reviewed results business overview n.
Skip this Video
Loading SlideShow in 5 Seconds..
Reviewed Results & Business Overview PowerPoint Presentation
Download Presentation
Reviewed Results & Business Overview

Reviewed Results & Business Overview

573 Vues Download Presentation
Télécharger la présentation

Reviewed Results & Business Overview

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Reviewed Results& Business Overview for the 12 months ended 30 September 2008 Published on 25 November 2008

  2. Forward looking statement Various remarks that we may makeabout future expectations, plans and prospectsfor the Group or its subsidiariesconstitute forward looking statements Actual results may differ materially from thoseindicated by these forward looking statementsas a result of various important factors

  3. Agenda John Bright – CEO – UCS Group Limited Introduction & trading environment 2008 financial results highlights Dean Sparrow – CFO – UCS Group Limited Group financial review for the year ended 30 September 2008 John Bright – CEO – UCS Group Limited Divisional Review BBBEE Looking Forward Q&A

  4. The UCS Group (‘UCS’) UCS is an IT business with a primary focus on the provisionof Software, Solutions & Services for selected markets UCS has achieved a leadership position in the retail market sector in South Africa and is well positioned for further growth locally and internationally through a number of defined initiatives Currently, over 80% of UCS’s revenues are derived fromthe provision of its own Software, Solutions & Services,rather than the sale of 3rd party products

  5. About us We are a diversified IT Software, Solutions & Services business which adds significant customer value through vertical market focus We are the acknowledged leaders in solutions for the retail market in South Africa and have commenced our international expansion in this vertical The majority of SA’s largest retailers are customers of UCS Group Our software runs in over 15 000 stores Our retail software & solutions touches over 20m South Africans every month We employ more than 2 500 people across the Group We are well positioned for further growth locally & internationally through a number of defined initiatives already in progress

  6. UCS Group 2008 segmental report • SoftwareDivision • (6 trading entities) UCS GroupLimited • Solutions & ServicesDivision • (10 trading entities) UCS Software UCS Solutions CKS CEB Maintenance GAAP TSS MS UCS Software Manufacturing Destiny (incl CSC)* UCS UK Accsys Aquitec UK** UKS • UCS USA Inc** • (t/a Aquitec USA) Fernridge LifeWorld/4Life DiverseIT * Acquisition effective 1st September 2008 ** Acquisition effective 1st March 2008 *** Lifeworld and 4 Life are two associated but separate statutory entities

  7. Trading environment Global slowdown Extremely volatile trading conditions Non-food retail markets under intense pressure Number of major IT projects in speciality retail market reducing & competition intensifying Domestic market Good activity levels in Government sector until Mbeki recall Expect low activity in Government sector until after elections next year As with International markets, non-food retail sector under intense pressure Other UCS trading entities The knock-on effect of reduced consumer confidence and discretionary spend is rippling through most industries Overall, a challenging trading environment for IT businesses like UCS, particularly with a focus on speciality retail

  8. Results highlights Acceptable performance given the tough trading conditions Revenue up 14.5% to R1 226m (2007: R1 071m) Normalised EBITDA up 11.2% to R195m reflecting a margin of 15.9% (2007:16.4%) Normalised PBIT up 16.1% to R130m reflecting an improving margin of 10.6% (2007: 10.4%) Cash generated from operations, aligned with EBITDA up 11.5% to R199m (2007: R179m) Total assets = R1 billion for the first time Return on equity at 22.1%

  9. Dean Sparrow CFO – UCS Group Limited

  10. Income Statement analysis Revenue growth of 14.5% consists of organic growth of 10.1% and the balance related to prior and current year acquisitions Annuity revenue grew by 28.6% to R759m (2007: R590m) Material once off items included in EBITDA and PBIT FY08 related to the acquisition of Aquitec: R5m profit on revaluation of loan account acquired in Aquitec UK R3m negative goodwill arising on acquisition of Aquitec USA Material once off items included in EBITDA and PBIT FY07 were as follows: R66m profit on creation and unbundling of Argility Limited R8m profit on sale of the network business to Internet Solutions The above items have been stripped out to reflect normalised EBITDA and PBIT as highlighted Decrease in the R&D cost associated with the unbundling of Argility Limited and the outsourced product development agreement with UCSSM

