| Mon 29 Apr 2002, 0:00 | | Ucs Group - Interim Report - For The 6 Months Ende |
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UCS GROUP LIMITED
(Registration number 1993/002253/06)
(Incorporated in the Republic of South Africa)
Share code: UCS
ISIN code: ZAE000016150
Interim Report - For the 6 months ended 31 March 2002
* 28% increase in revenue
* 23% growth in annuity revenue
* 17% increase in net asset value per share
* Cash flow from operating activities up R 14.9 million
Commentary
UCS Group Limited has continued to increase its footprint in its chosen
markets, despite extremely difficult trading conditions during the period
under review. Turnover grew by 28%, of which 27% was achieved organically
and only 1% attributable to acquisitions.
Operating income (before R & D, depreciation, amortisation and interest)
increased by 14%. This was slightly down on budget due largely to the
difficult trading conditions.
Significant investments in research and development - up by 36% on the same
period last year - restricted EBITDA growth to 5%.However, a significant
milestone in the Group's R&D programme was reached when the new new
flagship Linux and Java-based retail solutions platform was released during
the period. The platform was successfully commissioned throughout a
furniture chain of 32 stores in February.
Depreciation and amortisation charges grew by 46%, largely as a result of
historic acquisitions. Interest and investment income was negatively
affected by turmoil in the financial markets over year-end and declined by
25%.
Net income before tax declined by 15% as an overall result of these
factors, while attributable earnings came in 7% lower at R12.4m (2001
R13.3m). Earnings per share declined marginally to 4.8c (2001 4.9c).
Headline earnings per share grew by 4% to 5.4c (2001 5.2c).
Cash flows from operating activities improved dramatically to R15.1m (2001
R0.2m) and management will continue to focus on this aspect of the business.
The Group's commitment to the sale of its own technology and services as
well as the generation of sustainable annuity revenue streams remains
strong. 24% of turnover (2001 21%) came from the sale of 3rd party products,
while turnover from sustainable annuity revenue streams grew by some 23% to
R58.9m (2001 R48.1m).
For the period under review, capital expenditure amounted to R5.4m (2001
R9.1m) while direct research and development costs amounted to R6.5m (2001
R4.8m). R & D costs continue to be fully expensed as incurred. Headcount at
the end of March 2002 was 586 (March 2001 528).
The Group acquired a 51% interest in GAAP Point of Sale, a company focused
on the FMCG, hospitality market, effective 1 February 2002 and increased its
interest held in CCS Software (Proprietary) Limited from 51% to 62.76%
effective 1 April 2002.
Share buy-backs
The Group continues to buy back its shares in terms of the general authority
granted on 24 January 2001 and renewed at the shareholders meeting on 18
January 2002. During the 6 months under review, the Group acquired a further
11,819,137 shares to add to the 9,444,800 shares bought in the previous
financial year. By 31 March 2002 the Group had acquired a total of
21,263,937 shares (7.8% of total shares issued) which are held as treasury
shares in one of the subsidiaries.
Staff Share Trust
As stated in our 2001 annual report, the UCS Group's share price has settled
at a level where the objectives of the Staff Share Trust are not being met.
After due consideration of various alternatives, the directors have decided
that the granting of options rather than the outright sale of shares to
staff would offer a more acceptable incentive to staff.
The directors will therefore propose appropriate resolutions in a general
meeting of shareholders to give effect to this change. These resolutions
will involve the cancellation of the sales of shares to the staff and equal
replacement with share options. This will also lead to the Group buying back
the shares from the Staff Share Trust (27,270,000 shares) and the
cancellation thereof. It is expected that this will result in a one-off cost
(non-cash) of less than R5m, based on current market prices for the Group's
shares.
A formal announcement in this regard will be sent to shareholders in due
course.
Dividend Policy
The directors have reviewed the Group's cash requirements and have decided
to institute a policy of paying dividends twice annually, amounting to
approximately one third of headline earnings per share. This policy will be
reviewed regularly and may be changed at the discretion of the directors.
Prospects
At the time of our annual 2001 report, potentially good growth in headline
earnings per share were indicated and it was stated that this forecast would
be updated at the time of our interim results announcement.
Although market conditions remain difficult and extremely volatile, current
indications are that the Group can still achieve good growth in headline
earnings per share for the full year.
Dividend declaration
Notice is hereby given that the board has declared an interim dividend of
1.8 cents per ordinary share in respect of the six months ended 31 March
2002. The dividend will be paid on Monday
8 July 2002.
To comply with the procedures of STRATE the last day to trade in the shares
for the purpose of entitlement to the interim dividend is Friday 28 June
2002. The shares will commence trading ex dividend on Monday 1 July 2002 and
the record date will be Friday 5 July 2002.
