Skarta Group Plc joins forces with Swedish NYAB Group to step up the pace of building a clean future

Skarta Group Plc, builder of a clean future, has today, on 16 December 2021 signed a share exchange agreement, according to which it acquires all shares in Swedish NYAB Sverige AB. NYAB Sverige AB is a parent company in a group that is concentrated on infrastructure, industrial and specialized construction. The Group also includes the company’s fully owned subsidiaries, NYAB Infrastruktur AB and NYAB Mälardalen AB.

The consideration for the shares of NYAB Sverige AB according to the share exchange agreement is 210 million euros, of which 140 million euros will be paid by arranging a directed share issue for the shareholders of NYAB Sverige AB, and 70 million euros will be paid as a cash payment. 288,397,790 new shares in Skarta Group Plc, that correspond to the current number of shares in the company, will be issued in the directed share issue, i.e., the share exchange ratio is 1:1 and the dilution for current shareholders 50 percent. The share issue will be paid with in-kind considerations through shares of NYAB Sverige AB. The cash payment is intended to be financed through debt financing, of which the parties have started negotiations with potential creditors. The amount of the cash payment can be revised before the confirmation that the prerequisites of the transaction are met.

The closing of the transaction is conditional to resolutions of Skarta Group Plc’s extraordinary general meeting regarding the share issue directed at NYAB Sverige AB’s shareholders and the approval of the transaction, approval from the Swedish Competition Authority, financing arrangements for the transaction, and the due diligence reviews regarding both parties.The transaction is pursued to be finalized in January-February 2022 subject to the closing conditions.

In the extraordinary general meeting, Skarta Group Plc’s name is intended to be changed to Skarta NYAB Plc, and its board of directors is intended to be reinforced with members suggested by NYAB Sverige AB´s current shareholders. The company will continue to be headquartered in Oulu, and Tuomas Hirvonen will continue as its CEO.

The new group will be one of the largest operators in the Bothnian Arc region

Through the transaction, Skarta’s resources will grow markedly, and its expertise will increase especially in the Norrbotten area that is a significant market area for both companies. The planned investments in carbon-free industry and infrastructure in the area for the coming decades will amount to more than a hundred billion euros.

The transaction also provides Skarta with an excellent opportunity to grow its Clean Energy business operations in Sweden and expand to be a significant builder of a clean future in the whole Bothnian Arc region. Skarta has concentrated more and more in comprehensive energy construction projects and its project development has started in a positive manner both in wind and solar power. Both the Norrbotten area and the Oulu region, where Skarta is a strong operator, are essential locations regarding the future hydrogen economy as well, and through the transaction Skarta will have the resources to implement more tangible actions to build a hydrogen economy.

The new Skarta NYAB Group will reach a turnover of close to 300 million euros and it has more than 300 employees throughout Finland and Sweden. The equity of the group will increase to approximately 190 million euros through the transaction, which after the financing arrangements related to the transaction will correspond an equity ratio of more than 60 percent. The company will give a more precise financial guidance for 2022 in the financial statement release from the year 2021 at the latest.

“The combination of Skarta and NYAB is an important milestone in our strategic way forward. NYAB’s activities are characterized by rapid growth, good profitability and great cashflow. Head markets of the company in Northern Sweden and Stockholm are growing markets driven by investments related to clean energy, as well as urbanization. All this fits our visions very well and provides us with a unique opportunity to reach our financial targets set for 2024 already during the next financial year”, comments Tuomas Hirvonen, CEO of Skarta Group Plc.

Swedish markets will constitute approximately 70 percent of the new Skarta NYAB Group during the following year. Therefore, changes in exchange rates have a larger effect on the Skarta Group Plc’s business operations than before. The company also investigates possibilities to dual list its shares in a Swedish marketplace during 2022.

The operations of the NYAB Group are essentially similar to current business of Skarta Group. Consequently, there are no major changes in risks related to the business operations of the group because of the transaction. Risks related to the business operations are typical industry related risks that regard, for example, offer calculation, project management, material prices, occupational safety, and human resources. NYAB Group typically has a project management role in its business, in which case the subcontractors also have a significant impact on its position.

“Both Skarta and NYAB are consortiums of entrepreneurs, and their activities can be described with flexibility and agility. Our combination creates a strong entrepreneur-driven group that has a significant position in energy construction in Northern Finland and Northern Sweden, green transition, and the development of hydrogen economy. Our common target is to be the most profitable company in the industry and create long-term value for both our customers and shareholders”, says Markku Kankaala, Skarta Group Plc’s Chairman of the Board.

