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Featured Project:
Battersea Power Station, London, U.K. | US $13.6B Value
Trusted by the world’s largest projects
Aconex acquires Conject, launches capital raising
17 March 2016
Leigh Jasper, CEO
Paul Perrett, COO
Steve Recht, CFO
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Agenda
Tod BottariInvestor RelationsWelcome
Steve RechtCFOFinancial impact
Leigh Jasper CEOBusiness impact
AllQ&A
Leigh JasperCEOOutlook and summary
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Disclaimers (1)
Important notices
This presentation has been prepared by Aconex Limited (ABN 49 091 376 091) (“Aconex” or “Company”).
Summary information
This presentation contains summary information about Aconex and its activities current as at 17 March 2016. This presentation is not a recommendation or advice in relation to Aconex or any product or service offered by Aconex or any of its subsidiaries. The information in the presentation is of a general nature only, and is not intended to be relied upon as advice to investors or potential investors, and does not purport to be complete or comprise all information which is relevant to an investment decision or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act 2001 (Cth). This presentation should be read in conjunction with Aconex’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange, and in particular, Aconex's 2015 Annual Report and the 31 December 2015 Half Yearly Report, which are available at www.asx.com.au, and also available on Aconex's website at http://investor.aconex.com.
Not financial product advice
This presentation is for information purposes only and is not a prospectus, disclosure document, product disclosure statement or other offering document under Australian law (and will not be lodged with the Australian Securities and Investments Commission) or under any other law. This presentation does not constitute financial product, investment, legal, taxation or other advice or a recommendation to acquire Aconex shares and has been prepared without taking into account the objectives, financial situation or needs of individuals. No reliance may be placed for any purpose whatsoever on the information contained in this presentation or on its accuracy or completeness.
Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek financial, legal and taxation advice appropriate to their jurisdiction.
Financial data
All dollar values are in Australian dollars ($) unless stated otherwise.
Past performance
Past performance information, including past share price performance, given in this presentation is given for illustrative purposes only and should not be relied upon as an indication of future performance.
Future performance
This presentation contains certain “forward-looking statements” including statements regarding our intent, belief or current expectations with respect to the Company’s business and operations, market conditions, results of operations and financial condition, and risk management practices. The words “likely”, “expect”, “aim”, “should”, “could”, “may”, “anticipate”, “predict”, “believe”, “plan” and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.
Forward-looking statements, opinions and estimates provided in this presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions.
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Disclaimers (2)
Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains such statements that are subject to risk factors associated with an investment in Aconex. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially.
Forward-looking statements involve known and unknown risks, uncertainties and assumptions and other important factors that could cause the actual results, performances or achievements of Aconex to be materially different from future results, performances or achievements expressed or implied by such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
Financial information
Certain financial data included in this presentation is ‘non-IFRS financial information.’ The company believes that this non-IFRS financial information provides useful insight in measuring the financial performance and condition of Aconex. Readers are cautioned not to place undue reliance on any non-IFRS financial information and ratios included in this presentation.
Market share information
All market share information in this presentation is based on management estimates and internally available information, unless otherwise indicated.
Reliance on third party information
The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information.
Investment risk
An investment in Aconex shares is subject to investment and other known and unknown risks, some of which are beyond the control of the Company, including possible loss of income or principal invested. Aconex does not guarantee any particular rate of return or the performance of Aconex shares, nor does it guarantee any particular tax treatment. Investors should carefully consider the risk factors outlined in this presentation when making their investment decision.
Not an offer
This presentation does not constitute an offer, invitation or recommendation to subscribe for or purchase any security and neither this presentation nor anything contained in it shall form the basis of any contract or commitment. In particular, this presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities in the proposed offering have not been and will not be registered under the U.S. Securities Act of 1933, or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the securities in the proposed offering may not be offered or sold, directly or indirectly, in the United States, except in a transaction exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This document may not be distributed or released in the United States.
