ISS Group 1H profit falls 59%

Industrial software company ISS Group (ASX:ISS) said its unaudited results show a 59 per cent decline in pre-tax profit and a 12 per cent slump in operating revenue for 1H11

Industrial software developer ISS Group (ASX:ISS) has revealed it is expecting to report a 59 per cent decline in 1H pre-tax profit to $1.27 million.

In a market update, the company said its unaudited results show that operating revenue fell 12 per cent year-on-year to $9.8 million.

ISS, which develops software for energy, minerals and manufacturing companies, was also hit by $1.1 million in exchange rate losses due to the strong Australian dollar.

In the second quarter, revenue grew six per cent to $7 million, while pre-tax profit fell a more moderate 13 per cent from 2Q10 to $2.8 million.

ISS said it had also managed to reduce the cost of sales for the half year by eight per cent after implementing operational efficiencies.

CEO Richard Pang said the company expects a “solid performance” in the second half, because it is pursuing a range of opportunities in Asia, while the Australian market continues to recover.

He said the strengthening Australian dollar continues to be a cause for concern, but that ISS has a robust working capital of $9.6 million to help it weather any issues.

These results are subject to change after the final audit. ISS shares fell 2.78 per cent during Thursday's trading to $0.175.