Annual Report 2002 - ShareData · 2005-10-24 · Income statement 20 Balance sheet 21 Statement of changes in equity 22 Cash flow statement 23 Notes to the financial statements 24

A n n u a l R e p o r t 2 0 0 2

AR2002 27/1/03 10:09 am Page 2

Board of directors 2

Administration 2

Basic tenets 2

Financial highlights 3

Group structure 4

Chairman’s report 6

Chief Executive Officer’s report 7

Chief Operating Officer’s report 9

Chief Financial Officer’s report 12

Five year financial review 13

Analysis of key ratios 14

Corporate governance 15

Report of the independent auditors 17

Declaration by company secretary 17

Statement of directors’ responsibilities and

approval of the annual financial statements 17

Directors’ report 18

Income statement 20

Balance sheet 21

Statement of changes in equity 22

Cash flow statement 23

Notes to the financial statements 24

Schedule of interest in subsidiary companies 42

Value added statement 43

Shareholding and shareholders analysis 44

Notice to shareholders 45

Group directory 46

Shareholders’ diary 48

Contents

1

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Group chairman (non-executive)

Richard Goodman (45) BA, LLB, LLM

Executive directors

John Bright (55)

Chief Executive Officer, UCS Group Limited

Chief Executive Officer, Universal Computer Services (Pty) Ltd

Neil Michelson (44) CA (SA)

Chief Operating Officer, UCS Group Limited

Member of the audit committee

Dean Sparrow (27) CA (SA)

Chief Financial Officer, UCS Group Limited

Duncan Coles (54) MCSSA

Chief Information Officer, UCS Group Limited

Chairman of Universal Computer Services (Pty) Ltd

Patrick Fitzgerald (54)

Managing director, EasiRun Software (Pty) Ltd

Non-executive directors

Rebecca Eliot (32)*

Joseph Claassen (43)

Member of the UCS remuneration committee

Bryan Hattingh (46)

Chairman of the UCS remuneration committee

Peter Terblanche (58) MCSSA

Chairman of the UCS audit committee

E.B. (Bert) Levenstein (89) BA, LLB

Member of the UCS audit committee and of the remuneration committee

* British

Basic tenets The group's basic tenets are to:

• Conduct business with integrity and in a way that contributes to the continued development

of a democratic and prosperous South Africa;

• Respect individual dignity and diversity;

• Practice financial prudence;

• Maintain fair employment practices;

• Invest in the development of competent and committed employees;

• Strive to provide shareholders and all stakeholders with above-average financial rewards.

Board of directors Administration

2

UCS Group Limited

Incorporated in the Republic of

South Africa

Reg No: 1993/002253/06

ISIN Code: ZAE00016150

Share Code: UCS

Registered office

20th Floor

209 Smit Street

Braamfontein 2001

P.O. Box 31266

Braamfontein 2017

www.ucs.co.za

Company secretary

Verity Mary-Ann Broadrick

Auditors

Kaplan & Kaplan

Chartered Accountants (SA)

155 8th Avenue

Highlands North 2192

P.O. Box 64188

Highlands North 2037

Transfer secretaries

Computershare Investor Services Limited

70 Marshall Street

Marshalltown

Johannesburg 2001

P.O. Box 61051

Marshalltown 2107

Bankers

Nedbank

Commercial Wits Central

Johannesburg

Sponsor

Barnard Jacobs Mellett

2nd Floor

Barnard Jacobs Mellett House

5 Sturdee Avenue

Rosebank 2196

P.O. Box 62200

Marshalltown 2107

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• Cash flow from operating activities 29.1%• Annuity revenue 27.0%• Revenue 23.9%• Headline earnings 3.5%• 1st dividend payment since listing• Strategic acquisitions concluded

Group Income statement2002 2001

R 000 R 000 %change

Revenue 218 746 176 573 +23.9

Profit from operations before interest, depreciation,

research and development and impairment 49 758 45 756 +8.7

Research and development 16 826 11 773 +42.9

Depreciation and amortisation 12 986 8 632 +50.4

Impairment of loan to staff share trust 8 115 - +100

Profit before interest and investment income 11 831 25 351 -53.3

Net interest received and investment income 7 631 9 262 -17.6

Profit before taxation 19 462 34 613 -43.8

Taxation 1 476 6 269 -76.5

Profit after taxation 17 986 28 344 -36.5

Minority shareholders 132 (174) -175.9

Net profit for the year 18 118 28 170 -35.7

Ordinary share performanceEarnings per share (cents) 7.2 10.5 -31.4

Headline earnings per share (cents) 10.9 11.3 -3.5

Weighted average number of ordinary shares in

issue (000) 251 478 267 626 -6.0

Ordinary shares in issue net of treasury shares 240 093 263 255 -8.8

Net asset value per share (cents) 74.4 68.9 +8.0

Share price (cents) at 30 September 63 85 -25.9

Financial Highlights

3

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Group structure

4

Retail

Universal Computer Services (Pty) Ltd

Universal Computer Services provides

customised application solutions and

associated services, including total and

partial outsourcing, for large-scale retail

enterprises. Dedicated software develop-

ment teams provide ongoing support for

each customer.

Revenue analysis

2002 2001

Monthly service charges 81% 81%

Other services/sales/

own technology 18% 18%

Third party products 1% 1%

VST, acquired by the Group with effect

from 1 October, is strongly positioned

in the Western Cape and is a leading

provider of software solutions and

services to the fashion retail industry

as well as large and medium

speciality retailers.

CCS provides fully integrated point-of-

sale (POS) and back-office software

solutions to customers in the fast food,

FMCG and speciality (serialised goods)

niche markets in the retail industry. All

solutions are supported by an experienced

team of developers who have built up

in-depth knowledge and an enviable

record of accomplishments in the retail

IT environment.

Revenue analysis

2002 2001





GAAP specialises in the provision of

point-of-sale solutions in the restaurant

and bar sectors of the South African

hospitality industry. The company, which

dominates its market sector in the

KwaZulu-Natal region, also supplies

retail solutions to stand-alone stores and

a property management solution to the

hotel industry.

Revenue analysis

2002

Monthly service charges 47%


own technology 5%

Third party products 48%

B R A N D S

UCS Brands is a company that takes

responsibility for the management and

marketing of the Group’s proprietary

software applications and owned

technologies. The company is focused

primarily on international markets.

CKS specialises in the provision of hard-

ware, software and support services to the

retail pharmacy industry. The company’s

wide area network connects its customer

base of more than 900 pharmacies to

almost every medical scheme in the

country for the processing of real-time

medical scheme and electronic funds

transfer (EFT) transactions.

Revenue analysis

2002 2001





(formerly Ultimate Connection)

UCS Software is an internationally

acclaimed developer of Microsoft-based

software applications for use in small,

medium and large enterprises within

the general merchandise and speciality

store sectors of the retail industry. The

company’s award-winning ActiveRetail

solutions suite is sold by a network of

certified business partners throughout

South Africa and in 21 countries

throughout Europe, the Middle East and

Africa (EMEA).

Revenue analysis

2002

Monthly service charges 29%


own technology 69%

Third party products 2%

100%

100% 51% 100%62.76%

100% 93%

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5

UCS Group Limited is an investment holding

company for a group of information technolo-

gy businesses focused on the provision of

software solutions and outsourcing services in

chosen markets.

A member of the UCS Group A member of the UCS GroupUniversal Knowledge Software (Pty) Ltd

Accsys markets and supports South

Africa’s most comprehensive suite of

integrated personnel and human resource

management solutions. High-level

training, professional consultancy and

technical support back industry-leading

software applications, including Accsys

Payroll Manager, Accsys Time Manager

and Accsys-HR.

Revenue analysis

2002 2001





EasiRun provides complete ERP (enter-

prise resource planning) solutions to the

mid-range market across a wide spread

of industry sectors. Solutions are all

based on latest technology products from

the Microsoft Business Solutions

Division and supported with a variety of

consulting, customisation and other value

added services.

Revenue analysis

2002 2001





UKS is a leading supplier of integrated

library management systems and

associated technical and support services

to the library industry of South Africa and

the neighbouring states.

Revenue analysis

2002 2001





100% 100% 100%

Non-retail

AR2002 27/1/03 10:09 am Page 14

focused and committed the managementteam is to serving the interests of share-holders, customers and staff.

At a strategic level, the Group has beenstrongly positioned in two clearly definedoperational divisions - "Retail" and "Non-retail" operations.

In the retail division, the Group continuesto consolidate its leadership as the country’s largest provider of software solutions and services across a wide rangeof chosen markets. Pleasing progress wasmade in extending the Group’s footprint in the retail sector through both organic as well as acquisitive growth.

In the "Non-retail" division, considerablestrides have been made towards pursuingthe strategy that is so successfully beingexecuted in the retail sector.

Prudent financial management and theexploitation of synergies that exist or that are being developed throughout theGroup yielded satisfying returns in a number of areas, including healthy cashflow resources.

As a relative newcomer to the Group, I have been tremendously impressed by thequality of the research and developmentbeing undertaken in the software arena.Representing a substantial investment inthe future of the Group as an innovativeprovider of world-class technology-basedsolutions in chosen markets, this quality isconstantly underpinned by staff who consistently demonstrate the highest possible levels of skill, experience, loyaltyand commitment.

Continuing economic conditions that canjustifiably be described as extremely harshand turbulent, characterised a year inwhich the Group once again demonstratedits underlying strength as well as the valueof its committed business strategy. Despitea slightly disappointing but only marginaldecline in earnings, the Group has certainlyproved its resilience in circumstances thatsome customers and several competitorsfound to be overwhelming.

Having accepted the appointment as non-executive chairman during the year under review, I do not believe itappropriate to report to shareholders at adetailed operational level. However, I can comment with confidence on severalaspects of the Group that have been asource of tremendous satisfaction duringmy brief tenure.

The Group’s commitment to adhere to the principles and recommendations contained in the King Reports on corporategovernance is beyond question. During theprevious year, appropriate appointmentswere made to bring the Group into linewith representation expectations at bothexecutive and non-executive director levelsand within the audit and remunerationcommittees. The board is acutely awarethat mere lip-service to King corporategovernance principles is to be eschewed.Not only are there structures in place but they are supported by an ethos thatguarantees tangible benefits for the Groupand its stakeholders.

During the year under review, furtherappointments were made to ensure compliance with the requirement to separate executive responsibilities. John Bright holds the post of chief executive officer (formerly Group managing director), while Neil Michelson,formerly Group financial director, took upthe post of chief operating officer. DeanSparrow, a new and valuable member ofthe board, was appointed chief financialofficer. The latter’s auditing experience hasalready added an important and vitaldimension to various levels of governancewithin the Group.

In-depth reports elsewhere in this document covering the respective areas of executive responsibility of all three of my colleagues offer shareholders someinvaluable insights into the Group’s business philosophies and strategies. I believe these reports provide a compelling demonstration of just how

It is pleasing to report that the Group’sassociation with St Barnabas College,which was launched in 1999, has beenextended to other schools. The programmeaims to assist schools in disadvantagedcommunities by helping students to worktowards attaining high-level computer-based skills in order to foster personal fulfilment and for the benefit of the information technology industry.

In terms of the UCS bursary and educationprogramme, candidates are selected foruniversity study in information systemsmanagement or computer science, and fortraining to prepare them for software programming learnerships. The Group isactively engaged in planning this industry-wide learnership programme, which will beimplemented in 2003.

Part of the Group’s institutional supportalso includes the formulation of jointstrategies for identifying promising candidates for specialised secondary education, university study or other training, and for assisting students whenthey encounter difficulties in the earlystages of such further or higher education.This programme reflects an awareness ofthe Group’s social responsibilities and aclear understanding of its position of leadership within the industry.

On a personal level, I wish to extend sincere gratitude to the leadership skills ofmy predecessor as chairman, E.B. ("Bert")Levenstein, and to express the Group’spleasure at his continued presence on the board.

We shall continue to draw on his esteemedjudgment and experience. So too do Iappreciate the energetic and dynamic contributions made by my colleagues onthe board, whose support has been inspiring and has greatly assisted me in the challenges to be faced. The mix ofexecutive and non-executive directors onthe board has instilled a balance of expert-ise and values which will increasinglyenure to the benefit of the Group.

Given only modest improvements in theeconomy and the trading environment, I am confident that a sound foundation hasbeen established for the Group to deliverabove-average growth and real value.

Chairman’s report

6

“ The Group’s commitment

to adhere to the principles

and recommendations

contained in the King

Reports on corporate

governance is beyond

question.”

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OverviewThe year to September 2002 proved to bethe most challenging yet for the Groupsince its listing in 1998.

Local market conditions remained extremely difficult with several customersclosing stores, some postponing scheduledinstallations and others delaying buyingdecisions. In addition, certain large customers servicing the lower-incomeretail market experienced extreme financialdifficulties, with one going into liquidationand two others being forced to recapitalise.For the second successive year, pricing forboth product and services has come underintense pressure.

Despite these adverse trading conditions,the Group continued to increase its foot-print in Southern Africa through strategicacquisitions, details of which are outlinedbelow. As the Group remains committed to the generation of sustainable annuityrevenue streams, margins in newly-acquired businesses are negatively affectedin the short term as this model is intro-duced and traditional once-off billings arereplaced by annual or monthly charges.

