The UCS Group experienced a tough year, but succeeded in streamlinging the business and reducing its exposure to large-scale project work which is of a once-off nature.
Although this had an impact on growth, the group was able to improve visibility and control of future cash flows, whiile continuing to reduce debt.
Announcing its year-end results UCS Group notes that strategic progress was made during the period, the two main highlights being:
* The exclusive collaboration agreement for international retail markets between UCS and Jan Baan’s Cordys operation, headquartered in the Netherlands, signed on 2 February 2010. This agreement enables UCS to leverage the Cordys multi-billion rand Service Orientated Architecture related platform investment with our deep domain expertise in retail, to develop and evolve both on-premise and off-premise retail solutions.
* The acquisition of a 56% interest in Cquential Solutions, a Software as a Service (SaaS) solution for warehouse and distribution operations with effect from 1 April 2010. This acquisition positions UCS with a complementary product offering to that of Aquitec.
"In addition, good progress was made towards the consolidation of the ownership, management, development and commercial exploitation of the retail software Intellectual Property that the group owns, including the conclusion of the acquisition of a 100% shareholding in Argility," the group states. "This initiative also involved the creation, with effect from 1 October 2009, of UCS Technology Services, a services business separated from the software business."
The group’s revenues, on a continuing basis, grew by 9,4% to R644-million (2009 restated: R588-million), of which 7,7% represents organic growth. The acquisitive growth is attributable to UCS Solutions Inc, in which the Group, through its wholly owned UK holding company Universal Computer Software UK, converted its loan funding into a 92,5% equity interest in February 2009.
Annuity revenues grew by 9,5% to R356-million (2009 restated: R325 million), representing 55% of total revenues (2009 restated: 55%) and 81% of cash overheads.
Profit from operations before interest, amortisation, depreciation, impairments and foreign exchange differences (EBITDA) increased by 14,8% to R92,2-million (2009 restated: R80,3-million) representing a margin improvement of 15% to 14,3% from the reported EBITDA margin as at the 2009 financial year end of 12,4%.
The foreign exchange differences, mainly attributable to the translation of foreign loan accounts with subsidiary companies, totalled some R7-million representing a 91,6% increase on the prior comparable loss associated with translation differences of R3,7-million (restated).
Finance charges, net of interest and investment revenues, decreased by 16% to R8,5-million (2009 restated: R10,1-million) attributable to the decreased borrowings in the group as a consequence of debt repayments in line with repayment terms as well as the decrease in the prime rate of lending by three basis points since April 2009.
These factors contributed to an increase of 90,7% in profit before tax to R45,7-million (2009 restated: R23,9-million).
Profit for the period increased by 330,3% to R24,7-million (2009 restated: R5,7-million). After taking into account the loss from discontinued operations in the prior period, the profit attributable to UCS shareholders of R20,3 million, after minority interests, represents an increase of 7 181% from the comparable prior period.