Westend ICT Plc and Innofactor Oy to merge

Westend ICT Plc and the shareholders of Innofactor Oy have today signed an agreement on the merger of the companies. The name of the company will be Innofactor Plc (the companies together are later referred to as "Innofactor").

The merger will be implemented as an exchange of shares (later referred to as "Arrangement"). Westend ICT Plc will direct to the shareholders of Innofactor Oy a share issue with stipulation concerning subscription in kind. In this issue, 409,665,891 new shares will be offered in the subscription price of EUR 0.04. The subscription price will be paid by handing over the minimum of over 90% of Innofactor Oy shares. The ownership of the new company will be distributed as follows: the current shareowners of Westend ICT Plc will own 30% of the shares and the Innofactor Oy shareowners who are parties in the transaction will own 70% of the shares. The total number of shares in the company will be 585,236,987.

Innofactor offers its customers comprehensive solutions in the Microsoft environment. The solutions are based on the latest web-based technologies.

Innofactor has grown strongly since year 2000. During the fiscal years 2007-2009 the average yearly growth has been about 30 %. The estimated net sales for 2010 are about EUR 10 million. In spite of the remarkable annual growth, Innofactor's business operations have been profitable.

Innofactor group’s annual accounts have been prepared according to the Finnish accounting standards (FAS). Financial figures presented here are according to FAS.

Annual report for 2009 is in Appendix 1.

Annual report for 2008 is in Appendix 2.

On June 3, 2010, Innofactor Oy acquired the entire share capital of Visual Management Oy. Visual Management deliveres Microsoft Business Intelligence solutions. In 2009, the net sales of Visual Management Oy were approximately EUR 1.9 million (approx. EUR 2.1 million in 2008), business profit was EUR 0.066 million (EUR 0.012 million in 2008) and the result before taxes was EUR 0.013 million (EUR 0.07 million in 2008). At the end of 2009, the company employed 20 persons. The acquisition strengthened Innofactor's know-how in solutions for electronic data management and data processing.

The combined net sales of Innofactor Oy and Westend ICT Plc for 2010 will be approximately EUR 14,5 million and the combined estimated profit before taxes will be about EUR 1 million.

The reporting of the Westend ICT Plc group for the financial period of 1 January-31 December 2010 will not include the figures for the new company, but the group's reporting for the financial period of 2010 will be done according to the current group structure of Westend ICT Plc. Reporting in accordance with the merged business operations will start as of January 1, 2011.

The company that will be formed in the merger will have about 170 employees at the end of 2010. The head office will be located in Espoo and branch offices in Tampere, Turku, Oulu, Lahti, Kuopio and Kajaani.

The products, customer relationships and operations of Innofactor Oy and Westend ICT Plc and its subsidiary Documenta Oy will provide plenty of synergy benefits that can be utilized in the new company. The merger will strengthen significantly the prerequisites of growth in both parties' business operations.

For Innofactor Oy, listing in the stock exchange will give a new financing possibility, which can help it to continue growth in Finland and possibly also internationally in the future. Innofactor Oy has been growing the whole time it has been in operation. During fiscal years 2007- 2009, the growth was in average 30 % annually. Innofactor Oy has regularly been on Deloitte's Technology Fast 50/500 list of growing companies. Innofactor’s growth has taken place both organically and through acquisitions. Innofactor Oy has acquired the parish business operations of Tieto in 2004, the electronic business unit of Enfo in 2007, Software Innovation Finland Oy in 2009, and Visual Management Oy in 2010.

Documenta Oy's leading knowledge in customer projects for document and case management implemented in SharePoint environments and its knowledge of IBM Lotus Notes, Domino and DB2 Content Manager solutions will have a central part in implementing the new Innofactor's strategy based on Microsoft solutions. Documenta Oy's customer relationships combined with Innofactor Oy's customer relationships will ensure that after the merger, the companies will have a significant position as an information systems provider for public administration and largest companies in Finland.

The merged Innofactor will become one of Finland's leading providers of comprehensive Microsoft solutions. The product range will include central Microsoft solutions, for example, web services, solutions for electronic transactions, web stores, electronic desktops, solutions for multichannel communication and document and case management, quality management solutions, and solutions for Business Intelligence and Enterprise Search, enterprise resource planning and customer relationship management. Technically, the solutions are based, for example, on the use of Microsoft SharePoint Server and Dynamics CRM and on own software and components implemented in .NET and Azure environments. These include INNOFACTOR^® Prime™, INNOFACTOR^® Dynasty™ and INNOFACTOR^® Quality First™ product families. The last two of these have been Documenta Oy's trademarks.