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Disclaimers (3)
Disclaimer
None of Macquarie Capital (Australia) Limited and UBS AG, Australia Branch and their respective affiliates, directors, officers, partners, employees, contractors, agents and advisers (Limited Parties) have authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this presentation and do not take any responsibility for, nor make or purport to make any statements, representations, warranties or undertakings in this presentation and there is no statement in this presentation which is based on any statement by any of them.
No representation or warranty, expressed or implied, is made by any person as to the fairness, accuracy, completeness or reliability of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, the Limited Parties, the Company, its related bodies corporate, and their respective affiliates, officers, employees, agents and advisers, expressly disclaim all liabilities and responsibility in respect of any expenses, losses, damages or costs incurred by any recipient as a result of the use or reliance on anything contained in or omitted from the information in this presentation, including without limitation, any liability arising from fault or negligence or otherwise, and make no representation or warranty, express or implied, as to the fairness, currency, accuracy, reliability or completeness of the information.
The information in this presentation remains subject to change without notice.
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Agenda
Tod BottariInvestor RelationsWelcome
Steve RechtCFOFinancial impact
Leigh Jasper CEOBusiness impact
AllQ&A
Leigh JasperCEOOutlook and summary
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Aconex acquires Conject to accelerate global leadership
Strategic rationale
Acquisition overview
• Consolidate global and European market leadership of Aconex3
• Enhance our product and sales capabilities, integrating a team with deep industry experience, including significant cost control expertise
• Add significant scale and operating leverage, increasing our global footprint and economies of scale
• Aconex has agreed to acquire Conject Holding GmbH ‒ a leading cloud construction collaboration service provider in Europe
• CY15 revenue of €24.5m (A$36.1m) and EBITDA of €0.8m (A$1.1m)1
• Cash consideration of €65.0m (A$96.0m)
• Expected close on or about 31 March 2016, subject to customary closing conditions2
1) Financials converted from EUR to AUD at 0.677.2) Including approval of Federal Ministry of Economics and Technology, German equivalent of Foreign Investment Review Board (~2 weeks).3) In the construction collaboration sector, by revenue.4) Excluding the amortisation of intangibles related to the acquisition and one-time transaction and restructuring costs, and including the benefit of
existing tax losses.
Financial impact and
funding
• Acquisition implies trailing EV / CY15 revenue multiple of 2.7x
• Strongly accretive to FY17 revenue, EBITDA and earnings per share4
• Funding through A$120m fully underwritten placement
• Non-underwritten share purchase plan to follow
1
2
3
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Conject at a glance:European leader in construction collaboration
• Leading provider of project collaboration solutions to largest construction markets in Europe – Germany, UK, France, and Russia1
• More than 670 customers in 50 countries
• Significant enterprise contract penetration
• 210 employees in 12 offices, with headquarters in Munich
Venda Nova III Hydroelectric Power Station | Project size: US$438.6M | Location: Portugal
European offices
1) Leading provider by revenue.
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Historical Conject revenue1
$A millions
Conject adds significant revenue and profit,driving global scale
• Revenue CAGR (CY13-CY15) of 18%
• Significant proportion of SaaS revenue is recurring, providing high visibility and aligning with Aconex business model
High forward revenue visibility
Conject CY16F revenue contracted at 31 Dec 2015
Aconex CY16F revenue contracted at 31 Dec 2015
1) Converted from EUR to AUD at exchange rate of 0.677.
