Salford Priors, Worcestershire-based Misys Plc has reached a conditional agreement to acquire Innsite International Ltd of Hounslow, Middlesex for UKP3.55m. Innsite, which supplies Unix-based software and services to the hotel industry, was founded 11 years ago by US computer services company Automatic Data Processing Inc, bought out by its management in 1987, with financing from institutional investors. It has some 100 staff and turned in pre-tax profits of UKP662,000 on revenues of UKP8m for the year to February 28, 1991. Net assets are around UKP714,000. Misys, which will also assume Innsite’s UKP1.7m bank debt, will raise the UKP3.55m capital for the acquisition by the issue of 1.8m new shares. For Misys, the deal is a way into a market with great potential: chairman Kevin Lomax estimates that there are some 22,000 hotels in the UK, of which only 2,500 are fully computerised. Innsite’s hotel business software is written in C and has its own proprietary tools built into it. The Hounslow company claims to have 150 systems installed at 1,150 UK hotels, and at 425 hotels overseas, to which it sells via 12 distributors. A large portion of Innsite’s revenues, Lomax says, is derived from software support, maintenance and training, fitting well with Misys’ own business. The cash-positive Worcestershire group has made two other acquisitions since its period end in November: still busy over the Christmas period, Misys handed over UKP235,000 cash on December 24 for the hardware maintenance business of Principality Systems Ltd, one of its TIS resellers in South Wales, which has an annual contract base of UKP260,000; and, on December 31, it snapped up for UKP205,000 cash from its administrative receiver the business of Manchester-based Computer Management Systems Ltd, a supplier of software products to the construction industry that are complementary to the Mentor range. After UKP645,000 exceptional costs last time, adjusted for the trading losses of Modular Technology Ltd sold last July, Misys reported pre-tax profits for the first half of 1992 up 136% at UKP3.6m on sales down 2% at UKP32.3m. Excluding the Star Computer Group Maintenance Business, acquired last March, turnover was actually down 6.5%. Misys had UKP7.4m cash at the period end, before the recent acquisitions. With the exception of TIS Ltd, all business performed well.. and recorded profits which are satisfactory in the current recession, and Misys Dataller, now renamed Misys Financial Systems, contributed record profits. Lomax says the significant improvement in trading profits – up 66% at UKP3.6m is largely due to earlier cost cuts, including 230 job losses last year. The chairman is confident that the group’s experienced management team and the high level of investment in product development should ensure a growing and profitable share of whatever levels of business are available. On Misys’ proposed expansion into North America (CI No 1,724), Lomax says the group is still working towards that goal with a view to making an acquisition there in 18 months to two years. The purpose of the expansion is to protect Misys against the effects of the continuing recession. He is still on the lookout for further acquisitions in this country in the areas of services and support, and claims to have been approached by some larger businesses that have expressed an interest in being absrobed into the Misys fold.
