| Mon 23 Jun 2003, 10:11 | | Blow for Softline buyout bid |
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June 23, 2003
By Nicky Smith
Johannesburg - The bid by the Softline management buyout consortium was dealt another blow on Friday, when the accounting software company reported better-than-expected full-year results.
Investors said they felt vindicated by the numbers because they illustrated that the buyout offer of R1.30 a share, announced in April, was too low.
"The numbers are better than expected," said Steve Minnaar, a fund manager at Old Mutual Asset Managers, which holds just over 10 percent of the company's stock.
The group's revenue growth was robust, climbing 31 percent to R636 million in the year to March. Profit after tax was R9 million compared with R37 million a year ago.
A write-down of about R51 million on the company's investment in the US-based group Integrity hurt the bottom line. Another US-based investment, SVI, reported a healthier share price and better financial performance.
In Softline's interim results to September, SVI was written down by R155 million to R77 million. "The value of the SVI investment has been restated to its full cost of R124 million," Softline said.
The group said the SVI management had been in negotiations to buy the business for $0.80 a share. The shares have been trading above $1 for the past month and were at around the $2 level on Friday.
It is an in-principle agreement and no formal agreement has been signed
.
Questions have been raised over how suitable it is for a deal to be negotiated with SVI's management while there are two offers on the table to buy Softline.
On June 12 a former director of Softline, Ivan Ferrer, along with a Dutch software company, Exact, announced their consortium would possibly offer R1.45 a share once it had had a look at Softline's books.
Lara Jawitz, the investor relations manager, said the issue of suitability was not relevant.
"We cannot surmise what may or may not happen in the context of the buyouts. We still need to keep running the company," Jawitz said.
At Softline, headline earnings a share grew 8 percent to 23c, but basic earnings a share fell from 9.8c to 2.3c.
The net asset value was R1.339 compared with R1.403.
Anthony Sedgwick, a fund manager at African Harvest, which holds about 7 percent of the company, said he had expected the group's numbers to look worse: "They have expensed every thing they possibly could."
The company had good cash reserves at R147 million, he said, and generated R124 million in cash flows during the period under review.
The share closed at R1.55 on Friday, after reaching an intraday high of R1.59 on the JSE Securities Exchange.
