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IBS AB ("IBS") has signed an agreement to sell 100 percent of one of its UK subsidiaries, IBS Public Services Ltd, by means of an IPO, fully underwritten, on the London Stock Exchange. IBS is expected to receive Eur 75 m (GBP 52 m) of cash consideration, generating a capital gain of Eur 63 m.
The disposal is a significant step in the strategic development of IBS to focus operations on core business areas. With a substantially strengthened balance sheet, as a result of the sale, IBS will now accelerate its strategic measures to focus on supply chain management for certain vertical markets.
IBS Public Services, acquired by IBS in 1991, focuses on public sector software and services, mainly for management of social housing, collection of local taxes and payment of benefits. During 2004, the company had a turnover of Eur 24 m, amounting to some 9 percent of the IBS Group's total turnover. IBS Public Services operates solely in the UK. There are few international synergies with IBS's supply chain management business. IBS Public Services will be listed under the name of IBS OPENSystems plc. The transaction is fully underwritten by Numis Securities Ltd and IBS is expected to receive the entire cash consideration on 23 March 2005 when the listing is effective. The transaction is conditional upon admission to listing and trading of IBS OPENSystems plc on the London Stock Exchange. IBS will, in addition to the cash consideration, receive warrants to subscribe for 3 percent of the issued ordinary share capital of IBS OPENSystems plc. IBS was advised by Strata Technology Partners.
IBS will continue to increase market penetration in the UK market for supply chain management softwarethrough the development and expansion of its remaining subsidiary, IBS UK Ltd.
IBS to achieve continued growth through acquisitions
The stated strategy of IBS is to complement organic growth with acquisitions which increase its customer base and specialist knowledge within areas where IBS has, or is able to develop, a leading international market position.
Commenting on the transaction, Magnus Wastenson, CEO of IBS said: "The sale of the subsidiary provides capital to increase the pace at which IBS positions its supply chain management business to focus on certain vertical markets. In the current consolidating market for business software, there are many interesting business opportunities for IBS. We plan to make a number of acquisitions moving forward."
"The acquisition of TMS in Australia, announced on 1March, 2005, means that we have already strengthened our international position in the area of business software solutions for the publishing industry. At the same time, we increased our market share in the expansive Australian market for supply chain software. We will seek to acquire additional businesses at attractive valuations, with customer focused offerings which fit with the overall IBS Group offering. We also intend to increase our market channels through acquisitions in selected countries where we want to increase our market share."
IBS' overall strategic direction
IBS focuses its business operations on medium and large companies and subsidiaries of major groups. Its strategy is based on the following cornerstones:
A focus on market areas in which IBS can maintain a leading position, provide customers with high value and in this way achieve a sound level of profitability
An emphasis on sector solutions that include pharmaceutical distribution, electronic components, industrial supplies, food, publishing and consumer durables
A stronger market position through acquisition of companies with complementary customer bases and competence
A global market presence in order to be able to serve international groups
Offering comprehensive solutions based on professional services, servers and network solutions as well as financing
Cost effectiveness in product development, marketing and sales, implementation and support, in order to be able to offer integrated solutions at a competitive price.
Unchanged forecast for the full year 2005
The financial effects of the sale of IBS Public Services on turnover and profits of the IBS Group will partly be compensated by the acquisition of TMS and profit improvements in Swedish operations.
This means that the previously communicated forecast for IBS of an increase in earnings after financial items for the full-year 2005 compared with 2004 remains unchanged.
Long term financial targets for IBS
IBS' overall objective is to create added value for its customers and shareholders. The goal is to reach an operating margin of 8 to 10 per cent.