|
UCS
UCS
UCS Group Limited - Interim Financial Results Reviewed Results For The Six
Months Ended 31 March 2006
UCS Group Limited
Incorporated in the Republic of South Africa
Reg no 1993/002253/06
ISIN ZAE000016150
Share code UCS
INTERIM FINANCIAL RESULTS REVIEWED RESULTS FOR THE SIX MONTHS ENDED 31 MARCH
2006
- Revenue growth +43%
- Annuity revenue growth +48%
- EBITDA growth +64%
- HEPS growth +52%
- Cash generated
- from operations growth +52%
John Bright, CEO, commented:
"We are pleased with these results which show good growth on the top line
together with modest margin improvements across the Group, reflecting initial
benefits of our continuing `drive for efficiency" program. In addition, CEB
Maintenance delivered outstanding results, trading ahead of their targets. We
are optimistic that UCS Group will continue the earnings growth trend in the
second half of the 2006 financial year, albeit at a possibly slower comparative
pace given the strong performance in the second half of the 2005 financial
year."
Enquiries
UCS Group 011 712 1249
John Bright, CEO
Dean Sparrow, CFO 082 494 6803
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Income statement for the period ended 31 March 2006
Reviewed Restated Restated
6 months 6 months 12 months
31/3/2006 31/3/2005 30/9/2005
R"000 R"000 % change R"000
Revenue 355 596 249 063 42,8 516 722
Profit from 63 023 43 105 46,2 92 418
operations before
interest,
depreciation,
amortisation and
research and
development
Research and (10 209) (10 877) (6,1) (19 185)
development
expenditure
Depreciation and (20 907) (17 219) 21,4 (34 940)
amortisation
Profit before 31 907 15 009 112,6 38 293
interest and
taxation
Interest received 528 886 (40,4) 1 704
Interest paid (3 813) (867) 339,8 (2 717)
Profit before 28 622 15 028 90,5 37 280
taxation
Taxation (6 729) (2 200) 205,9 (2 977)
Profit for the 21 893 12 828 70,7 34 303
period
Attributable to: 21 074 12 543 68,0 33 482
Equity holders of
the parent
Minority interest 819 285 187,4 821
Earnings per
share (cents)
Basic 8,7 5,3 64,2 14,0
Diluted 8,0 4,7 70,2 12,7
Dividends paid 3,0 2,3 30,4 4,3
per share (cents)
Net asset value 97,8 86,0 13,7 92,6
per share (cents)
Ordinary shares 244 939 239 627 2,2 241 857
in issue ("000)
Weighted average 242 192 239 540 1,1 239 975
number of
ordinary shares
in issue
Diluted number of 263 102 265 354 (0,8) 263 109
ordinary shares
("000)
Headline earnings
per share (cents)
Basic 8,2 5,4 51,9 14,0
Diluted 7,5 4,8 56,3 12,7
Balance sheet at 31 March 2006
Reviewed Restated Restated
31/3/2006 31/3/2005 30/09/2005
R"000 R"000 R"000
ASSETS
Non-current 252 792 197 736 218 213
assets
Property, plant 50 354 45 917 52 193
and equipment
Intangible 80 474 54 843 65 634
assets
Goodwill 97 338 74 139 74 139
Investments and 7 674 5 734 6 926
loans receivable
Deferred tax 16 952 17 103 19 321
assets
Current assets 172 583 122 478 134 478
Inventory 19 991 8 367 9 196
Trade and other 116 313 81 477 83 297
receivables
Taxation 683 805 879
Cash and cash 35 596 31 829 41 106
equivalents
Total assets 425 375 320 214 352 691
EQUITY AND
LIABILITIES
Capital and 241 782 207 116 225 347
reserves
Equity 239 622 206 138 223 953
attributable to
equity holders
of the parent
Minority 2 160 978 1 394
interest
Non-current 42 442 29 736 24 639
liabilities
Long- and medium-31 550 11 155 9 902
term loans
Revenue received 10 892 18 581 14 737
in advance
Current 141 151 83 362 102 705
liabilities
Trade and other 103 654 59 939 87 530
payables
Current portion 24 306 5 391 4 915