Conject CY16F revenue by geography
75%
25%
Contracted Uncontracted
78%
22%
Contracted Uncontracted
26.0
31.836.1
CY13 CY14 CY15
41%
31%
11%
16%
Germany UK France Other
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Conject reinforces Aconex strategic focus, core strengths
• Extend market leadership in Europe1
• Strengthen customer base in Germany, UK, France
• Strengthen top 500 owner and contractor network
• Expand global user network
• Consolidate leadership position in Middle East and Asia
• Leverage product and operational synergies across broader market footprint, increasing margin
• Broaden product growth through upsell opportunities– e.g., BIM, Field
• Add experienced local leadership and sales team with deep industry experience in cost control sales and delivery
• Extend product depth and IP• Leverage BIM penetration in UK and
other EU markets
1. Consolidate Aconex global leadership
2. Add significant scale and operating leverage
3. Enhance our product and sales capabilities
3. Drive scale
1. Grow the network
2. Expand product breadth
1
2
3
1) In the construction collaboration sector, by revenue.
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Conject extends Aconex market leadership throughout Europe
1) Global Construction Perspectives and Oxford Economics, Global Construction 2030, November 2015.2) ENR 2014 Top Global Contractors Report. 3) Leading market share in the construction collaboration sector, by revenue. 4) UK leads the world in BIM adoption.
• Strong footprint and customer relationships across Germany, UK, France, and Russia
‒ The world’s 5th, 7th, 8th, and 10th largest construction markets in 2014, respectively1
‒ European contractors account for 50% of revenues of top 250 global contractors2
• Leading market share in Germany3 and UK3,4 –developed, early-adopting, influential markets
• Improved entry points into France and Russia –emerging construction collaboration markets
Market consolidation will be the catalyst for accelerated growth and scale
Europe is the second largest construction market after Asia1
AconexConject
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Conject expands Aconex market penetration and user network
• Conject has more than 670 customers –diversified customer base across asset owners/operators and contractors‒ European enterprise customers with
international projects‒ Private / public sector mix‒ Low customer concentration – top 10
customers account for ~20% of revenue ‒ Over 100 enterprise customers
• Long-term relationships, with typical project lengths of 6-7 years
• Users in 50 countries• Reinforce network effects globally
Large, complex projects – similar to Aconex
• Airports in UK and Singapore
• Gas power plants in Germany and the US
• Real estate infrastructure in UK and UAE
• Local government infrastructure in Russia
• Energy infrastructure in UK
• Retail properties in Japan
• Retail distribution centers in US
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Connecting teams project-wide
OperateConstructDesignBidPlan
Document
Control
RFIs &
Change
Orders
Bidding &
Tenders
Workflows
&
Approvals
BIM
Collaboration
Submittals Handover
to
Operations
Cost
Management
Dashboards & Reporting
API
Conject provides strategic value for BIM penetration and cost control launch
Save money. Increase productivity. Manage project risk.
Field Inspections
Product expansion
opportunities
Cost control expertise
Deep industry experience
AconexConject
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Conject will be fully integrated with Aconex, increasing profit growth
Operational impact
Platform consolidation
Integration investment
• Near-term operation of Conject platform for existing customer projects (similar to successful partnership with CIMIC Group and INCITE Keystone integration)
• Long-term alignment of customers and platform
• One-time operational integration investment to bring Conject up to Aconex operating standards
• Leverage of synergies to improve operating performance and increase global economies of scale
• Synergies and improved operating performance to achieve medium- to long-term EBITDA margin growth
• Product investment in one integrated platform
• Leverage of global business infrastructure
• Consolidated sales and service operationsFor
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Agenda
Tod BottariInvestor RelationsWelcome
Steve RechtCFOFinancial impact
Leigh Jasper CEOBusiness impact
AllQ&A
Leigh JasperCEOOutlook and summary
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Financing the Conject acquisition
