The market is awash with talk that a third buyer is about to enter the bidding for JSE-listed Softline, driving the group's share price higher than the proposed offers by two consortiums currently eyeing the group.
<B>Salient figures</B>
Softline results for the year to 31 March 2003.
Previous year's figures in parentheses:
Revenue: R636.28m (R486.83m)
Operating profit before non-operating expenses: R86.95m (R84.2m)
Profit before tax: R12.95m (R55.25m)
Profit after tax: R9.08m (R37.7m)
EPS: 2.3c (9.8c)
HEPS: 23c (21.3c)
Current assets: R220.5m (R188.16m)
Cash and equivalents: R147.86m (R108.2m)
Current liabilities: R119.74m (R122.82m)
NAV per share: 133.9c (140.3c)
Cash flows from operating activities: R124.33m (R113.13m)
The share price of Softline, which yesterday released its figures for the year to 31 March, soared initially after the publication of a cautionary notice relating to an offer by a management-led consortium to buy the group for 130c a share.
The share rose again after a consortium comprising Dutch group Exact Holding and Pastel Accounting founder Ivan Ferrer, who sold his business to Softline for about R200 million, said it was considering making an offer at 145c a share.
This week the Ferrer consortium bought 59.3 million shares in the market at 145c each, which means its stake is now 65.6 million shares or just under 17% of Softline.
By the close of trade yesterday the Softline share was trading at 155c, 10c higher than the Ferrer consortium's proposed bid.
Dealers say the buying was sparked by talk that a third bidder could enter the market, with an offer between 160c and 180c a share.
The share continued to rise this morning, reaching 159c in early morning trade before slipping back to 157c by 10:51am.
Softline's revenue for the year to 31 March 2001 rose to R636.28 million from the previous year's R486.83 million.
However, the group saw its pre-tax profit fall from R55.25 million to R12.95 million, with an after-tax profit of R9.08 million compared with R37.7 million previously.
CEO Ivan Epstein says operating margins were negatively affected by an increase in research and development (R&D) expenditure.
"R&D is an integral component of Softline's business and key to maintaining and growing market share," he says.
"The increase in R&D spend, from R37 million to R60 million, is primarily attributable to increased investment due to the highly competitive global software environment and accelerated amortisation of capitalised R&D as new products have come to market, superseding older technology."
The value of the investment in US-based SVI has been restated to its full cost of R124 million as a result of the improvement in SVI's share price and its year-end results.
Epstein says the group's key operations, in SA and Australia, performed in line with expectations, with SA contributing 46% of revenue and Australia 32%. SA accounted for 45% of operating profit and Australia 55%.
While North America contributed 22% of revenue, those operations made no contribution to operating profit. Epstein says on aggregate the North American operations broke even.
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