On the international front, the Group terminated its relationship with RetailBusiness Solutions (RBS) for the distribution of its core application solutionsin the United Kingdom as a potential conflict of interest arose with future RBS offerings. UCS is in the process ofestablishing a new channel for its products in this market and hopes to reportpositively in this regard during the firsthalf of next year. All costs associated withbusiness development in the UK continueto be expensed as incurred.

Financial results for the period, viewedagainst this backdrop, are considered to

be acceptable in terms of overall revenuegrowth and annuity revenue growth, but disappointing at the earnings level.

Revenues grew by 24 percent to R219-million, while annuity revenues grew by 27 percent to R127-million, representing 58 percent of total turnover.Operating income (before interest, depreciation, research and development,amortisation and impairment) grew by 9 percent to R49-million. Operating margincontracted from 25.9 percent in 2001 to22.7 percent in 2002 due largely to pricingpressures and the emphasis on annuityrather than one-time revenue generation.These factors contributed to the 3.5%decline in headline earnings per share from11.3 cents in 2001 to 10.9 cents in 2002.

The balance sheet remains strong, with aquick ratio of 4:1 and with cash resourcesat R63-million. Net asset value per share

increased by 8 percent from 68.9 cents to74.4 cents.

During the year, the Group bought back atotal of 23,162,411shares at an averageprice of 71.62c. Of these shares,17,962,911 were bought by a subsidiaryand are being held as treasury shares, while 5,199,500 were cancelled. At yearend 878,400 of the treasury shares boughtback in the 2001 financial year were cancelled. The board has authority to buy back up to 20 percent of the shares in issue, representing a further 29,488,629 shares.

AcquisitionsDuring the year the Group successfullyconcluded two strategic acquisitions in itsfocused retail solutions operations.

Effective 1 February 2002 the going concern business of GAAP IT Solutionswas acquired from GAAP IT Solutions(Proprietary) Limited through the Group’s100 percent held subsidiary, VisabilitySolutions (Proprietary) Limited. As part ofthe acquisition, the Group sold a 49 percentequity interest to the vendors, which result-ed in the Group’s interest diluting to itscurrent holding of 51 percent. Visability’sname has subsequently been changed toGAAP Point-of-Sale (Proprietary) Limited- a company focused on the provision ofcomputer related services and softwaresolutions used primarily by the restaurantand hospitality markets.

Chief Executive Officer’s report for the year ended 30 September 2002

7

“ Despite these adverse tradingconditions, the Group continuedto increase its footprint inSouthern Africa through strategic acquisitions.”

“ The balance sheet remains strong,with a quick ratio of 4:1 and with cashresources at R63-million. Net asset valueper share increased by 8 percent from68.9 cents to 74.4 cents.”

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With a large portion of the KwaZulu-Natalmarket as well as employees with over 14years of software development and relatedcomputer service experience in its chosenmarket, this acquisition strengthens theGroup’s position in this region.

Effective 1 May 2002 the Group acquired93 percent of the issued share capital andshareholder loans of Ultimate Connection(Proprietary) Limited. The cash purchaseprice was R 3 529 930 and the Groupassumed an overdraft obligation of R 16 702 000. The overdraft was settledbefore the financial year end.

This transaction introduces a suite ofaward-winning, internationally recognisedMicrosoft products into the UCS Groupunder the ActiveRetail brand.

ActiveRetail was adjudged by Microsoft tobe the "Most Innovative Retail Applicationin Europe, the Middle-East and Africa" in1999 and again in 2002 was awarded the"Best General Merchandise Application inEurope, the Middle-East and Africa".

Effective 1 November 2002 (post financialyear end) Ultimate Connection changed its name to UCS Software (Proprietary)Limited.

Profit warranties and other conditionsapply to both acquisitions.

Effective 1 April 2002 the Group increasedits share holding in CCS Software(Proprietary) Limited by 11.76 percentfrom 51 percent to 62.76 percent. This was effected through a cash payment of R 1 400 000.

Post balance sheet acquisitionEffective 1 October 2002 the Groupacquired the going concern business ofVirtual Systems Technology (VST) from Softline Holdings (Proprietary)Limited for R13-million settled in cash.

Should VST achieve its forecast profit aftertax, the Group will increase its purchaseprice by a maximum additional payment of R1-million.

There is also a large potential contract that could be awarded to VST. Should thiscontract be won within 12 months of theeffective date, the UCS Group will pay 30 percent of the net profit before tax ofthe total contract within 12 months of suchcontract being awarded. This will, however, be capped at 30 percent of the

net profit before tax for three years shouldthe contract extend beyond three years.

VST consolidates the Group’s position inthe Western Cape and strengthens its focusin the fashion retail industry. The businesshas an attractive list of annuity-based customers and a strong team of employeeswith extensive skills and experience in theretail software development and computerservices industry.

Dividend policyIn line with the announcement made at theinterim stage in April 2002, the directorshave decided to maintain a policy to paydividends twice a year. Dividends willamount to approximately one third of headline earnings per share. This policywill be reviewed regularly and may bechanged at the discretion of the directors.

Research & development The Group’s ongoing commitment toresearch and development continues to provide a strong and differentiated platform for future growth.

R&D investments are focused on ensuringa constant flow of new proprietary application software solutions and aredirected primarily into the five businessunits that are concentrated on the retailmarket - Universal, CKS, CCS, GAAPand UCS Software, as well as the integrated Payroll/HR product suite offered by Accsys.

Prospects & forecast The extremely challenging and turbulentmarket conditions are expected to continue for some time. While this willagain put constraints on organic growth,the realisation of synergistic benefits fromrecent acquisitions, as well as carefullyplanned cost containment programmes,represent a sound basis for management to improve margins.

The adverse trading environment is alsoexpected to cause further consolidationamong Group competitors, giving rise tofurther acquisition opportunities as well

as a more profitable market place for the"survivors" when conditions improve.Unfortunately, in the short term the harsheconomic climate will continue to put pressure on trading margins.

Given this scenario, management hasadopted a conservative view for new salesprospects in the year to September 2003.Consequently, our budgets show only amodest growth in earnings per share.

AppreciationI extend my sincere gratitude and apprecia-tion to our customers for their support aswell as to my board and management colleagues and our very talented staffthroughout the Group for their continuedguidance, enthusiasm, loyalty, support and commitment.

It was my privilege during the year to welcome Richard G. Goodman to the UCS board as non-executive chairman. Mr Goodman, an eminent practising advocate of the Cape Bar and of the HighCourt of South Africa, brings with him anenviable track record and extensive experience in several specialised fields ofcommercial law.

A graduate of the University of Stellenbosh(B.A. Law, 1978 and LL.B, 1980), he wenton to study at the University of Cambridgewhere he completed his LLM in 1982.

In welcoming Mr Goodman and on behalfof the board and all staff throughout theUCS Group, I would like to pay tribute toE.B. "Bert" Levenstein (BA. LLB). As theGroup’s founding non-executive chairman,Mr Levenstein has played a tireless anddevoted role as counsellor and mentorsince the inception of the Group and thelisting of UCS in 1998. I am delighted toconfirm that he will continue to play aninvaluable role within the Group as a non-executive director.

8

“ The Group’s ongoing commitment to researchand development continues to provide a strongand differentiated platform for future growth.”

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Introduction The UCS Group’s vision is to become aworld class supplier of specialised tech-nology solutions in chosen markets. In pursuit of this vision, the Group believes:

• That market dominance must first be achieved in South Africa.

• That highly skilled development teams, working on rand-based costs, must be in place.

• That strong alliances must be formed with international business partners, and

• That business must be conducted on a basis that generates sustainable earnings and that is equitable for all stakeholders.

Chosen marketsTo enable the market to gain a clearerunderstanding of the Group’s vision,reporting has been segmented into "RetailSolutions" and "Non-retail Solutions". As operations within the "Non-retailSolutions" category begin to achieve mar-ket dominance or critical mass, segmentalreporting will be split into further detail toprovide more meaningful information on aspecific market.

The proviso will always be that segmentalreporting should be for the benefit ofshareholders rather than to disclose com-petitive information to rivals in the market.

Retail Solutions

Market dominance There are numerous local and internationalcompetitors in all sectors of the retail solutions market in South Africa - from micro, one-person businesses tomultinational vendors.

In keeping with the nature of the retailindustry itself, the market is vertically segmented with a number of small to medium-sized companies focusing on solutions in various niche markets. A majority of these niche businesses hassuffered in the harsh economic climate that has prevailed since Y2K. The dot.comcrash and persistent difficult trading conditions have also hampered their abilityto fund ongoing developments on newtechnology platforms.

This trend has presented the Group with anideal opportunity to expand its investmentsin the retail solutions market.

By targeting quality companies with goodtechnology that dominate their chosenniches, UCS has built a portfolio of businesses that possess the best humanresource skills as well as in-depth knowledge and extensive experience ofseveral particular retail sectors.

In most cases, the Group has re-capitalisedthese businesses to get them onto a soundfinancial footing. Defined research anddevelopment budgets, with agreed deliver-ables and appropriate incentives, have beensigned off to ensure continued growth anddominance in chosen retail sectors.

The Group recently introduced a "culturalaudit" methodology into the pre-acquisitiondue diligence process. This methodology is centred on assessing the human capitalcomponent of the business to be acquiredto enable a better understanding of theteam dynamics within each acquisition.This process is expected to pay dividendsas the Group continues to maximise the synergies that exist within the various teams.

Chief Operating Officer’s report for the year ended 30 September 2002

9

“ By targeting quality companies with good technology that dominate their chosen niches,UCS has built a portfolio of businesses that possess the best human resource skills as well asin-depth knowledge and extensive experience ofseveral particular retail sectors.”

“ The Group believesthat success dependson a clear focus within chosen verticalindustries within theretail sector.”

Significant investments being made in theretail sector form the foundation for delivering on the Group’s overall visionand one of the prime objectives, which is to dominate chosen local markets.

Highly skilled rand-based developmentThe retail market is characterised by eachsector in the overall industry having uniquenuances, business requirements and operational drivers.

The Group believes that success dependson a clear focus within chosen verticalindustries within the retail sector. Thisfocus translates into an ability to continueto enhance existing business systems andservices and to deliver solutions that are far superior to those offered by local andinternational competitors.

Today, through focused subsidiaries, theGroup addresses most aspects of the retailsector through either customised solutionsdelivered off a highly sophisticated retailarchitectural framework, or via parameter-driven packaged solutions.

Retail sectors that are currently addressedby the Group through focused subsidiariesinclude furniture, fashion and clothing,building suppliers, supermarkets, pharmacies, hardware stores, cellularshops, fast food outlets, restaurants andspeciality/general merchandisers.

AR2002 27/1/03 10:09 am Page 22

The Group’s total in-store population of systems throughout South Africa is estimated to be more than 12,000. All retail solutions technology is developedand owned by the Group and is enhancedand maintained in South Africa at rand-based costs. The Group’s human capital in the retail sector is unrivalled, whichpositions the Group to sustain a pro-activeapproach to constantly enhancing its software solutions while at the same timecontinuing to develop business solutionsthat meet the needs of a changing andincreasingly sophisticated market.

Business alliances In pursuing its vision in the internationalmarket, the Group has chosen to developstrong alliances with professional businesspartners in preference to investing in itsown offshore operations. These partnersshould have the necessary knowledge oflocal retail markets and be able to provideall the value-added services that are considered essential to supporting softwareretail solutions.

Within these alliances, the UCS Groupoffers international business partners anextremely focused, competitive and professional software development capability that can respond to market and customer demands with world classsolutions that are based on rand costs.

This approach to offshore expansion wasone of the Group’s main reasons for theacquisition of Ultimate Connection (Pty)Ltd. Ultimate, having established a successful local and international value-addreseller strategy, is well placed to initiategrowth for the Group in offshore markets.

At the retail enterprise level and spear-headed by the Universal ComputerServices (Pty) Ltd subsidiary, the Groupcontinues to invest in establishing a working relationship with the correct business partner. The Universal range ofsoftware solutions is technologically at theforefront of worldwide developments. It isanticipated that a planned entry into theinternational markets with these solutionswill begin to reap financial benefits for theGroup during the second half of the newfinancial year.

Sustainable business modelsThe Group regards it as imperative thatsoftware has to be driven by a businessmodel that guarantees access to ongoingrevenues to fund the continued researchand development associated with thisindustry.

Several acquisitions made by the Group in its retail focus were attractively pricedand facilitated by business models thatinhibited revenue generation to fund futuredevelopments. The Group is committed toan annuity revenue model and strategicallymonitors its annuity ratios. It is a statedobjective to keep annuity revenues above50% of total revenue.

All subsidiaries in this sector are encour-aged to migrate from once-off licencingsales to annuity-based sales of owned technology. This model results in a long-term commitment to all customers and istherefore mutually beneficial. Althoughthere are operational and cash flow challenges associated with this businessmodel during the transformation phase, the Group has the experience to ensure thatlong-term benefits accrue to the business.

The year ahead should see an end to therationalisation and consolidation that hasbeen underway in the retail solutions market over the past three years. This will enable the Group to concentrate onpositioning the various subsidiaries in

order to streamline the business processesand teams and look to aggressively maximising the obvious synergies thatexist across the subsidiaries in this sector.

Non-retail Solutions The Group’s overall vision is to be recognised as a world-class supplier inchosen markets. The Group regards two ofthese as not yet having achieved therequired level of local dominance – payrolland HR solutions and enterprise resourceplanning systems (ERP).