of long-term
loans
Revenue received 10 149 12 123 8 784
in advance
Taxation 3 042 455 1 476
Bank overdraft - 5 454 -
Total equity and 425 375 320 214 352 691
liabilities
Cash flow statement for the period ended 31 March 2006
Reviewed Restated Restated
6 months 6 months 12 months
31/3/2006 31/3/2005 30/9/2005
R"000 R"000 % change R"000
Cash flow 19 334 (5 252) 47 097
from
operating
activities
Cash 50 269 33 035 52,2 75 251
generated
from
operations
Working (15 643) (28 944) (10 654)
capital
changes
Cash 34 626 4 091 746,4 64 597
generated
from
operating
activities
Investment (2 215) 19 (1 013)
income and
net finance
cost
Dividend (7 489) (5 626) (10 588)
paid
Taxation (5 588) (3 736) (5 899)
Cash applied (45 956) (30 679) 49,8 (67 425)
to investing
activities
Cash 21 112 11 291 87,0 10 419
received
from
financing
activities
Cash and
cash
equivalents
- Net (5 510) (24 640) (9 909)
decrease
- At 41 106 51 015 51 015
beginning of
the year
- At end of 35 596 26 375 35,0 41 106
period
Segmental analysis for the period ended 31 March 2006
Reviewed Restated Restated
6 months 6 months 12 months
31/3/2006 31/3/2005 30/9/2005
R"000 R"000 % change R"000
Revenue 355 596 249 063 42,8 516 722
Software 163 418 146 263 11,7 289 930
Solutions & 192 178 102 800 86,9 226 792
Services
Profit from 52 814 32 228 63,9 73 233
operations
before interest
and
depreciation
and
amortisation
Software 19 810 13 784 43,7 33 419
Solutions & 35 414 20 187 75,4 44 107
Services
Corporate and (2 410) (1 743) (4 293)
eliminations
Profit before 31 907 15 009 112,6 38 293
interest and
taxation
Software 8 680 5 352 62,2 16 265
Solutions & 26 205 11 752 123,0 27 027
Services
Corporate and (2 978) (2 095) (4 999)
eliminations
Note:
Comparative
figures are
reclassified,
where
necessary, in
accordance with
current year
classifications
Statement of changes in equity for the period ended 31 March 2006
Prefe Share- Foreign Attribu
rence based currenc table
y to
equity
Share share Share payment Trans- Accumu- holders Mino- Total
s lation lated of rity
capita Capi- Prem- reserve reserve profit the Inte- equity
l tal ium parent rest
R"000 R"000 R"000 R"000 R"000 R"000 R"000 R"000 R"000
Bal- 1 197 40 61 876 - - 134 948 198 061 810 198 871
ance
at 1
Octo
ber
2004
as
prev
ious
ly
repo
rted
Net 4 248 (4 465) (217) (217)
IFRS
adju
stme
nt
to
equi
ty
IFRS 4 248 (4 248) - -
2
Shar
e-
base
d
paym
ents
open
ing
bala
nce
IAS - (217) (217) (217)
38
Inta
ngib
le
asse
ts
open
ing
bala
nce
adju
stme
nt
Bala 1 197 40 61 876 4 248 - 130 483 197 844 810 198 654
nce
at 1
Octo
ber
2004
as
rest
ated
Ordi 1 104 105 - 105
nary
shar
es
issu
at a
prem
ium
Net 1 106 12 543 13 649 285 13 934
prof
it
for
the
peri
od
as
rest
ated
Net 11 393 11 393 285 11 678
prof
it
for
the
peri
od
as
prev
ious
ly
repo
rted
IFRS 1 106 (1 106) - -
2
Shar
e-
base
d
paym
ents
tran
siti
on
adju
stme
nt
IFRS 1 985 1 985 1 985
3
adju
stme
nt
proc
esse
d at
2005
fina
ncia
l
year
end
IAS 271 271 271
38
Inta
ngib
le
asse
ts
tran
siti
on
adju
stme
nt
Exch 49 49 49
ange
diff
eren
ces
aris
ing
on
tran
slat
ion
of
fore
ign
enti
ty
Divi (5 509) (5 509) (117) (5 626)
dend
paid
Bala 1 198 40 61 980 5 354 49 137 517 206 138 978 207 116
nce
at
31
Marc
h
2005
as
rest
ated
Ordi 7 891 898 898
nary
shar
es
issu
at a
prem
ium
Pref 4 (4) - -
eren
ce
shar
es
conv
erte
d to
ordi
nary
shar
es
Pref (1) (40) (41) (41)
eren
ce
shar
es
repu
rcha
sed
Net 705 20 939 21 644 536 22 180
prof
it
for
the
peri
od
as
rest
ated
Net 21 372 21 372 536 21 908
prof
it
for
the
peri
od
as
prev
ious
