K2fly snaps up new software company

K2fly is on the acquisition trail, this week picking up fellow “software as a service” specialist, SATEVA. The company is building a strategic position in the resource’s software space and this week’s acquisition looks like it may come with bottom line and client sharing synergies. Both companies already enjoy tier one client relationships with goliath sized companies and the opportunity to cross sell software looks real.

SATEVA is an established Perth-based provider of software solutions and technology consulting to the mining, resources and rail sectors. Its key focus is technical assurance and includes an innovative product line that covers a diverse range of applications from rail and rolling stock tracking systems through to mining drill program management.

Whilst the SATEVA product suite does not directly compete with K2fly’s own software products, the RCubed resource management software and Infoscope land management solution, it does add further depth to these two product offerings. SATEVA offers a range of stand-alone software including block modelling software, stockpile management, strategic planning and professional development solutions that can potentially be sold to K2fly’s existing impressive client base.

K2fly will pay the owners of SATEVA an initial $2 million in cash upon completion of the acquisition and a subsequent $2 million in K2Fly shares. The purchase will also include a deferred consideration through to 30 June 2024 equal to 18 per cent of SATEVA’s invoiced amounts relating to product and consulting sales.

K2fly will acquire 100 per cent ownership of SATEVA and its assets, including all contracts and software. Interestingly, at the end of last month SATEVA held over $2.5 million in cash and had generated total revenues of $1.4 million through the 2020 financial year. The acquisition will see SATEVA’s Managing Director, Mark Forster, join K2Fly as its Chief Development Officer.

The company will also add to its a laundry list of high-profile mining clientele which already includes the likes of Teck and South 32.

K2Fly’s software has also permeated through three of the four big iron ore producers in Australia, including Rio Tinto, FMG and Roy Hill.

K2Fly Chief Commercial Officer, Nick Pollock said: “The SATEVA acquisition contributes to three key strategic objectives for K2fly. It provides additional software solutions that address our technical assurance capability in mining and ESG. It increases our opportunities to deliver improving Annual Recurring Revenues and further strengthens our share of software solutions in major iron ore producers. As a significant additional bonus, we get to leverage Mark Forster and his team to further enhance our local development capability for further scale.”

K2fly’s SATEVA acquisition comes on the back of yet another successful quarter for the budding software provider with the company tabling solid positive cash flows of close to $400,000 for the September quarter which took its end of quarter cash balance to an impressive  $3m.

K2Fly has also taken on French nuclear fuel cycle company, Orano SA, who has embraced its RCubed  resource management software and it is also continuing to develop a new suite of software solutions for various mining applications including a reconciliation solution for Canadian giant, Teck and tailings management software for Westfarmers subsidiary, Decipher.

Is your ASX listed company doing something interesting? Contact: matt.birney@businessnews.com.au