However, these segments are regarded by the Group as representing significantopportunities and are the focus of consider-able attention and future development.

Integrated HR and payroll solutionsThe Accsys subsidiary is regarded as one of the leading suppliers of payrollsolutions in South Africa. Significantinvestments have been made in this company to enhance its payroll solutionand to integrate this offering with a comprehensive HR system.

10

“ The Group’s total in-store population of systems throughoutSouth Africa is estimated to bemore than 12,000. All retail solutions technology isdeveloped and owned by theGroup and is enhanced andmaintained in South Africa atrand-based costs.”

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The decision by EasiRun to invest inNavision was fully vindicated when, inSeptember 2002, Navision was the subject of a US$1.3-billion acquisition by Microsoft. Microsoft has since formed a new business unit called MBS (Microsoft Business Solutions) which includes its Great Plains, Navisionand Axapata products.

As a result of the Microsoft acquisition, the Group has reaped enormous benefits in terms of brand awareness, technical support, new technological developmentsand customer confidence that are nowdirectly associated with Navision.

During the past four years EasiRun hasdeveloped considerable in-house skills covering all aspects of Navision. EasiRunhas a number of Navision CertifiedProfessionals in its highly skilled staff and has an on-going programme thatensures that skills are constantly updatedand improved.

EasiRun’s standing as the largest and mostsuccessful NSC in South Africa enables thecompany and the Group to capitalise on therapidly-expanding Microsoft BusinessSolutions business development thrust.

EasiRun has also embarked on a pro-gramme to extend its skills and capabilitiesinto the Axapta product range that addresses the market previously held by SAP, Baan, JD Edwards and others.

During the coming year EasiRun will continue to build on these chosen softwaretechnologies while at the same time exploring synergistic opportunities withother UCS Group companies.

11

To help ensure that Accsys remains leadingedge, development investments and associated direct costs have been as high as 14 percent of the company’s turnover.

The previous generation of payroll andtime and attendance products has beenfully re-developed to provide customerswith a Windows solution. Although thepayroll market has reached a high level ofmaturity, HR and time and attendanceproducts offer enormous potential forgrowth. The successful integration of the Accsys product suite into a human resourcemanagement solution provides an edge in its market.

Accsys operates in a highly competitiveand fragmented market that, like the retailsector, is expected to experience a highlevel of rationalisation and consolidationover the next few years.

Consolidation will continue to be driven by the level of capital required by small to medium-size competitors if they wish to stay in business by evolving from purely payroll solutions to sophisticatedand integrated HR and time and attendance solutions.

While most Group competitors have beenbattling to extend the life of their legacysystems, Accsys has successfully developed, tested and launched the latest in personnel and human resource manage-ment technology.

The company is thus strongly positioned toaddress the Group’s requirement to take amarket-leading, dominant share of theSouth African market.

ERP SolutionsThe Group has always held the view thatthe development of ERP solutions in competition with major international vendors should be avoided. In line withthis policy, the Group adopted a strategy to select a leading international supplierthat would provide the Group with a worldclass solution on which to build dominancein chosen markets.

In 1998 after a lengthy investigation, the Group’s EasiRun subsidiary selectedNavision as a preferred ERP platform andwas appointed as the first NSC (NavisionSolution Centre) in South Africa. TodayEasiRun has more than 40 installationsnationwide and is recognised as the number one NSC.

“ While most Group competitors have

been battling to extend the life of their

legacy systems, Accsys has successfully

developed, tested and launched the

latest in personnel and human

resource management technology.”

AR2002 27/1/03 10:09 am Page 26

Despite adverse trading conditions thatimposed severe pressure on operating margins, the Group continued to focus onkey objectives aligned with the businessstrategy.

Growth of annuity revenue, continuedinvestment in research and development,investing of cash resources into strategicacquisitions, the continued share buybackprogramme and pleasing growth in cashflow from operating activities, are all areassupporting the sustainability of the Group.

The Group continues to grow its top linewith revenue increasing by 24 percent,comprising 14 percent organic growth and 10 percent acquisitive growth.

It is pleasing to note that overall growthwas achieved without undermining theGroup’s focus on annuity revenue. Annuity revenues at R127-million(2001:R100-million) reflected a Randgrowth of 27 percent (2001: 33 percent).This comprises 58 percent (2001: 57 per-cent) of the Group’s total revenue of R219-million (2001: R176-million).

A provision for the full impairment of theloan to the UCS Group Limited Staff ShareTrust in respect of Share scheme 1 hasbeen raised. This was due to the UCS shareprice at 30 September 2002 of 63 cents(2001: 85 cents) being less than the loansowing to the Trust by the employees. Asthe shares held by the Trust are security forthe repayment of the loan it was consideredprudent to impair the loan. The impairmentwas based on the extent to which the year-end share price would not cover the Grouploan and results in an expense to theincome statement of R8-million. This isapproximately 60 percent of the realiseddecrease in the profit before finance andinvestment income and taxation.

Amortisation and depreciation hasincreased by 50 percent to R13-million (2001: R8.6-million) and is largely relatedto the increase in computer software andintangible assets arising from acquisitions.

The Group has continued to invest inresearch and development (R&D) with therelated expense increasing by R5-million.This brings the Group’s R&D of R16.8-million (2001: R11.8-million) to 8 percent (2001: 7 percent) of total revenueand confirms that, despite contracting margins, the Group’s commitment to up-to-date technology remains key. As in previous years and consistent with

our accounting policies, R&D costs werenot capitalised but fully expensed asincurred.

The Group’s staff costs have increased toR103-million (2001: R77-million), largelydue to a 25 percent increase in head countfrom 523 (2001) to 653 (2002).

Profit before finance and investmentincome and taxation has declined byR13.6-million to R11.8-million (2001:R25.4-million) of which R8-million was in respect of the impairment of loan to the staff share trust and R5-million was in respect of the increase in R&Dexpenditure.

The net interest income and dividendsreceived have decreased by 18 percent toR7.6-million (2001: R9.3-million) and thisis mainly due to the utilisation of cashresources for strategic acquisitions and thecontinued buyback of UCS Group shares.

The taxation line shows a decrease in the tax charge to R1.5-million (2001: R6.3-million). This is predomi-nantly due to the raising of a deferred taxasset of R6.0-million (2001: R1.3-million)in respect of the estimated tax losses thathave arisen within the Group during the

current financial year. Tax losses availablefor set off in subsidiaries against futuretaxable income is estimated at R28.5-million (2001:Nil).

The Group has realised a 31.4 percentdecrease in earnings per share at 7.2 cents(2001: 10.5 cents) but only a 3.5 percentdecrease in headline earnings per share at10.9 cents (2001: 11.3 cents).

The balance sheet remains strong with a quick ratio of 4:1 (2001: 5:1) and cash resources at R63.1-million (2001: R88.2-million). The cash resourceshave decreased owing to two main reasons.Firstly the Group has continued to partici-pate actively in the Group’s share buybackprogramme which utilised R16.6-million(2001: R7.6-million) of the Group’s cashresources. Secondly the conclusion of twonew acquisitions - Gaap Point-of-Sale (Pty)Ltd and Ultimate Connection (Pty) Ltdutilised R2-million and R20.2-million ofthe cash resources respectively. The Groupalso increased its investment in CCSSoftware (Pty) Limited by 11.76 percentwith a cash payment of R1.4-million.

Debtor’s days have improved slightly to68.8 days (2001: 71.3 days) and with thegrowth through recent acquisitions as well as current market conditions this isconsidered acceptable. The Group doescarry a prudent provision policy for allamounts over 90 days outstanding withamounts over 180 days outstanding beingfully provided for.

The net asset value of the Group hasincreased by 8 percent to 74.4 cents pershare (2001: 68.9 cents).

Cash flow from operating activities hasincreased by 29.1 percent (2001: decreaseof 41.1 percent), which equates to a 37.5percent increase in cash flow from operat-ing activities per share. This has beenachieved through an improvement in themanagement of cash utilised in the working capital cycle.

In July 2002 the dividend of 1.8 cents pershare, declared at interim, was paid. Thisresulted in a net cash outflow for theGroup of R4.5-million.

A final dividend for the financial yearunder review of 1.8 cents per share hasbeen declared and is due to be paid inJanuary 2003.

Chief Financial Officer’s reportfor the year ended 30 September 2002

12

“ The Group contin-

ues to grow its top

line with revenue

increasing by 24

percent ... and cash

flow from operating

activities increased

by 29.1 percent.”

AR2002 27/1/03 10:09 am Page 27

Profit history Actual Actual Actual Actual Pro-forma

2002 2001 2000 1999 1998

Group R000 R000 R000 R000 R000

Revenue 218 746 176 573 134 869 107 317 64 718

Profit before interest

and investment income 11 831 25 351 26 038 33 481 16 883

Net interest paid/(received)

and investment income 7 631 9 262 16 414 15 320 138

Profit before taxation 19 462 34 613 42 452 48 801 17 021

Taxation 1 476 6 269 10 035 14 771 5 414

Profit after taxation 17 986 28 344 32 417 34 030 11 607

Minority shareholders 132 (174) - - -

Net profit for the year 18 118 28 170 32 417 34 030 11 607

Ordinary shares in issue

net of treasury shares (000s) 240 093 263 255 272 700 272 700 224 978

Earnings per share (cents) 7.2 10,5 11,9 12,5 5,2

Headline earnings per share (cents) 10.9 11,3 12,6 13,0 5,3

Dividends per share (cents) 1.8 N/A N/A N/A 2,0

Share price (cents) 63 85 135 250 130

Group balance sheet - actual2002 2001 2000 1999

R000 R000 R000 R000

Non current assets

Property, plant and equipment 19 308 17 729 11 946 10 327

Intangible assets 47 294 28 166 24 350 24 001

Investments and loans receivable 24 108 29 353 23 073 16 352

Deferred taxation 5 986 1 273 994 -

Current assets

Inventory 4 711 3 505 2 698 734

Trade and other receivables 44 332 38 148 30 849 18 746

Cash and cash equivalents 63 081 88 196 99 510 81 605

Taxation 2 562 - - -

Total assets 211 382 206 370 193 420 151 765

Equity & liabilities

Shareholder’s interest 178 659 181 608 159 432 116 630

Minority interests - 174 - -

Non current liabilities

Long and medium-term loans 3 713 280 390 12 332

Deferred taxation - - - 54

Current liabilities

Trade and other payables 28 289 22 654 26 140 11 704

Taxation 721 1 654 7 458 11 045

Total equity and liabilities 211 382 206 370 193 420 151 765

Five year financial review for the year ended 30 September 2002

13

0

50

100

150

200

250

‘98 ‘99 ‘02‘01‘00

Revenue

* Pro-forma

*

AR2002 27/1/03 10:09 am Page 30

2002 2001 2000

Ordinary share performanceWeighted average number of ordinary shares in issue (000s) 251 478 267 626 272 700

Earnings per share (cents) 7,2 10,5 11,9

Headline earnings per share (cents) 10,9 11,3 12,6

Net asset value per share (cents) 74,4 68,9 58,5

Cash flow from operating activities per share (cents) 9.9 7,2 12,0

Dividends per share (cents)

Interim declared and paid 1.8 Nil Nil

Final declared 1.8 Nil Nil

Dividend cover 4 N/A N/A

Profitability and asset management Operating income to revenue (percent) 22.7 25,9 29,6

Return on total equity (percent) 15.2 17,8 24,7

Asset turnover ratio (times) 2.1 2,2 1,9

Debtors days 68.8 71,3 67,1

Inventory turnover (times) 33.8 32,7 29,9

Current ratio (times) 4,0:1 5,3:1 4,0:1

Employees Number of employees at year end 653 523 507

Revenue per employee (R000) 335 337 266

Operating profit per employee (R000) 76,20 87,49 78,75

Definitions The summary set out below incorporates definitions of terms used in this annual report.

• Net asset value per share - total equity divided by the number of ordinary shares in issue at year end.

• Cash flow from operating activities per share - cash flow from operating activities divided by weighted average number of ordinary shares in issue.

• Return on total equity - the percentage of headline earnings to average total equity.

• Asset turnover ratio - current year’s revenue divided by the average operating assets.

• Operating assets - total assets less investments and bank balances.

• Debtors days - the average debtors days divided by current year’s revenue multiplied by 365 days.

• Inventory turnover - the average inventory divided by current year’s cost of sales multiplied by 365 days.

• Current ratio - The ratio of current assets to current liabilities.

• Operating profit – The profit before interest received and/or paid, investment income, depreciation and amortisation, research and development and impairment.

Analysis of key ratios for the year ended 30 September 2002

14

0

10

20

30

40

50

60

70

80

‘00 ‘01 ‘02

Net asset value per share

0

2

4

6

8

10

12

‘00 ‘01 ‘02

Cash flow from operating activities per share

AR2002 27/1/03 10:09 am Page 31

The board of directors of UCS GroupLimited confirms its commitment to theprinciples of openness, integrity andaccountability as advocated in the KingCode on Corporate Governance.

As part of this commitment the board participated in an "effective director program" presented by Deloitte and ToucheEnterprise Risk Services in June this yearand in so doing, familiarised itself with themore recent recommendations set out inKing II of March 2002.

Owing to the relative size of the Group,certain aspects of the King Code ofCorporate Practice and Conduct are difficult to address, however the board will continue to strive to implement all recommendations at Group level and extend these practices wherever possible down to the respective subsidiarycompanies.