ly
repo
rted
IFRS 705 (705) - - -
2
Shar
e-
base
d
paym
ents
tran
siti
on
adju
stme
nt
IAS 272 272 - 272
38
Inta
ngib
le
asse
ts
tran
siti
on
adju
stme
nt
Exch 156 156 - 156
ange
diff
eren
ces
aris
ing
on
tran
slat
ion
of
fore
ign
enti
ty
Divi (4 842) (4 842) (120) (4 962)
dend
paid
Bala 1 209 35 62 831 6 059 205 153 614 223 953 1 394 225 347
nce
at
30
Sept
embe
r
2005
as
rest
ated
Ordi 10 1 209 1 219 1 219
nary
shar
es
issu
at a
prem
ium
Pref 6 (6) - -
eren
ce
shar
es
conv
erte
d to
ordi
nary
shar
es
Pref (2) (57) (59) (59)
eren
ce
shar
es
repu
rcha
sed
Incr 731 731 731
ease
in
shar
e-
base
d
paym
ents
rese
rve
Net 21 074 21 074 819 21 893
prof
it
for
the
peri
od
Exch 39 39 39
ange
diff
eren
ces
aris
ing
on
tran
slat
ion
of
fore
ign
enti
ty
Divi (7 335) (7 335) (154) (7 489)
dend
paid
Mino - 101 101
rity
acqu
ired
shar
e of
equi
ty
in
subs
idia
ry
Bala 1 225 27 63 983 6 790 244 167 353 239 622 2 160 241 782
nce
at
31
Marc
h
2006
Notes to the financial statements for the period ended 31 March 2006
1 Basis of preparation
With effect from 1 October 2004 ("the transition date"), the Group has adopted
International Financial Reporting Standards ("IFRS") making use of certain
exemptions provided for under IFRS 1 (First time adoption of IFRS). These
interim results are prepared in accordance with IAS 34 (Interim Financial
Reporting), the listing requirements of the JSE Limited and Schedule 4 of South
African Companies Act, 1973.
The adoption of these new and revised standards and interpretations has resulted
in changes to the Group"s accounting policies in the following areas that have
affected the amounts reported for the current and/or prior years:
- share-based payments (IFRS 2)
- business combinations (IFRS 3)
- intangible assets (IAS 38)
The Group also assessed the requirements of IAS 16 (property, plant and
equipment) in terms of considering the useful lives and the residual values of
property, plant and equipment when calculating the depreciation charge. The
historical impact of this assessment was found to be immaterial and no
retrospective adjustment has been passed in this regard. The Group will reassess
the residual values and useful lives of the assets at each balance sheet date to
determine whether there is any requirement for the residual values and
depreciation charge to be adjusted at that stage.
Share-based payments
The fair value, as calculated in accordance with IFRS 2, of share options and
incentive preference shares granted to employees is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and expensed over the period during which the employees are required
to provide services in order to receive the equity instruments (ie the vesting
period). The Group has elected not to apply the provisions of IFRS 2 to share-
based awards granted either on or before 7 November 2002 or that had vested by 1
January 2005 (the effective date of IFRS 2).
Business combinations
The Group has elected not to apply the requirements of IFRS 3 retrospectively to
acquisitions prior to the transition date. As a result the goodwill, net of
amortisation, at the transition date becomes the carrying value of the goodwill
thereafter.
Intangible assets
IAS 38 requires that the useful life of intangible assets be reassessed at each
balance sheet date. Under SA GAAP the useful life of an intangible asset was
determined on recognition of these assets and amortised accordingly. The Group
historically amortised intangible assets, excluding goodwill, over a fixed 10-
year period.