With its over 200 customers, the merged Innofactor will become one of Finland's leading providers of case management, document management and portal solutions for municipalities, towns and municipal federations. Also, combined customers from the state administration form one of Finland's most significant clienteles. Innofactor Oy has delivered to the State Treasury the solution for citizen's account for public services. By connecting it as a part of the customers' existing electronic services, the transfer to electronic public services can be significantly accelerated in Finland. The Finnish Defense Administration and especially the Defense Forces have been the largest single customer group for Documenta Oy for almost 20 years. In the parish sector, Innofactor Oy has been a clear market leader and organizations also have a major role in the company's clientele.

Together with Microsoft, Innofactor can provide a solution based on comprehensive knowledge for those companies and organizations that want to transfer their IBM-based solutions into Microsoft solutions. In addition Innofactor can offer high-quality specialist services and maintenance in IBM-based solutions.

Innofactor's plans for future growth are strongly based on utilizing Microsoft's cloud solutions. When they are ready, components implemented in a cloud environment will offer Innofactor new kinds of possibilities in international markets.

The business name of the company in the future will be Innofactor Plc.

Innofactor Oyj will be led by the current majority owner and CEO of Innofactor Oy, Sami Ensio. Sami has 15 years of experience in the ICT field in Finland. For the last 11 years, he has been the CEO of Innofactor Oy, which he has also founded. Sami is M.Sc. (Eng.) in technical physics and studied in the Helsinki University of Technology (current Aalto University). He is 39 years old.

The current CEO of Westend ICT Plc, Hannu Jokela, will continue in his current position and as the CEO of the subsidiary, Documenta Oy, until December 27, 2010. After this, he will transfer into special tasks assigned by the Board of Directors and will report to CEO Ensio. Westend ICT Plc wishes to thank Hannu for his focused work for the company in the past five years, which has in part made this merger possible.

A new Board of Directors, comprising of four persons, will be selected for the company and the persons who are proposed to be selected are: Sami Ensio, Pekka Puolakka, Mikko Salminen and Ilpo Santala. Ensio, Puolakka and Santala are currently in the Board of Directors of Innofactor Oy (Santala is the Chairman of the Board) and Salminen is the Chairman of the Board for the Westend ICT Plc's Board of Directors.

After the Arrangement, the five largest shareowners will own a total of over 50% of the company's shares and votes. Based on the shares of ownership at the time of the release, the shares of ownership will be as follows:

* The final shares of ownership will depend on how many shares will be subscribed before the merger, using Innofactor Oy warrants, and also on how many of the Innofactor Oy owners will be parties in the transaction (90% at the minimum).

Prerequisites for the Arrangement becoming valid are that the Westend ICT Plc's Extraordinary General Meeting on December 27, 2010, will accept the Arrangement and that the minimum of 90% of Innofactor shares will be subject to the exchange of shares.

The notice to the extraordinary general meeting concerning the Arrangement will be published today(3.12.2010).

After the Arrangement, the current shareowners of the company will own 30% of the company's shares and votes and the Innofactor Oy shareowners selling their shares will own 70% of the company's shares and votes. According to the IFRS regulations applied (IFRS 3), the Arrangement is a reverse acquisition as the organization issuing stocks (the judicial buyer, i.e. Westend ICT Plc) is named as the target of the acquisition from the point of view of bookkeeping based on the IFRS regulations. Correspondingly, the organization whose shares are acquired (judicial target of the acquisition, i.e. Innofactor Oy) is the buyer from the point of view of bookkeeping.

According to the rules of the Nasdaq OMX Helsinki stock exchange, the Arrangement means that a significant change (reverse takeover) has taken place concerning Westend ICT Plc. Thus, the fulfilling of listing criteria must be re-evaluated. For the company, this means that a new listing application needs to be submitted to the stock exchange and it will be handled in the listing committee. The listing committee will re-evaluate the prerequisites of listing for the new company that will be formed in the Arrangement. Should it happen that the new company is not accepted to be listed and the new shares not admitted to public trading, the parties will have the right to dissolve the Arrangement.

In the Arrangement, the company will issue an amount of new shares that will require drawing up a new prospectus and having it accepted by the Financial Supervisory Authority. After the acceptance, the stock exchange will decide on admitting the new shares to public trading. This will happen around March-April 2011.

Additional information:

Sami Ensio, CEO of Innofactor Oy

Tel. +358 (0) 50 5842029

Mikko Salminen, Chairman of the Board of Westend ICT Plc

Tel. +358 (0) 40 7439382