JSE-listed software development company Softline has released its interim results for the period to September showing a marginal 14% increase in turnover to R232 million.
While the results for the first half of the last financial year included the performance of the group's US investment, SVI, the results for the comparable period to September do not reflect the SVI figures as Softline is in the process of reducing its exposure to the US company.
Sustainable earnings per share of 10.6c, excluding exceptional items, are up from the 9.8c reported in the second six months of last year, and down from the 18.5c reported in the comparable period.
"A stronger set of results has been reported for the interim period compared to the second half of last year, despite being down on the comparable period. The primary reasons for the weaker performance from the comparable period include an increased expense base, the inclusion of AccountMate, a significantly higher tax rate and an increased number of shares in issue," says Softline CEO Ivan Epstein.
"Taking these factors into account, I am satisfied that the results indicate a positive upward recovery trend from the second half of last year. Operating profit, excluding exceptional items, has improved by 44% from R33 million in the second six months to R48 million, (R81 million in the comparable period)."
Margins of 20.6% were turned in compared to the 39.9% reported for the comparable period. Margins were, however, up from the 15.9% reported in the second half of the last financial year.
The group had to deal with tax rates of 28.5% for the six months, compared to the 19.7% rate reflected for the comparable period.
Epstein remains confident the investment in AccountMate will bear fruit and says it is poised to capture a bigger portion of the US market.
The greatest challenge, according to Vantage Investment Solutions analyst, Marlene Heymans, is for the group to convert its current business model to an annuity-based model, and she says the migration might be a slow one, given the current market conditions.
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