Stronger business and increased revenue for the UCS Group could mean the effects of the country's credit crunch may be stabilising.
This is according to John Bright, CEO of UCS, commenting on the group's financial results for the year ended 20 September 2008.
He says, as a software business that plays in the retail space, there are signs that consumers are slowly returning to better credit patterns and can now afford to take different credit options.
Bright points to the JD Group's results, which were released last week. JD Group is also a customer of UCS. “The fact that they are trading ahead is a positive sign that the consumer credit market is starting to normalise.”
However, the opposite is true for those businesses looking to raise finance for debt, he adds. “Banks are more cautious, following the macro economic climate. They have less appetite and have become more expensive.”
Coming year caution
Bright says, while the credit market is stabilising, there is no guarantee what will happen with the global economic situation. “Not even the best minds in the world can tell us what will happen over the next few years.”
As such, Bright says the UCS Group will continue to trade “business as usual”; however, he adds the company has a contingency plan in place should the climate worsen. “Our business unusual plan includes plans to use more contract employees as opposed to permanent staff. We are also revising the project-by-project model we traditionally used.”
However, he is convinced the company is in a better position than most. He says 80% of the company's revenue is annuity-based and the remaining 20%, which is non-annuity, is predictable.
“We are not relying on product sale. Our customers are part of an upgrade and service contract, which means we are in a better position than international vendors like SAP.”
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