• $120.0 million fully underwritten placement‒ Variable-price book build underwritten at floor price of $4.95 (7.8% discount to Aconex’s
last closing price)• Aconex will also offer non-underwritten share purchase plan (SPP) to allow eligible
shareholders to acquire Aconex shares‒ Shareholders with registered addresses in Australia or New Zealand will be offered
opportunity to acquire up to $15,000 of Aconex shares per shareholder ‒ Further information regarding SPP will be mailed to shareholders in due course
• In conjunction with placement, co-founders are selling modest proportion of their shareholdings following recent release from escrow‒ Leigh Jasper and Rob Phillpot to realise approximately 10.4% and 11.9% of their
shareholdings, respectively (~$15.0m in aggregate at floor price)
Sources of funds $m Uses of funds $m
Placement 120.0 Acquisition of Conject 96.0
Integration costs 5.8
Increase in cash 14.6
Transaction costs 3.6
Total 120.0 Total 120.0
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Financial impact of ConjectBalancing profitability and growth investments
• Revenue
‒ Immediate impact
‒ Long-term network effects
• Sales & Marketing
‒ Synergies across UK, Middle East and Asia
Grow the network
Expand product breadth
Drive scale
Balanced growth and profitability:
Increasing revenue
Increasing earnings
Strategy Financial results
• R&D
‒ In line with existing R&D investment as % of revenue
• EBITDA
‒ Accretive excluding one-time costs
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Conject expected to continue strong growth,with margin expansion post-integration
Aconex ownership
Conject financials HistoricNear Term
1-2 Years
Medium Term
3-4 Years
Revenue growth18% CAGR
(CY13-CY15)15%-20% 15%-20%
Gross margin 73% (CY15) 70%-72% 73%-75%
Pro forma EBITDA margin 3% (CY15) 11%-16% 20%-25%
All estimates exclude impact of foreign currency exchange movements.
• Conject earnings margins expected to improve with benefit of integration with Aconex platform, operating experience and synergies Excluding one-time transaction and restructuring costs of ~A$6m
• Acquisition is expected to be significantly accretive (high teens percentage) to FY17 EPS, excluding amortisation of intangibles and one-time transaction and restructuring costs, and including benefit of existing tax losses
• Opportunity for further revenue growth over time
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Agenda
Tod BottariInvestor RelationsWelcome
Steve RechtCFOFinancial impact
Leigh Jasper CEOBusiness impact
AllQ&A
Leigh JasperCEOOutlook and summary
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Acquisition expected to deliver long-term value to Aconex shareholders
• Cloud-based construction collaboration – US$5.6b total available market1
‒ Conject adds scale and network effects to accelerate industry leadership2
• Conject acquisition: a substantial consolidation opportunity toward platform standardisation‒ Significantly increases revenue and profit
‒ Adds large customer base and user network
‒ Expands company’s global market leadership and scale
‒ Provides synergies, leveraging existing global infrastructure
‒ Provides real opportunities to improve operating performance and drive margin expansion
London Trocadero Hotel | Project size: US$15.4M | Location: London, U.K.
1) Frost & Sullivan, Independent Market Report on the Construction Collaboration Solutions Market (2014).2) In the construction collaboration sector, by revenue.
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Agenda
Tod BottariInvestor RelationsWelcome
Steve RechtCFOFinancial impact
Leigh Jasper CEOBusiness impact
AllQ&A
Leigh JasperCEOOutlook and summary
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Battersea Power Station, U.K. | US $13.6B Value
Thank you
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Appendix A: Risk factors – operational (1)
Introduction
Aconex is subject to a variety of risk factors. Some of these are specific to its business activities, while others are of a more general nature. Individually, or in combination, these risk factors may affect the future operating and financial performance of Aconex, its investment returns and the value of an investment in shares in Aconex.
The risks listed below are not an exhaustive list of risks associated with an investment in Aconex, either now or in the future, and this information should be considered in conjunction with all other information in this presentation. Many of the risks described below are outside the control of Aconex, its Directors and management. There is no guarantee that Aconex will achieve its stated objectives or that any forward looking statements or forecasts will eventuate.