Board of directors The board of directors as set out on pagetwo of this report comprises a non-execu-tive chairman, five executive directors andfive non-executive directors.

The board meets at least four times a year.Non-executive directors, have access tomanagement, including the CompanySecretary, and to the information that isrequired to carry out their duties andresponsibilities fully and effectively as adirector.

The directors are entitled and authorised, at the Company’s expense, to seek independent professional advice about the affairs of the Group.

Executive directors do not have long-termservice contracts with the company. Interms of the company’s articles of associa-tion directors are subject to retirement byrotation and stand for re-election by shareholders at least every three years.

Internal control and risk managementIt is the directors’ responsibility to ensurethe maintenance of adequate accountingrecords and to prepare annual financialstatements that present the state of affairsand results of the Company and the Group.The external auditors are responsible forindependently auditing and reporting onthe fair presentation of these annual financial statements.

The annual financial statements referred toin this report have been prepared by

management in accordance with SouthAfrican Statements of Generally AcceptedAccounting Practice. They are based onappropriate accounting policies, whichhave been consistently applied and are supported by reasonable and prudentjudgement and estimates. The annual financial statements have been prepared ona going concern basis and the directors aresatisfied that the Company will remain agoing concern for the foreseeable future.

The directors are responsible for theprocess of risk management and the systemof internal controls. During the course ofthe 2003 financial year, management willembark on a risk management assessment,tailoring and documentation strategy whichwill set out to formalise the currentlyemployed risk management policies andpractices. This exercise will enable thedirectors to ensure that the appropriate riskand control policies are in place and takethe necessary corrective action where anycontrol policy is inappropriate or inade-quate. It is also seen as an opportunity tocommunicate "best practice" within theGroup as well as to benchmark againstgenerally accepted best practices.

Internal control systems are designed toprovide reasonable, but not absolute, assurance as to the reliability of the annual financial statements and to adequately safeguard, verify and maintainaccountability for assets. These controls are monitored throughout the Group by management and employees. Closemanagement supervision mitigates the risks that arise where certain duties are not separated due to limited administrationstaff within the subsidiary companies.Processes are in place to monitor internalcontrols, to identify material breakdownsand implement timely corrective action.

A practice was implemented during thecurrent financial year, as part of the monitoring process, which requires theexternal auditors of the respective subsidiary companies to report bi annually(at half year and year end), to the auditcommittee, on the system of internal controls and whether there has been anysignificant breakdown in the controls. We are pleased to report that no significantbreakdown has been reported at the year end.

Corporate governance

15

AR2002 27/1/03 10:09 am Page 34

Corporate governance continued

16

Based on the audit procedures performedto express an opinion on the fair presenta-tion of the annual financial statements, the auditors concur with the directors’statements on going concern and financialinternal controls.

Audit committee The audit committee is comprised of twonon-executive directors and one executivedirector.

• Mr P Terblanche (Chairman) • Mr EB Levenstein • Mr NA Michelson

The committee meets at least twice a year,at half year and year end, with additionalmeetings convened as necessary. The auditcommittee is entitled to invite one or more executives to attend the meeting with the requirement however that thechief financial officer and external auditrepresentative attend all audit committeemeetings.

The committee has adopted formal termsof reference which essentially state that the overall objective of the audit committeeis to assist the directors to discharge theirduties relating to safeguarding of assets,the operation of adequate systems and controls and the reviewing of financialinformation including interim and annualfinancial statements.

The committee has satisfied its responsibil-ities in respect of these terms.

Remuneration committeeThe remuneration committee is comprisedof three non-executive directors.

• Mr BP Hattingh (Chairman) • Mr EB Levenstein • Mr JR Claassen

The terms of reference of the remunerationcommittee are to:

• determine on behalf of the Board and the shareholders of the Company the broad policy for executive remuneration, and approve the entire individual remunera-tion packages for each executive director and other senior executives of both the holding company and its respective subsidiary companies;

• encourage enhanced Company and Group performance through the remuneration policy;

• recommend to the Board what it considers to be fair reward for individual contribution to the achievement of corporate goals;

• provide a mechanism for assurance to all stakeholders in the organisation that all aspects of executive remuneration are decided upon by the remuneration committee constituted of non-executive directors.

The committee meets at least twice a yearto review and approve remuneration practices and invites any such executivedirectors to attend meetings as deemednecessary to discuss performance of theexecutive directors. Where necessary theremuneration committee will draw on out-side advice with regard to remunerationcomparisons, philosophies and trends.

UCS Group Limited directors’ emolumentsfor the financial year ended 30 September2002 have been disclosed in note 2.4 to theannual financial statements.

Employee participation The group and its operating subsidiariesand divisions are committed to creating aworkplace in which individuals of abilityand application can develop rewardingcareers, regardless of their background,race or gender.

Employee participation is part of the culture of the group and employees areinvolved in developing and refining ofgroup values and participating in taskforces to investigate employee and related benefits.

TransformationThe group remains committed to support-ing social and workplace transformation ina free and democratic South Africa.Attention is focused on training and development with particular emphasis onpeople from previously disadvantagedcommunities.

The Group requires all its subsidiaries tocomply with employment equity legislationand submit and implement their respectiveplans at individual Company level.

Code of ethics The Group has published its basic tenets,which are set out on page two of thisreport. All employees are required to main-tain high ethical standards in ensuring thatthe Group's business practices are conducted in a manner which in all

reasonable circumstances complies withthese tenets.

Relations with shareholdersThe Group is represented by SouthgroInvestor Relations, an independent professional consultancy, and the investorrelation programme includes communica-tions with shareholders through interim andannual reports, meetings and presentations.

Insider tradingDirectors and other senior managementofficials of the Group who have access tounpublished price-sensitive information inrespect of any of the Group’s companiesmay not trade in UCS Group Limited’sshares during defined closed periods. At aminimum these periods run between theend of the interim and annual reportingperiods and the announcement of resultsfor such period.

AR2002 27/1/03 10:09 am Page 35

Certificate of compliance

In terms of Section 268 G(d) of theCompanies Act 1973, as amended, I certifythat the Company has lodged with theRegistrar of Companies all such returns asare required by the Companies Act and allsuch returns are true, correct and up todate.

V M A Broadrick

The directors of the Company are responsi-ble for the maintenance of adequateaccounting records and the preparation andintegrity of the annual financial statements,group annual financial statements andrelated financial information included inthis report. The annual financial statementsare prepared in accordance with SouthAfrican Statements of Generally AcceptedAccounting Practices.

The directors are also responsible for theGroup’s systems of internal controls andbelieve that these controls provide reason-able, but not absolute, assurance as to thereliability of the financial statements and toadequately safeguard, verify and maintainaccountability of assets and to prevent anddetect material misstatement and loss.

The directors are satisfied that theCompany will be a going concern for the

We have audited the annual financial statements and group annual financialstatements of UCS Group Limited set out on pages 18 to 42 for the year ended 30 September 2002. These financial statements are the responsibility of theCompany's directors. Our responsibility is to express an opinion on these financialstatements based on our audit.

Scope We conducted our audit in accordance with statements of South African AuditingStandards. Those standards require that we plan and perform the audit to obtainreasonable assurance that the financialstatements are free of material misstate-ment. An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

We believe that our audit provides a rea-sonable basis for our opinion.

Audit opinion In our opinion, the annual financial state-ments fairly present, in all materialrespects, the financial position of theCompany and of the Group at 30 September 2002, and the results of their operations and cash flows for the year thenended in accordance with South AfricanStatements of Generally AcceptedAccounting Practice and in the mannerrequired by the Companies Act in South Africa.

Chartered Accountants (SA) Registered Accountants and Auditors Johannesburg 15 November 2002

foreseeable future and have adopted thegoing concern basis in preparing the financial statements. The annual financialstatements and group annual financialstatements set out on pages 18 to 42 wereapproved by the Board of Directors atJohannesburg on 15 November 2002 andare signed on its behalf by:

R G Goodman

J D Bright

UCS Group Limitedand its subsidiaries

17

Annual financial statementsfor the year ended 30 September 2002

Directors responsibilities and approval of the annual financial statements

Report of the Independent Auditors to the Members of UCS Group Limited

AR2002 27/1/03 10:09 am Page 38

The directors have pleasure in submittingtheir report together with the annual financial statements of the Company and of the Group for the year ended 30 September 2002.

Nature of business UCS Group Ltd is an investment holdingcompany for a group of information technology businesses focused on the provision of software solutions and outsourcing services in selected niche markets.

Your Company and its subsidiaries operateas an information technology (IT) servicesgroup listed on the JSE SecuritiesExchange SA.

Financial results Group net profit for the year ended 30 September 2002 was R 18,118,893(2001 - R28,169,900) representing headlineearnings per ordinary share of 10,91 cents(2001 - 11,32 cents) based on the weightedaverage number of shares as set out in note6 to the financial statements.

Full details of the financial position andresults of the company and its subsidiariesare set out in the accompanying financialstatements.

Share capitalDuring the accounting period an additional17,962,911 (2001 - 9,444,800) ordinaryshares of UCS Group Limited were pur-chased by the wholly owned subsidiary,Universal Computer Services (Proprietary)Limited, at a total cost of R 13,140,864(2001 - R7,589,493), resulting in this subsidiary holding 9,95% (2001 - 3,46%)of UCS Group Limited’s issued ordinaryshare capital . Shareholders’ equity hasbeen reduced by the cost of these shares.There is no intention to trade in theseshares which are classified as treasuryshares.

During the year the company repurchased5,199,500 ordinary shares for R 3,448,086and cancelled these shares after they were delisted by the JSE SecuritiesExchange SA.

The authorised and issued capital isdetailed in note 15 to the financial statements.

Subsequent to the year end, applicationwas made to the JSE Securities ExchangeSA to delist a further 878,400 shares whichwere held by the subsidiary as treasury

shares and to cancel them upon receipt ofthe necessary authorisation.

Tangible and intangible assetsThere have been no major changes in thenature of the above assets during theaccounting period or any changes in thepolicy relating to their use.

Share incentive schemes The company has adopted Staff ShareTrusts in order to enable employees of thecompany and its subsidiaries to have theopportunity of acquiring an interest in theequity of the company, thereby providing such employees with furtherincentive to advance the group’s interestsand to promote an identity of purposebetween the employees and the shareholders of the company.

1.UCS Group Ltd Staff Share TrustThis trust was established during July1998. The total number of ordinary sharestaken up by the trust amounted to27,270,000 shares. The total number ofordinary shares held by the trust, for futureissue to employees, at the accounting dateamounted to 4,594,000 (2001 - 3,306,000)ordinary shares.

Options in respect of 1,281,000 (2001 -1,308,000) of the unallocated ordinaryshares had been granted to employees, tobe exercised at some time in the future.Subsequent to the year end no shares weretaken up by employees (2001 - Nil).

2. UCS Group Ltd Staff Share Scheme IIThis trust was established during February2001. A total of 4,070,000 redeemablepreference shares were allotted.

The terms relating to this trust are detailedin note 15 to the financial statements.

Dividends A dividend of 1,8c per share totallingR4,908,600 (2001 - R Nil) was paid on 8 July 2002.

SecretaryVerity Mary-Ann Broadrick served as secretary throughout the year.

Business address: Postal address:20th Floor P O Box 31266 209 Smit Street BraamfonteinBraamfontein 2002 2017

Directorate Mr D C Sparrow was appointed to theBoard of Directors on 1 August 2002.

Directors’ report

18

AR2002 27/1/03 10:09 am Page 39

19

The names of the directors of the Company in office at the year end are set out on page 2.

In accordance with the Company’s articlesof association Ms R J Eliot and Messrs J C Claassen and B P Hattingh retire byrotation, but being eligible, offer them-selves for re-election.

The aggregate interest of the directors inthe issued share capital of the company isset out in note 2.4.2.

Subsidiaries

Details of all the subsidiaries are set out onpage 42 of the financial statements.

The holding company’s interest in theaggregate profits after tax of the sub-sidiaries amounted to R10,286,108 (2001 -R9,403,146) and losses amounted toR22,114,445 (2001 -R9,124).

Subsidiaries under warranties

Computerkit Holdings (Proprietary) LimitedDuring a previous accounting period, theCompany acquired the total issued sharecapital of this company. The acquisition isthe subject of a profit warranty in order todetermine the final purchase price. Detailsare set out in note 29 of the financial statements.

CCS Software (Proprietary) Limited The Company increased its share holdingin this subsidiary from 51% to 62,76%with effect from 1 April 2002. This waseffected through a cash payment ofR1,400,000. There is a profit warranty,details of which are set out in note 29.

GAAP Point of Sale (Proprietary) Limited The Company acquired the business ofGAAP IT Solutions as a going concernthrough its wholly owned subsidiary company, Visability Solutions (Proprietary)Limited ("Visability"). As part of the acquisition , the Company disposed of 49% of its equity interest in Visability tothe vendors which resulted in theCompany’s interest diluting to its currentholding of 51%. Visability’s name was subsequently changed to GAAP Point ofSale (Proprietary) Limited. This acquisitionis subject to a profit warranty in order todetermine the final purchase price. Details are set out in note 29 of the financial statements.

Ultimate Connection (Proprietary) Limited Effective 1 May 2002, the Companyacquired 93% of the issued share capitaland shareholder loans of this company fora cash consideration of R3,529,930. TheCompany also assumed the subsidiary’soverdraft obligation of R16,702,000 whichamount was settled prior to the accountingdate. This acquisition is subject to a profitwarranty in order to determine the finalpurchase price. Details are set out in note29 of the financial statements.

