In the year to 31 March sales at Software Circle rose to £16.2m from £12.5m the prior year, and operating EBITDA increased from £1.3m to £2.8m.
The group had hoped that sales would be around £17m, but Nettl Systems – currently the group’s biggest business – had “a difficult year” posting sales down by £1.1m, or 12%, at £8.4m.
CEO Gavin Cockerill said that the downturn at Nettl had been driven by the impact of divested print wing Works Manchester going into administration, along with the “wider macro-economic environment remaining uncertain” and additional provisions for bad debt.
Works Manchester went bust under the disastrous ‘ownership’ of PFI Group.
The Works Manchester issues, along with some additional costs related to liquidating the group’s French operating entity, resulted in exceptional items of £2.4m.
The drop in turnover at Nettl also meant that like-for-like sales overall were down 4%.
“This has not shifted our focus away from driving forward with the strategy to become a serial acquirer of vertical market software businesses. Neither should it mask the underlying strength and improvements in our continuing operations,” Cockerill stated.
Software Circle made a net loss from continuing operation of £2.37m for the year.
Cockerill said the group was cautiously optimistic about prospects for the current year.
Chairman Jan-Hendrik Mohr will retire after eight years in the role at the upcoming AGM in September, with changes to the non-executive board structure to be announced soon, following a “structured process”.
Mohr admitted that the group’s initial strategy to acquire signage businesses “proved to be a failure”, but after pivoting to its current strategy of acquiring niche software businesses he believed the business had an increasingly bright future.
“To me, it's very clear that Software Circle will become one of the great success cases of publicly traded serial acquirers,” he stated.
The sale of the Printing.com domain name for nearly £2m was completed after the year-end.
Software Circle’s share price rose by 2.12% to 17.36p on the news. The share price has gone up by nearly 30% since the start of the year (52-week high: 21.00p, low: 7.92p).
