Kofax Acquires Singularity

IRVINE, CA, December 6, 2011

Commenting on the acquisition, Reynolds C. Bish, Chief Executive Officer of Kofax, said: “We’ve become a leader in the capture market by managing information into customers’ enterprise applications and repositories. The acquisition of Singularity will now allow our customers to manage that information as it flows through their organizations, expanding our reach beyond capture into the BPM market and providing a uniquely differentiated product with strong competitive advantages in both markets. We’re excited to deliver more capabilities to our customers and welcome the Singularity management team and its employees, customers and partners to Kofax.”

The acquisition should allow Kofax to realize numerous strategic benefits, including:

• The Company will significantly increase its addressable market. Kofax’s core capture market is expected to grow from $2.2 billion in 2010 to $2.9 billion in 2013⁽¹⁾ at a 10% compound annual growth rate (CAGR). The BPM market is forecasted to grow from $2.2 billion in 2010 to $3.1 billion in 2013 at a 12% CAGR⁽²⁾. This increase in addressable market, coupled with Kofax’s existing direct and indirect sales channels and global reach, will significantly expand and accelerate Kofax’s revenue growth opportunities.
  
  
• Kofax will be the first company to offer a capture enabled BPM platform, which will provide uniquely differentiated software product and solution offerings in both the capture and BPM markets. This will allow the Company to maintain its leadership position in the capture market, establish a leadership position in the BPM market and create sustainable competitive advantage.
  
  
• Customers will benefit from the capture enabled BPM platform by being able to automate both the capture processes needed to enter content into enterprise applications and repositories as well as the downstream knowledge worker processes needed to effectively utilize that informati on. This will allow them to invest in a single platform for automating all of their critical business processes and thereby enjoy a lower total cost of ownership and faster return on investment.
  
  
• The combined Kofax and Singularity products will be fully deployable “on premise” or via private clouds under a traditional perpetual license model and via a public cloud under a Software-as-a-Service (SaaS) subscription model. This will allow the Company to better serve a broader array of customer buying preferences and over time create more predictable revenue streams. 

Singularity has been recognized as a “Visionary” in Gartner’s “Magic Quadrant” and as a “Leader” in Forrester’s “Wave” for Dynamic Case Management. Its flagship product – TotalAgility™ – provides BPM software for automating the knowledge worker processes needed to effectively utilize information in enterprise applications and repositories, thereby improving business performance and agility. It includes the design, simulation, workflow control, business rule and integration capabilities needed to implement more efficient, flexible and better executed business processes, and the dynamic case management capabilities required to manage the fluid mix of correspondence, structured data, unstructured content, resources and processes that arise during interactions between a corporation or government agency and its constituents. This would include, for example, the ability to offer new customer on-boarding, order entry, “quote-to-cash”, customer service or incident tracking and other dynamic case management solutions. TotalAgility is deployable “on premise” or via private clouds under a traditional perpetual license model. LiveAgility™ is a version of TotalAgility deployable via a public cloud under a SaaS subscription model.

Padraig Canavan, Founder and Chief Executive Officer of Singularity, said: “We’re excited to now be part of Kofax, a proven leader in the capture market and natural fit for Singularity. Kofax’s direct sales force, large channel of value added resellers and global reach will significantly expand our access to the market. I’m very happy to continue as the Senior Vice President of BPM Software Sales at Kofax and along with the Singularity team remain fully committed to our future success.”    

Further commenting on the acquisition, Reynolds C. Bish said: “This transaction has been structured with a significant portion of the total consideration in the form of an earn out in order to maintain our strong cash position – which was $92.5 million at September 30, 2011 – and minimize integration and execution risk. We expect it to add approximately $8.0 million of revenue and be slightly dilutive on an Adjusted EBITA⁽³⁾ basis during our fiscal year ending June 30, 2012 but accretive in subsequent periods.”

Kofax has acquired all of Singularity’s stock for total consideration of up to $48.1 million in cash, net of cash held by the company on closing. Of this amount, $30.3 million was paid on closing of the transaction and $3.3 million will be paid one year from closing subject to certain indemnification terms and conditions. Additional payments totalling up to $14.5 million may be made one and two years following closing subject to the achievement of specific annual software license revenue growth rates and certain management employment conditions.

Singularity was a privately held company headquartered in Derry, Northern Ireland with approximately 215 employees principally in Derry and Belfast, Northern Ireland, Hyderabad, India and London, England. Audited financial statements for its fiscal year ended September 30, 2011 reflected revenues of $16.1 million, an Adjusted EBITA of $1.0 million and gross assets of $18.2 million with no material debt. Padraig Canavan, age 50, was its most important employee and majority shareholder. He is now an employee of Kofax, functioning as its Senior Vice President of BPM Software Sales.

Mr. Bish and Mr. Arnold will discuss the acquisition and conduct a question and answer session via teleconference at 7:30 am GMT December 6, 2011.

The telephonic replay will be available by 1:00 pm GMT December 6. In addition, an audio replay and call transcript will be available on the investor relations section of the company’s website.

⁽¹⁾ Harvey Spencer Associates, October 2011, “Worldwide Market for Document Capture Software: Update of 2010 – 2015 Market Analysis”
⁽²⁾ Gartner, April 2011, “Market Trends: BPM Technology Market is Wider Than BPM Suites,” Teresa Jones and Laurie F. Wurster
⁽³⁾ For a definition of Adjusted EBITA please refer to Kofax’s most recent Annual Report, which is available on the investor relations section of the Company’s website.

About Kofax
Kofax plc (LSE: KFX) is a leading provider of capture enabled business process management solutions. For 25 years, Kofax has provided award winning solutions that manage the capture and streamline the flow of business critical information throughout an organization in a more accurate, timely and cost effective manner. These solutions provide a rapid return on investment to thousands of customers in banking, insurance, government, business process outsourcing and other markets. Kofax delivers these solutions through its own sales and service organizations, and a global network of more than 800 authorized partners in more than 70 countries throughout the Americas, EMEA and Asia Pacific. For more information, visit www.kofax.com.

A Q&A document is available for review by clicking here

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