UCS Group is planning to split into two entities, with one listing on a foreign exchange within three years while the other will continue as its SA-listed operation, says a UCS Solutions director.
According to Jessica Knight, a director of UCS Solutions (formerly Affinity Logic), in terms of the strategy, UCS Solutions would continue as the SA-listed operation, while UCS Software would be listed overseas.
"We have set ourselves a target to double the size of UCS`s services business by 2007 - to a turnover of about R500 million. This would enable the software business to be unbundled and UCS Solutions to remain as the JSE-listed entity."
Knight says UCS Solutions` target is to achieve margins of more than 20% and the implied compound annual growth in turnover would be 26%.
Emphasis on growing the business would be through organic growth. However, Knight says complementary acquisitions have not been ruled out.
UCS Solutions has completed its transformation after being bought by UCS from its previous shareholder Datatec for R19.3 million plus settlement of R44 million in debt. UCS Group had to take out a short-term loan to finance the deal and this was repaid in the first quarter of this year. UCS Group now has cash resources of about R63 million.
UCS Solutions originally grew out of the Massmart and Datatec alliance that aimed to serve the retail sector. It continues to do business with 17 of the top 34 retail firms in the country.
Knight says IT services spending in the retail and the wholesale industries is accelerating and expected to grow by 13% per annum over the next few years.
"IT services spending is expected to reach R3.6 billion (in terms of external spending) within the next three years," she says.
UCS Group recently indicated and then withdrew its interest in acquiring troubled ICT group CS Holdings, citing "environmental conditions" while expressing satisfaction with the company.
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