As Australia's publicly listed companies prepare to release their full-year annual reports over the next couple of weeks, we throw the spotlight on some of the public technology businesses that are active in the channel but flying under the radar.
THE ACQUISITION-HUNGRY INTEGRATOR
RXP Services
Went public: 28 November 2011
2013 revenue: $30.2 million
Current share price: 70 cents
CEO: Ross Fielding
Who are they?
For a 20-year-old IT solutions provider with locations in Melbourne, Canberra, Sydney, Brisbane and Hobart as well as as international presence in Hong Kong, it seem strange that RXP isn't more well known. The company offers a broad sweep of services, from infrastructure and cloud integration to application development and project work.
Why should I care?
The company turned over $30 million and change last financial year and is tipped to approach the $50 million mark when it publishes its 2014 results this month. That would put RXP in the rare club of Australian integrators to have broken through the $10-$20 million barrier.
Driving this growth is acquisition. Not only does RXP share the three-letter acronym – and the letter X – with highly regarded, publicly listed IT firm UXC, it seems to have taken a sheet from the larger firm's M&A playbook. RXP has made a whopping six acquisitions in the past financial year, including spending $5.4 million on Tasmanian Microsoft partner Insight4 in March and $1.8 million for identity management reseller Aptus in May. Other takeovers have added Salesforce and Apple credentials, as well as extending RXP's Microsoft practice.
The company positions itself more around consultancy than specific vendor partners, and you won't find a vendor list on its website. But it certainly resells a range of ICT solutions. New vendors signed up this year include Sitecore and Tintri, the storage appliance provider that recently landed in Australia. RXP also recently started getting closer to AWS, exhibiting at the public cloud giant's AWS Summit in Sydney.
What do they say?
RXP chief executive Ross Fielding at the UBS Australian Emerging Companies Conference in Sydney: "Our acquisition strategy and drivers remains the same; focussed on driving a spread of services (in demand services), spread of clients and spread of geographies. We are currently in detailed discussion with 2 acquisition targets We continue to follow the acquisition framework and process that we have developed and evolved; it’s proven successful to date."
THE CHANNEL ROLLUP
PS&C Group
Went public: December 2013
2013 revenue: N/A
Current share price: 80 cents
Managing director: Kevin McLaine
Who are they?
Created last year via the merger of four resellers, PS&C had more than 300 staff at launch and specialises in security, communications and contractor management and recruitment. The company comprises for former companies: Allcom Networks, Hacklabs, Securus and Systems & People. At least one member of its management team has high-level experience in technology delivery - managing director Kevin McLaine was previously CFO at CSG Limited for more than four years. The company went public in December 2013.
Why should I care?
So how is PC&C performing in its first year? The company's prospectus forecast $75.5 million in revenues for the financial year. In February it reported that in the first half it had achieved 33 percent of its forecasted earnings for the full year - blaming the distraction of the merger and a "patchy" market. Despite this, the company issued a statement that it was "pleased" with the result, and that earnings were on track.
What do they say?
"The diverse client base and the breadth of PS&C’s services across People, Security and Communications provide sound foundations for PS&C to grow in the Australian ICT marketplace," stated chairman Adrian Wischer in the 2013 prospectus.
THE TECH INVESTMENT HOUSE
Montech
Went public: 19 December 2000 (former entity Sirius), 17 April 2014 (Montech reverse listing)
2013 revenue: N/A
Current share price: 2.3 cents
Chairman: David Shein
Who are they?
When Australian asset management software vendor Sirius went under last year, the listed shell was acquired by a consortium of investors and renamed Montech. One of the buyers should be well known to CRN readers – David Shein was the co-founder of distributor ComTech, which he grew to 1,400 staff before it was acquired by Dimension Data in 2000.
Why should I care?
At first, Shein was tight-lipped about his plans for the public entity, telling CRN in March that "at this stage all I can say is that I hope to add value to shareholders, customers and staff". Since selling ComTech, Shein has been primarily focused on mentoring entrepreneurs. His projects include bar tab splitting app Clipp, shopping tool ShopReply and cash managing app Pocketbook Connect – and it turns out that Montech will continue in this vein.
