Forward Looking Statement

Various remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by these forward looking statements as result of various important factors.

The UCS Group is the dominant player in its domestic market providing the widest range of software, solutions and services for the retail and CPG market in Southern Africa. We are positioning to become a significant player in the global market through various international initiatives

Started as Universal Computer Services (Pty) Ltd in 1978 as on-line computer service bureau specialising in development and support of customised solutions for Import / Distribution. Listed UCS in Sep 1998 after acquiring Accsys / Easirun (raised R60m in private placement of 10%) Y2K phenomenon burst IT spending bubble in large scale retail and decision taken to focus on ‘building our footprint in retail’.

• 2005 – CEB Maintenance (Bought into UCS Solutions)
• 2004 – Branch Software, Figment Technologies (Bought into UCS Software)
• 2003 – Fernridge (51%), Affinity Logic (Re-branded UCS Solutions)
• Acquisition payments to date R178.8m plus 22.1m UCS shares
• Currently 240 million shares in issue from an original 272 million on listing with gearing sitting at 9%

• External IT services spending in the retail and wholesale industries in SA accelerating and expected to grow by 13% pa for the next few years (R3.6bn in 2001)
• Tier 1 strategic priorities relate to customer service and managing costing and pricing
• Generally IT replacement cycle every 7 years
• Retail boom in SA expected to lead to new store roll-out in Tier 1 & 2 retail
• Software business – international focus, unlimited growth potential

• UCS Solutions
• Consulting, implementation & support services for non-UCS software (eg. SAP, JDA, etc)
• Aimed at tier 1 & 2 retail and supply chains
• Business consulting & outsource services aimed at same markets
• Fernridge Consulting
• Sales optimisation for retailers
• CEB
• Specialist POS on-site support for tier 1 retailers
• Accsys
• Payroll, HR & T&A solutions for all industries / markets
• UKS
• Local distributor for SIRSI library software

• Implementation & support services for UCS package products
• Aimed at all tiers of the Retail market
• Also development, implementation & support services for customised application software solutions for large-scale retailers
• UCS Software Manufacturing
• Research, development & support services for UCS package products
• Aimed at all tiers of the retail market as well as OEM manufacture of ‘assemble to order’ retail applications for any tiers of the retail market
• CKS - As per UCS Software but aimed at pharmacies and hardware stores
• GAAP - As per UCS Software but aimed at sit-down restaurants

1. To create 2 businesses – both focused on the retail market

2. The one being a pure software business and the other being a solutions & services business

3. To achieve minimum PBIT of 30% in software business

4. To achieve PBIT of 20% in solutions & services business

Strategy – Software Business:

• UCSSM being positioned to become the core of the future ‘pure’ software business (100% channel sales - no end-user project or support services)
• UCS Software being positioned to become a ‘pure’ software services business (no application software product R & D) and to become a significant channel partner to the ‘pure’ software business
• International expansion essential to maintain high growth rates
• UCS Software to move all ‘generic’ services (any service not requiring access to UCS source code) to UCS Solutions
• Focus on annuity revenue models
• Focus on selected verticals within retail domain
• CKS & GAAP merged into UCS Software and R & D moved into UCSSM

• To eliminate competitive products and duplication of future R & D
• Move all development of packaged products into a single entity where international ‘best practice’ processes can be enforced
• To separate the IP from the underlying code and technology platforms
• To synchronise product roadmaps and ‘converge’ competitive products into single product over time
• Create ‘on demand’ software development capacity through outsource arrangement (VisualsSoft – India) facilitated by formalised software manufacturing environment

Customers & Markets – UCS Software

Apparel
PEP
Cape Union Mart
Foschini
Queenspark
Pick 'n Pay
Stuttafords
Moss Bros Group PLC

Furniture
Lewis
JD Group
Relyant Retail Limited

Food & Conv
SASOL
CBW
Metro
Shoprite Holdings Limited
SPAR
ENGEN

Speciality
The Clicks Holdings Limited
Incredible Connection
Vodacom
Teljoy
Loads of Living
Picardi Group
MICA
Hi-Fi Corporation
Dis-Chem Discount Pharmacies

Hospitality and Fast Food Chains
KEG
Famous Brands Limited
KFC
News Cafe
Nandos

Strategy – Solutions & Services businesses:

• UCS Solutions Business (incl CEB acquisition) being positioned to become the leading supplier of outsourced IT solutions and services to tier 1 & 2 retailers, CPG manufacturers and logistics providers
• Several tier 1 retailers now looking at implementing leading package software applications and exploring selective outsourcing relationships
• Key partnerships – SAP, JDA, IBM and Microsoft – reinforcing UCS Solutions’ ‘go to market’ approach in both applications and infrastructure services
• Telecoms deregulation opening up opportunities for network services
• Proactively pursuing BEE partnership to strengthen market positioning and support growth objectives
• Exploring opportunities for international growth – eg. expert applications support services for international clients

Customers & Markets – UCS Solutions

Rainbow, Foschini, Denny, Massmart, Mass Discounter (Dion/Game), BPB Gypsum Rhinoboard Division, Consol Glass, Distell, Tile Warehouse, Avision, Vector, Total, Lewis, AVI, Makro, Afgri, National Brands Limited (NBL), Cape Union Mart, Edcon, EH, Builders Warehouse, Unilever, Midas Group, I&J, Cadbury Bromor, Pick 'n Pay, Truworths, Clicks, Nasstrade, Ellerines, Sasol, Relyant Retail Limited, De Beers

International Initiatives

Small ‘operation’ (1 person) in UK

Building UK distribution channel for package products

Initial channel sales successes in UK, Dubai and Saudi Arabia

Considering acquisitions in UK to use as springboard to European markets

Exploring ‘OEM’ opportunities for UCSSM

• IT market recovery underway, particularly internationally
• IT market ‘trough’ created by Y2K phenomenon has subsided – the 7 year average replacement cycle for retail software will see demand for UCS products and solutions improving
• Integration of the 6 merged Software units to be largely completed by end September – will deliver sustainable margin improvements
• New customer projects under way and good visibility of revenues for next year
• ‘Backlog’ of previously delayed large scale customer projects largely cleared – annuity revenues now in force
• Opportunities for the CEB acquisition to leverage off the large UCS customer base (over 15 000 stores in Southern Africa)