Paxus grows quickly by buying other companies

Press, 21 August 1984, Page 29

Paxus grows quickly by buying other companies

The announcement of aggressive marketing plans by. Framework Information Systems is just one of a number of indications from Paxus as it enters its second year of operation that it is working hard to achieve its goal of becoming Australasia’s pre-eminent and most internationally significant information services organisation. Recently it opened a new plant to manufacture computers in Brisbane under the Hartley name and it moved its Idaps subsidiary into a new building in Wellington. In its first full year of operations, ending March 31, Paxus achieved a revenue of $46 million, up from $2O million from the previous year’s results of the component companies. The audited tax-paid profit for the 1983-84 year was $1.3 million. A subsidiary of NZI Corporation, Paxus' plans to maintain a vigorous future growth based on its skilled personnel. "We intend to have the best human resource base, if we don’t already have it,” said Mr George Wheeler, general manager of Paxus. One of the cornerstones of the company’s strategic plan is growth by acquisition. Last year the company concluded five acquisitions and announced a sixth at

the start of this financial year. Mr Wheeler says that Paxus is aiming to achieve half its growth by acquisition and half by growth of the existing subsidiaries. To generate the expansion of its subsidiaries it is budgeting $8 million this year for research and development throughout the group. The acquisitions last year cost the group about $8 million, according to Mr Wheeler, although he hastened to add that the group does not have unlimited access to capital from its parent, NZI Corporation. With its size and reputation as an advantage over the many small New Zealand computer companies, Paxus finds it gets first bite at any companies looking for a suitor. Mr Wheeler said that Paxus has looked at close to 50 companies during its brief history of acquisitions. Each subsidiary continues to run as a separate operation, with an emphasis on entrepreneurial management, reporting to a small executive team at the headquarters of the Paxus group in Auckland. Each subsidiary has a head office, which could be in New Zealand or Australia, and maintains branch offices separate from other Paxus subsidiaries. The first acquisition of last year was Interactive Applications, Ltd (lAL), the microcomputer software company. In May, 1983, Paxus acquired David Hartley Computer (Australia), which was floundering because of lack of venture capital. Hartley’s new Brisbane, plant assembles the re-cently-released 3902 Hartley personal computer, other Hartley single and multiterminal systems and a larger minicomputer. It will produce about 200 units a month with a local content of about 60 per cent. In March this year New Zealand Commercial Computing, Ltd, was brought into the Paxus fold. This acquisition, which included a professional staff of 50 people, gave Paxus a foot-

hold in the consulting and custom software businesses. Idaps’ origins date back to the. late 1960 s as the original computer department of New Zealand Insurance and it become known as Idaps Computer Science (NZ), Ltd, in 1972. The acquisition of Group Data Services (Wellington), the data processing subsidiary of the Cable-Price Downer group, in 1978 saw major growth of Idaps in Wellington. To this day Idaps provides major processing facilities for CablePrice Corporation and

National Electrical and Engineering Co, Ltd, both members of the Cable-Price Downer group. Over ensuing years Idaps diversified, establishing specialist software products groups and an integrated systems group, and acquired Inscom Systems (Australia) specialising in the insurance market. In 1983 the N.Z. South British group created Paxus (which absorbed New Zealand Insurance) and purchased the total shareholding of Idaps Computer Science (NZ), Ltd.

Paxus does not intend that New Zealand and Australia should remain its major markets. Through the Hartley acquisition it inherited agents in the United Kingdom. However, the group prefers to concentrate on the Pacific basin area. “In Australasia we are leading the pack,” said Mr Wheeler, “but we are an international fledgling.” One year ago Paxus expected to be a $lOO million company by 1988. Now it predicts it will hit the $lOO million mark in 1985.