Better placed than most
UCS’S ????? FOCUS FALLS predominantly on South Africa’s retail sector, where it’s considered to be a leader in proprietary in-store retail intellectual property (IP). The company, which traditionally focused exclusively on the local market, is now exploring numerous international opportunities leveraging its SA-based IP.
The group recorded a sturdy financial performance in the year to 30 September 2008, with revenue increasing 14,5% to R1,2bn, of which 10,1% was organic, with 4,4% of that attributable to current and prior year acquisitions. Headline earnings per share declined by 8% to 31,9c, largely due to interest and tax increases plus the slightly higher number of shares in issue.
Finance costs paid almost doubled to R16m following a substantial increase in long-term loans from R148m to R215m. That was the result of acquisition finance raised to buy CEB Maintenance, which specialises in “man-in-van” IT services for large-scale, blue chip retail operators. Nevertheless, gearing remains acceptable at 42%. On a normalised basis (earnings excluding one-off profits) EBITDA increased 11,2% to R195m. That excludes profit of R74m in the year before from the profit of the Argility unbundling, the sale of the network division to Internet Solutions and abnormal profits attained in 2008 (in negative goodwill and loan account translation that formed part of the Aquitec acquisition).
However, UCS’s price didn’t escape the market carnage. Its price has moved between 150c and 350c/share over the past 12 months and is currently trading at around 170c. Nevertheless, UCS increased its dividend payments to R39m (2007: R24m), equating to dividends per share of 9c. While the global market turmoil could delay software listing plans and revenue expectations as companies delay spending plans, with 80% of revenues coming from its own IP and in excess of 60% of turnover being annuitybased income derived from the provision of end-to-end services to retail customers, UCS is better placed than some competitors to ride out the current global crisis.