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Censof back on acquisition trail
by Cals Sun 15 Nov 2015, 02:28
Saturday, 14 November 2015
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It buys Asian Business Software Solutions, says the deal is a synergistic acquisition
HAVING taken a back seat on acquisitions over the past two two years, accounting software specialist Censof Holdings Bhd is reversing the trend now.
The accounting software company recently announced its plan to acquire a 51% stake in Asian Business Software Solutions Pte Ltd (ABSS) for S$10mil (RM28.06mil) and will be calling for an EGM on Nov 30 to decide on the acquisition.
The last time Censof acquired a major business was two years ago. Censof then forked out RM69.8mil for the acquisition in a tender process called by Khazanah Nasional Bhd for Time Engineering Bhd in November 2013. Prior to that, Censof acquired Knowledgecom Corp Sdn Bhd in 2012.
Group managing director Ameer Shaik Mydin describes the deal as a synergistic acquisition. He says there were a lot of synergy the group could derive from the acquisition.
“The potential earnings growth in ABSS is positive. The company have been showing positive growth year-on-year. Geographically, ABSS is present in 11 countries. It is not easy to get to these places and we can tap into those countries through ABSS,” Ameer tells StarBizWeek.
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He explains that Censof has a unit in Indonesia and it took the company a while to establish its operations in Indonesia thus ABSS’s presence in so many countries could enable the company to tap those markets as well.
Ameer adds that ABSS will also enable Censof to provide its solutions to the whole spectrum catering to different customers needs.
“Censof caters mainly to medium to large organisations. With ABSS, it fits the whole spectrum as we can tap into the growing small medium enterprises (SME) and other businesses,” Ameer says.
He adds that Censof has obtained all the necessary approvals as well as funding for the acquisition. He says the upcoming EGM to obtain shareholders approval is likely to be the last hurdle for the acquisition.
The acquisition will be funded by the proceeds from Censof’s private placement and a bank loan.
“Funds are there waiting to be disbursed. We have taken a loan and repayment will not be an issue as the cash flow from ABSS will be able to cover that,” Ameer says.
He says that, if all goes well, the acquisition will be completed a week or two after the EGM and ABSS will start contributing to Censof.
Censof and ABSS’ joint venture will also cease following the acquisition.
Singapore-based ABSS markets its product under MYOB, a GST-compliant accounting software for SMEs. MYOB was started in Australia in 1991 and was one of the first businesses to recognise the needs of SMEs.
ABSS managing director Paul Alistair Jennings says ABSS is “clean financially”.
“We have no borrowings and have high cash flow.
“We have high profitability with about 40% earnings before interest, taxes, depreciation and amortisation (ebitda) margin and good growth prospects,” he says, adding that ABSS presents an uncomplicated business.
Despite selling a majority stake, Jennings says ABSS shareholders remain committed to the business.
ABSS has 11 shareholders and nine out of the 11 are executive managers while one of the remaining two is his wife.
He sees the sale as a “good fit”. He explains that by selling to Censof, it will enable the company to grow bigger in an aligned industry.
“They (Censof) understand the market. They can help to add value and help take the growth of the company to another level,” Jennings says.
In the last three financial years, ABSS has shown growth in revenue and profits with ebitda margin of above 40% .
In 2014, ABSS showed high growth in comparison to 2013 from demand created by the need to comply with Government’s implementation of goods and services tax (GST) effective April 1, 2015.
“In the first six months, we sold seven years worth of products driven by the implementation of GST,” Jennings says.
For the financial year ended Dec 31, 2014 (FY14), ABSS’ revenue was at S$8.06mil compared with S$6.1mil in 2013.
Its ebitda stood at S$4mil in 2014 against S$2.7mil in the FY13.
Its profit margin is also high as most direct costs and operating expenses are fairly fixed.The offer price of S$10mil is based on five times the provisional ebitda of ABSS for FY14.
ABSS’ principal markets include Singapore, Malaysia and Hong Kong while Censof’s markets are Malaysia, Indonesia and the United States.
Jennings says competition wise, ABSS has competition ranging from ordinary shoe boxes (to keep receipts), or Microsoft Excel to accounting software like SAP or Oracle.
For the financial year ended March 31, 2015, Censof’s revenue was RM152mil, from RM80mil in FY14 while its net profit was RM21.6mil compared with RM4.13mil a year earlier.
In the first quarter to June 30, Censof posted a net profit of RM838,000 on revenue of RM34mil.
Ameer concedes that some of the sales were one-off but adds recurring income would come from maintenance and upgrades.
“We are finishing some major projects. Once the projects are finished, maintenance fees will increase,” he explains.
Ameer also discloses that the group will be venturing into cloud solution.
“It will be more on mobile. We are moving towards that.”
He says it will see how this acquisition pans out and has nothing solid in the pipeline in terms of mergers and acquisitions.
