UCS Group achieved a net profit of R34.75 million for the year to September, representing a 40.6% increase on the R24.71 million of the previous year.
Earnings per share rose 39.4% from 10.4c to 14.5c, while headline earnings were up 21.9% at 14.5c, compared with 11.9c previously.
CEO John Bright says the higher growth in earnings per share is a result of the change in accounting treatment of goodwill write-offs in terms of the revised AC140 (IFRS3) accounting standard.
However, he says the quality of the earnings growth is illustrated by a 23.7% increase in cash generated from operations per share to 31.3c, compared with 25.3c previously.
Revenue of R516.72 million compares with a restated previous figure of R459.12 million. Revenue for the year to 30 September 2004 was originally put at R486.29 million.
The company`s previous results accounted as revenue billings representing the recovery of direct costs incurred on behalf of certain customers and for which UCS earned no margin. The group says the difference between gross billings and revenue has been reallocated to cost of sales.
It adds that the restatement and reallocation have no effect on net profit.
Cash applied to investing activities rose sharply, from R45.02 million to R67.43 million. Bright says this is mainly because of the refresh of the central hardware infrastructure at UCS Solutions and the roll-out of the satellite network.
The result was a 19.4% drop in the group`s cash and cash equivalents, from R51.02 million at the end of September last year to R41.11 million on 30 September this year.
"As a result of these investment activities, the current ratio of 1.3 (2004:1.4) is still below the group`s minimum policy target of 1.5 and this will be a management priority in the coming year," Bright says. A current ratio indicates how many times short-term debts could be paid out of short-term assets.
Bright describes 2005 as a year of consolidation and positioning for the future. All the group`s businesses traded profitably during the period, although penetration in the UK market has been less than expected.
He adds that the group is optimistic that earnings growth for the 2006 financial year could exceed that of the 2005 year.
"The earnings for the first half of the 2006 financial year, which includes the traditional South African holiday periods, are forecast to be less than that for the second half of the 2005 financial year due to less billable time," he says.
UCS`s board has declared a final dividend of 3c a share, to be paid on 13 February. The share was trading at 144c by midmorning today, up 4c or 2.9% from yesterday`s close.
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