This section discusses the key risks attaching to an investment in shares in Aconex, which may affect the future operating and financial performance of Aconex and the value of Aconex shares (before and after the proposed acquisition of Conject). Before investing in Aconex shares, you should consider whether this investment is suitable for you having regard to publicly available information (including this presentation), your personal circumstances and following consultation with financial or other professional advisers. Additional risks and uncertainties that Aconex is unaware of, or that it currently considers to be immaterial, may also become important factors that adversely affect Aconex’s operating and financial performance.
Operational Risks
• Failure to retain existing clients and attract new business
Aconex’s business is dependent on its ability to retain its existing clients and attract new clients. The Company’s business operates under various subscription models, all of which are exposed to the risk of expiry and non-renewal. Aconex is also dependent on its clients undertaking new projects that Aconex can seek to service. If Aconex fails to retain existing customers, if its clients terminate projects or cease to undertake new projects or if the Company fails to win new business, the Company’s future operating and financial performance may be adversely affected and its reputation may be damaged.
• Aconex operates in a competitive industry
The collaboration industry that services the construction industry is subject to competition based on factors including price, service, quality, performance standards, information security and innovation.
A failure by Aconex to effectively compete with its competitors or new entrants to the construction collaboration solutions industry may adversely affect the Company’s future financial performance and position.
• Dependence on market demand and acceptance of construction collaboration solutions software
Aconex’s business model depends on its ability to continue to ensure that its customers are satisfied with its core product. Consequently, any factor adversely affecting sales of the Aconex product, including market acceptance, product and price competition, performance and reliability, reputation, changes in law or regulation or economic and market conditions, may have an adverse effect on the Company’s business, financial condition, results of operations and prospects.
Aconex sells its software as an alternative to existing in-house information management systems that have been developed by construction industry participants. Aconex’s business model relies on increasing acceptance and proliferation of web-based software for information management in the construction industry. If Aconex’s construction collaboration solutions are not accepted and used by organisations in the construction industry, or if the market for construction collaboration solutions in the construction industry fails to grow at the expected rate, demand for Aconex’s core product could be negatively impacted and the Company’s ability to sustain and grow its business may be adversely affected.
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Appendix A: Risk factors – operational (2)
• Expansion of international business may not achieve intended outcomes
A significant part of Aconex’s growth strategy is its goal to significantly grow its presence in the overseas markets in which it already operates. The Company’s growth plans may be inhibited by unforeseen issues particular to a territory, including differences in local cultures, business practices and regulation. If Aconex cannot successfully grow and expand its international business, its future financial performance and position may be adversely affected.
• Reliance on its core product and failure to develop new products
Aconex derives a significant majority of its revenue from sales of its core construction collaboration solutions software. A failure by Aconex to develop successful new products, features and enhancements may adversely impact its business, financial position and prospects.
• Disruption or failure of technology systems
As a provider of online construction collaboration solutions, Aconex is dependent on the performance, reliability and availability of its technology platforms, communications systems, servers, the internet, hosting services and the cloud-based environment in which it provides its products. Aconex relies on third party service providers for the delivery of its products, and accordingly many potential operational issues are outside the Company’s control. There is a risk that these systems may be adversely affected by disruption, failure, service outages or corruption of Aconex’s information technology network and information systems.
Any disruption or failure of the Company’s technology systems, including those provided by third party providers, would adversely affect the Company’s business and financial position.
• Loss or theft of data and failure of data security systems
Aconex provides its construction collaboration solutions software via the internet. Aconex’s products are designed to maintain the confidentiality and security of its customers’ confidential and proprietary information that is stored on its systems, including highly valuable intellectual property, strategic business information and other confidential information. Any accidental or wilful security breaches or other unauthorised access to Aconex’s clients’ data would have significant impacts on the Aconex business and its ability to maintain and attract new business.
• Reliance on data providers
There is a risk that the third party data provider may fail to adequately deliver Aconex’s products and the transition to the new provider may result in interruptions or delays in access to Aconex’s products. Aconex’s level of service delivery will be dependent on the performance of its data provider and risks facing the third party data provider such as service disruptions, damage to its facilities, loss or theft of data and failure of data security systems, may adversely affect the Company’s product delivery and business operations.