Reconciliation of changes in basis of preparation
Previously IFRS ad- Other ad-
reported justments justments(*) Restated
2005 2005 2005 2005
R"000 R"000 R"000 R"000
Balance sheet
reconciliation
As at 31 March
2005
Shareholders" 204 147 54 1 937 206 138
interest
Deferred tax 16 988 (69) 184 17 103
assets
Property, 52 117 (6 200) - 45 917
plant &
equipment
Intangible 45 709 6 323 2 811 54 843
assets
Trade and 58 880 - 1 059 59 939
other payables
As at 30
September 2005
Shareholders" 223 627 326 - 223 953
interest
Deferred tax 19 459 (138) - 19 321
assets
Property, 58 423 (6 230) - 52 193
plant &
equipment
Intangible 58 940 6 694 - 65 634
assets
(*) The other adjustments relates to goodwill amortisation as well as the
treatment of an operating lease on a straight-line basis. The Group adjusted for
this in the financial year ended 30 September 2005 but had not taken the
adjustments into account at the time of releasing the interim results in May
2005.
2 Reconciliation of earnings per share to headline earnings per share
Reviewed Restated Restated
6 months 6 months 12 months
31/3/2006 31/3/2005 30/9/2005
Cents Cents % change Cents
Basic 8,7 5,3 64,2 14,0
earnings per
share
Adjusted
for:
- permanent 0,3 - -
dimunition
in proceeds
from sale of
business
- profit on (0,7) - -
sale of
interest in
business
- profit on (0,1) 0,1 -
disposal of
property,
plant &
equipment
Basic 8,2 5,4 51,9 14,0
headline
earnings per
share
Commentary
OPERATIONAL OVERVIEW
The results for the six-month period under review represent a solid performance
by the Group. Most of the operating business units within the Software division
as well as the Solutions and Services division have achieved or exceeded first-
half profit targets.
Software Division
Overall the division showed an improvement in operating margin on the back of
organic growth of 11,7%. CKS"s successes in the Building Supplies sector
compensated for tough trading conditions in the Pharmacy sector. GAAP showed
solid growth of 39,5% in turnover while UCS Software is well positioned with new
products improving their competitive positioning.
Solutions and Services Division
The Solutions Division"s results reflect positive trade and growth in each of
the divisions and also the incorporation of CEB Maintenance from 1 October 2005.
This translated into revenue growth of 86,9% and EBITDA growth of 75,4%.
A number of material contracts have been entered into across this division and
key projects are on track. The recently announced transaction with Tactical
Software Services (Pty) Ltd will result in further critical mass for this
division and delivers a good black empowerment equity status for the bulk of the
Solutions Division.
FINANCIAL OVERVIEW
Total revenue grew by 43% to R356 million (2005: R249 million), with organic
growth amounting to 22%. The Group continues to focus on growth. Annuity
revenues increased by a pleasing 48% to R235 million (2005: R159 million),
representing 66% of total revenues (2005: 64%).
Research and Development (R&D) expenditure reduced by 6% compared to the first
half of the 2005 financial year. This is in line with management"s efforts to
eliminate duplication in R&D expenditure and results from the consequent focus
on new product development in UCS Software Manufacturing ("UCSSM"), where
product development costs are capitalised until the product is released for sale
in the market.
During the period under review the Software development costs capitalised in
UCSSM amounted to R8,6 million (2005: R5 million). No further costs were
incurred in the set-up and certification of UCSSM which amounted to R2 million
in the prior year comparative period and which were capitalised at that stage.
EBITDA is up 64% at R52,8 million (2005: R32,2 million) and reflects the quality
of the revenue growth realised. The EBITDA margin has improved to 15% of revenue
(2005: 13%). Depreciation and amortisation increased by 21% to R20,9 million
(2005: R17,2 million) which is due predominantly to the acquisition of CEB
Maintenance and the commencement of the amortisation of the UCS Software
Manufacturing set-up costs. Profit before interest and tax is up 113% at R31,9
million (2005: R15,0 million) reflecting an improved PBIT margin of 9% (2005:
6%).
Interest paid was up at R3,8 million (2005: R0,9 million) and includes the
interest incurred on the financing of the CEB acquisition.
These factors contributed to an overall increase of 91% in profit before tax to
R28,6 million (2005: R15,0 million). Taxation charges increased significantly to
R6,7 million (2005: R2,2 million) due to taxable profits being earned in
statutory entities with no accumulated assessed losses. This resulted in a 71%
increase in profit for the period to R21,9 million (2005: R12,8 million). The
minorities" share of subsidiary earnings increased to R0,8 million. The disposal
of 38% of the UKS Subsidiary to a consortium of staff which was effective 1
October 2005 contributed to this increase. The net profit attributable to
shareholders increased by 68% to R21,1 million (2005: R12,5 million).
