ELOP enters Nordic infrastructure market – signs term sheet to acquire Nordic Infrastructure Group for NOK 92 million

05. July 2022 - Elop AS (Elop) and Nordic Infrastructure Group AS (N.I GROUP)
have agreed the principal terms of an agreement where Elop is to acquire 100
percent of the shares in N.I GROUP in a deal that values Elop at NOK 2.80 per
share. 

With this strategic move ELOP enters the Nordic infrastructure market and
expects to be profitable by 2023. 

The transaction enables Elop to move higher up in the infrastructure
maintenance, construction, and TIC (testing, inspection, and certification)
value chain, and get closer to key business enablers like asset owners and
infrastructure owners.

"This transaction is a big and important step forward for Elop. The group will
no longer only deliver technology, we will now provide asset owners with a wider
range of services that includes inspections, education, construction, and
maintenance. We believe this will help to fast-track the adoption of Elop's
ultrasound software and scanning technologies. This will enable us to get closer
and to have a more direct dialogue with owners and managers of infrastructure,"
says Elop board member Kristian Lundkvist.

"Going forward we will utilise N.I GROUP as a growth platform to grow within the
Nordic infrastructure market. In addition to organic growth, we will continue to
consider M&A and become a consolidator within the infrastructure niches we find
relevant and interesting," Lundkvist continues. 

Lundkvist pinpoints the fact that the Simplifai sale has been a key enabler to
secure this deal with N.I GROUP at favourable terms for Elop's shareholders.

"As stated on 4. May, the divestment of Simplifai, in an all-cash deal and our
subsequent strong balance sheet, provides us with the financial strength to
accelerate our growth plans, open new markets quicker and evaluate strategic
options," adds Lundkvist. 

Elop had a cash position of NOK 75 million end of May, Elop expects to receive
another NOK 90 million upon closing of the Simplifai sale and a second
instalment from the Simplifai transaction of NOK 40 million within 36 months. No
cash will be used in the N.I GROUP transaction. The N.I GROUP transaction is
share based only, thus securing a continued strong balance sheet for Elop. 

ABOUT N.I GROUP
N.I GROUP - Nordic Infrastructure Group - is a group with a rapidly growing
presence in the Norwegian and Swedish infrastructure markets. Through its
subsidiaries, the group delivers entrepreneurial services as well as tools and
equipment to the railway and tramway industries; training, management and
consulting services for the road, rail, construction, and civil engineering
sectors; and accommodation services to the construction industry. 

Headquartered at Kolbotn outside Oslo, N.I GROUP has been established by
personnel with decades of experience from the Nordic infrastructure markets,
including road, rail, and construction. CEO is construction industry veteran
Gjermund Sogn. 

Today, N.I GROUP has approximately 50 employees across Norway and Sweden. In
2021, N.I GROUP delivered revenues of NOK 66 million and EBITA of NOK 2.5
million. The company has no debt. For 2022, N.I GROUP expects revenues of
approximately NOK 155 million and profit before tax of around NOK 12 million.

"We have built up a dedicated team and a strong client base during the last
couple of years, winning numerous agreements that we will harvest from in years
to come. As a part of Elop we believe that we will have a favorable base to
create a leading infrastructure specialist, including a highly competitive
inspection offering in the Nordic region. Joining a listed company will also
make it easier for us to capitalize on the growth opportunities we have
identified. The fact that all N.I GROUP shareholders will reinvest the full
purchase prices in Elop underlines our belief in Elop and its future" says
Gjermund Sogn, CEO of N.I GROUP. 

SIGNIFICANT SYNERGIES
There are several potential market and operational synergies between Elop and
N.I GROUP. Firstly, N.I GROUP has an extensive client base among infrastructure
owners in Norway and Sweden. The aim is to utilize this client base to build up
a joint inspection offering towards asset owners, including driving the adoption
and utilization of the Elop Insight, Elop Insight Crawler, and other
ultrasound-based scanner solutions from Elop. 

Further, Elop's AI and software competence will be applied across N.I GROUP's
subsidiaries and their service lines. This represents significant potential for
increased automation and thereby higher revenue profitability in projects.  

In addition, N.I GROUP already has a growing, cash-generating business. As a
result, the new and expanded Elop group targets to deliver cash positive
operations already in 2023. 

THE TRANSACTION
Elop and N.I GROUP have agreed to the principal terms of an agreement where Elop
will take over all of the shares in N.I GROUP in a 100 percent share-based deal,
settled by shares in Elop valued at NOK 2.80 per share. This represents a
significant premium compared to the trading level in Elop shares.

The purchase price for the shares in N.I GROUP shall be based on an enterprise
value NOK 92 million based on locked box accounts as of 31. December 2021. N.I
GROUP's shareholders will receive shares in Elop AS at a price of NOK 2.80 per
Elop share. All shareholders in N.I GROUP have agreed to 12-36 months lock-up
period for their shares in Elop. The consideration shares will consist of a
combination of treasury shares and new shares issued in Elop, subject to
approval by Elop's annual general meeting. 

CEO in Elop, Øivind Horpestad, is a minority shareholder with 10 percent
ownership in N.I GROUP via Gimle Invest AS. Gjermund Sogn, via Sogn Invest AS,
is a minority shareholder with 5.45 percent ownership in Elop and 37% ownership
in N.I Group. As a result the Transaction will be subject to approval in
accordance with the Norwegian private limited liability company's act section
3-8.

The share purchase agreement is expected to be signed later this month. The
transaction is subject to customary closing conditions, due diligence, and final
transaction documentation, and closing is expected to be on or about 15. August
2022.

(ENDS)

Contact information:
Øivind Horpestad, CEO, Tel: +47 910 00 626
Stian Thorsrud, Head of Communications and Marketing, Tel: +47 993 00 003
Kim Boman, CFO, Tel: +47 959 63 912

About Elop AS 
Elop is a Norwegian technology company that delivers tools and digital solutions
to inspect, monitor and manage infrastructure worldwide. Through data-driven and
AI-based solutions for inspection and predictive maintenance of concrete
infrastructure, Elop's vision is to provide asset owners with solutions that
improve safety, extend asset lifetime, minimise total lifecycle cost and
environmental footprint. For more information: www.elop.no

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