• Dependence on the strength of the construction industry
Economic trends that negatively affect the construction industry may adversely affect the Company’s business by reducing the number of new projects being undertaken that Aconex may service or target to service and may also reduce the amount that potential customers may be willing to spend on Aconex’s construction collaboration solutions. A significant downturn in the construction industry may have a material adverse effect on Aconex’s business, financial condition, results of operations and prospects.
• Failure to adapt to new technologies
The online construction collaboration solutions industry is characterised by rapid changes in technology, new evolving standards and new product and service introductions. Aconex’s future business prospects will depend on its ability to anticipate and respond to technological changes. Failure to keep up with future technological changes could harm its business, financial condition and operational results.
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Appendix A: Risk factors – operational (3)
• Loss of key members of senior management team
Aconex’s success depends to a significant extent on its key personnel, in particular the senior management team The loss of key members of senior management may adversely affect Aconex’s ability to develop its products or implement its business strategies and may adversely affect its future financial performance.
• Failure to effectively manage anticipated future growth
Aconex expects to experience rapid growth in the scope of its operating activities, which is likely to include operating in new markets. If Aconex is unable to manage its expected growth successfully, including through the recruitment, training, integration and management of the personnel required to support its expected growth, it may not be able to take advantage of market opportunities, satisfy customer requirements, execute its strategic plans or respond to competitive threats.
• Risks associated with intellectual property rights
Aconex may fail to protect its intellectual property rights for a number of reasons, and certain aspects of its core product may be difficult to protect for reasons including the use of open source code. Monitoring unauthorised use of Aconex’s intellectual property is difficult and may require the commitment of a large amount of financial resources.
Any failure to adequately protect intellectual property rights may adversely affect Aconex’s future financial performance.
Aconex may be subject to claims from time to time that it has infringed a third party’s intellectual property rights. If these allegations are successful, injunctions may be granted against Aconex which could materially affect the operation of its products, and consequently have a negative impact on its business.
• Country-specific risks in foreign operations
Aconex has operations in a number of overseas jurisdictions and is exposed to a range of different legal and regulatory regimes. This gives rise to risks relating to labour practices, foreign ownership restrictions, tax regulation, difficulty in enforcing contracts, changes to or uncertainty in the relevant legal and regulatory regime and other issues in foreign jurisdictions in which Aconex operates.
Some of the countries in which Aconex does business, including Israel, Iraq and Libya, are currently experiencing political and social instability and others, including have from time to time experienced instability. Instability, which could interrupt parts of Aconex’s business, the business of its customers or the business of its service providers, in which case the Company’s financial condition and prospects may be adversely affected.
• Exposure to foreign exchange rates
Aconex’s financial reports are prepared in Australian dollars. However, a substantial proportion of the Company’s sales revenue, expenditures and cash flows are generated in various other currencies, including United States dollars. Further, as Aconex expands its operations it is expected that it will be exposed to additional currencies. Any adverse exchange rate fluctuations or volatility in the currencies in which Aconex generates its revenues and cash flows, and incurs its costs, would have an adverse effect on its future financial performance and position.
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Appendix A: Risk factors – Conject acquisition (1)
• Completion risk
Completion of the acquisition is conditional on a number of conditions precedent, including German foreign investment regulation clearance and Aconex receiving the proceeds of the underwritten placement on or before completion.