After a 1,1% increase in the weighted average of ordinary shares in issue to
242,2 million (2005: 239,5 million), earnings per share grew by 64% to 8,7 cents
(2005: 5,3 cents), whilst headline earnings per share grew by 52% to 8,2 cents
(2005: 5,4 cents).
Cash generated from operations grew by 52% to R50,3 million (2005: R33,0
million). Working capital changes resulted in a net outflow of R15,6 million
(2005: R28,9 million) due mostly to the growth in the Group"s accounts
receivable.
Cash applied in investing activities grew by 50% to R46,0 million (2005: R30,7
million) partly due to the acquisition of CEB Maintenance as well as the
investment in product development in UCSSM. The CEB acquisition upfront cash
payment was financed by the raising of acquisition finance which supports the
net cash inflow from financing activities of R21,1 million (2005: R11,3
million).
Headcount at the end of March 2006 was 1 712 (March 2005: 1 132), a growth of
51% which relates predominantly to the CEB Maintenance acquisition.
The Software segment showed a 12% growth in revenue while the Solutions and
Services segment which includes CEB Maintenance, showed an 87% growth in
revenue. The growth in earnings before interest, tax, depreciation and
amortisation ("EBITDA") came in at 44% to R19,8 million (2005: R13,8 million)
for the Software division and 75% to R35,4 million (2005: R20,2 million) for the
Solutions and Services division.
PROSPECTS
We continue to anticipate gradual margin improvements through the `drive for
efficiency" program in the merged UCS Software business unit. The
`commercialisation" program in UCS Software Manufacturing, which operated as a
cost centre during its two year start-up phase, is in progress and should start
to generate direct customer revenues for the first time this year. UCS Solutions
is well placed to continue profitable revenue growth, with CEB Maintenance
adding critical mass on the services side. These factors, together with the
stronger trading period of April to September where traditional South African
holiday periods have less impact on billable time, indicate that the outlook for
the full year is positive.
"We are optimistic that UCS Group will continue the earnings growth trend in the
second half of the 2006 financial year, albeit at a possibly slower comparative
pace given the strong performance in the second half of the 2005 financial
year."
ACQUISITION
On 10 May 2006 UCS Group and UCS Solutions Holdings (Pty) Ltd ("UCS Solutions")
entered into a BEE transaction with Tactical Software Systems (Pty) Ltd and the
shareholders thereof to acquire 100% of the share capital of Quadrant Consulting
Group (Pty) Ltd (which will incorporate the businesses of TSS Business Services
and Quartet) and 60% of the share capital of TSS Managed Services (Pty) Ltd in
exchange for a 25,1% shareholding in UCS Solutions. The transaction is
anticipated to be effective on 1 July 2006 following the successful fulfillment
of the conditions precedent. An announcement released to the market on 11 May
2006 provides further detail to this transaction.
DIVIDEND DECLARATION
Notice is hereby given that the Board of Directors has declared an interim
dividend of 3 cents per ordinary share in respect of the six months ended 31
March 2006. The dividend will be paid on Monday 7 August 2006.
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 July 2006. The
shares will commence trading ex dividend on Monday 31 July 2006 and the record
date will be Friday 4 August 2006.
Share certificates may not be dematerialised or rematerialised between Monday 31
July 2006 and Friday 4 August 2006, both days inclusive.
AUDIT REPORT
These results have been reviewed by Deloitte & Touche and their unqualified
review report is available at the Group"s registered office.
For and on behalf of the Board
DF Coles JD Bright
(Chairman) (CEO)
Company secretary
Corporate Governance CC
UCS Group Limited
Incorporated in the Republic of South Africa
Reg no 1993/002253/06
ISIN ZAE000016150
Share code UCS
Registered office
20th Floor 209 Smit Street
Braamfontein 2001
PO Box 31266
Braamfontein 2017
Transfer secretaries
Ultra Registrars (Pty) Limited
11 Diagonal Street
Johannesburg 2001
PO Box 4844
Johannesburg 2000
Board of directors
Duncan Coles (Chairman), John Bright (CEO), Joseph Claassen*,
Rebecca Eliot*+, Richard Goodman, SC* Bryan Hattingh*,
Neil Michelson (COO), Mntungwa Morojele*, Dean Sparrow (CFO),
Peter Terblanche*.
*Non-executive +British
www.ucs.co.za
Date: 16/05/2006 07:02:13 AM Produced by the JSE SENS Department
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
