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SPS
SPS
SPS - Spescom - Unaudited Interim Results For The Six Months Ended 31
March 2007
SPESCOM LIMITED
(Incorporated in the Republic of South Africa)
(Reg No 1987/001083/06)
Share Code: SPS & ISIN: ZAE000017919
("Spescom")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2007
SUMMARISED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/07 31/03/06 30/09/06
R`000 R`000 R`000
Total revenue 145 062 101 446 210 049
Continuing operations
Turnover 139 031 96 338 202 164
Cost of sales (78 013) (53 755) (101 268)
Gross profit 61 018 42 583 100 896
Operating expenses after (60 369) (50 200) (108 432)
other income
Trading profit/(loss) 649 (7 617) (7 536)
from operations
Foreign exchange (512) 230 (4 005)
(losses)/gains on foreign
loans
Loan recoveries - - 657
Operating profit/(loss) 137 (7 387) (10 884)
before impairments,
goodwill and interest
Impairment and goodwill - - (2 506)
adjustments
Operating profit/(loss) 137 (7 387) (13 390)
before interest
Investment income 798 770 1 595
Finance charges (2 472) (1 961) (4 280)
Operating loss before (1 537) (8 578) (16 075)
taxation
Taxation (26) (537) 355
Net loss after tax (1 563) (9 115) (15 720)
Profit/(loss) from 4 474 (1 630) (2 861)
associate
Net profit/(loss) for the 2 911 (10 745) (18 581)
period from continuing
operations
Discontinued operation
Loss for the period from - (646) (1 822)
discontinued operation
Profit/(loss) for the 2 911 (11 391) (20 403)
period
Attributable to:
Equity holders of parent 2 911 (11 391) (20 403)
Minority interests - - -
2 911 (11 391) (20 403)
Reconciliation of
headline earnings/(loss)
Net earnings/(loss) 2 911 (11 391) (20 403)
attributable to ordinary
shareholders
Headline earnings/(loss) 69 16 2 404
adjustments
- Profit/(loss) on sale 69 16 (102)
of fixed assets
- Write down in - - 2 506
investment
Headline earnings/(loss) 2 980 (11 375) (17 999)
Number of shares in issue 78 768 056 78 768 056 78 768 056
Number of shares on which 72 320 538 72 320 538 72 320 538
earnings per share and
diluted earnings per
share is calculated
cents cents cents
Ratio analysis per share per share per share
Earnings/(loss) per
share:
- basic and diluted, for 4,0 (15,8) (28,2)
the profit/(loss) for the
period attributable to
ordinary equity holders
of the parent
- basic and diluted, for 4,0 (14,9) (25,7)
the profit/(loss) from
continuing operations for
the period attributable
to ordinary equity
holders of the parent
- basic, for the - (0,9) (2,5)
profit/(loss) for the
period from discontinued
operations
Headline earnings/(loss)
per share:
- Headline 4,1 (15,7) (24,9)
(loss)/earnings per share
for the period from
continuing operations
Net asset value per share 75,3 86,5 71,6
NOTES TO THE FINANCIAL STATEMENTS
Basis of presentation
The interim financial statements have been prepared in terms of
International Financial Reporting Standards (IFRS) expected to be
applicable at 30 September 2007 and in compliance with IAS 34: Interim
Financial Reporting.
The accounting policies used in preparing the interim financial
statements are consistent with those applied in the 2006 financial
statements and are in accordance with IFRS, except where the Group has
adopted new or amended IFRS statements.
The Group has adopted the following new or revised IFRS statements in the
current period which did not have any impact on the reported results:
1. AC 503: Accounting for BEE Transactions
2. IAS 21 Amendment: The Effect of Changes in Foreign Exchange Rates: Net
Investment in a Foreign Operation
3. IAS 39 Amendment: Financial Instruments: Recognition and Measurement
4. IFRIC 4: Determining whether an Arrangement contains a Lease
5. IFRIC 10: Interim Financial Statements and Impairment
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/07 31/03/06 30/09/06
R`000 R`000 R`000
Profit/(loss) before tax
Included in profit/(loss)
before tax is:
Depreciation and 6 564 5 426 11 923
amortisation
Listing Requirements
The interim financial statements have been prepared in accordance with
the listing requirements of the JSE Limited.
