Accounting software company MYOB announced today that it had snapped up Australian Web hosting business SmartyHost for $7 million.
The purchase followed an investment in Western Australian-based Web hosting company Ilisys in February, signalling a strong move into Web hosting, according to MYOB.
The company wanted to provide a low-cost hosting package to small business. "Through the acquisition of SmartyHost, we can now deliver a basic website and domain name package to Australian businesses starting from under $100 per year," MYOB CEO Tim Reed said in a statement.
Small companies will follow the large corporations' trend of using their websites to conduct business, according to Reed.
"There's no doubt in our minds that in 10 years time, many of the things that large corporations are now just starting to do through their websites, will be done by small businesses. This will involve posting of invoices, receiving payment from invoices, submission of orders, checking of stock levels etc," he said.
Since much of the information customers want to access through a small business website could be found on MYOB systems, moving into hosting was a natural move, Reed said.
According to MYOB, SmartyHost clocks up $3 million in annual revenue and over $1 million in earnings (EBIT).
However, its other Web hosting acquisition, Ilisys, did not have a positive effect on the company's half year results released today, contributing a $0.3 million loss since the purchase.
In general, the half year saw MYOB's revenue for continuing operations grow six per cent year-on-year to $91 million.
Net profit after tax from continuing operations grew 27 per cent to $9.8 million. However, following a loss on discontinued operations of $28.3 million from the company's sale of its European operations for $79 million, the company reported a net loss after tax of $18.5 million.
Despite the loss on the sale CEO Tim Reed said it was a "great outcome for the group", because he believed the company had received an excellent price for the operations and it allowed management to focus on Australia, New Zealand and Asia.
The New Zealand business had seen difficult market conditions, Reed continued, but he added that the company had identified opportunities for margin improvement and he expected to see the benefits throughout the year.
"Our business is in great shape and I am looking forward to a good second half's trading for our existing businesses," Reed concluded.