IT holding company UCS Group increased its net profit by 16.7% to 19.33 million in the year to 30 September, a period the group describes as both challenging and rewarding.
<B>Salient figures</B>
UCS Group results for the year to 30 September 2003.
Figures for the previous year in parentheses.
Revenue: R306.22m (R216.27m)
Profit before interest, depreciation, R&D and exceptionals: R66.19m (R47.28m)
Profit before tax: R24.01m (R17.04m)
Net profit: R19.33m (R16.57m)
HEPS: 10.3c (9.1c)
NAV per share: 77.5c (72.3c)
Current assets: R146.73m (R107.8m)
Cash and equivalents: R73.91m (R63.08m)
Current liabilities: R106.18m (R29.31m)
Cash flow from operating activities: R40.4m (R24.86m)
Cash generated from operations: R41.26m (R30.68m)
Revenue grew by 41.6% from R216.27 million to R306.22 million. CEO John Bright says organic growth was 12% while the balance came from current- and prior-year acquisitions. Annuity revenue grew by 40% to R175 million, representing 57% of total turnover.
"As expected, the continuation of harsh trading conditions hampered organic growth and kept trading margins under pressure," Bright says. "For the third successive year prices for IT products and services were governed by a buyer`s market, with intense competition for the limited business available."
For the first time, the balance sheet reflects material borrowings of about R26 million (15% of equity) as a result of the mainly cash-based acquisition of Affinity Logic.
"Although our cash position has improved by R21 million since the interim stage, to close at R74 million, we have acquired some R24 million in short-term debt, which will be repaid at the end of the first quarter in 2004," Bright says.
He says the strengthening of the rand against most major currencies over the past year will make export initiatives less profitable than previously projected. "However, we remain convinced that our products are competitively positioned in our chosen markets."
The pressure on margins is expected to continue and Bright expects the first half of the new financial year to be very challenging in this regard as UCS`s overhead structure increases ahead of the annuity revenue streams contained in its order books.
The UCS share was trading at 107c on the JSE at midmorning today, 2c or 1.9% up on yesterday`s close.
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