Profit announcement for the year to March 31, 2007
Attention Business Editors
For Immediate Release
8th April 2007
Software of Excellence International
Profit announcement for the year to March 31, 2007
Software of Excellence International Limited (“SOE”, the “Company”) is pleased to provide financial results for the year ending to 31 March 2007.
EARNINGS SUMMARY for year ending 31 March 2007
/ 31-Mar-07 / 31-Mar-06 / Movement
/ UK PCT
Revenues / $26.818m / $21.061m / +27.3%
Recurring Revenues / 48.3% / 44.8% / --
EBITDA Margins / 23.0% / 18.0% / +27.7%
EBITDA (1) / $6.160m / $3.772m / +63.3%
NPAT / $3.916m / $1.959m / +99.9%
Revenues / $1.678m / $2.500m / (32.9%)
EBITDA / $0.466m / ($0.920m) / nm
NPAT / $0.447m / ($1.00m) / nm
Revenues / -- / $1.110m / --
EBITDA / -- / ($5.800m) / --
NPAT / -- / ($6.310m) / --
Revenues / $28.496m / $24.671m / +15.5%
EBITDA (1) / $6.626m (2) / ($2.948m) / nm
NPAT / $4.363m / ($5.351m) / nm
Basic Earnings per Share (cents) / 16.6 / nm /
Cash reserves / $7.403m / $9.758m /
1. EBITDA is shown after expensing all software development costs
2. EBITDA includes one off costs of $0.223m in relation to MCN repurchase
3. EBITDA includes a profit on the sale of GSD’s assets of $0.169m
Dental software company Software of Excellence International Ltd today announced a net after tax profit of $4.363 million for the year to March 31, 2007. This result is in line with the earnings guidance the company issued last month.
The result reflects the continued strong performance of SOE’s core Professional dental software business in the United Kingdom and Australasia. Net profit after tax from continuing activities was $3.916million, up 99.9% on the previous year’s earnings of $1.959 million.
Key factors behind the growth in earnings in the March 07 year were:
- Strong revenues from the company's core UK market, which accounted for 80% of total turnover. In local currency terms, sales in the UK were 8.9% higher at ₤8 million.
- A weakening of the Kiwi dollar against the British pound continued into the second half of the year compared to the previous corresponding period. This contributed an additional $2.228 million to revenue.
- A strong first full year from the Oasis operations in Australia (acquired in December 2005) contributed $2.016 million in revenue and $0.205 million in EBITDA.
- An encouraging performance from the company’s new UK digital imaging sales strategy in the second half of the year. This product strategy is built around SOE’s proprietary software, which can accommodate a range of digital imaging equipment, allowing the company to sell product from a variety of suppliers both to its existing customer base and new customers.
- The successful divestment of the assets of SOE’s US dental schools subsidiary, GSD, in December 2006.
United Kingdom / European operations
Record numbers of Professional software orders were processed in the first half of the year, largely due to a substantial backlog from the March 31, 2006 cutover date imposed by the UK Government’s “Options for Change” programme.
In the second half of the year the new Digital Imaging initiative supplemented revenue as practice management software sales returned to levels similar to those before the Options for Change programme.
The company’s recurring income continued to grow in the UK and accounted for 46% of UK turnover. At year end the company’s UK order book stood at ₤0.827 million ($NZ2.261 million).
SOE is also continuing to enjoy good organic sales growth in the Republic of Ireland.
Asia Pacific / Oasis
The Oasis business in Australia, acquired in December 2005, experienced a 16% increase in unit sales in the March 2007 year. SOE’s dual product strategy in Australia has also resulted in strong sales gains by its EXACT Professional product.
With more than 1500 sites, SOE is now the clear leader in the Australian market and it is looking to build on this position through further product development, innovative marketing activities and a better-resourced centralised support operation.
The Asia Pacific region accounted for 10% of the company’s total revenues in the year under review.
A final ‘earn-out’ payment of AU$561,000 was made to the vendors of Oasis in February 2007 following achievement of profit targets.
All the assets of GSD were sold in December 2006 and SOE no longer has any continuing activities in the US market.
Directors are not recommending a final dividend at this stage given the current conditional takeover proposal. However, it is their intention that existing imputation credits will be distributed shortly.
Chief Executive Brian Weatherly said:
“This result is a milestone for SOE in that it delivers a financial performance that reflects the benefits of the change in strategic direction that we have been driving over the past 18 months.”
“We have focused our activities on our Professional business and that is bringing gratifying results in both in our UK and Asia Pacific markets.”
“Our digital imaging sales initiative is starting to gain traction in the UK and is already delivering good incremental business for us. In the medium term we will be offering an increased range of products and services to all our existing 5000 customers.”
“We are continuing to evaluate the taking of our Professional business model into other European markets, but have yet to identify any specific opportunities that meet our criteria”.
“Our strategy continues to be based on being the market leader in our chosen sectors and building on the leading market positions we have established in the UK, Australia, New Zealand and Ireland.”
“Whilst we have no doubt benefited from the spike in activity surrounding the UK Options for Change programme, we are confident that we have the product strategies in place to deliver growth in line with our longer-term targets, and confirm the guidance provided to shareholders on 26 April this year
Conditional takeover proposal
On April 30, 2007, SOE advised the NZX that it had received a conditional proposal from an independent party that is contemplating making a takeover offer for all the company’s issued securities.
This party will not disclose its identity until it has completed accelerated due diligence and confirmed that it wishes to proceed with an offer. It has indicated that it requires 20 working days to complete its due diligence and that any offer would be subject to regulatory approvals.
The board of SOE has established an Independent Directors Committee to monitor this process and this committee has indicated that it will obtain an independent appraisal of any offer on behalf of all securityholders and then make a recommendation to securityholders on whether they should accept any such offer or not.