Kiwis find solution to sales

By ADAM GIFFORD

The acquisition of Auckland accounting software company exo-net by Australia's Solution 6 has helped to boost its sales across the Tasman.

After a year in the market, more than 750 companies are now running exo-net's 3000 e-business software.

Chief executive David McKee-Wright said most sales were in the $5000 to $10,000 range, averaging about five users, but the company had signed two $1 million-plus contracts for delivery of the software by ASP (application service provider) when that service was launched early next year.

He said exo-net 3000 was launched a little too late for the software scramble that happened as companies prepared for the introduction of GST.

"Solution 6 has given us some credibility in Australia. If you want to have a go at Australia, you need to put a management team there, not try to do it from here."

Since buying exo-net in August for $38 million in cash and shares from its founders - Mr McKee-Wright, Maurice Bryham and Mark Loveys - and 35 per cent shareholder IT Capital, Solution 6 has undergone some turmoil.

New chief executive Neil Gamble lowered revenue and earnings targets, closed non-earning units and laid off staff, including a number of Auckland-based developers. None was at exo-net.

Solution 6's share price has also fallen, although Mr McKee-Wright said the exo-net sellers had cashed up the bulk of their shares.

Shares in Solution 6 were trading at $A1.21 ($1.55) yesterday. Worth $A16.75 at the start of the year, the stock has headed down since the April rout of tech stocks.

The company has no debt and has cash reserves of $A63 million, despite spending $A11 million in operational costs in the quarter to September.

Yesterday, Solution 6 acquired Ceedata Holdings, the Australian parent of Xlon, for $A10 million cash and 15 million Solution 6 shares, plus options for another 10 million shares, exercisable at $A1.25 each, on confirmation of financial performance.

The deal provides the company with a web-enabled ERP (enterprise resource planning) software platform for small-to-medium businesses.

Mr McKee-Wright said the clean-out had improved the position of exo-net within the group.

"exo-net is a strategic part of Solution 6 because the linking of Solution 6's core product, its practice management software for accountants, and exo-net in the ASP environment will differentiate it from the competitors."

The online version of exo-net is being modified to talk directly to Solution 6 practice management software.

That means accountants will have an incentive to get their clients to use exo-net, so they can dial in and work directly on clients' accounts.

Apart from its Australian conquest, exo-net has opened offices in Malaysia and Singapore.

"Now we've done the customisation needed to take account of different accounting practices in Asia, we're ready to roll it to Britain effortlessly."

The United States market for accounting software was "overcrowded and overly competitive," and the company had no plans to move there, he said.

Also overcrowded is exo-net's Upper Queen St offices. It is shifting to 1 Queen St this month.

It now has more than 100 staff, two-thirds of them in New Zealand.

At Solution 6's annual meeting last month, Mr Gamble said the company's previous centralised operating philosophy made it difficult to discern the performance of some of its businesses.

He said there was a lack of quality leadership in some of them, with too little accountability.

Former chief executive Chris Tyler had focused on an aggressive acquisition strategy at a cost to the core business.

"As most of these acquisitions were made in the pre-tech-wreck timeframe, they were priced at a premium."