Share certificates may not be dematerialised or rematerialised between
Monday, 24 June 2002 and Friday, 5 July 2002, both days inclusive.
For and on behalf of the board
RG Goodman (Chairman)
JD Bright (Managing Director)
Directors
RG Goodman (Chairman), JD Bright (Managing), JR Claassen*, DF Coles, Ms RJ
Eliot*, PS Fitzgerald, *, BP Hattingh*, EB Levenstein*, NA Michelson
(Financial), P Terblanche*.
* Non-executive
Registered office
UCS Group Limited
Incorporated in the Republic
of South Africa
Reg. No: 1993/002253/06
20th Floor
209 Smit Street
Braamfontein 2001
ISIN Code: ZAE000016150
Share Code: UCS
www.ucs.co.za
Income statement
for the period ended 31 March 2002
The interim results for the period ended 31 March 2002 have been reviewed by
the auditors, Kaplan and Kaplan, and are consistent with the groups
accounting policies and in compliance with the South African Statements of
Generally Accepted Accounting Practice. The review opinion is available for
inspection at the company's offices.
Reviewed Reviewed Audited
6 months 6 months Percentage 12 months
31/03/2002 31/03/2001 change 30/09/2001
R'000 R'000 R'000
Revenue 100,655 78,846 27.7% 176,573
Profit from operations
before interest,
depreciation and research
and development 22,060 19,558 12.8% 45,756
Research and development
expenditure (6,506) (4,799) 35.6% (11,773)
Depreciation and
amortisation (5,876) (4,036) 45.6% (8,632)
Profit before interest and
investment income 9,678 10,723 -9.7% 25,351
Net interest and investment
income 3,905 5,193 -24.8% 9,262
Profit before taxation 13,583 15,916 -14.7% 34,613
Taxation (1,431) (2,595) -44.9% (6,269)
Minority share of
subsidiary loss (earnings) 218 (68) -420.6% (174)
Net profit for the period 12,370 13,253 -6.7% 28,170
Earnings per share
attributable (cents) 4.8 4.9 -2.0% 10.5
Adjusted for: (net of taxation)
Amortisation of
intangible assets 0.5 0.3 0.8
Headline earnings
per share (cents) 5.4 5.2 3.8% 11.3
Cash flow per share (cents) 5.9 0.6 883.3% 7.2
Net asset value per share 72.1 61.9 16.5% 67.9
Net tangible asset
value per share 59.1 51.0 15.9% 57.3
Ordinary shares in issue
(excl shares held
in treasury) 251,436 264,561 -5.0% 263,255
Weighted average of
ordinary shares in issue 257,071 271,344 -5.3% 267,626
Balance sheet
at 31 March 2002
Reviewed Reviewed Audited
6 months 6 months 12 months
31/03/2002 31/03/2001 30/09/2001
R'000 R'000 R'000
ASSETS
Non current assets 86,773 72,237 76,521
Property, plant and equipment 18,984 16,979 17,729
Goodwill and trademarks 33,408 29,612 28,166
Investments and loans 30,983 25,646 29,353
Deferred taxation 3,398 - 1,273
Current assets 130,149 115,726 129,849
Inventories 4,363 2,701 3,505
Receivables 40,581 36,658 38,148
Cash 82,723 76,367 88,196
Taxation 2,481 - -
Total assets 216,922 187,963 206,370
EQUITY AND LIABILITIES
Capital and reserves
Shareholder's interest 185,259 168,066 181,608
Non current liabilities 2,443 562 454
Minority shareholders in
subsidiary 1,978 68 174
Long and medium term loans 306 415 280
Deferred taxation 160 79 -
Current liabilities 29,220 19,335 24,308
Payables 24,993 19,335 22,638
Current portion of long term
loans 116 - 16
Taxation 4,111 - 1,654
Total equity and liabilities 216,922 187,963 206,370
Statement of changes in equity
for the period ended 31 March 2002
Share Preference Share Distributable
capital share capital premium reserves Total
R'000 R'000 R'000 R'000 R'000
Balance at 30
September 2001 1,317 20 79,158 101,113 181,608
Treasury shares
acquired (59) (8,660) (8,719)
Attributable earnings
for the period 12,370 12,370
Balance at 31 March
2002 1,258 20 70,498 113,483 185,259
Segmental information
for the period ended 31 March 2002
Business segments
Reviewed Reviewed Audited
6 months 6 months Percentage 12 months
31/03/2002 31/03/2001 change 30/09/2001
R'000 R'000 R'000
Revenue 100,655 78,846 27.7% 176,573
Retail solutions 69,250 52,994 30.7% 122,759
Non retail solutions 31,405 25,852 21.5% 53,814
Corporate - - 0.0% -
Profit (loss) from operations 22,060 19,558 12.8% 45,756
Retail 18,500 16,956 9.1% 39,625
Non retail 5,792 4,368 32.6% 10,243
Corporate (2,232) 1,766 26.4% (4,111)
Cashflow statement
for the period
ended 31 March 2002
Reviewed Reviewed Audited
6 months 6 months 12 months
31/03/2002 31/03/2001 30/09/2001
R'000 R'000 R'000
Cash flow from operating activities 15,102 165 19,256
Cash generated from operations 15,554 14,685 33,939
