The market has baulked at interim results from software developer Softline, after its US subsidiary SVI put in a dismal performance for the period.
Headline earnings for JSE-listed Softline Holdings grew by 9.4% to R66 million and fully diluted headline earnings per share excluding amortisation increased 5.8% from 17.2c to 18.2c.
However, US subsidiary SVI saw a plummet in headline earnings, from an earning of R20.2 million in 1999, to a loss of R1.1 million this year.
Revenue was left almost static at R322 million for the six months to September.
Attributable income after taking into account amortisation of intangible assets and non-recurring start-up costs totalling R25 million was R41 million. Attributable income for the comparable period was R60.5 million.
Softline made an announcement in October regarding an exit of the battling SVI, but not fast enough for the company to be saved the impact on its interim results and market perception.
Steven Cohen, CEO of Softline, says any exit from Softline will be made responsibly.
"We have to comply with US regulations, and we can't jump out, we are looking at exiting over the next six months, so yes, we can expect to still see SVI reflected in year-ends," he says.
Softline management is confident SVI will recover to trade more profitably in the second half of the year and minimise any damage done in the first six months.
The group finished the first half of the year with R76 million cash in hand and has expressed plans of further strategic offshore acquisitions. Cohen says these will go ahead if and when a good deal presents itself, regardless of whether Softline has extricated itself from SVI.
The JSE took a dim view of the company's latest results. By mid-morning the share had hit new 12-month lows, losing almost 20% of its value, trading at 220c in heavy volume.
Cohen says the knock the share has taken after the interims is the result of a skittish market. He adds that the share price will settle down to reflect the intrinsic value he believes exists in the counter.
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