The subsidiary changed its name to UCS Software (Proprietary) Limited on 1 November 2002

Major shareholders Besides the directors’ holdings (direct and indirect) and the treasury shares, thedirectors have not been informed of anyshareholdings other than those detailed asfollows, which are in excess of 5% of theissued share capital of the company at 30 September 2002.

Shareholder No. of shares % of issued

capital

UCS Group Ltd

Staff Share Trust 27,270,000 10,19%

Old Mutual Life

Assurance Co (SA) 21,875,572 8,18%

Post balance sheet events On 1 October 2002, the company acquiredthe business of Virtual Systems Technology(VST) as a going concern for R13,000,000through Electable Trading (Proprietary)Limited, a 100% held dormant company.The purchase consideration was paid incash. This acquisition may result in anadditional payment of R1-million shouldVST meets its forecast profit. Details areset out in note 29 of the financial statements.

An amount of R3,500,000 was paid to thevendors of Computerkit Holdings(Proprietary) Limited as detailed in note 29 as the company achieved its profit warranty in terms of the acquisition agreement for the current year.

A final dividend for the year of 1,8c pershare was declared on 15 November 2002.

No other material events occurred betweenthe accounting date and the date of thisreport.

AR2002 27/1/03 10:09 am Page 42

Notes Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

Revenue 218,746 176,573 4,465 5,936

Cost of sales 44,297 34,625 - -

Gross profit 174,449 141,948 4,465 5,936

Operating expenses 162,618 116,596 (12,710) 4,107

Selling, general and administration 124,691 96,192 4,575 4,087

Impairment of loan to staff share trust 8,115 - 8,115 -

Amortisation of trademark, goodwill and intellectual property 2.2 4,327 2,815 20 20

Depreciation of fixed assets 2.3 8,659 5,816 - -

Research and development costs 16,826 11,773 - -

Profit (loss) before finance and investment income 2 11,831 25,352 (8,245) 1,829

Investment income 3 9,145 9,447 8,700 110,092

Finance (charges) income 4 (1,514) (186) 17,6 88 9,921

Profit before taxation 19,462 34,613 18,143 121,842

Taxation 5 1,476 6,269 2,003 2,048

Profit after taxation 17,986 28,344 16,140 119,794

Attributable from (to)minority shareholders 17 132 (174) - -

Net profit for the year 18,118 28,170 16,140 119,794

Earnings

Per share 6 7,21c 10,53c

Fully diluted 6 7,09c 10,43c

Headline earnings

Per share 6 10,91c 11,32c

Fully diluted 6 10,73c 11,39c

Income statement for the year ended 30 September 2002

20

AR2002 27/1/03 10:09 am Page 43

Notes Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

Non current assets

Property, plant and equipment 7 19,308 17,729 58 -

Intangible assets 8 47,294 28,166 79 99

Investments in subsidiaries 9 - - 155,662 121,048

Investments 10 22,200 22,233 65,000 65,033

Staff share trust 11 1,624 6,731 1,624 6,731

Loans receivable 12 284 389 - -

Deferred taxation 13 5,986 1,273 24 17

96,696 76,521 222,447 192,928

Current assets

Inventory 14 4,711 3,505 - -

Trade and other receivables 44,332 38,148 2,926 3,467

Cash and cash equivalents 63,081 88,196 34,076 62,332

Taxation 2,562 - 107 -

114,686 129,849 37,109 65,799

Total assets 211,382 206,370 259,556 258,727

Equity and liabilities

Issued capital 15 1,221 1,337 1,354 1,384

Share premium 16 62,685 79,158 82,730 86,701

Accumulated profits 114,753 101,113 154,557 143,326

Total equity 178,659 181,608 238,641 231,411

Minority interest 17 - 174 - -

Non current liabilities

Long term loans 18 3,713 280 - -

Loans from subsidiaries 19 - - 19,036 25,780

3,713 280 19,036 25,780

Current liabilities

Trade and other payables 23,235 19,544 1,798 133

Taxation 721 1,654 - 1,346

Provisions 20 5,037 3,094 81 57

Current portion of long-term liabilities 18 17 16 - -

29,010 24,308 1,879 1,536

Total equity and liabilities 211,382 206,370 259,556 258,727

Balance sheet at 30 September 2002

21

AR2002 27/1/03 10:09 am Page 46

Ordinary Preference

share share Share Distributable

capital capital premium reserve Total

R’000 R’000 R’000 R’000 R’000

Group

Balance at 30 September 2000 1,364 - 85,125 72,943 159,432

Redeemable preference shares issued - 20 1,576 - 1,596

Treasury shares purchased (47) - (7,543) - (7,590)

Net profit for the year - - - 28,170 28,170

Balance at 30 September 2001 1,317 20 79,158 101,113 181,608

Treasury shares purchased (90) - (13,051) - (13,141)

Shares cancelled (26) - ( 3,422) - ( 3,448)

Cash dividend paid of 1,8 cents per share - - - (4,478) (4,478)



Company

Balance at 30 September 2000 1,364 - 85,125 23,532 110,021

Redeemable preference shares issued - 20 1,600 - 1,620

Share issue expenses - - (24) - (24)



Shares cancelled (30) - (3,971) - (4,001)

Cash dividend paid of 1,8 cents per share - - - (4,909) (4,909)



Statement of changes in equityfor the year ended 30 September 2002

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AR2002 27/1/03 10:09 am Page 47

Notes Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

Cash flow from operating activities 24,862 19,256 20,149 111,234

Cash generated from (utilised by) operations 21 33,149 33,939 (94) 1,850

Investment income 9,145 9,447 8,700 110,092

Working capital changes 22 (1,756) (11,592) 2,228 (10,157)

Cash generated from operating activities 40,538 31,794 10,834 101,785

Finance income (charge) (1,514) (186) 17,688 9,921

Taxation paid 23 (9,684) (12,352) (3,464) (472)

Dividend paid (4,478) - (4,909) -

Cash flow from investing activities (36,647) (24,640) (37,661) (115,932)

Acquisition of intangible assets 24 (23,455) (6,630) - -

Acquisition of property, plant and equipment 25 (11,016) (12,923) (58) -

Proceeds on disposal of property, plant and equipment 709 1,192 - -

Investment in subsidiaries - - (4,400) -

Loans advanced (2,902) (6,279) (33,220) (115,932)

Proceeds on disposal of investment 17 - 17 -

Cash flow from financing activities (13,330) (5,929) (10,744) (3,613)

(Decrease) Increase in minority shareholders interest (174) 174 - -

Proceeds of shares issued - 20 - 20

Treasury shares purchased (13,140) (7,589) (552) -

Share premium raised - 1,599 - 1,576

Treasury shares purchased for cancellation (3,449) - (3,449) -

Loans raised 3,433 - - -

Loans repaid - (109) (6,743) (5,209)

Payment of share issue expenses - (24) - -

Cash and cash equivalents

- Net decrease (25,115) (11,313) (28,256) (8,311)

- At beginning of year 88,196 99,509 62,332 70,643

- At end of year 63,081 88,196 34,076 62,332

Cash flow statementfor the year ended 30 September 2002

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AR2002 27/1/03 10:09 am Page 50

1. Accounting policiesThe annual financial statements and group annual

financial statements are prepared on the historical

cost basis and incorporate the following principal

accounting policies which have been consistently

applied in all material respects. These policies comply

with South African Statements of Generally Accepted

Accounting Practice. The financial statements are

prepared on a going concern basis.

1.1 Basis of consolidation

The group annual financial statements incorporate the

annual financial statements of the company and its

subsidiaries. The operating results of the subsidiaries

are included from the date on which control of the

assets and operations of the acquiree have actually

passed. All inter-company transactions and balances

have been eliminated. Premiums arising on the

acquisition of subsidiaries and any excess of the net

assets of a subsidiary over the cost of acquisition are

treated in terms of the group’s accounting policy for

intangible assets.

1.2 Property, plant and equipment

Property, plant and equipment is stated at cost to the

group less accumulated depreciation with the exception

of land which is not depreciated.

Depreciation is calculated on cost using the straight line

method over the estimated useful lives of the assets to

estimated residual values, as follows:

- Computer equipment 3 years

- Computer software 3 years

- Furniture, fixtures and fittings 6 years

- Buildings 10 years

- Motor vehicles 5 years

- Office equipment 5 years

- Rental equipment 3 years

- Improvements to

leased premises Remaining period of the lease

1.3 Intangible assets

Intangible assets are included at cost less amounts

written off.

Amortisation is calculated by a charge to income

computed on a straight line basis so as to write off the

cost over the following periods:

- Trademarks 10 years

- Intellectual property 10 years

- Goodwill 20 years

Goodwill arising on consolidation represents the excess

of the cost of acquisition over the Group’s interest in

the fair value of the identifiable assets and liabilities of

a subsidiary at the date of acquisition. Goodwill is

recognised as an asset and amortised on a straight line

basis following an assessment of its foreseeable life.

Current estimates of goodwill’s useful life do not

exceed 20 years.

On disposal of a subsidiary, the attributable amount of

unamortised goodwill is included in the determination

of the profit or loss on disposal.

1.4 Impairment

At each balance sheet date, the Group reviews the

carrying amounts of its tangible and intangible assets

to determine whether there is any indication that those

assets may be impaired. If any such indication exists,

the recoverable amount of the asset is estimated in

order to determine the extent of the impairment

(if any). Where it is not possible to estimate the

recoverable amount for an individual asset, the

recoverable amount is determined for the cash-

generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to

be less than its carrying amount, the carrying amount of

the asset is reduced to its recoverable amount.

Impairment losses are recognised as an expense

immediately, unless the relevant asset is carried at a

revalued amount under another Standard, in which case

the impairment loss is treated as a revaluation decrease

under the Standard.

Where an impairment loss subsequently reverses, the

carrying amount of the asset is increased to the revised

estimate of its recoverable amount, so that the increased

carrying amount does not exceed the carrying amount

that would have been determined had no impairment

loss been recognised for the asset in prior years.

A reversal of an impairment loss is recognised as

income immediately, unless the relevant asset is carried

at a revalued amount under another Standard, in which

case the reversal of the impairment loss is treated as a

revaluation increase under that other Standard.

1.5 Financial instruments

Financial instruments are initially measured at cost,

which includes transaction costs. Subsequent to initial

recognition these instruments are measured as set

out below.

Investments:

Unlisted investments are shown at fair value, unless

their fair value cannot be reliably determined, in which

case they are shown at cost less accumulated

impairment losses.

Trade and other receivables:

Trade and other receivables originated by the Group are

stated at cost less provision for doubtful debts.

Cash and cash equivalents:

Cash and cash equivalents are measured at fair value

based, where appropriate, on the relevant exchange

rates at balance sheet date.

Trade and other payables:

Non-derivative financial liabilities are recognised at

amortised cost, comprising original debt less principal

payments and amortisations.

Derivative instruments:

Derivative instruments are measured at fair value.

1.6 Inventory

Inventory is stated at the lower of actual cost or net

realisable value. Cost has been determined on the

first-in first-out basis.

1.7 Leasing

Leases are classified as finance leases whenever the

terms of the lease transfer substantially all the risks and

rewards of ownership to the lessee. All other leases are

classified as operating leases.

Where assets are being held under finance leases, the

cash cost of the asset is capitalised with the equivalent

amount being shown as a liability to the lessor. Lease

payments are apportioned between a reduction in

liability to the lessor and interest charged to income.

Rentals payable under operating leases are charged to

income on a straight line basis that reflects the pattern

of usage of the economic benefits from the leased asset

over the term of the relevant lease.

1.8 Deferred taxation

Deferred taxation is accounted for using the balance

sheet liability method in respect of temporary

differences arising from differences between the

carrying amount of assets and liabilities in the financial

statements and the corresponding tax bases used in the

computation of taxable profit. In principle, deferred

tax liabilities are recognised for all taxable temporary

differences and deferred tax assets are recognised to

the extent that it is probable that taxable profits will

be available against which deductible temporary

differences can be utilised. Such assets and liabilities

are not recognised if the temporary difference arises

from goodwill (or negative goodwill) or from the initial

recognition (other than in a business combination) of

other assets and liabilities in a transaction, which

affects neither the tax profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable

temporary differences arising on investments in

subsidiaries and associates, and interests in joint

ventures, except where the Group is able to control the

reversal of the temporary difference and it is probable

that the temporary difference will not reverse in the

foreseeable future.

Deferred tax is calculated at current tax rates. Deferred

tax is charged or credited in the income statement,

except when it relates to items credited or charged

directly to equity, in which case the deferred tax is also

dealt with in equity.

Notes to the financial statementsfor the year ended 30 September 2002

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AR2002 27/1/03 10:09 am Page 51

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

2. Profit (loss) before finance and investment incomeis stated after taking into account the items detailed below:

2.1 Auditors' remuneration

Fee for audit - current 674 423 149 79

Underprovision prior years 13 - - -

Fee for other services 70 22 - -

757 445 149 79


25

Deferred tax assets and liabilities are offset when they

relate to income taxes levied by the same taxation

authority and the Group intends to settle its current tax

assets and liabilities on a net basis.