The largest shareholders of Skarta Group Plc after the transaction, based on the holdings in the signing day of the share exchange agreement, would be as follows:

-          Holding Investment Förvaltning Luleå AB: 27.8%

-          Andament Group Oy: 23.4%

-          Säthergrens Entreprenad AB: 9.0%

-          Laisdalen Konsult AB: 6.1%

-          Mininvest Oy: 4.6%

-          Oy Haapalandia Invest Ltd: 3.9%

-          Mikael Sidér: 3.8%

-          Mitteo Holding AB: 2.9%

-          Granljung Holding AB: 2.9%

-          Pekka Niskanen: 2.8%

The shareholders of NYAB Sverige AB have committed to lock-up restrictions that amount to 50 % of shares in Skarta Group Plc that have been subscribed in the directed share issue. The lock-up period will be 12 months since the closing of the share exchange.

NYAB Group has been among the best in the industry in terms of profitability

NYAB Group has been growing rapidly in recent years. Its profitability combined with its organic growth has been among the best in the industry. Both the revenue and the operating profit of the group have almost quadrupled in 2016-2020, and it has shown profitable growth annually since 2013. The estimated turnover of the group for 2021 is close to 150 million euros. Its adjusted EBITDA is estimated to be approximately 20 million euros and EBIT more than 16 million euros. The group has an all-time high contract book that includes many perennial contracts, due to which the forecasted turnover for 2022 exceeds 170 million euros and the estimated EBIT exceeds 10 percent.

NYAB Group operates all over Sweden within its core businesses: earthworks, infrastructure, and specialized construction. Its clients are both private and public sector. The headquarter of the group is situated in Luleå. NYAB has offices in Stockholm and six different locations in Northern Sweden and is opening a new office in Gävle in January. A total of 160 employees are working for the group.

“Combining with Skarta strengthens NYAB in its continued growth journey very well. The demand for our services in specialized construction in the northern parts of Sweden due to investments related to clean energy production is growing in the coming decades. Skarta has experience in the construction and projects of clean energy production, local expertise in the Norrbotten area, as well as good insight in smart and clean building, locally produced renewable energy, and hydrogen. Together we have even better possibilities to expand profitably in a very interesting market area and to expand in the value chain of clean energy by developing and owning overall projects”, comments Johan Larsson, founder and CEO of NYAB Sverige AB.

The key figures of the group have been presented in the table below. The figures are unaudited, as the financial statements of the group companies have been consolidated to Holding Investment Förvaltning Luleå AB’s consolidated financial statements in accordance with the applicable accounting regulation. Audited consolidated financial statements regarding NYAB Group have therefore not been drafted.

INCOME STATEMENTS (1000 euros)	1.1.–30.9.2021 (9 months)	1.1.–31.12.2020 (12 months)
TURNOVER	92 725	125 107
Other operating income	374	355
Raw materials and services	-74 096	-100 606
Staff expenses	-8 919	-11 127
Other operating expenses	-1	-64
EBITDA (% of turnover)	10 082 (10,9 %)	13 665 (10,9 %)
Depreciation, amortization, and reduction in value	-742	-935
EBIT (% of turnover)	9 340 (10,1 %)	12 730 (10,2 %)
Financial income and expenses	-15	-423
EBT (% of turnover)	9 325 (10,1 %)	12 307 (9,8 %)
Income taxes and calculatory taxes	-1 944	-2 736
PROFIT FOR THE PERIOD (% of turnover)	7 382 (8,0 %)	9 571 (7,7 %)

BALANCE SHEET (1000 euros)	30.9.2021	31.12.2020
Intangible assets	42	53
Tangible assets	7 216	6 502
Investments	18	19
NON-CURRENT ASSETS	7 277	6 573
Raw materials and consumables	889	705
Trade and accrued receivables	44 657	26 042
Cash and cash equivalents	4 328	14 925
CURRENT ASSETS	49 874	41 672
ASSETS	57 151	48 245
Subscibed capital	16	16
Reserves	3	27
Retained earnings	26 384	23 864
EQUITY	26 403	23 907
Minority shares	0	3 111
Tax provisions	2 640	2 059
Long-term loans	1 433	2 366
Short-term liabilities	26 675	16 802
EQUITY AND LIABILITIES	57 151	48 245

Income statement figures presented above have been converted to euros using the average exchange rates in both periods, according to which the value of one euro has been 10,4848 SEK in 1.1.-31.12.2020 and 10,1522 SEK in 1.1.-30.9.2021. Balance sheet figures have been converted to euros using the exchange rate of the last day in both periods, according to which the value of one euro has been 10,0343 SEK on 31 December 2020 and 10,1683 SEK on 30 September 2021.

Invitation to news conference

Skarta Group Plc and NYAB Sverige AB will arrange a news conference in Oulu regarding the transaction today 16.12.2021 at 11 am (Finnish time). The conference will include greetings from the governments as well as speeches of the management of the companies. The conference can be followed as a live broadcast at https://e-concerthouse.videosync.fi/info.

Disclaimer

This is an unofficial translation from the company announcement released by Skarta Group Plc. According to Skarta Group’s disclosure policy, Finnish is the official language of communication of the company, and in case there are conflicts between the translation and the Finnish company announcement, the company announcement shall prevail.