Software group UCS is pondering delisting after selling off its cash-generative units to Business Connexion (BCX) in a deal that was wrapped up earlier this month.
The company yesterday released its results for the six months to March and reported a net loss from continuing operations. Despite the decline in profitability, the group's shares closed 13.89% ‑ or 5c - higher at 41c.
UCS says it may delist from the JSE, because of its smaller size relative to its peers after it sold the bulk of its business to BCX. Both Mustek and TeleMasters are also considering delisting from the bourse.
BCX bought Accsys, CEB Maintenance Africa, UCS Solutions, UCS Technology Services and UCS's 70% stake in Destiny Electronic Commerce for R614 million. BCX has since sold the Destiny stake to VeriFone Singapore, a subsidiary of VeriFone Systems, for R255 million.
Stripping out the assets that were sold after the end of the first half, revenue from continuing operations moved 12% higher, to R190.6 million.
However, restructuring costs of R17.4 million and research and development costs of R3 million weighed on the bottom line. UCS made a R27.7 million loss from continuing operations, compared with a R1.3 million profit a year ago.
Profit from its discontinued operations was R40.2 million, compared with R23.4 million a year ago, a 71.5% gain. Earnings per share across all its businesses came in 53.5% lower, at 3.3c.
Targeting profit
Sparrow says the board has been debating whether UCS should remain on the Johannesburg bourse, because of the cost involved compared with its reduced size. He adds that a listing is prejudicial to the company, because it is required to be transparent, while building up its software business, which could see competitors gain an advantage.
Sparrow says the loss from continuing operations was expected as the units it sold to BCX were very cash generative. However, the sale leaves the company free to focus on building its software assets.
UCS is now focusing on getting its software unit back onto a sound footing and embedding Cordys into its offerings, says Sparrow. UCS has an exclusive deal with Cordys until February 2013.
Sparrow says this year UCS will focus on product launches and then, in 2013, will look at taking the product range international. He says the key focus is to get Cordys embedded and then get products to market by September.
UCS incurred R17.4 million in costs to restructure Argility, which it bought last May for R44.2 million. Sparrow says 48 staff members accepted voluntary retrenchment packages and the unit will now save R2 million a month in costs.
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