Bet­ter placed than most

Finweek English Edition - - Companies & Markets - LAUREN COLE lauren.cole@fin­week.com

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.

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