• Reliance on information provided
Aconex undertook a due diligence process in respect of Conject, which relied in part on the review of financial and other information provided by the vendors of Conject. Despite taking reasonable efforts, Aconex has not been able to verify the accuracy, reliability or completeness of all the information which was provided to it against independent data. Similarly, Aconex has prepared (and made assumptions in the preparation of) the financial information relating to Conject on a stand-alone basis and also to the Aconex Group post-acquisition (“Combined Group”) included in this presentation in reliance on limited financial information and other information provided by the vendors of Conject. Aconex is unable to verify the accuracy or completeness of all of that information. If any of the data or information provided to and relied upon by Aconex in its due diligence process and its preparation of this presentation proves to be incomplete, incorrect, inaccurate or misleading, there is a risk that the actual financial position and performance of Conject and the Combined Group may be materially different to the financial position and performance expected by Conject and reflected in this presentation. Investors should also note that there is no assurance that the due diligence conducted was conclusive and that all material issues and risks in respect of the acquisition have been identified. Therefore, there is a risk that unforeseen issues and risks may arise, which may also have a material impact on Aconex.
• Analysis of acquisition opportunity
Aconex has undertaken financial, business and other analyses of Conject in order to determine its attractiveness to Aconex and whether to pursue the acquisition. It is possible that such analyses, and the best estimate assumptions made by Aconex, draws conclusions and forecasts that are inaccurate or which are not realised in due course. To the extent that the actual results achieved by Conject are different than those indicated by Aconex’s analysis, there is a risk that the profitability and future earnings of the operations of the Combined Group may be materially different from the profitability and earnings expected as reflected in this presentation.
• Integration risk
The acquisition involves the integration of the Conject business, which has previously operated independently to Aconex. As a result, there is a risk that the integration of Conject may be more complex than currently anticipated, encounter unexpected challenges or issues and takes longer than expected, divert management attention or not deliver the expected benefits and this may affect Aconex’s operating and financial performance. Further, the integration of Conject’ accounting functions may lead to revisions, which may impact on the Combined Group’s reported financial results.
• Historical liability
If the acquisition of Conject completes, Aconex may become directly or indirectly liable for any liabilities that Conject has incurred in the past, which were not identified during its due diligence or which are greater than expected, and for which the market standard protection (in the form of insurance, representations and warranties and indemnities) negotiated by Aconex prior to its agreement to acquire Conject turns out to be inadequate in the circumstances. Such liability may adversely affect the financial performance or position of Aconex post-acquisition.
• Change of control risk
As the acquisition of Conject will result in a change in control of Conject, there could be adverse consequences for Aconex. For example, contracts to which Conject is a party may be subject to review or termination in the event of a change of control of Conject.
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Appendix A: Risk factors – Conject acquisition (2) and general
• Acquisition accounting
In accounting for the acquisition in the pro-forma combined balance sheet, Aconex has performed a preliminary fair value assessment of all of the assets, liabilities and contingent liabilities of Conject. Aconex will undertake a formal fair value assessment of all of the assets, liabilities and contingent liabilities of Conject post-acquisition, which may give rise to a materially different fair value allocation to that used for purposes of the pro-forma financial information set out in this presentation. Such a scenario will result in a reallocation of the fair value of assets and liabilities acquired to or from goodwill and also an increase or decrease in depreciation and amortisation charges in the Combined Group’s income statement (and a respective increase or decrease in net profit after tax).
General Risks
• Economic factors
Aconex is dependent on global economic conditions and the global economic outlook, and on the economic conditions and outlook in its key markets and the construction industry generally. Economic conditions may be affected by levels of business spending, inflation, interest rates, consumer confidence, access to debt and capital markets and government fiscal, monetary and regulatory policies. A prolonged downturn in general economic conditions may have a material adverse impact on Aconex’s trading and financial performance.
• Market prices
The market price of Aconex shares will fluctuate due to various factors, many of which are non-specific to Aconex, including recommendations by brokers and analysts, Australian and international general economic conditions, inflation rates, interest rates, changes in government, fiscal, monetary and regulatory policies, global geo-political events and hostilities and acts of terrorism, and investor perceptions. In the future, these factors may cause Aconex shares to trade at a lower price.
• Changes to government, monetary or fiscal policy or regulatory regimes
Changes to key government policies or regulatory regimes affecting the businesses of Aconex, including those in the areas of construction, the internet, industrial relations and tax may affect the operational and financial performance of Aconex.
