Despite the increase in operating income and headline earnings per share, Unihold management says it is disappointed with its interim financial results. Unihold also announced it has received JSE approval to switch to the IT sector.
Unihold reported a 37% increase in operating income to R15.1 million from R11.1 million and revenue grew from R273 858 to R302 330. Headline earnings per share increased from 8.7c to 12.3c, up 41% for the period to 31 December 1999.
The reported figures have been adjusted to reflect the impact of the disposal of the company`s industrial division. Had the adjustment not been effected, the results would have shown a smaller growth for the period and a decline in headline earnings per share from 14c to the reported 12.3c.
The Unihold board expects the debt-to-equity ratio to increase from the present 10% in the next six months when the company has to settle the remainder acquisition price for UK software company, Access Consulting.
Unihold says it will attempt to keep its debt-to-equity ratio within acceptable limits through the disposal of non-core businesses, including the sale of the Hix Technologies cash shell. Unihold also intends to dispose of its Australian industrial interests and Randata Outdoor for a combined amount of R13.5 million, resulting in a R2.8 million capital profit.
Stating slow-down in IT spend over the Y2K period as the reason for the SA IT division not meeting forecast, the board says the e-commerce and Internet-based solutions businesses incurred development costs in line with models for these types of businesses. It expects to see both divisions reaching monthly profitability by the year-end financial results.
"Profitability in the e-commerce and Internet-based business is expected by the end of the current financial year as industry forecasts show strong growth in these sectors as well as the emergent application service provision and customer relationship management markets," says Gary Harlow, group CEO of Unihold.
"The international IT division has been established with the acquisition of Access Consulting, a niche SAP application software integration business in the UK, contributing significantly to the group`s growth and profitability."
The Unihold board says international IT operations continued to show growth in earnings and margins. The group forecasts an increasing contribution to group profits from offshore sources. "Developments internationally look promising, with the likelihood of further acquisitions that could culminate in a foreign listing of these interests," says Harlow.
The announcement of the interim results coincides with the news that Unihold has secured the nod from the JSE to switch sectors to the main IT board.
The Unihold share price fell back 3% to close at 300c on Friday afternoon. At 11.30am today, the share had dropped to 275c.
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