UCS Group Ltd. has reported a 75 percent growth in revenue, and raised headline earnings per share by 43 percent for the six months to March 31.
Describing the interim reporting period as "successful" in terms of operational performance and meeting strategic objectives, group CEO, John Bright, says that while the extremely harsh trading conditions experienced by the ICT sector showed signs of improving, the group benefited from a full six months of trading after the acquisition of the Affinity Logic business.
"The acquisition of Affinity Logic -- now renamed UCS Solutions (Pty) Ltd -- made a significant contribution to the increase in turnover of R246 million (US$36 million) from R140 million in the same period last year," says Bright. "However, it was pleasing to note that organic growth accounted for more than 20 percent of the 75 percent increase in group revenue."
He points out that, while UCS Solutions performed well during the six-month period, the full synergistic benefits of the acquisition, as well as other strategic restructuring initiatives underway in the group would not be fully realized for another two to three years.
The group says that revenue growth of 75 percent was matched by a 75 percent increase in annuity revenue to R142 million -- from the 2003 amount of R81 million.
According to UCS its Ebitda growth of 83 percent to R 33.6 million (2003 -- R18.4 million) was partially offset by a 113 percent growth in depreciation and goodwill to R18.9 million (2003 -- R8.9 million) largely as a result of the Affinity Logic acquisition.
It reports an overall increase of 25 percent in profit before tax, to R15.5 million against 2003's R12.4 million, and earnings per share grew by 31 percent. Headline earnings per share, the group notes, increased by 43 percent.
Cash generated from operations, it says, improved by 94 percent to R27.5 million from 2003's figure of R14.2 million. Bright says the board remains cautiously optimistic about the group's prospects for the full year.
"As stated in our annual report, the group has a healthy order book and continues to grow its market share in chosen business sectors. Prospects for the second half of the year remain promising although not without challenges. The focus on the generation of sustainable annuity revenue streams means that overhead structures grow in advance of new business billings and any delays on installations can have a short-term negative impact on margins. In addition, the synergistic benefits of the various restructuring programs currently under way are only expected to flow through to the bottom line in the medium to long term.
"Given these factors, management believes that the group should achieve satisfactory growth in headline earnings per share for the full year," he says.