He told CRN in June that Montech will be a tech investment vehicle, and is hunting Australian companies with annuity revenues streams or software development expertise.
Through the public listing, Montech is looking to build up $2 million to finance investments in the right kinds of companies.
What do they say?
"We see ourselves as building a company that can add value held in smaller companies to grow locally and globally and providing capital to take the business to the next level," said Shein. "Any ISV that is focused on the cloud that has a customer base or revenues base would be a organisation we would love to work with."
"We don't see ourselves as bank or PE company, we see ourselves as tech company with a management team that can add a lot of value around helping smaller companies grow and with access funding.
"We have access to really good IT lawyers, really good IT accountants, and a lot of expertise, so whether you are providing managed services to move clients from a traditional environment to the cloud or if you are writing a piece of software, you will need accounting, legal and HR back of house."
THE AUSTRALIAN ICON
Hills Limited
Went public: 30 June 1962
2013 revenue: $507.6 million
Current share price: $1.71
CEO: Edward Pretty
Who are they?
The Australian brand famous for the clothes hoist is nowadays focusing on more digital concerns as Hills Limited. The integrator says its range of solutions now cover “security and access control, health, audio visual, automation, communications and mobility”.
The transformation has been deliberately carried out in recent years, with the company aiming to earn 75 percent of revenue from ICT and 20-25 percent from services by June 2016. Hills posted $507.6 million in revenue for the 2013 financial year and has offices in Sydney and Adelaide.
Why should I care?
Although it suffered a loss of $94 million in 2013, Hills was in the process of stemming the bleeding by offloading some “non-core” business lines to buyers such as Bluescope Steel. The move worked a treat, with a profit of $15 million ushered in the half year to 31 December 2013.
Hills has made headlines in the channel this year for an exclusive distribution deal for a home sensor system, resale deal for a “technician-in-a-box” solution, and its Lan 1 brand becoming the second distributor in Australia for security vendor Sophos.
What do they say?
"We have built a strong reputation with our security practice in Australia and we are very excited to be working with Sophos to provide its best-in-class products to our channel partners," said Daniel Lee, Hills head of CCTV, Surveillance and IT.
THE FIGHTER
Invigor
Went public: 3 December 1999
2013 revenue: $38 million
Share price: 6.5 cents
CEO: Gary Cohen
Who are they?
Invigor is an Australian digital solutions provider and IT investment house with offices in Sydney, Melbourne and Chennai, India. The company deals in big data projects, creating solutions for clients to assist in their understanding of internal data and analyse how the business operates.
Why should I care?
The leadership team is dominated by the Cohens - chairman and CEO Gary, finance director Gregory, and CTO Dr Brian Cohen. Brian and Gary own Marcel Equity, which has a significant stake in Invigor. Radio and television personality Vic Lorusso is also a board member.
This year Invigor has seemingly pulled off a sensational turnaround in fortunes since positing an almost $16 million net loss for 2013.
In a former life, Invigor was known as Hyro and in 2012 the board sold its assets to US company KIT Digital. However, the transaction was never properly completed with KIT Digital running into financial trouble. A dispute followed between the two parties, with the buyer eventually filing for bankruptcy.
Despite the Cohens stepping in to rebuild Invigor, the costs of the legal battle mounted. Last year the company reaped a revenue increase of 40 percent to $38 million but still copped a net loss of $15.95 million. The board warned in the annual report that if further funding could not be found Invigor “will have difficulty continuing to operate as a going concern”.
An injection of cash this year has rejuvenated the outfit. Invigor took over the company led by the web entrepreneurs behind Menulog and GetPrice (and retaining their know-how), acquired Search Results Group, invested in My Verified ID and opened a new development centre in Chennai, India.
The latest earnings guidance released to the ASX last month stated that the company expects EBITDA to break even in the second half of 2014, while forecasting $2.5 million EBITDA for 2015.
What do they say?
“We've been really focused on building our own business since we took over from the former board,” chairman and chief executive Gary Cohen told CRN last month.
“We are bringing together strong projects. Look out for some clever announcements and transformative work from us in the coming period. Big data is the main game, but there will be plenty of complementary work.”
-1.jpg&w=100&c=1&s=0)
.png&w=100&c=1&s=0)