  11. Income Statement analysis (continued) Interest paid up substantially (98%) year on year due to increase in debt on balance sheet and the shift from non interest bearing non bank debt to interest bearing bank debt The taxation for 2008 of R 21.5m (2007: R17.9m) comprises: Statutory charge (incl CGT & STC) of R39.9m (2007: R29.6m) Deferred tax credit of R18.4m (2007: R11.7m) Previously unrecognised assessed losses raised in FY08 relating largely to Destiny e Commerce resulted in a credit to taxation of R13.4m(2007: UCS Solutions R10.8m credit) Current year normalised tax rate equates to 27% (2007: 16%) i.e. after removing the once off items (incl tax effect) and adding back the R13.4m (2007: R10.8m) deferred tax credit The Group’s effective tax rate going forward will move closer to the statutory rate of 28%

  12. Income Statement analysis (continued) EPS down 42% to 33.3 cents (2007: 57.4 cents) prior year Argility Limited transaction contributed 20.5 cents of the 57.4 cents EPS Headline earnings relatively flat year on year at R91.6m (2007: R92.5m) HEPS down 8% to 31.9 cents (2007: 34.7 cents) Key reconciling items between EPS and HEPS: Negative goodwill arising on Aquitec transaction – 1.1 cents Normalised HEPS down 18% to 25.5 cents (2007: 31.1 cents) – after excluding full impact of R13.4m (2007: R10.8m) deferred tax credit Aquitec loan revaluation on acquisition of R5m Diluted HEPS 30.8 cents down 6% (2007: 32.7 cents) Final dividend declared of 5 cents results in full year dividends of 9 cents consistent with the full dividend declared and paid in respect of FY07

  13. Balance Sheet analysis Non-current Assets P,P&E net decrease in net book value of R7.9m supported by: Capex of R48.7m (2007: R58.6m) P,P&E arising on acquisitions of R3.4m; which is offset by Disposals of R11.9m, re-allocation to assets held for sale R11.6m and depreciation of R36.5m The growth in intangible assets (excl. goodwill) supported by: Acquisition of CSC R42.6m Acquisition of Aquitec R25.5m Software purchased R8.2m Development costs capitalised R5.6m Amortisation R28.4m Disposals and other R1.1m

  14. Balance Sheet analysis (continued) Non current assets (cont) Key contributors to the large growth in goodwill: Acquisition of CSC R37.5m Acquisition of Aquitec R21.1m Additional purchase price associated with TSSMS R4.9m 4life R1.9m Current Assets Group rental stock transaction triggers: Finance lease receivables (short and long term) R9.7m Asset held for sale R11.6m still to be sold and leased back R9.1m of debt in total (both short and long term) Trade and other receivables have increased by 13% or R26m to R224m (2007: R198m) Trade receivables incl. current year acquisitions of R19.1m when excluded shows debtors days perspective of 49 days (2007: 45 days)

  15. Balance Sheet analysis (continued) Equity and reserves The material movements in the equity attributable to equity holder’s of the parent: Current year net profit generated R95.8m Ordinary shares issued at a premium R12.4m Fair value adjustment (R1m) Share based payments reserve increase R4.7m Dividends paid (R26m) Net decrease in treasury shares R5.4m Liabilities Net growth in loans of R67m to R216m (2007: R149m) mainly as a result of: CSC acquisition comprising: bank debt R53m deferred vendor loans of R15m Rental stock sale and leaseback commitments of R9.1m

  16. Balance Sheet analysis (continued) Liabilities The year end balance sheet reflects a gearing of 43% (2007: 36%) with the true external bank debt component reflecting a gearing of 33.1% (2007: 10.2%) where equity incorporates minority interests The Group’s current ratio at year end has improved to 1.3:1 (2007: 1.1:1) with the short term loan obligation reducing by 18.2% year on year and the current assets growing by 15.8% Trade and other payables have increased by 7.4% to R213m (2007: R198m) inclusive of accruals and advance billings but excluding provisions. The relatively small increase on this line has had a negative impact on working capital as per the cash flow statement

