Optimistic outlook for Runge

SOFTWARE and consulting company Runge has declared a $A1.7 million underlying profit for the first half of the 2012 financial year, up 11% period-on-period, and is optimistic its faltering African and Australian divisions can improve over the next six months.
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Runge at work.

Nicholas Brant

The company posted underlying earnings before interest, tax depreciation and amortisation of nearly $4 million, up 11% on the corresponding 2011 period.

Runge announced an interim unfranked dividend of 1c for the period, to be paid on April 5.

Software license and maintenance sales revenue for the period was $9.1 million, up 6% compared to the corresponding 2011 period.

The company also received nearly $2 million in non-taxable proceeds from a key man life insurance policy from its former managing director Tony Kinnane.

Kinnane died last year not long after resigning from the top job at Runge, citing health reasons.

Runge said it would apply up to 25% of the insurance proceeds to company activities and would decide on the balance by the end of the financial year.

Runge subsidiary GeoGas also posted revenue at $5.6 million for the half year, up from $3.4 million period-on-period.

The company said net revenue for the half year was at $48.4 million, driven by growing demand for consulting services outside of Australia.

It said consulting revenue had increased across all regions apart from Australia, however fees from its local arm were down 43%.

Runge managing director David Meldrum said the result was in line with its expectations and reflective of the challenges in specific markets.

“We are pleased to see the continued strong revenue growth experienced by Africa and GeoGas, but at the same time business experienced margin pressures in Australia and Africa,” Meldrum said.

“Poor utilisations in Africa and building distribution networks in Australia contributed to lower margins in these regions and reduced margins overall.”

Meldrum said outlook for the remainder of the financial year was positive and he expected to see a turnaround in the African and Australian divisions.

“We see strong demand for our services and software across our business and we have wide distribution networks to deliver our products,” he added.

“In the first half we focused on delivering strategies to combine and utilise our intellectual property on software, professional development and testing through partnerships with our major customers and building a new sales team.

“We will see first results of these initiatives in the second half of the 2012 financial year.”