Investor NewsBuildingIQ Boosts Its Capabilities & Growth...

Investor News
BuildingIQ Boosts Its Capabilities & Growth Prospects By Acquiring Greenfield Building Sector Partner, Buildingsense

August 23, 2018

BuildingIQ Inc. (ASX: BIQ), a tech-enabled services business, today announced the execution of a definitive agreement to acquire its greenfield building sector partner, Buildingsense Australia Pty Ltd (Buildingsense).

Highlights
BuildingIQ acquires Buildingsense for the issue of $825,000 of CDIs and deferred cash payments of $200,000 payable over two years.
Significant financial benefits will be realised:
− 1H FY2019 additional revenue of approx. A$1,000,000
− 1H FY2019 net positive cashflow of approx. A$350,000
− Improved terms of trade and cash receipts (in greenfield sector) by 30 days
Expands BuildingIQ’s sales and marketing capabilities in the greenfield sector.
Extends BuildingIQ’s service offering through new distribution rights.

“The acquisition of Buildingsense, which has been a highly valued partner of BuildingIQ in Australia since 2016, secures our greenfield market opportunity locally and delivers significant financial benefits to the Company. Importantly, it also provides a platform for our previously stated intentions to grow this sector globally.” Mr. Michael Nark, President & CEO of BuildingIQ, said in commenting on the deal.

“The deal strengthens our sales and marketing capabilities in the greenfield sector and also allows BuildingIQ to offer additional 5i Platform enabled solutions – Sauter BMS and Pettinaroli Valves – to clients locally through distribution rights owned by Buildingsense.”

About BuildingSense Australia

Buildingsense was founded in 2015 by Hari Singh and is headquartered in Perth, Western Australia. The firm has strong capabilities in services related to the design, supply, engineering, installation, commissioning and service of building technologies. Additionally, Buildingsense has the distribution rights in Australia for the integrated Building Management Systems and related building technologies of the Swiss-based Sauter Group; and has partnered with a number of companies – including Pettinaroli and GAMI, to offer valves, air handling and fan coil units. Acquisition Delivers Financial and Strategic Benefits

The strategic partnership with Buildingsense, working on multiple greenfield contracts in WA and NSW to deliver our 5i Platform, has been a strong contributor to our overall growth in Australia, delivering total bookings of over A$4.0 million (approximately A$2.5 million of which is still to be recognised as revenue).
Financial Benefits From Acquisition

Additional revenue to the consolidated entity of approximately A$200,000 in Q4 FY2018, whilst providing a strong base for future revenue growth.
Positive cashflow impact in Q4 FY2018 of approx. A$80,000. Current terms of trade and cash receipts for greenfield contracts anticipated to improve by 30 days.
Gross margin from greenfield contracts forecast to improve by approximately 10%.
Q4 FY2018 Operating Profit is expected to be positive for the new business unit.

Strategic Benefits

Reinforces the delivery of BuildingIQ’s stated strategic growth initiatives (ASX: 23 February, 2018). Expert resources increased to deliver more projects and expand sales and marketing capabilities in Australia and, potentially globally.
Improved value throughout the entire building lifecycle for Australian customers using BuildingIQ’s 5i Platform. Adds further control services, such as Sauter’s BMS installation and ongoing control, tuning and optimization services. BuildingIQ will look to leverage these and similar capabilities in other markets in the future.
Secured local distribution rights for Swiss-owned Sauter Building Management Systems and Italian-owned Pettinaroli Valves.

Transaction Terms
The key terms of BuildingIQ’s acquisition of Buildingsense are:

BuildingIQ will establish a subsidiary, to purchase 100% of the shares of Buildingsense. The new subsidiary will be 70% owned by BuildingIQ Inc. and 30% by the current owners of Buildingsense.
he equity and cash consideration for the purchase is:
− CDIs of BuildingIQ Inc. to the value of $825,000 based on the 30-day VWAP prior to the date of this announcement.
− Deferred cash payments of A$80,000 due on 15 December 2018, A$90,000 due on 15 August 2019, subject to the achievement of certain revenue targets and A$30,000 due on or about 30 June 2020, subject to any warranty claims.
BuildingIQ will retain certain key personnel from Buildingsense on employment and consulting agreements, ensuring a smooth transition and continuity of skills and experience to deliver the services to greenfield contracts.
Completion of the transaction is expected to be 31 August 2018.
I'm a newbie to this one.. Good luck to all