  17. Cash Flow analysis Cash generated from operations up 11.5% at R199m (2007: R179m) closely aligned with normalised EBITDA of R195m and supporting the quality of earnings After the working capital requirements, interest, dividend and taxation paid this converted into a 30.7% decrease in cash flow from operating activities Cash applied to investing activities can be broken down as follows: Acquisition of CSC – R68.7m Acquisition of Aquitec – R34.8m Acquisition of 4Life – R1m Cash acquired – (R14.8m) Capex – P,P&E and intangible assets – R55.5m Development costs capitalised – R5.6m Purchase of treasury shares – R2.3m Proceeds on disposal of P,P&E – R10.5m Loans advanced – R20.3m

  18. Cash Flow analysis Cash utilised in financing activities is made up as follows: Proceeds from net shares issued – R2.5m Net Loans raised – R75.8m Cash and cash equivalents at R143m (2007: R145m)relatively flat year on year after substantial investing activities

  19. John Bright Divisional Review

  20. UCS Group 2008 segmental report • Software Division • (6 trading entities) UCS Software Custom and packaged software services & solutions for large scale retail enterprises – multiple verticals (furniture, fashion, forecourt, convenience) CKS Custom and packaged software services & solutions for retail – pharmacies & hardware/ building supplies/all tiers GAAP Packaged software services & solutions (Incl. hardware) for restaurants & fast food outlets UCS Software Manufacturing Retail domain-specialised, outsourced software product development & assemble-to-order (A2O) software application manufacture UCS UK Original UCS Software UK operation now a holding company for international investments Aquitec UK** Custom and packaged software services & solutions for large scale warehouses & distribution centres – multiple verticals – Bagshot, UK • UCS USA Inc** • (t/a Aquitec USA) As per Aquitec UK, but based in Chicago, USA ** Acquisition effective 1st March 2008

  21. Software Division financial results Revenue up 26.1% to R475m (2007: R377m) of which 5% was related to Aquitec and the balance organic Annuity revenue of the division has grown by 21.5% to R288m (2007: R237m) Annuity revenue equates to 61% of total revenue (2007: 63%) Normalised EBITDA up 40.7% to R83m (2007: R59m) reflecting a 17.4% margin (2007: 15.6%) Normalised PBIT up 81.3% to R58m (2007: R32m) reflecting a 12.2% PBIT margin (2007: 8.6%) Continued margin improvement as anticipated

  22. Software Division operational highlights The UCS Software Manufacturing unit moved closer to break-even this year although narrowly missing its target of recording its maiden profits We continue to work hard to secure our first international orders for this unit in the USA, where market conditions are extremely volatile right now, but where innovation is far more readily embraced than elsewhere in the world As expected, margins for the division as a whole improved due to improved efficiencies and higher UCSSM capacity utilisation with the Clicks and Cashbuild projects and including the effects of the Argility unbundling Margins in the Pharmacy and Restaurant sectors declined slightly due to tighter trading conditions The conclusion of the Aquitec acquisition in March was a very important step in the execution of our strategy to enter selected international markets

  23. Software Division prospects Annual price escalation negotiations with retailers have been tougher than ever and will affect margin growth Current project schedules should ensure continued strong capacity utilisation of our key project and software development resources except in the UCSSM unit, where conversion from sales pipeline to orders in the USA is still proving difficult We continue to invest heavily in innovation and exciting developments are in progress that should entrench our leadership position in IT solutions for retailers We are cautiously optimistic of recording another good year for the Software Division, but unpredictable market conditions make confident planning impossible

  24. Divisional Review Solutions & Services Division

  25. UCS Group 2008 segmental report • Solutions &Services Division • (10 trading entities) Business Consulting & IT Solutions (incl. SAP & JDA applications) for large scale retail and supply chain enterprises plus SAP AiO solutions for medium scale retail in selected verticals UCS Solutions CEB Maintenance Specialist ‘man in van’ IT services for large scale retail TSS MS IT infrastructure, software, services & support supplier for Government & Financial Services sectors Destiny (Incl CSC)* Transaction switching services including bank payments, medical-aid authorisations, electronic voucher sales, gift registries, etc. CSC offers secure payment technologies (Incl. hardware, customised software, services and solutions) at point of sale Integrated payroll, HR & Time & Attendance software & solutions (own products) Accsys UKS Library software & solutions (SIRSI software distributor) Retail consulting/store locations/sales & stock optimisation services Fernridge LifeWorld/4Life CRM consulting, software & services & loyalty programme design & management – multiple industries including retail & hospitality. 4Life is a Loyalty program providing a range of benefits through multiple industry players including retail DiverseIT Retail in-store marketing & promotional products, services & solutions – all tiers * Acquisition effective 1st September 2008

