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Fabrity invests in Panda Group, looks for more opportunities
After a successful first half of the year, in which, according to preliminary estimates, the Fabrity Holding Group achieved PLN 37.7 million in revenue from the sale of services (+20% y/y), PLN 4.3 million in EBITDA (+15% y/y) and PLN 3.5 million in operating profit (+40% y/y), the Fabrity Holding Management Board recommended to the Supervisory Board the payment of over PLN 2.9 million (PLN 1.3 per share) of an interim dividend from the 2024 profit over the next three months. After the consent of the Board, the Management Board will adopt a target resolution on the payment of the interim payment, in which it will specify, among other things, the specific date of its payment and the date of determining the right to receive the interim payment from the shares held.
At the end of June this year, Fabrity Holding paid out PLN 7.4 million in dividends (PLN 3.25 per share), and together with the previously implemented share buyback, a total of PLN 15.1 million went to shareholders. The total amount of funds transferred to shareholders from profits in 2021-2023 is nearly PLN 44.4 million, of which dividends alone amount to PLN 36.7 million, which corresponds to a payout of PLN 15.65 per share. This means that investors who bought shares just over two years ago (early 2022 and earlier periods) have already received the amount of their investment in gross dividends alone.
Merger of operational activities
The intention to merge the main operating company of Fabrity with the holding company Fabrity Holding is gaining momentum. The merger plan and the exchange ratio of Fabrity shares for Fabrity Holding shares have already been agreed, which was established based on company valuations prepared by an independent entity. The ratio is 69.51:1, which means that in the merger process, Fabrity partners other than Fabrity Holding will receive 69.51 Fabrity Holding shares for one Fabrity share, i.e. for the total of 7,400 Fabrity shares they hold, they will receive a total of 514,374 Fabrity Holding shares, which will ultimately constitute 18.50% of the increased share capital.
The planned merger is to be carried out by transferring all of Fabrity's assets to Fabrity Holding in exchange for shares that Fabrity Holding will issue to other Fabrity partners (merger by acquisition). Fabrity will be dissolved without liquidation, and the WSE-listed Fabrity Holding will shorten its name, leaving the first part.
– After the sale of marketing companies, the question immediately arose about what will happen next with the structure of the Fabrity Group. The merger of the listed company Fabrity Holding SA with the leading subsidiary in the Group, Fabrity sp. z o. o. is the next natural step and will also be the last stage of the long-term process of simplifying the structure. In 2018, there were nine entities in the Group, and the scale of the simplification will also be evidenced by the change of the name of the listed company, as we are giving up the word "holding" in the name and the listed company will use the name "Fabrity SA". We also associate the merger with expectations regarding the simplification of internal processes, reducing the number of operations between companies in the Group and the resulting reduction of administrative costs. We should feel these benefits already in the first half of 2025. We hope that the formal merger of companies through registration in the National Court Register will take place in the first quarter of next year – explains Artur Piątek, Vice President of the Management Board of Fabrity Holding.
– Apart from the obvious benefits related to simplifying the structure and processes related to providing support services, we are primarily deciding on this step with the implementation of the strategy and acceleration of development in mind. We will be able to implement acquisition investments in a more transparent way, and we will also have greater opportunities when creating an incentive program for the management staff, the vast majority of which is currently employed in the subsidiary. In practice, we also transfer funds from operating activities, accumulated in the subsidiary, to a company listed on the WSE – indicates Tomasz Burczyński, president of Fabrity Holding.
The valuation of Fabrity Holding for the purpose of the merger includes the overpayment of income tax in connection with the use of the holding relief on the sale of subsidiaries, which has already been partially recovered. In June this year, the tax office returned the CIT overpayment for 2023 to Fabrity Holding (PLN 1.79 million, RB 45/2024), and a similar application for a refund also concerns the tax for 2022 (nearly PLN 2.5 million). Due to the significant increase in the probability of receiving this amount from the tax authority, the Management Board of Fabrity Holding reclassified this receivable from highly uncertain and off-balance sheet to a balance sheet receivable. As a result, Fabrity Holding's standalone net result for the first half of 2024 will amount to an estimated PLN 4.8 million, and the consolidated net result for this period will exceed an estimated PLN 6.8 million (the interim report for the first half of 2024 will be presented on August 30 this year).
Fabrity Holding Group
The Fabrity Holding Group (until August 2023 the K2 Holding Group) provides solutions and services in the areas of software engineering, as well as digital transformation services. The group consists of a holding company and three business units.
The software segment – Fabrity – provides custom software development services, including business consulting, solution design, software development, and maintenance services. In February 2024, the segment expanded to include e-commerce solutions with the acquisition of a majority stake in Panda Group.
The chatbot segment, i.e. PerfectBot, in which Fabrity Holding has a 50% stake, is a startup offering AI chatbots that automate customer service in e-commerce. The solution is already used by dozens of online stores in the US, Canada, Great Britain and Australia, as well as many large e-stores in Poland, including 4F, x-kom, Diverse, Tatuum, Ryłko, TaniaKsiążka, and Martes Sport.
The history of Fabrity Holding dates back to 1997, and since 2008 its shares have been listed on the main market of the Warsaw Stock Exchange. The shares of Fabrity Holding SA (formerly K2 Holding SA) were included in the WIG-INFO (IT companies) and WIG-TECH (new technologies) indices at the end of 2020.
