All of UCS Group`s operating subsidiaries were adversely affected by the Y2K slowdown, with divisions with the lowest percentage of annuity revenues being the hardest hit, says MD John Bright.
"This was countered by growth of some 15% in the installed base of retail stores in the group`s flagship subsidiary, Universal Computer Services, during the second half of the last financial year."
The JSE-listed group, which focuses on the provision of software, software development of customised applications, IT-enabled business solutions and applications and hosting services, lifted headline earnings per share 13.2% to 7.01c for the six months to 31 March 2000.
Operating income before depreciation and interest dropped 5.3% to R16.6 million (1999: R17.5 million) on turnover which was 25.9% up at R63.2 million (R50.2 million).
Net income before tax was up 1.9% to R24.4 million (R23.9 million), with attributable income 11.3% higher at R18.2 million (R16.4 million).
No interim dividend has been declared.
Bright says the results for the period reflect the difficult market conditions predicted when the group reported its year-end results in November last year.
"Most businesses serviced by the group`s subsidiaries took the decision not to replace application software during the months immediately preceding and following the millennium change. This severely restricted new sales and installations of application solutions."
Bright says the Y2K slowdown appears to be receding and he is optimistic that sales should improve significantly during the next six months.
"However, as we remain committed to our strategy of generating predominantly annuity revenue streams, we do not expect to see the full benefits of the improved sales activity on our bottom line in the period to our year-end as it takes 12 months for annuity income to reflect fully."
He says while prospects for all business units look positive, the Universal subsidiary, in particular, is well positioned to resume aggressive expansion of its retail customer base.
Extensive research into overseas markets has resulted in the group launching certain international initiatives that are focused on establishing a successful export market for the group`s application solutions and software technology.
"The group expects that the earnings per share for the second half of the year to September 2000 should exceed the 7.01c achieved for the first half and that strong growth will be achieved in the following year."
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