Unihold`s reorganisation hits operating income

By Iain Scott, ITWeb group consulting editor

Johannesburg, 10 Dec 2001

Unihold`s reorganisation after merging Unihold Business Solutions and Siemens Business Services has resulted in a substantial drop in operating income.

"As part of the process of preparing UBS for the merger, certain non-recurring write-offs totalling R11 million were made. However, a profit of R52.9 million was generated on the disposal of UBS and this is reflected as an exceptional item," says CEO Mike Rolfe.

"The net effect of this reorganisation was that operating income reduced substantially for the 15 months, while attributable earnings increased from R17.5 million to R49.9 million."

The group previously reported its results for the 12 months to end-June, but has changed its year-end to align with that of SBS.

"At the headline level, the company`s continuing operations earned 23.6c for the 15 months. However, headline earnings including discontinued operations reflected a loss of 12.3c per share, compared with 20.9c earned in the previous year."

Rolfe says the merger of SBS and UBS has been completed and all conditions precedent were met. The businesses have been integrated and SBS has won significant new business since then and is operating profitably.

"Prospects are promising and annuity income is expected to grow to 80% of total revenues in the current financial year," he adds.

Unihold announced in September that it was undertaking a complete repositioning that would transform the company.

Gary Harlow stepped down as CEO to take up the same post at offshore subsidiary Pecaso, which Rolfe says is showing substantial growth, despite the turmoil in the international IT markets.

"Pecaso has remained the largest generator of Unihold`s operating income and is in line to meet its forecast for its financial year to 31 March 2002," he adds.

"Continuing strong performance in Pecaso, and the positive results emanating from the merger of UBS and SBS, is expected to result in a positive turnaround in headline earnings performance.

"Unihold has a diversified mix of technology investments with a healthy rand hedge through its investment in Pecaso.

"An upturn in these sectors will enable Unihold to return value to shareholders."

The Unihold share price was unchanged at 150c on the JSE this morning.