It's taken over 18 months but Powerlan has finally divested its integration and volume sales businesses and is now free to chase lucrative overseas software dollars. At least that's the message taken from the sale of its remaining Business Integration (BI) units in Queensland, Victoria and New South Wales to Optima and NetOptions last week.
ASX announcements from Powerlan and Optima last week confirmed exclusive reports in ARN that Optima had purchased the NSW division of Powerlan's BI unit, while Queensland-based NetOptions picked up the Queensland and Victorian subsidiaries.
NetOptions has also acquired Powerlan's general software sales team and software consultants, which includes staff in Brisbane and Melbourne, as well as a unit of Powerlan's software development arm.
Powerlan BI, the box-moving roots from which Powerlan originated, reported revenue of $100 million last year, which, with a net profit of around $3.5 million, should have attracted a market valuation of between $8 million and $10 million. The financial details of the sales are being held in commercial-in-confidence but it is speculated that Powerlan divested its integration businesses for less than half that figure.
However, all parties appear to be walking away happy with the deals that have been struck. Powerlan managing director Theo Baker told ARN that the agreed price of the businesses was not the be-all and end-all of the deals.
Instead, the divestments enable Powerlan to redirect working capital from infrastructure expenses of staff, administration and locations to building its now-core software business, namely its IMX, Portfolio Manager and Clarity products.
"[The BI units] were a consumer of working capital. This lets us draw out our working capital and focus it on a business that is going to give us a greater return," said Baker. "They're not big numbers, but from a Powerlan perspective we got a good deal."
The sale sees Powerlan consolidate its work force to around 400 including staff across its interests in Asia. That's down from 1,100 in its heyday as a systems integrator.
For the full analysis, read this week's issue of ARN, out on Wednesday.