1.9 Foreign currency

Assets and liabilities denominated in foreign currency

are accounted for at the rates of exchange ruling at the

balance sheet date, or at the forward rate determined in

forward exchange contracts. Gains and losses arising on

translation are dealt with in the income statement.

1.10 Investments

Investments are stated at cost less provision for any

permanent diminution in value.

1.11 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and

deposits with banks and other financial institutions and

investments in money market instruments.

1.12 Retirement benefits

Payments to defined contribution retirement benefit

plans are charged as an expense as they fall due.

For defined benefit retirement benefit plans, the cost of

providing benefits is determined using the projected

unit credit method, with actuarial valuations being

carried out on a regular annual basis. Actuarial gains

and losses which exceed 10 per cent of the greater of

the present value of the Group’s pension obligations

and the fair value of the plan assets are amortised over

the expected average remaining working lives of the

participating employees. Past service cost is recognised

immediately to the extent that the benefits are already

vested, and otherwise amortised on a straight line basis

over the average period until the amended benefits

become vested.

The amount recognised in the balance sheet represents

the present value of the defined benefit obligation as

adjusted for unrecognised actuarial gains and losses and

unrecognised past service cost, and reduced by the fair

value of the plan assets. Any asset resulting from this

calculation is limited to unrecognised actuarial losses

and past service cost, plus the present value of

available refunds and reductions in future contributions

to the plan.

1.13 Revenue recognition

Revenue, which excludes value-added tax is recognised

as follows:

Revenue from the sale of goods

Revenue from the sale of goods is recognised when

significant risks and rewards of ownership are

transferred to the buyer.

Revenue arising from the rendering of services

Revenue arising from the rendering of services, which

include computer processing services, software

development charges, licence fees, installation and

maintenance charges and training, is recognised on

the accrual basis in accordance with the substance of

the agreement.

Finance income

Interest is recognised when it accrues to the group on a

time proportion basis, taking account of the principal

outstanding and the effective yield of the asset.

Investment income

Cash dividends and the full cash equivalent of

capitalisation share awards received, where applicable,

are recognised when the right to receive payment or

transfer is established.

1.14 Research and development costs

Research and development expenditure is written off in

the period in which it is incurred.

1.15 Provisions

A provision is recognised in the balance sheet when the

Group has a legal or constructive obligation as a result

of a past event and it is probable that it will be required

to settle the obligation.

AR2002 27/1/03 10:09 am Page 52

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

2.2 Amortisation of intangible assets

Trademark 2,593 2,104 20 20

Goodwill 555 238 - -

Intellectual property 1,179 473 - -

4,327 2,815 20 20

2.3 Depreciation of property, plant and equipment

Rental equipment 1,258 312 - -

Computer software 2,372 1,174 - -

Computer equipment 3,037 2,679 - -

Furniture, fixtures and fittings 485 408 - -

Motor vehicles 316 304 - -

Office equipment 489 383 - -

Improvements to leased premises 646 484 - -

Leased motor vehicle - 20 - -

Land and buildings 56 52 - -

8,659 5,816 - -

2.4 Directors' remuneration and interests

2.4.1 Non-executive directors

Services as directors 118 52 118 52

Consulting fees 493 272 493 272

Executive directors

Salaries and bonuses 2,583 2,226 2,583 2,226

Retirement , medical and other benefits 667 451 667 451

Total directors’ remuneration 3,861 3,001 3,861 3,001

Paid by subsidiaries 2,390 2,065

Remuneration paid by company 1,471 936

Executive Directors Other Total Total

Salary Bonus benefits 2002 2001

J D Bright 722 52 245 1,019 863

D F Coles 679 49 220 948 804

N A Michelson 627 35 123 785 612

D C Sparrow 73 - 2 75 -

P Fitzgerald 346 - 77 423 398

2,447 136 667 3,250 2,677

Non-Executive Directors Fees Consulting Total Total

Fees 2002 2001

R G Goodman 53 - 53 22

J R Claassen 20 - 20 10

R J Eliot 20 - 20 10

B P Hattingh(refer note 31.2) 25 - 25 10

E B Levenstein - - - -

P Terblanche 25 468 493 272

143 468 611 324

Total paid 3,861 3,0010


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2.4.2 Directors interests in share capital

The aggregate interests of the directors in the issued ordinary share capital of the company are as detailed

Beneficial Non-beneficial

Non-executive ’000 ’000

R G Goodman 5 -

E B Levenstein 17,620 6,380

17,625 6,380

Executive

J D Bright 5,945 31,400

D F Coles 7,595 29,760

P Fitzgerald - 5,118

13,540 66,278

September 2002 31,165 72,658

September 2001 31,165 72,658

2.4.3 Loan granted by Staff Share Trust

Ordinary Preference Loan

Name shares shares balance

’000 ’000 R’000

J D Bright 500 - 437

D F Coles 500 - 437

N A Michelson 1,000 500 2,224

P S Fitzgerald 205 - 179

P Terblanche - 500 201

2,205 1,000 3,478

2.4.4 Directors’ interests in contracts

The directors have declared at the approval date of this report that they are not materially interested in any transaction of significance with the company or any of its subsidiaries.

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

2.5 Loss (net of gains) on disposal of property, plant and equipment 70 130 - -

2.6 Loss on disposal of listed investments 15 - 15 -

2.7 Operating lease charges

Premises 5,710 6,788 - -

Office equipment 104 980 - -

5,814 7,768 - -

2.8 Staff costs 102,630 76,816 1,596 1,450


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Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

3. Investment income

Dividends from unlisted investment 9,145 9,447 8,700 110,092

4. Finance income

Net finance income is made up as follows:

Interest paid 8,369 7,329 2,458 2,778

Interest received: 2,945 2,149 16,236 7,705

Subsidiary companies - - 14,904 6,883

Other sources 2,945 2,149 1,332 822

Net interest (paid) received (5,424) (5,180) 13,778 4,927

Capital appreciation on endowment investments 3,910 4,994 3,910 4,994

(1,514) (186) 17,688 9,921

5. Taxation

5.1 South African normal taxation

-Current 5,881 6,548 1,702 2,056

-Prior year 61 - 61 -

Capital gains taxation 247 - 247 -

Deferred taxation (4,713) (279) (7) (8)

1,476 6,269 2,003 2,048

5.2 Reconciliation of the rate of taxation % % % %

South African normal tax rate 30,00 30,00 30,00 30,00

Adjusted for:

Exempt income (20,78) (16,76) (20,85) (28,33)

Non-deductible items 16,53 5,55 0,24 0,02

Capital gains taxation 1,27 - 1,36 -

Assessed losses (20,70) - - -

Other 1,27 (0,68) 0,29 (0,01)

Effective rate 7,59 18,11 11,04 1,68

5.3 Tax losses available for set off in subsidiaries against future taxable income is estimated at 28,500 - - -

5.4 Unutilised STC Tax credits(tax value) 2,198 2,268


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6. Earnings per share

Earnings per share is based on earnings attributable to shareholders of the company and the weighted average number of shares in issue during the year after taking the share buyback pro-

gram into account.

Group

2002 2001

R’000 R’000

Earnings attributable to ordinary shareholders 18,118 28,170

Weighted average number of

- ordinary shares in issue 251,478 267,626

- fully diluted shares in issue 255,548 270,000

Earnings per share 7,21c 10,53c

Adjusted for: (net of taxation) Amortisation of intangible assets 1,41c 0,76c

Trademarks 0,72c 0,67c

Intellectual property 0,47c -

Goodwill 0,22c 0,09c

Sale of property, plant and equipment 0,03c 0,03c

Impairment of loan 2,26c -

Headline earnings 10,91c 11,32c

Earnings (fully diluted) 7,09c 10,43c

Headline earnings(fully diluted) 10,73c 11,39c

Effect of share buyback program on headline earnings 0,62c 0,11c

7. Property, plant and equipment Accumulated Carrying

Cost Depreciation value

R’000 R’000 R’000

7.1 2002 Group

Immovable property 593 108 485

Computer software 10,362 6,059 4,303

Computer equipment 13,998 8,513 5,485

Furniture, fixtures and fittings 3,295 1,419 1,876

Motor vehicles 1,519 741 778

Rental equipment 5,628 1,531 4,097

Office equipment 2,554 1,478 1,076

Improvements to leased premises 2,810 1,602 1,208

Total assets 40,759 21,451 19,308

2001 Group

Immovable property 525 53 472

Computer software 9,690 4,030 5,660

Computer equipment 9,325 4,920 4,405

Furniture, fixtures and fittings 2,761 868 1,893

Motor vehicles 1,739 639 1,100

Office equipment 2,308 983 1,325

Improvements to leased premises 2,616 924 1,692

Rental equipment 1,497 315 1,182

Total assets 30,461 12,732 17,729

2002 Company

Computer software 58 - 58


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7.2 Movement summary Carrying

Carrying value Current value

beginning of year Additions Disposals depreciation end of year

R’000 R’000 R’000 R’000 R’000

2002 Group

Immovable property 472 68 - (55) 485

Computer software 5,660 1,140 (125) (2,372) 4,303

Computer equipment 4,405 4,335 (218) (3,037) 5,485

Furniture, fixtures and fittings 1,893 480 (11) (486) 1,876

Motor vehicles 1,100 234 (240) (316) 778

Improvements to leased premises 1,692 162 - (646) 1,208

Office equipment 1,325 252 (12) (489) 1,076

Rental equipment 1,182 4,345 (172) (1,258) 4,097

17,729 11,016 (778) (8,659) 19,308

2001 Group

Immovable property 1,120 - (596) ( 52) 472

Computer software 2,175 4,659 - (1,174) 5,660

Computer equipment 3,746 3,783 (445) (2,679) 4,405

Furniture, fixtures and fittings 1,547 768 (14) (408) 1,893

Motor vehicles 979 615 (205) (304) 1,085

Improvements to leased premises 1,107 1,069 - (484) 1,692

Office equipment 1,236 535 (63) (383) 1,325

Rental equipment - 1,494 - (312) 1,182

Leased motor vehicles 35 - - ( 20) 15

11,945 12,923 (1,323) (5,816) 17,729

2002 Company

Software - 58 - - 58

Group

2002 2001

R’000 R’000

7.3 Details of immovable property are as follows:

Land and buildings

At cost -2001 525 525

Additions -2002 68 -

Less accumulated depreciation (108) (53)

485 472

Erf 4264 Durbanville situate at 19a King Street, Durbanville, Cape Town acquired in 2001. The fixed property is encumbered by a mortgage bond as detailed in note 18.4.

8. Intangible assets Amounts Carrying

Cost written off value

R’000 R’000 R’000

8.1 Group - 2002

Trademarks 30,595 9,621 20,974

Intellectual property 13,460 1,652 11,808

Goodwill 15,503 991 14,512

59,558 12,264 47,294

2001

Trademarks 21,796 7,028 14,768

Intellectual property 9,460 473 8,987

Goodwill 4,860 449 4,411

36,116 7,950 28,166

Company - 2002

Trademark 250 171 79

2001

Trademark 250 151 99


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8.2 Movement summary Carrying

Carrying value Current value

beginning of year Additions Disposals depreciation end of year

R’000 R’000 R’000 R’000 R’000

Group 2002

Trademarks 14,768 8,799 - (2,593) 20,974

Intellectual property 8,987 4,000 - (1,179) 11,808

Goodwill 4,411 10,656 - (555) 14,512

28,166 23,455 - (4,327) 47,294

Group 2001

Trademarks 19,912 - (3,040) (2,104) 14,768

Intellectual property - 9,460 - (473) 8,987

Goodwill 4,439 210 - (238) 4,411

24,351 9,670 (3,040) (2,815) 28,166

Company 2002

Trademark 99 - - (20) 79

Company 2001

Trademark 119 - - (20) 99

9. Interest in subsidiaries Company

2002 2001

R’000 R’000

Shares at cost 7,256 2,856

Indebtedness by subsidiary companies 148,406 118,192

155,662 121,048

Details of subsidiaries are reflected on page 42.


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10. Investments Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

Listed investments - 33 - 33

Unlisted investments 22,200 22,200 65,000 65,000

22,200 22,233 65,000 65,033

10.1. Market value of listed investments 25 25

10.2 Unlisted investments comprise

650 13,38% redeemable cumulative participating

preference shares in Darrenfield Investments (Pty) Ltd 65,000 65,000 65,000 65,000

Less loan payable

Quarryfield Investments (Proprietary) Limited (42,800) (42,800) - -

22,200 22,200 65,000 65,000

Directors valuation of unlisted investments 22,200 22,200 65,000 65,000

The coupon rate of 13,38% is linked to the interest rate payable in respect of the R153 Government bond.

These shares have been pledged as security for loans granted by Quarryfield Investments (Pty) Ltd (per note 30.2).

The loans from Quarryfield Investments (Pty) Ltd currently bear interest at the rate of 16,67% p.a. which is compounded semi-annually in arrear and which is payable six-monthly.

The interest rate is linked to the interest rate payable in respect of the R153 Government bond.

The capital amount of the loans is repayable no later than 31 March 2010. The loans are unsecured but have been guaranteed by this company.

As security for the performance of Darrenfield Investments (Pty) Ltd, Quarryfield Investments (Pty) Ltd has re-ceded to the company all rights, title and interest to the loans granted to the

subsidiaries and the staff share trust.

