app NovIn; task management app DocMan; asset verification app TagMan; electronic information sharing app HandoverNotes and asset inspection app PropertyInspector.
Infoscope, meanwhile, owns and operates a data collaboration platform, built on the Microsoft Suite, which connects disparate data sources, eliminates silos and assembles information layers to present a single source of data.
“The acquisition of Infoscope provides K2fly with a significant entry into the mining industry with FMG, a key client of Infoscope," K2fly's executive chairman, Brian Miller, said. "The Keeping Place project, currently in implementation, also involves FMG, BHP and Rio Tinto and is an exciting innovation in cultural heritage information management.
"This is an excellent product which will have a wide application to other resources’ companies. This is how we are going to drive immediate revenue growth for Infoscope,” he said.
Infoscope closed the 2017 financial year with revenue of approximately $1.5 million, according to K2fly, and EBIT of approximately $400,000. Infoscope’s 2017 financial results represent some 200 per cent growth compared to the 2016 financial year which posted revenue of $523,000.
Miller said Infoscope had an “attractive” earnings before interest and tax (EBIT) multiple that is expected to allow K2fly to conserve its current working capital.
“Since our listing in November 2016, we have been actively engaged in evaluating several acquisition targets, and it was the growth possibilities and limitless upside associated with Infoscope that led us to make this acquisition,” Miller added.
Infoscope CEO Navin Nirmalrajan, meanwhile, said that his company is excited about its future with K2fly, and the additional resources that the business will have access to as a result of the acquisition.
"Over the past 12 months we have been able to grow the revenue of infoscope to approximately $1.5 million whilst maintaining a 27 per cent EBIT margin," he said.
Nirmalrajan said that K2fly will give the company the tools to continue to grow and secure new customers.
Following the acquisition, the operations of Infoscope will be integrated with K2fly to ensure the business development area leverages the opportunities to position Infoscope into existing K2fly customers and vice versa. The development teams will be “gradually combined”.
The Infoscope team will be relocating to K2fly’s office. Redundancies are to be expected with the back office consolidation occurring across accounting, legal, HR, insurance and IT departments.