Reviewed Results

1
Reviewed Results Business Overview

• for the 12 months ended 30 September 2008

Published on 25 November 2008
2
Forward looking statement
Various remarks that we may makeabout future
expectations, plans and prospectsfor the Group
or its subsidiariesconstitute forward looking
statements Actual results may differ materially
from thoseindicated by these forward looking
statementsas a result of various important
factors
3
Agenda

• John Bright CEO UCS Group Limited
• Introduction trading environment
• 2008 financial results highlights
• Dean Sparrow CFO UCS Group Limited
• Group financial review for the year ended 30
  September 2008
• John Bright CEO UCS Group Limited
• Divisional Review
• BBBEE
• Looking Forward
• QA

4
The UCS Group (UCS)
UCS is an IT business with a primary focus on the
provisionof Software, Solutions Services for
selected markets UCS has achieved a leadership
position in the retail market sector in South
Africa and is well positioned for further growth
locally and internationally through a number of
defined initiatives Currently, over 80 of UCSs
revenues are derived fromthe provision of its
own Software, Solutions Services,rather than
the sale of 3rd party products
5
About us

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

6
UCS Group 2008 segmental report
UCS GroupLimited
SoftwareDivision (6 trading entities)
Solutions ServicesDivision (10 trading
entities)
UCS Software
UCS Solutions
CKS
CEB Maintenance
GAAP
TSS MS
UCS Software Manufacturing
Destiny (incl CSC)
UCS UK
Accsys
Aquitec UK
UKS
UCS USA Inc (t/a Aquitec USA)
Fernridge
LifeWorld/4Life
DiverseIT
Acquisition effective 1st September
2008 Acquisition effective 1st March
2008 Lifeworld and 4 Life are two associated
but separate statutory entities
7
Trading environment

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

Overall, a challenging trading environment for IT
businesses like UCS, particularly with a focus on
speciality retail
8
Results highlights

• Acceptable performance given the tough trading
  conditions
• Revenue up 14.5 to R1 226m (2007 R1 071m)
• Normalised EBITDA up 11.2 to R195m reflecting a
  margin of 15.9 (200716.4)
• Normalised PBIT up 16.1 to R130m reflecting an
  improving margin of 10.6 (2007 10.4)
• Cash generated from operations, aligned with
  EBITDA up 11.5 to R199m (2007 R179m)
• Total assets R1 billion for the first time
• Return on equity at 22.1

9
Dean Sparrow

• CFO UCS Group Limited

10
Income Statement analysis

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

11
Income Statement analysis (continued)

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

12
Income Statement analysis (continued)

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

13
Balance Sheet analysis

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

14
Balance Sheet analysis (continued)

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

15
Balance Sheet analysis (continued)

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

16
Balance Sheet analysis (continued)

• Liabilities
• The year end balance sheet reflects a gearing of
  43 (2007 36) with the true external bank debt
  component reflecting a gearing of 33.1 (2007
  10.2) where equity incorporates minority
  interests
• The Groups current ratio at year end has
  improved to 1.31 (2007 1.11) with the short
  term loan obligation reducing by 18.2 year on
  year and the current assets growing by 15.8
• Trade and other payables have increased by 7.4
  to R213m (2007 R198m) inclusive of accruals and
  advance billings but excluding provisions. The
  relatively small increase on this line has had a
  negative impact on working capital as per the
  cash flow statement

17
Cash Flow analysis

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

18
Cash Flow analysis

• Cash utilised in financing activities is made up
  as follows
• Proceeds from net shares issued R2.5m
• Net Loans raised R75.8m

Cash and cash equivalents at R143m (2007
R145m)relatively flat year on year after
substantial investing activities
19
John Bright