Censof back on acquisition trail
BY LEONG HUNG YEE[You must be registered and logged in to see this image.]
It buys Asian Business Software Solutions, says the deal is a synergistic acquisition
HAVING taken a back seat on acquisitions over the past two two years, accounting software specialist Censof Holdings Bhd is reversing the trend now.
The accounting software company recently announced its plan to acquire a 51% stake in Asian Business Software Solutions Pte Ltd (ABSS) for S$10mil (RM28.06mil) and will be calling for an EGM on Nov 30 to decide on the acquisition.
The last time Censof acquired a major business was two years ago. Censof then forked out RM69.8mil for the acquisition in a tender process called by Khazanah Nasional Bhd for Time Engineering Bhd in November 2013. Prior to that, Censof acquired Knowledgecom Corp Sdn Bhd in 2012.
Group managing director Ameer Shaik Mydin describes the deal as a synergistic acquisition. He says there were a lot of synergy the group could derive from the acquisition.
“The potential earnings growth in ABSS is positive. The company have been showing positive growth year-on-year. Geographically, ABSS is present in 11 countries. It is not easy to get to these places and we can tap into those countries through ABSS,” Ameer tells StarBizWeek.
[You must be registered and logged in to see this image.]
He explains that Censof has a unit in Indonesia and it took the company a while to establish its operations in Indonesia thus ABSS’s presence in so many countries could enable the company to tap those markets as well.
Ameer adds that ABSS will also enable Censof to provide its solutions to the whole spectrum catering to different customers needs.
“Censof caters mainly to medium to large organisations. With ABSS, it fits the whole spectrum as we can tap into the growing small medium enterprises (SME) and other businesses,” Ameer says.
He adds that Censof has obtained all the necessary approvals as well as funding for the acquisition. He says the upcoming EGM to obtain shareholders approval is likely to be the last hurdle for the acquisition.
The acquisition will be funded by the proceeds from Censof’s private placement and a bank loan.
“Funds are there waiting to be disbursed. We have taken a loan and repayment will not be an issue as the cash flow from ABSS will be able to cover that,” Ameer says.
He says that, if all goes well, the acquisition will be completed a week or two after the EGM and ABSS will start contributing to Censof.
Censof and ABSS’ joint venture will also cease following the acquisition.
Singapore-based ABSS markets its product under MYOB, a GST-compliant accounting software for SMEs. MYOB was started in Australia in 1991 and was one of the first businesses to recognise the needs of SMEs.
ABSS managing director Paul Alistair Jennings says ABSS is “clean financially”.
“We have no borrowings and have high cash flow.
“We have high profitability with about 40% earnings before interest, taxes, depreciation and amortisation (ebitda) margin and good growth prospects,” he says, adding that ABSS presents an uncomplicated business.
Despite selling a majority stake, Jennings says ABSS shareholders remain committed to the business.
ABSS has 11 shareholders and nine out of the 11 are executive managers while one of the remaining two is his wife.
He sees the sale as a “good fit”. He explains that by selling to Censof, it will enable the company to grow bigger in an aligned industry.
“They (Censof) understand the market. They can help to add value and help take the growth of the company to another level,” Jennings says.
In the last three financial years, ABSS has shown growth in revenue and profits with ebitda margin of above 40% .
In 2014, ABSS showed high growth in comparison to 2013 from demand created by the need to comply with Government’s implementation of goods and services tax (GST) effective April 1, 2015.
“In the first six months, we sold seven years worth of products driven by the implementation of GST,” Jennings says.
For the financial year ended Dec 31, 2014 (FY14), ABSS’ revenue was at S$8.06mil compared with S$6.1mil in 2013.
Its ebitda stood at S$4mil in 2014 against S$2.7mil in the FY13.
Its profit margin is also high as most direct costs and operating expenses are fairly fixed.The offer price of S$10mil is based on five times the provisional ebitda of ABSS for FY14.
ABSS’ principal markets include Singapore, Malaysia and Hong Kong while Censof’s markets are Malaysia, Indonesia and the United States.
Jennings says competition wise, ABSS has competition ranging from ordinary shoe boxes (to keep receipts), or Microsoft Excel to accounting software like SAP or Oracle.
For the financial year ended March 31, 2015, Censof’s revenue was RM152mil, from RM80mil in FY14 while its net profit was RM21.6mil compared with RM4.13mil a year earlier.
In the first quarter to June 30, Censof posted a net profit of RM838,000 on revenue of RM34mil.
Ameer concedes that some of the sales were one-off but adds recurring income would come from maintenance and upgrades.
“We are finishing some major projects. Once the projects are finished, maintenance fees will increase,” he explains.
Ameer also discloses that the group will be venturing into cloud solution.
“It will be more on mobile. We are moving towards that.”
He says it will see how this acquisition pans out and has nothing solid in the pipeline in terms of mergers and acquisitions.
Cals- Administrator
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