The company has entered into an option agreement with Peregrine Finance (Pty) Ltd to place any preference shares issued to the company in Darrenfield Investments (Pty) Ltd to Peregrine

Finance (Pty) Ltd for R100,000 per share. The option period will extend for 3 years and 1 day after the issue of the first share and ending 3 years and 1 day after the issue of the last share.

11. Staff share trust

UCS Group Limited Staff Share Scheme II 1,624 1,632 1,624 1,632

UCS Group Limited Staff Share Trust - 5,099 - 5,099

Loan 8,114 5,099 8,114 5,099

Impairment of loan 8,114 - 8,114 -

1,624 6,731 1,624 6,731

These loans bear interest at mutually agreeable rates and have no fixed date for repayment.


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12. Loans receivable

These loans bear interest at the prime bank overdraft rate and have no fixed date for repayment.

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

13. Deferred taxationThe movement is reconciled as follows:

Balance - beginning of year 1,273 994 17 9

Income statement credit 4,713 279 7 8

Balance - end of year 5,986 1,273 24 17

Comprising:

Deferred taxation asset 6,067 1,279 24 17

- Provisions 1,459 1,279 24 17

- Assessed tax losses 3,975 - - -

- Capital allowances (78) - - -

- Other 711 - - -

Deferred taxation liability (81) ( 6) - -

- Capital allowances (189) (67) - -

- Provisions 108 61 - -

5,986 1,273 24 17

14. Inventory

Consumables 24 14

Merchandise for resale 4,687 3,491

4,711 3,505

15. Share capital

15.1 Authorised

480,000,000 ordinary shares of 0,005c each 2,400 2,400 2,400 2,400

20,000,000 redeemable preference shares of 0,005c each 100 100 100 100

400,000 A class shares 2 2 2 2

600,000 B class shares 3 3 3 3

800,000 C class shares 4 4 4 4

1,000,000 D class shares 5 5 5 5

1,200,000 E class shares 6 6 6 6

1,600,000 F class shares 8 8 8 8

2,400,000 G class shares 12 12 12 12

3,200,000 H class shares 16 16 16 16

4,000,000 I class shares 20 20 20 20

4,800,000 J class shares 24 24 24 24

Total authorised share capital 2,500 2,500 2,500 2,500


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Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

Issued

266,622,100 (272,700,000) ordinary shares of 0,005c each 1,334 1,364 1,334 1,364

4,070,000 redeemable preference shares of 0,005c each 20 20 20 20

81,400 A class shares - - - -

122,100 B class shares 1 1 1 1

162,800 C class shares 1 1 1 1

203,500 D class shares 1 1 1 1

244,200 E class shares 1 1 1 1

325,600 F class shares 2 2 2 2

488,400 G class shares 2 2 2 2

651,200 H class shares 3 3 3 3

814,000 I class shares 4 4 4 4

976,800 J class shares 5 5 5 5

1,354 1,384 1,354 1,384

Treasury shares acquired by subsidiary 26,529,311 (9,444,800)

ordinary shares of 0,005c each 133 47 - -

Total issued share capital 1,221 1,337 1,354 1,384

15.2 Rights and limitations attaching to the redeemable preference shares (incentive shares).

A total of 15,930,000 incentive shares remain unissued for the benefit of the UCS Group Limited Share Scheme II. All the issued incentive shares have been taken up by

incentive participants.

The incentive shares have limited rights relative to the ordinary shares. The incentive shares will compulsorily automatically convert, at staggered intervals, into ordinary shares, if certain

objectively determinable criteria based on the performance of the company, are met. The incentive shares will not be listed on the JSE Securities Exchange SA. Holders of the incentive

shares will have the right to receive a dividend equal to 10% of any dividend declared and paid to ordinary shareholders.

15.3 Detailed conditions and rights relating to the various classes of the par value redeemable preference shares may be inspected at the company’s registered office.

15.4 The unissued shares are under the control of the directors until the forthcoming annual general meeting.

16. Share premium

Balance at beginning of year 79,158 85,125 86,701 85,125

Premium on shares (cancelled) issued during year (3,971) 1,600 (3,971) 1,600

Share issue expenses - (24) - (24)

Premium on treasury shares (12,309) (7,543) - -

Loss on treasury shares

cancelled (193) - - -

62,685 79,158 82,730 86,701


34

AR2002 27/1/03 10:09 am Page 33

Group

2002 2001

R’000 R’000

17. Minority interest

At beginning of year 174 -

Acquisition of shares (from) by minority (42) -

Share of (loss) profit (132) 174

At end of year - 174

18. Long term loans

Loans from shareholders of subsidiaries 3,165 -

Unsecured loan 265 -

Installment sale agreement 1 10

Amount owing 18 26

Less current portion 17 16

Mortgage bond 282 270

3,713 280

18.1 The loans from the shareholders of subsidiary companies are unsecured and interest free with no specified date for repayment.

18.2 The unsecured loan bears interest at 17% p.a and is repayable in monthly instalments of R2,000.

18.3 The instalment sale agreement is secured over motor vehicles with a book value of R 31,873 (2001 - R42,498). The loan bears interest at

17,69% (2001 - 15,65%) per annum and is repayable in monthly instalments of R 944 (2001 - R923).

18.4 The mortgage bond is secured by a first mortgage over Erf 4264 Durbanville and bears interest at 16% (2001 - 13,68%) per annum and is

repayable in monthly instalments of R 4,354 (2001 - R3,893).

18.5 Interest rates vary with the prime overdraft rates.

19. Loans from subsidiaries

Accsys (Pty) Ltd 1,121 2,352

Easirun Software (Pty) Ltd 2,501 2,404

Universal Computer Services (Pty) Ltd 13,032 18,334

Universal Knowledge Software (Pty) Ltd 2,382 2,690

19,036 25,780

These loans are unsecured and bear interest at the call account rate from time to time. No date has been specified for repayment of these loans.


35

AR2002 27/1/03 10:09 am Page 32

20. Provisions

Provision for Provision for Provision for Other Total

leave pay incentive bonus programmers

commission

R’000 R’000 R’000 R’000 R’000

Group -2002

Balance - beginning of year 3,094 - - - 3,094

Additional amount provided(net) 1,346 373 198 26 1,943

Balance- end of year 4,440 373 198 26 5,037

Group -2001

Balance - beginning of year 2,892 - - - 2,892

Additional amount provided(net) 202 - - - 202

Balance - end of year 3,094 - - - 3,094

Company -2002

Balance - beginning of year 57 - - - 57


Balance -end of year 81 - - - 81

Company -2001

Balance - beginning of year 28 - - - 28


Balance - end of year 57 - - - 57


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AR2002 27/1/03 10:09 am Page 29

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

21. Cash generated from (utilised by) operations

Net profit before taxation 19,462 34,613 18,143 121,843

Adjustments for:

Loss on disposal of assets 85 130 16 -

Depreciation and amortisation 12,986 8,631 20 20

Impairment of loan 8,115 - 8,115 -

Investment income (9,145) (9,447) (8,700) (110,092)

Net interest paid (received) 5,424 5,180 (13,778) (4,927)

Capital appreciation on endowment investments (3,910) (4,994) (3,910) (4,994)

Minority shareholders share of (loss) profit 132 ( 174) - -

33,149 33,939 (94) 1,850

22. Working capital changes

Increase in inventory (1,206) (806) - -

(Increase) decrease in accounts receivable (6,184) (7,299) 540 (3,248)

Increase (decrease) in accounts payable 5,634 (3,487) 1,688 (6,909)

Net (increase) decrease (1,756) (11,592) 2,228 (10,157)

23. Taxation paid

Amount unpaid - beginning of year (1,654) (7,458) (1,346) 238

Taxation charge for year (6,189) (6,548) (2,011) (2,056)

Amount unpaid - end of year (1,841) 1,654 (107) 1,346

Amount paid (9,684) (12,352) (3,464) (472)

24. Acquisition (disposal) of intangible assets

Trademarks 8,799 (3,040)

Intellectual property 4,000 9,460

Goodwill 10,656 210

23,455 6,630


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AR2002 27/1/03 10:09 am Page 28

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

25. Acquisition of property, plant and equipment

Immovable property 68 -

Computer software 1,140 4,659 58 -

Motor vehicles 234 615

Computer equipment 4,335 3,783

Furniture, fixtures and fittings 480 768

Office equipment 252 535

Improvements to leased premises 162 1,069

Rental equipment 4,345 1,494

11,016 12,923 58 -

26. Retirement benefits

The Group provides retirement benefits for all its permanent employees. A number of defined contribution funds and a defined benefit fund exists which are governed by the Pension Funds

Act of 1956. In respect of the defined contribution funds, the employer contributes at a fixed rate and for the defined benefit fund, the employer contributes at a rate which is adequate to

fully fund the benefits.

The defined benefit plan was actuarially valued at 28 February 2002. Provision has been made for all benefit obligations, taking into account the accounting policy, and no events have taken

place which could have materially affected the fund. The fund was reported to be in a sound financial position at the valuation date. The previous actuarial valuation took place on

28 February 1999. Comparative figures relate to that valuation.

Present value of fund obligations 10,670 5,596

Less fair value of plan assets 10,051 5,161

Unrecognised actuarial losses (619) (435)

There are no unrecognised past service costs nor any unrecognised assets.

The company has no company equity securities included in any of the benefit plan assets nor are there any properties owned by the plan and by the company or any of its subsidiaries.

The principal actuarial assumptions applied in the determination of fair values include:

Expected return on plan assets 13,0% 14,2%

Expected future salary increases 11,0% 12,0%

Number of members 12 14

Employee costs

Current year salary and benefit costs in respect of employees covered by

defined benefit plan 4,489 3,558

Past service costs - -

4,489 3,558

Contribution in respect of defined benefit plan 1,422 1,280

Total employee costs 5,911 4,838


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AR2002 27/1/03 10:09 am Page 25

Group Company

2002 2001 2002 2001

R’000 R’000 R’000 R’000

27. Commitments

Operating lease commitments

Due within one year 8,572 6,713 - -

Due within two to five years 18,107 19,623 - -

Due after five years - - - -

Total operating lease commitments 26,679 26,336 - -

28. Financial instruments

Credit risk

Financial assets which potentially subject the group to concentrations of credit risk consist principally of cash, short-term deposits and trade receivables. The group’s cash equivalents and

short-term deposits are placed with high credit quality financial institutions. Trade receivables are presented net of the allowance for doubtful receivables. Credit risk with respect to trade

receivables is limited due to the large overall customer base of the Group. Accordingly, the group has no significant concentration of credit risk.

The carrying amounts of financial assets included in the consolidated balance sheet represent the group’s exposure to credit risk in relation to these assets.

Fair values

At 30 September 2002 and 2001, the carrying amounts of cash and short-term deposits, receivables, payables and accrued expenses, and short-term borrowings approximated their fair values

due to the short-term maturities of these assets and liabilities.

The fair values of marketable securities are presented in note 10. The fair values of long-term borrowings are not materially different from the carrying amounts.

Interest rate risk

The group’s exposure to interest rate risk and the effective interest rates on financial instruments at balance sheet date are:

Weighted

average

effective Floating Non-interest

interest rate interest rate bearing Total

% R’000 R’000 R’000

30 September 2002

Assets

Cash 9,18 63,082 - 63,082

Receivables 283 44,332 44,615

Total financial assets 63,365 44,332 107,697

Liabilities

Payables - 28,272 28,272

Loans 16,47 565 3,165 3,730

Total financial liabilities 565 31,437 32,002

Net financial assets 62,800 12,895 75,695

30 September 2001

Total financial assets 88,585 38,148 126,733

Total financial liabilities 296 22,638 22,934

Net financial assets 88,289 15,510 103,799


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AR2002 27/1/03 10:09 am Page 24

29. Contingent liabilities

Contingent liabilities exist in respect of the following:

29.1 Computerkit Holdings (Proprietary) Limited

A maximum amount of R9,25 million(the balance remaining after the second payment),may become payable in respect of the balance of the purchase price owing to the vendors of this

company. A payment will be made during November 2003, should certain profit warranties be met for the year ending 30 September 2003. Any amount due may be payable in shares and/or

cash, at the option of the directors of UCS Group Ltd.

An amount of R3,5 million was paid, in cash, on 8 November 2002 to the vendors of this company, the second tranche of the profit warranty in respect of the year ended to 30 September

2002, having been met. This amount has been deducted from the total amount which may become payable as reflected above.

The first tranche in respect of the period to 30 September 2001 amounting to R3 million was paid during this year.

29.2 CCS Software (Proprietary) Limited

An adjustment to the purchase price for this company may become payable should certain profit warranties be met. The final payment, if required, will be made in respect of the period

ending 31 March 2005. The initial warranty period commenced on 1 March 2001 and terminates on 31 March 2004. In respect of the additional interest (11.76%) acquired during the current

financial year, the profit warranty period was extended to 31 March 2005.

29.3 GAAP Point of Sale (Proprietary) Limited

An adjustment to the purchase price for this company may become payable should certain profit warranties be met. The Company may acquire additional equity (up to 10%) at no cost

should the profit warranties not be achieved. The warranty commenced on 1 February 2002 and terminates on 31 January 2005.

29.4 Ultimate Connection (Proprietary) Limited

An additional amount, limited to a maximum of R4 million, may become payable in respect of the purchase price, should certain profit warranties be met for the period ended 30 April 2003.

The minority shareholder has entered into an agreement to dispose of 7% in the subsidiary company, at any time between 1 June and 31 December 2004 at a price based on a predetermined

formula.

