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High dollar gives dental software firm a tooth ache
Posted by randy on: 2005-10-17 08:07:31
High dollar gives dental software firm a tooth ache
By NZPA
Monday 3rd October 2005
The company, which generates 77% of its revenue in the UK, said a 10% appreciation in the kiwi dollar against the British pound during the reporting period would wipe $800,000 off earnings in the six months to September 30.
SOE is forecasting a half-year result ranging between a $500,000 net after tax loss and a break-even figure.
That compares with a $73,000 profit for the same period a year earlier, and comes despite a forecast rise in revenue to around $10.9 million-$11.3 million, compared with $9.5 million the previous year.
The company, which in May posted its first full year profit since listing in 2000, said the strong currency and costs relating to the protracted rollout of its Enterprise dental software into 10 countries had dented its bottom line.
SOE's profit story is a tale of two halves. The business is divided into two divisions: Professional and Enterprise.
The Professional division -- which supplies individual practices in the UK, Australia and New Zealand, is in fine fettle. It is the market leader in New Zealand, the fastest-selling dental software in the UK, and has a significant market share across the Tasman.
UK sales rose 28% in British pounds during the half year, and the division is expected to contribute $9 million in revenue and $1.5 million in ebidta (earnings before interest, tax, depreciation and amortisation) during the period.
On the flipside, the Enterprise division -- which supplies multi-site software for dental chains, public health institutions and dental schools, is still a drag on earnings.
"While SOE has developed market-leading products, its Enterprise revenues have not as yet grown to the levels required to bring the division into profitability," the company said.
The division is expected to contribute $1.9 million-$2.3 million in revenue during the half year, but post an ebitda loss of $300,000-$800,000.
"The Professional and Enterprise businesses are at different stages of their development, and are currently producing significantly different financial results," SOE said.
The company said it is looking at ways of improving the economics of Enterprise.
Shares in SOE last traded steady at $1.22, against a year high of $1.68 and a low of 92c.
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