Working capital changes (936) (8,295) (11,592)
Cash generated from operating
activities 14,618 6,390 22,347
Investment income and net
finance cost 3,905 5,193 9,262
Taxation (3,420) (11,418) (12,353)
Cash applied to investing activities (14,004) (16,899) (24,641)
Cash applied to financing activities (6,571) (6,409) (5,929)
Cash and cash equivalents
- Net change (5,473) (23,143) (11,314)
- At beginning of period 88,196 99,510 99,510
- At end of period 82,723 76,367 88,196
UCS Group boosts revenuein difficult trading climate
UCS GROUP LIMITED
PRESS RELEASE
UCS interims
UCS Group Limited, backed by a strong focus on the provision of software
solutions and associated IT services into the South African retail industry,
has reported a 28 percent increase in revenue for the six months ended 31
March 2002.
Describing trading conditions for the period as "extremely difficult", group
managing director John Bright said the increase in revenue (from R78.8-
million to just over R100-million) reflected continuing and pleasing growth
in the group's footprint in its chosen markets.
"It is particularly encouraging to note that 27 percent of the 28 percent
increase in revenue was directly attributable to organic growth in the
group's core operations and that only one percent came from acquisitions,"
he said.
Bright points out that strong revenue growth was slightly off-set by the
difficult trading conditions that continue to characterise the South African
retail sector.
"Customers throughout the group's primary markets have cut back dramatically
on IT budgets in the face of an extremely challenging and volatile economic
climate. Fierce competition, particularly for certain categories of
products, contributed to a lower than expected increase of 14 percent in
operating income before research and development, depreciation, amortisation
and interest.
"However, the group's commitment to the sale of its own technology and
services, as well as the generation of sustainable annuity income revenue
streams, continues to help avoid the full impact of the negative sentiment
in the market," said Bright.
Revenue from sustainable annuity income grew by some 23 percent for the
period to R58.9-million (R48-million in 2001). Attributable earnings came in
seven percent lower at R12.4-million (2001: R13.3-million) and earnings per
share declined marginally to 4.8 cents (2001: 4.9c). Headline earnings per
share grew by 4 percent to 5.4 cents (2001: 5.2c).
The group continues to channel substantial investments into its research and
development programme and during the period increased spending in this area
by 36 percent to R6.5-million on the same period last year.
"These investments are starting to bear fruit. During the period, the
group's new flagship Linux and Java-based retail solutions platform, a major
target for our R&D efforts, was released with a fully customised solution
being successfully commissioned into a furniture chain of 32 stores," said
Bright.
At an operational level cash flow from activities improved dramatically to
R15.1-million - up R14.9-million on the same period last year. Bright said
this aspect of the business would continue to be a major ongoing focus for
management.
Bright also announced plans to restructure the group's staff share trust.
"The group's share price has settled at a level where the objectives of the
staff share trust are not being met. To address this issue the directors
have decided that the granting of options rather than the outright sale of
shares to staff would offer a more acceptable method of attracting,
retaining and rewarding staff," he said.
A formal announcement on proposed changes to the staff share trust will be
made in due course.
For the first time since its listing in 1998, the UCS board has declared a
dividend.
"After a careful review of cash requirements, the group has decided to
institute a policy of paying dividends twice a year. The dividend will
amount to approximately one third of headline earnings per share. This
policy will be reviewed regularly and may be changed at the discretion of
the directors," Bright said.
A dividend of 1.8 cents per share has been declared.
Ends
For further information contact:
UCS Group Limited
Dean Sparrow
Financial Manager
Tel: (011) 712-1539
Fax: (011) 339-3421
Cell: 082 494 6803
e-mail: dcs@jhb.ucs.co.za
ISIN Code: ZAE000016150
Share Code: UCS
