South Africa: UCS Software Units to Merge Under Argility

Mergers, Acquisitions and Financial Results

Software group UCS will merge its software businesses by the end of the financial year to create an enlarged entity that will boost its market position.

UCS will consolidate the software assets, intellectual property, and research and development activities of UCS Software, excluding the services business, UCS Software Manufacturing and the recently acquired Argility, into a new software business that will retain the Argility name.

CEO John Bright said yesterday that the merger would eliminate duplication in research and development and save costs.

The enlarged business will also incorporate UCS's exclusive agreement with international company Cordys, signed in February. Cordys's technology would be embedded in UCS's software solutions and would target the retail market globally.

UCS has already sold Cordys technology to one of its retail customers. "With the enlarged business and Cordys agreement, we think we will have a competitive urge in the local and international market," Bright said.

UCS has made three acquisitions in the past six months, including a 56% stake in CQuential, which offers software as a service to the supply chain and warehouse management industry. Bright said over time the software component of CQuential would be incorporated in Argility.

Yesterday UCS reported a 9% growth in revenue to R644m, of which 7,7% is organic growth. Profit for the period increased 330,3% to R24,7m. Headline earnings per share rose to 7,1c from 5,2c.

Bright said challenging trading conditions had continued during the period but actions taken by management since the onset of the global financial crisis had been relatively successful in streamlining the company and significantly reducing its exposure to large-scale contracts, which are mainly one-off projects.

UCS had sold two businesses that were exposed to the "lumpiness" of one-off large contracts to give the group "more vision and predictability in cash flows", Bright said.