  26. Solutions & Services Division financial results Revenue growth of 7.8% to R748m (2007: R694m) Normalised EBITDA decline of 4.8% to R120m (2007: R126m) reflecting 16.0% EBITDA margin (2007: 18.1%) Normalised PBIT decline of 11.1% to R80m (2007: R90m) reflecting a 10.7% PBIT margin (2007: 13.0%) Annuity revenue however up 36% to R479m (2007: R352m) with the change in mix particularly in TSSMS from once off to annuity contracts The exposure towards discretionary project revenue continuesbut underlying cost exposures have been significantly reducedand a number of key contracts have been secured

  27. Operating highlights Most business units recorded solid results and continue to be well positioned in their chosen markets UCS Solutions and TSSMS have secured material new annuity contracts Consulting and implementation business unit results were lower than expected because of deferred or cancelled customer projects – arising from current market conditions Have lowered our costs exposures in this business unit as a result 4Life multi-vendor loyalty program launched wiWallet Mobile Payment field trials progressing well

  28. Prospects – Solutions & Services Division Continue to be well positioned for growth within current customers and for new customers Continued exposure to pipeline of discretionary projects but are managing this carefully to protect margin Have launched UCS Solutions Inc. in the USA and will work on establishing a reference base there Acquisition of CSC means key components of Value Added Service Division are in place. Customers will now be targeted for the new value propositions CSC provides a significant growth platform within the division as well as enhancing our services stack for retailers

  29. UCS Group Limited BBBEE & Looking Forward

  30. UCS Group Limited – BBBEE Total BBBEE ownership of UCS was 13.62% at 30 September 2008 of which our BBBEE partners, TSS, account for 9.3% Our target remains to get our UCS Group BBBEE shareholding to over 25% within our strategy of combining increased BBBEE ownership of UCS Group equity with growth opportunities for the Group The only BBBEE transaction concluded during the year to 30 September 2008 was, effective 1st October 2007, UCS sold back 6% of its stake in TSS MS to TSS, taking the TSS MS BBBEE holding to greater than 51% In addition, our 2 main operating units, UCS Solutions & UCS Software, have attained level 4 ratings. These will be maintained or improved going forward and other operating subsidiaries are currently awaiting their ratings We continue to look for BBBEE opportunities at operating subsidiary level as well as at Group level

  31. UCS Group Limited – looking forward We have never been more enthused and excited about the level and intensity of innovation taking place within the Group, particularly in the creation of our future VAS (Value Added Services) unit We are confident that these innovations will be embraced by our customers to our mutual benefit in the years to come The Group continues to focus on the creation and sustainability of annuity revenue streams to enhance predictability of cash flows The critical mass established in the retail solutions market over the past few years continues to provide scope for further margin improvements through economies of scale Our vertical market focus and talent retention strategies mean that we are able to add more value for our customers than most of our competitors

  32. Looking forward – in summary UCS Group remains well positioned, strategically as well as operationally, to continue its growth momentum with the strong and growing annuity revenue base providing a solid foundation for trading in volatile market conditions However, our immediate future will probably be more affected by the unfolding global and domestic macro-economic circumstances than by our own strategy or plans We continue to be afforded attractive acquisition opportunities but current debt and capital market conditions make this form of growth extremely challenging We have budgets that show good growth potential exists in most operating units, but these budgets were prepared in July and macro-economic circumstances have deteriorated significantly since then

  33. Thank you Q&A

  34. Enquiries UCS Group011 712 1449 John Bright, Dean Sparrow, College Hill011 447 3030 Fred Cornet083 307 Hayley Crane072 758