• Divisional Review

20
UCS Group 2008 segmental report
Software Division (6 trading entities)
UCS Software
Custom and packaged software services solutions
for large scale retail enterprises multiple
verticals (furniture, fashion, forecourt,
convenience)
CKS
Custom and packaged software services solutions
for retail pharmacies hardware/ building
supplies/all tiers
GAAP
Packaged software services solutions (Incl.
hardware) for restaurants fast food outlets
UCS Software Manufacturing
Retail domain-specialised, outsourced software
product development assemble-to-order (A2O)
software application manufacture
UCS UK
Original UCS Software UK operation now a holding
company for international investments
Aquitec UK
Custom and packaged software services solutions
for large scale warehouses distribution centres
multiple verticals Bagshot, UK
UCS USA Inc (t/a Aquitec USA)
As per Aquitec UK, but based in Chicago, USA
Acquisition effective 1st March 2008
21
Software Division financial results

• Revenue up 26.1 to R475m (2007 R377m) of which
  5 was related to Aquitec and the balance organic
  
• Annuity revenue of the division has grown by
  21.5 to R288m (2007 R237m)
• Annuity revenue equates to 61 of total revenue
  (2007 63)
• Normalised EBITDA up 40.7 to R83m (2007 R59m)
  reflecting a 17.4 margin (2007 15.6)
• Normalised PBIT up 81.3 to R58m (2007 R32m)
  reflecting a 12.2 PBIT margin (2007 8.6)

Continued margin improvement as anticipated
22
Software Division operational highlights

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

23
Software Division prospects

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

24
Divisional Review

• Solutions Services Division

25
UCS Group 2008 segmental report
Solutions Services Division (10 trading
entities)
Business Consulting IT Solutions (incl. SAP
JDA applications) for large scale retail and
supply chain enterprises plus SAP AiO solutions
for medium scale retail in selected verticals
UCS Solutions
CEB Maintenance
Specialist man in van IT services for large
scale retail
TSS MS
IT infrastructure, software, services support
supplier for Government Financial Services
sectors
Destiny (Incl CSC)
Transaction switching services including bank
payments, medical-aid authorisations, electronic
voucher sales, gift registries, etc. CSC offers
secure payment technologies (Incl. hardware,
customised software, services and solutions) at
point of sale
Integrated payroll, HR Time Attendance
software solutions (own products)
Accsys
UKS
Library software solutions (SIRSI software
distributor)
Retail consulting/store locations/sales stock
optimisation services
Fernridge
LifeWorld/4Life
CRM consulting, software services loyalty
programme design management multiple
industries including retail hospitality. 4Life
is a Loyalty program providing a range of
benefits through multiple industry players
including retail
DiverseIT
Retail in-store marketing promotional products,
services solutions all tiers
Acquisition effective 1st September 2008
26
Solutions Services Division financial results

• Revenue growth of 7.8 to R748m (2007 R694m)
• Normalised EBITDA decline of 4.8 to R120m (2007
  R126m) reflecting 16.0 EBITDA margin (2007
  18.1)
• Normalised PBIT decline of 11.1 to R80m (2007
  R90m) reflecting a 10.7 PBIT margin (2007
  13.0)
• Annuity revenue however up 36 to R479m (2007
  R352m) with the change in mix particularly in
  TSSMS from once off to annuity contracts

The exposure towards discretionary project
revenue continuesbut underlying cost exposures
have been significantly reducedand a number of
key contracts have been secured
27
Operating highlights

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

28
Prospects Solutions Services Division

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

29
UCS Group Limited

• BBBEE Looking Forward

30
UCS Group Limited BBBEE

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

31
UCS Group Limited looking forward

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

32
Looking forward in summary

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

33
Thank you

• QA

34
Enquiries
UCS Group011 712 1449 John Bright,
CEOjdb_at_ucs.co.za Dean Sparrow,
CFOdcs_at_jhb.ucs.co.za
College Hill011 447 3030 Fred Cornet083 307
8286Frederic.cornet_at_collegehill.co.za Hayley
Crane072 758 1677Hayley.crane_at_collegehill.co.za