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Appendix B: International offer restrictions (1)
This document does not constitute an offer of new ordinary shares ("New Shares") of Aconex in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any country outside Australia except to the extent permitted below.
European Economic Area - Germany, Luxembourg and Netherlands
The information in this document has been prepared on the basis that all offers of New Shares will be made pursuant to an exemption under the Directive 2003/71/EC ("Prospectus Directive"), as amended and implemented in Member States of the European Economic Area (each, a "Relevant Member State"), from the requirement to publish a prospectus for offers of securities.
An offer to the public of New Shares has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as implemented in the Relevant Member State:
• to any legal entity that is authorized or regulated to operate in the financial markets or whose main business is to invest in financial instruments;
• to any legal entity that satisfies two of the following three criteria: (i) balance sheet total of at least €20,000,000; (ii) annual net turnover of at least €40,000,000 and (iii) own funds of at least €2,000,000 (as shown on its last annual unconsolidated or consolidated financial statements);
• to any person or entity who has requested to be treated as a professional client in accordance with the EU Markets in Financial Instruments Directive (Directive 2004/39/EC, "MiFID"); or
• to any person or entity who is recognised as an eligible counterparty in accordance with Article 24 of the MiFID.
Hong Kong
WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the "SFO"). No action has been taken in Hong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, the New Shares have not been and will not be offered or sold in Hong Kong other than to "professional investors" (as defined in the SFO).
No advertisement, invitation or document relating to the New Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to New Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person allotted New Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.
The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.
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Appendix B: International offer restrictions (2)
New Zealand
This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shares are not being offered or sold in New Zealand (or allotted with a view to being offered for sale in New Zealand) other than to a person who:
• is an investment business within the meaning of clause 37 of Schedule 1 of the FMC Act;
• meets the investment activity criteria specified in clause 38 of Schedule 1 of the FMC Act;
• is large within the meaning of clause 39 of Schedule 1 of the FMC Act;
• is a government agency within the meaning of clause 40 of Schedule 1 of the FMC Act; or
• is an eligible investor within the meaning of clause 41 of Schedule 1 of the FMC Act.
Norway
This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007. Accordingly, this document shall not be deemed to constitute an offer to the public in Norway within the meaning of the Norwegian Securities Trading Act of 2007.
The New Shares may not be offered or sold, directly or indirectly, in Norway except to "professional clients" (as defined in Norwegian Securities Regulation of 29 June 2007 no. 876 and including non-professional clients having met the criteria for being deemed to be professional and for which an investment firm has waived the protection as non-professional in accordance with the procedures in this regulation).
Singapore
This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of New Shares, may not be issued, circulated or distributed, nor may the New Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA.
This document has been given to you on the basis that you are (i) an existing holder of Aconex’s shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined in section 275(2) of the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this document to any other person in Singapore.
Any offer is not made to you with a view to the New Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire New Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.F
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International offer restrictions (3)Sweden
This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the New Shares be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of New Shares in Sweden is limited to persons who are "qualified investors" (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.
Switzerland
The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the New Shares may be publicly distributed or otherwise made publicly available in Switzerland. The New Shares will only be offered to regulated financial intermediaries such as banks, securities dealers, insurance institutions and fund management companies as well as institutional investors with professional treasury operations.
Neither this document nor any other offering or marketing material relating to the New Shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of New Shares will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA).
This document is personal to the recipient only and not for general circulation in Switzerland.
United Kingdom
Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended ("FSMA")) has been published or is intended to be published in respect of the New Shares. This document is issued on a confidential basis to "qualified investors" (within the meaning of section 86(7) of the FSMA) in the United Kingdom, and the New Shares may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) of the FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.
Any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received in connection with the issue or sale of the New Shares has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of the FSMA does not apply to Aconex.
In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 ("FPO"), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together "relevant persons"). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
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