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February 06 2004 Sys-Win (www.syswin.com) is widely recognized in China as a leading software company that specializes in business solutions for property sector. Its browser-based solutions have been installed in an extensive network of customers in China with advanced intelligence for smart building and property management. This acquisition will further enhance IFCA’s position as an international market leader in terms of a software provider for the property development and management industry. A joint venture agreement had been signed to acquire the business concerns and assets of Sys-Win Group of Companies, a prominent software provider in China. With this, IFCA will have 51% interest in Sys-Win IFCA Limited, a new company to be incorporated in Hai Ding, Beijing, to acquire Sys-Win ‘s selected assets, including intellectual property rights, brand name, and network of dealers and customers. Now, IFCA claimed an immediate market penetration in China, with
600 installations in more than 20 Chinese cities, boosting our
clientele base to about 1,300 that includes some of the top developers
in Beijing, Shenzhen and Guangzhou. By Yvonne Chong Signed on Monday, the deal with the vendors of Sys-Win involved the setting up of a new joint-venture company (newco), proposed to be named Sys-Win IFCA Software Development (Beijing) Ltd. IFCA would invest 12.45 million renminbi (RM6.22mil) for the 51% interest in the newco, and the vendors of Sys-Win would hold the balance 49%, via the injection of assets worth 11.95 million renminbi. Sys-Win's assets, including its intellectual property rights, brand name, contracts in-hand, and its network of dealers and customers would be transferred to the newco. The agreement would also involve the absorption of IFCA's assets and operations in Shanghai, currently undertaken by its subsidiary Jingyou Information Technology (Shanghai) Co Ltd, which would translate to cost savings of RM1mil–RM1.5mil for IFCA, Leong told StarBiz. The vendors of Sys-Win have given a three-year net profit guarantee of 2.8 million renminbi (RM1.4mil) a year, but IFCA is confident that the newco would generate profits than were much higher. “We believe that with the contribution of our experience and expertise, we'll be able to trim off some fat and boost the company's sales,” IFCA corporate finance director Steven Ho said. “We're very excited about the growth prospect of the joint-venture company. We expect its revenue and profit to grow faster than the group's,” Leong said. For the nine months ended Sept 30, 2003, IFCA posted net profit of RM3.83mil on revenue of RM21.75mil. The deal gave IFCA an immediate and much-needed break into the China market, which it had tried to penetrate over the past 1½ years without much avail. The acquisition would give IFCA reach to Sys-Win's 600 installations in more than 20 Chinese cities, and a customer base of more than 1,300. The company's current customer base (outside China) consists of about 750 installations. In addition, IFCA would have access to Sys-Win's strong research and development (R&D) team and its intellectual property rights, present and future, which it could market outside China. Sys-Win currently has 50 R&D personnel, out of a total 100 staff. “The joint-venture company would not expand outside China as the domestic market is already large enough. And we intend to list the company in the near future,” Leong said. Sys-Win, a leading software player in China specialising in business solutions for the property sector, was IFCA's strongest competitor in China and had won many of the projects IFCA had tried to bid, “due to their much stronger connection and network”. Sys-Win's proprietary solutions include advanced intelligence for smart buildings and property management. Its solutions, which are mostly front-end, are synergistic and complementary to IFCA's integrated solutions. Leong said that IFCA, via the newco, would also be introducing other products, such as its loan solutions Loan Plus to China, which has only recently opened up its loan sector. “We're talking with the Bank of China and Construction
Bank, two of the four largest banks in China,” Leong said. The remaining 49 per cent stake in the new company, Sys-Win IFCA Software Development (Beijing) Ltd, will be held by vendors of Sys-Win. IFCA and Sys-Win plan to use the joint-venture company as the platform to jointly develop new software products and expand their market share in China. In a statement released in Kuala Lumpur yesterday, IFCA said the move will present the company with immediate market penetration in China with about 600 installations in over 20 cities and an enhanced customer base of more than 1,300. “Besides the expected cost savings in our China operations, we will see savings in research and development due to our complementary range of products with Sys-Win products. “In addition, there is a large talent pool of software developers in China at affordable cost,” IFCA president Leong Nyu Kuan said in the statement. Outside China, IFCA, which provides enterprise-wide integrated business solutions, has about 750 installations and more than 15,000 licensed users. IFCA’s investment in Sys-Win IFCA Software Development will be sourced from internally generated funds. The company said the acquisition of Sys-Win will contribute positively to IFCA’s future group profits due to the profit guarantee and savings from the streamlining of its China operations. IFCA’s annual operating expenditure in Shanghai is estimated to be about RM1.8 million. Sys-Win is widely recognised in China as a leading software player specialising in business solutions for the property sector. Its proprietary solutions have advanced intelligence for smart buildings and property management. Among the terms of the agreement are a three-year after-tax profit guarantee of 2.8 million renminbi a year by the existing Sys-Win vendors and a total transaction valuation of 22 million reminbi. IFCA will finance the investment with cash, while Sys-Win vendors will inject assets worth 11.95 million renminbi for their 49 per cent stake in the new company. For the nine months to September 30 2003, IFCA posted an unaudited net profit of RM3.83 million on the back of a revenue of RM21.75 million, up from a profit of RM2.39 million and revenue of RM16.42 million in the same period in 2002.
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