Q-Free ASA — M&A Activity 2014

Jul 17, 2014

Q-Free acquires Open Roads Consulting to strengthen the ATMS business

Q-Free acquires Open Roads Consulting to strengthen the ATMS business

Trondheim/Oslo, 17 July 2014: Q-Free has signed a Share Purchase

Agreement (SPA) for the acquisition of Open Roads Consulting Inc. for a

cash consideration of approximately USD 6.2 million. Further

consideration is dependent on future financial performance. The

acquisition will strengthen Q-Free's presence in the US substantially,

and is a strategic good match with other ATMS and RUC activities within

the group.  Q-Free expects the transaction to be closed within the end

of the third quarter 2014.

Open Roads Consulting is a privately owned company established in 2000

in Virginia, USA. The company has 74 employees and operates mission

critical traffic deployments and video based surveillance of critical

assets in 30 states in the US. The company generated revenues of USD

12.8 million, EBITDA of USD 0.9 million and EBIT of USD 0.6 million in

2013, and will be consolidated into the accounts of Q-Free with effect

from closing, expected to be during the third quarter 2014.

The SPA is based on cash and debt free conditions, and no shares will be

issued as part of the consideration. Q-Free will pay an initial cash

consideration of approximately USD 6.2 million, equal to 7 times the

2013 EBITDA. Further consideration is dependent on financial performance

in part of 2014, 2015 and part of 2016, and is estimated to USD 2.5

million. Including earn-out payments, the total consideration is capped

at USD 12.5 million.

The acquisition of Open Roads Consulting represents a milestone for Q

-Free. Over time the company will become a global fully-fledged ITS

player with significant presence in the US. The current acquisition is a

strategic good match with other ATMS and RUC activities within the

group, and Q-Free's number of employees in the US increases to

approximately 100. Open Roads Consulting's software solutions will be a

valuable addition to Q-Free's offering of ATMS solutions both in the US

and internationally.

"The world's biggest market for Road User Charging and Traffic

Management is in the US. The acquisition of Open Roads Consulting will

provide an organisational platform for further penetration into the US

market in all of our three business areas ATMS, RUC/Tolling and Managed

Services. This addition to our portfolio will increase revenue synergies

for the existing Q-Free activities in the US, and is an important step

for Q-Free to become a fully-fledged ITS supplier," says CEO Thomas

Falck.

Open Roads Consulting is a leading provider of off-the-shelf solutions,

technology integration and full lifecycle support to help clients

operate, manage, and protect critical assets. The company has two highly

complementary business areas; the Intelligent Transportation Systems

Division (ITSD) and the Integrated Security Systems Division (ISSD).

Intelligent Transportation Systems Division (ITSD):

· Supports public sector clients through the design, deployment and

maintenance of real-time systems that enhance mobility and enable the

public to make smarter travel choices

· Primary product offering is Open TMS, an extensible ATMS solution

built around an open, modular architecture designed to support the

dynamic traffic management marketplace

·

Integrated Security Systems Division (ISSD):

· Provides critical asset protection solutions for the US military

worldwide

· Primary product offering is VICADS, a proprietary video management

system designed specifically to exceed DoD performance requirements and

is approved by the US Air Force for all priority levels of protection

"Open Roads Consulting is a company with a strong market position in the

US. Teaming up with Q-Free will strengthen our current position, in

addition to provide a global reach for our products. We are very excited

about the future opportunities and we are looking forward to be working

with Q-Free," says Founder and President Barbara Skiffington.

Q-Free's ATMS business has been strengthened substantially over the last

couple of years. Q-Free acquired the US based parking guidance company

TCS International in 2012, and followed-up with the acquisition of the

Serbian traffic management company ELCOM and a strategic 10 percent

investment in Intelight in the US in 2013. The acquisition of Open Roads

Consulting is the third acquisition in 2014, following the inclusion of

TDC Systems in the UK and Traffic Design in Slovenia into the Q-Free

Group earlier this year.

In the longer-term, Q-Free expects that the markets for ATMS and Road

User Charging will converge into a joint market for Intelligent

Transport Systems (ITS) - both technologically and commercially. Q-Free

intends to play an important role in this market, and will continue to

build its position through acquisitions as well as further development

of its current businesses within this area.

Please see the enclosed material for additional information in

accordance with Section 3.4 of Continuing Obligations for companies

listed on Oslo Stock Exchange.

For further information, please see www.q-free.com or contact:

CEO Tomas Falck, cell: +47 468 00 767

CFO Roar Østbø, cell: +47 932 45 175

About Q-Free:

Q-Free is a leading global supplier of products and solutions within

Road User Charging and Advanced Transportation Management Systems. The Q

-Free Group will have approximately 430 employees with offices in 17

countries and presence on all continents after the closing of the Open

Roads transaction. The Q-Free head office is in Trondheim, Norway. Q

-Free is listed on Oslo Stock Exchange under the ticker QFR.

About Open Roads Consulting:

Open Roads Consulting is a privately owned leading provider of off-the

-shelf solutions, technology integration and full lifecycle support to

help clients operate, manage and protect critical assets. The company

has 74 employees and operates mission critical deployments in 30 states

in the US from their headquarters in Chesapeake (VA) and office in

Austin (TX) and Cary (NC).