A strong performance in the six months to 31 March puts UCS on track to achieve R1 billion in revenue at its year-end, says the JSE-listed software and services company.
In a statement to shareholders this morning, UCS Group CEO John Bright commented: "We are very pleased with this excellent set of results. All businesses have performed broadly in line with expectation. We are optimistic that we'll continue to deliver strong growth in cash earnings for the full year to September 2007."
The company's interim results see revenue climb 43.6%, to R510 million. This was supported by "satisfactory" organic growth and contributions from acquisitions concluded in the second half of the 2006 financial year, said UCS.
Its software division increased revenue by 13.4%, to R185 million, through organic growth, and earnings after research and development, but before interest, depreciation and amortisation (EBITDA), climbed 50%, to narrowly miss the R30 million mark.
The improved margin contribution in this division - up 33%, to 16.1% - provides a good base for further growth, said UCS. The UCS Software Manufacturing unit is still in its early phase of commercial operations and the establishment of a Product Co venture is at an advanced stage, it added.
UCS's solutions and services division was the top performer. During the period, it delivered revenue of R325 million, up 69.2% year-on-year. The department's EBITDA climbed 86.4%, to R66 million.
"CEB Maintenance continued to deliver strong results and has already - 18 months from the effective date of acquisition - exceeded its 24-month profit warranty on the profit before the income tax line. TSS Managed Services appears on track to achieve or exceed its warranted profit for the 12-month period ended 30 September 2007. All other operating business units within the solutions and services division traded well and largely achieved or exceeded budgeted targets," said UCS.
The culmination of the company's half-year performance puts the group on track to record year-end revenue in excess of R1 billion for the first time, said UCS.
IP sell off
In a separate statement to shareholders, UCS said it intended to dispose of certain proprietary products and related intellectual property to a new company, currently named "Product Co". The company aims to unbundle its interests in Product Co by means of a dividend distribution to shareholders.
This proposed move would establish a separate and independent software product business, said UCS, with its primary focus being the creation of a leading brand and product suite for selected verticals in the global retail industry.
It will also allow Product Co to leverage off existing UCS software, intellectual property and products, and in so doing, enable such products to reach their global potential. Additionally, it would enable Product Co to establish a distribution and reseller channel without perceptions of the parent company UCS competing with partners.
The exact parameters of this transaction have yet to be finalised, said UCS, and shareholder approval would be sought before the company proceeded.
However, it noted that as at 31 March, the underlying value of its intellectual property had been independently calculated at R110.9 million.
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