Softline CEO Ivan Epstein says the downturn in the US economy has had a positive spin-off for his group because of the number of small businesses being established as a result.
"We operate in the SME [small and medium enterprise] market, and it`s an interesting market because as there is a downturn in the economy, people get laid off and they start up small businesses, and it increases our potential," he says.
Softline released a good set of results this morning, with the main highlight being its strong cash generation in the year to 31 March.
Although the operating margin fell from 27.7% to 17.3%, Epstein points out that it is still a healthy level.
Investor relations director Lara Jawitz says the decline is primarily attributable to investments in AccountMate and Sybiz, and was further affected by exchange rate movements.
"If we look at the margin across the rest of the group, margins were maintained," she adds. AccountMate was profitable and cash generative in the last quarter of the year and the group is expecting a better performance in the current year.
"I think we`ve done a pretty good job in bad times, and hopefully if you do a good job in bad times you do an even better job in good times," says Epstein.
"We got the cash conversion right. This year we`ll work on the revenue and hopefully get that up more, but you don`t always see the effort of your energies and reconstruction of certain areas of business flow through immediately."
He adds that the business model is solid and the group is optimistic going forward.
Offshore operations accounted for 42% of revenue during the year, and Epstein says the recent acquisition of MicrOpay in Australia will see the proportion increase.
"Today if you look at Softline - 5.5 million users, 350 000 to 360 000 businesses, a global position - we are not a South African business doing business in other parts of the world. Bear in mind that we are in Australia today - with all our companies there - a true Australian software company, and we have a significant position in Australia.
"So this isn`t about a couple of businesses doing business elsewhere in the world. Our user base is more outside of SA than in SA."
While the company has a presence in Europe through its investment in Integrity, Epstein says the focus this year will be on Australia and the US.
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