29.5 Virtual Systems Technology

An amount limited to a maximum of R1 million, may become payable should this company achieve its forecast earnings for the period ended 31 March 2003.

30. Guarantees

30.1 Guarantees amounting to R286,900 for the rental of premises by subsidiary companies have been issued by the bankers of those subsidiaries in favour of their landlords.

30.2 A guarantee has been issued in favour of Quarryfield Investments (Pty) Ltd on behalf of subsidiary companies and the UCS Group Ltd Staff Share Trust to secure their indebtedness

to it. The amounts owing to Quarryfield Investments (Pty) Ltd by the various borrowers amount to R60,000,000.

As additional security, the company has pledged its unlisted investment in Darrenfield Investments (Pty) Ltd to the loan creditor.

31. Related party transactions

31.1 The holding company and subsidiaries are considered to be related parties. During the year, group companies, in the ordinary course of business, entered into various sale and purchase

transactions under terms that are no less favourable than those arranged with third parties on an arm’s length basis.

31.2 The company entered into a consulting arrangement with a company associated with Mr B P Hattingh, a non-executive director of the company, for executive appointments and

human resource due diligence investigations on the acquisition of new subsidiaries. A total of R400,900 was paid for these services which are considered to be done at arm’s length

taking cognisance of market related circumstances.


40

AR2002 27/1/03 10:09 am Page 21

Group

2002 2001

R’000 R’000

32. Segmental information

Business segment

Revenue 218,746 176,573

Retail solutions 158,052 122,759

Non-retail solutions 60,694 53,814

Corporate and eliminations - -

Profit from operations 49,758 45,756



Corporate and eliminations 14,016 18,715

Amortisation and depreciation 12,986 8,632



Corporate and eliminations 465 481

Research and development 16,826 11,773



Corporate and eliminations - -

Assets 211,382 206,370



Corporate and eliminations 38,703 64,539

Liabilities 32,723 24,588



Corporate and eliminations (45,766) (41,360)


41

AR2002 27/1/03 10:09 am Page 20

Issued

share Effective holding Shares at cost

capital 2002 2001 2002 2001

R % % R’000 R’000

Accsys (Pty) Ltd 100 100 100 - -

CCS Software (Pty) Ltd 100 62,76 51 1,400 -

Computerkit Holdings (Pty) Ltd 1,000 100 100 5,856 2,856

Easirun Software (Pty) Ltd 100 100 100 - -

GAAP Point of Sale (Pty) Ltd

(formerly Visability Solutions (Pty) Ltd) 100 51 100 - -

UCS Brands (Pty) Ltd 1 100 100 - -

Ultimate Connection (Pty) Ltd* 300 93 - - -

Universal Computer Services (Pty) Ltd 100 100 100 - -

Universal Knowledge Software (Pty) Ltd 100 100 100 - -

7,256 2,856

Amounts due by subsidiary companies 148,406 118,192

CCS Software (Pty) Ltd 18,472 15,332

Computerkit Holdings (Pty) Ltd 5,489 3,062

GAAP Point of Sale (Pty) Ltd 2,346 -

UCS Brands (Pty) Ltd 100,923 99,798

Ultimate Connection (Pty) Ltd 21,176 -

Amount due 32,915 -

Less : impairment 11,739 -

155,662 121,048

All subsidiary companies are incorporated in South Africa.

* The name of Ultimate Connection (Pty) Ltd was changed to UCS Software (Pty) Ltd with effect from 1 November 2002.

Schedule of interest in subsidiary companiesfor the year ended 30 September 2002

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AR2002 27/1/03 10:09 am Page 17

2002 2001

R’000 % R’000 %

Revenue 218,746 176,573

Cost of goods, overheads and other expenses (90,799) (65,307)

Value added 127,947 111,266

Income from investments 16,000 16,591

Wealth created 143,947 100 127,857 100

Distribution of wealth

Employees 102,630 71,3 76,816 60,1

Salaries, wages and benefits

Providers of capital 8,369 5,8 7,329 5,7

Interest paid

Government 6,689 4,6 7,015 5,5

Taxation 6,189 4,3 6,548 5,1

Local taxes 500 0,3 467 0,4

Reinvested in group activities 26,259 18,3 36,697 28,7

Deferred tax (4,713) (3,3) (279) (0,3)

Depreciation 12,986 9,0 8,632 6,8

Profit after taxation 17,986 12,6 28,344 22,2

Wealth distributed 143,947 100 127,857 100

Value added statementfor the year ended 30 September 2002

43

Distribution of wealth

Employees 71,3%

Providers of capital 5,8%

Government 4,6%

Reinvestment in group activities 18,3%

AR2002 27/1/03 10:09 am Page 16

Shareholding by category Number of Percentage Number of Percentage

shareholders of total shares held of total

1- 10 000 88 72.73 380,220 0.14

10 001- 100 000 17 14.05 611,133 0.23

100 001- 500 000 11 9.09 2,175,302 0.81

500 001- 1 000 000 2 1.65 1,103,250 0.42

over 1 000 000 3 2.48 263,230,595 98.40

Total 121 100 267,500,500 100

Shareholder analysisat 30 September 2002

Description Number of Percentage Number of Percentage

shareholders of total shares held of total

Individuals 101 83.48 5,433,258 2.03

Limited companies 3 2.47 731,500 0.27

Nominee companies/trusts 13 10.75 7,697,647 2.88

Close corporations 3 2.47 25,100 0.01

Central securities depository 1 0.83 253,612,995 94.81

Total 121 100 267,500,500 100

Share performancefor the year ended 30 September 2002

2002 2001 2000 1999

Market price(cents)-closing at 30 September 63 85 135 250

-high for the year (cents) 85 135 359 348

-low for the year (cents) 52 63 130 110

Number of shares traded for the year (000s) 41,604 29,718 44,432 38,332

Market capitalisation at 30 September (Rm) 169 224 368 559

Shareholding analysisat 30 September 2002

44

AR2002 27/1/03 10:09 am Page 13

Notice is hereby given that the annual general

meeting of shareholders of UCS will be held on

the 20th Floor, 209 Smit Street, Braamfontein

on Friday, 24 January 2003 at 9.00am for the

following purposes:

To receive and adopt the annual financial statements

of the Group and Company for the year ended

30 September 2002.

To elect as directors Messrs R Eliot, JC Claassen

and BP Hattingh, who retire by rotation in

accordance with the articles of association and,

being eligible, offer themselves for re-election.

To re-appoint, Kaplan and Kaplan, as the Group’s

auditors for the ensuing year.

To consider and, if deemed fit, to pass, with or

without modification, the following resolutions:

Special resolution

"Resolved, as a special resolution, that the mandate

given to the company (or one of its wholly owned

subsidiaries) providing authorisation, by way of

a general approval, to acquire the company’s own

securities, upon such terms and conditions and in

such amounts as the directors may from time to

time decide, but subject to the provisions of

the Companies Act, 1973 (Act 61 of 1973), as

amended, ("the Act") and the Listings Requirements

of the JSE Securities Exchange South Africa

("JSE"), be extended, subject to the following terms

and conditions:

• Any repurchase of securities be implemented

on the main board of the JSE (i.e. open market);

• This general authority be valid until the

company’s next annual general meeting, provided

that it shall not extend beyond fifteen months

from date of passing of this special resolution;

• An announcement be published as soon as the

company has cumulatively repurchased 3% of the

initial number (the number of that class of share

in issue at the time that the general authority is

granted) of the relevant class of securities and for

each 3% in aggregate of the initial number of that

class acquired thereafter, containing full details

of such repurchases;

• Acquisitions of shares by the company in

aggregate in any one financial year may not

exceed 20% of the company’s issued share

capital as at the date of passing of this special

resolution or 10% of the company’s issued share

capital in the case of an acquisition of shares in

the company by a subsidiary of the company; and

• Repurchases may not be made at a price greater

than 10% above the weighted average of the

market value of the securities for the five business

days immediately preceding the date on which

the transaction was agreed."

The directors are of the opinion that, after

considering the effect of the maximum repurchase

permitted and for a period of 12 months after the

date of this annual general meeting:

• The Company and the Group will be able, in the

ordinary course of business, to pay their debts

as they become due;

• The assets of the company and the group will be

in excess of the liabilities of the company and the

group, the assets and liabilities being recognised

and measured in accordance with the accounting

policies used in the latest audited annual group

financial statements;

• The working capital resources of the company

and the Group will be adequate for their current

and foreseeable future business requirements; and

• The issued share capital and/or reserves are

adequate for the purposes of the business of the

company and the Group for the foreseeable future

without taking into account any further

acquisitions."

The effect of the special resolution and the reason

therefore is to extend the general authority given to

the directors in terms of the Act and the Listings

Requirements for the acquisition by the company of

its own securities, which authority shall be used at

the directors’ discretion during the course of the

period so authorised.

Voting

In terms of the Listings Requirements of the JSE,

the approval of a 75% majority of the votes of all

shareholders, present or represented by proxy, is

required to approve the special resolution.

Ordinary resolution number 1

"Resolved that subject to the provisions of the

Companies Act, 1973 (Act 61 of 1973), as

amended, the authority given to the directors to

allot and issue, at their discretion, the unissued

share capital of the company for such purposes

as they may determine, be extended until the

company’s next annual general meeting."


"Resolved that in terms of the Listing Requirements

of the JSE Securities Exchange South Africa, the

mandate given to the directors of the company in

terms of a general authority to issue securities for

cash, as and when suitable opportunities arise, be

renewed subject to the following conditions:

• That this general authority be valid until the

company’s next annual general meeting provided

that it shall not extend beyond fifteen months

from the date of the passing of this ordinary

resolution;

• That the securities be of a class already in issue;

• That securities be issued to public shareholders

and not to related parties;

• That an announcement giving full details,

including the impact on net asset value and

earnings per share, be published at the time of

any issue representing, on a cumulative basis

within a financial year, 5% or more of the

number of securities in issue prior to the issue/s;

• That issues in the aggregate in any one financial

year shall not exceed 15% of the company’s

issued share capital of that class; and

• That, in determining the price at which an issue

of securities will be made in terms of this

authority, the maximum discount permitted shall

be 10% of the weighted average traded price of

those securities over the 30 business days prior

to the date that the price of the issue is

determined or agreed by the directors."


"Resolved that any director of the Company be and

is hereby authorised to do all such things and sign

all such documents as may be necessary for and

incidental to the implementation of the resolutions

proposed at the meeting convened to consider the

above-mentioned resolutions."

Voting and proxies

All shareholders will be entitled to attend the

annual general meeting and to vote thereat.

A form of proxy for use by certified shareholders

and dematerialised shareholders with own name

registration who are unable to attend the annual

general meeting, is attached. Duly completed forms

of proxy must be received by the company’s trans-

fer secretaries at least 72 hours before the meeting.

Dematerialised shareholders must inform their

CSDP or broker of their intention to attend the

annual general meeting and obtain the necessary

authorisation from their CSDP or broker to attend

the annual general meeting, or provide their CSDP

or broker with their voting instruction should they

not be able to attend the annual general meeting

in person.

By order of the board

VMA Broadrick

Secretary

Johannesburg

13 December 2002

Notice to shareholders

45

AR2002 27/1/03 10:09 am Page 12

Universal Computer Services (Pty) Ltd

Group Directory

46

Retail

Licence-free platform, enterprise retail solutions

Speciality retail, pharmacy and healthcare solutions

Retail software tailored for the FMCG, speciality and fastfood markets

Hospitality POS and management software

The ActiveRetail enterprise retail solution

Software solutions and services to fashion and speciality retailers

Company Telephone Fax

Universal Computer Services (Pty) Ltd +27 11 712-1300 +27 11 339-3421

Computerkit Systems (Pty) Ltd +27 11 517-1000 +27 11 802-4069

CCS Software (Pty) Ltd +27 12 665-5132 +27 12 665-5131

GAAP Point-of-Sale (Pty) Ltd +27 31 562-8361 +27 31 572-4411

UCS Software (Pty) Ltd +27 12 643-8300 +27 12 643-8333

(formerly Ultimate Connection (Pty) Ltd)

Virtual Systems Technology +27 21 410-6000 +27 21 410-6100

AR2002 27/1/03 10:09 am Page 9

A member of the UCS Group

A member of the UCS Group

Universal Knowledge Software (Pty) Ltd

47

Non-retail

Complete ERP (enterprise resource planning) solutions

Integrated personnel and human resource management solutions

Library management systems and associated technical and support services

Company Telephone Fax

EasiRun Software (Pty) Ltd +27 11 421-4800 +27 11 421-4999

Accsys (Pty) Ltd +27 11 452-3456 +27 11 609-4207

Universal Knowledge Software (Pty) Ltd +27 11 712-1750 +27 11 403-9463

AR2002 27/1/03 10:09 am Page 8

Financial year end 30 September 2002

Annual general meeting 24 January 2003

Reports Published

Reports and profit statements 20 November 2002

Interim statements for half year April 2003

Annual financial statements 13 December 2002

Dividends paid on ordinary shares

Declaration of final dividend 15 November 2002

Payment of final dividend 13 January 2003

Shareholders diary

48

AR2002 27/1/03 10:09 am Page 5

Documents

Annual Report 2002 - ShareData · 2005-10-24 · Income statement 20 Balance sheet 21 Statement of changes in equity 22 Cash flow statement 23 Notes to the financial statements 24