Auditors` review
The external auditors have not reviewed the results for the period ended
31 March 2007.
SUMMARISED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
As at As at As at
31/03/07 31/03/06 30/09/06
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 36 896 38 487 37 399
equipment
Intangible assets 14 831 15 109 14 528
Investments and loans 24 716 33 024 30 940
Deferred taxation 13 143 11 706 13 143
89 586 98 326 96 010
Current assets 87 565 53 177 79 621
Inventories 17 260 10 149 10 278
Taxation prepaid 212 480 65
Trade and other receivables 51 596 29 197 53 905
Cash and cash equivalents 18 497 13 351 15 373
Total assets 177 151 151 503 175 631
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 45 283 45 283 45 283
Non-distributable reserves 20 810 23 511 20 802
Accumulated losses (6 759) (658) (9 670)
Ordinary shareholders` 59 334 68 136 56 415
equity
Non-current liabilities 24 714 11 039 2 010
Contract advances and 458 - -
deferred maintenance revenue
Deferred taxation 2 010 63 2 010
Interest bearing liabilities 22 246 10 976 -
Current liabilities 93 103 72 328 117 206
Current portion of interest 14 648 23 486 40 231
bearing liabilities
Bank finance 2 558 5 275 16
Taxation 3 285 3 050 2 503
Trade and other payables 47 314 21 304 47 314
Provisions and deferred 25 298 19 213 27 142
maintenance revenues
Total equity and liabilities 177 151 151 503 175 631
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/07 31/03/06 30/09/06
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash generated/(utilised) by 6 830 (1 284) (4 911)
operations
Working capital changes (6 487) (8 004) 4 249
Cash generated/(utilised) by 343 (9 288) (662)
operating activities
Investment income 798 770 1 595
Finance costs paid (2 472) (1 961) (4 280)
Taxation refunded/(paid) 609 (159) (956)
Net cash flow from operating (722) (10 638) (4 303)
activities
INVESTING ACTIVITIES
Investment to expand and 4 264 (5 926) (10 761)
maintain operations
4 264 (5 926) (10 761)
FINANCING ACTIVITIES
Bank financing and (336) 187 1 429
facilities
(336) 187 1 429
Net change in cash and cash 3 206 (16 377) (13 635)
equivalents
Effects of foreign exchange (82) 1 (719)
Cash and cash equivalents:
- At beginning of period 15 373 29 727 29 727
- At end of period 18 497 13 351 15 373
STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of
the parent
Distributable Share Share
reserves capital premium
R`000 R`000 R`000
Balance at 30 September 10 733 684 44 599
2005
Revaluation of land and
buildings
Share based payments
Foreign currency
translation profit arising
on consolidation
Net loss for the period (11 391)
Balance at 31 March 2006 (658) 684 44 599
Share based payments
Revaluation of land and
buildings
Foreign currency
translation loss arising
on consolidation
Net loss for the period (9 012)
Balance at 30 September (9 670) 684 44 599
2006
Share based payments
Foreign currency
translation loss arising
on consolidation
Net profit for the period 2 911
Balance as at 31 March (6 759) 684 44 599
2007
Attributable to equity holders of
the parent
Non-
distributable
reserves Total
R`000 R`000
Balance at 30 September 15 210 71 226
2005
Revaluation of land and 8 150 8 150
buildings
Share based payments 89 89
Foreign currency 62 62
translation profit arising
on consolidation
Net loss for the period (11 391)
Balance at 31 March 2006 23 511 68 136
Share based payments 101 101
Revaluation of land and (2 196) (2 196)
buildings
Foreign currency (614) (614)
translation loss arising
on consolidation
Net loss for the period (9 012)
Balance at 30 September 20 802 56 415
2006
Share based payments 10 10
Foreign currency (2) (2)
translation loss arising
on consolidation
Net profit for the period 2 911
Balance as at 31 March 20 810 59 334
2007
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
31/03/07 31/03/06 30/09/06
R`000 R`000 R`000
Sector turnover
Business and content 116 960 59 999 149 611
management solutions
Communication integration 6 106 25 414 28 840
activities
Services and other 15 965 10 925 23 713
139 031 96 338 202 164
Operating profit/(loss)
Business and content 1 064 (11 528) (6 131)
management solutions
Communication integration (4 667) 4 295 (4 026)
activities
Services and other 3 740 (154) (727)
137 (7 387) (10 884)
Geographic turnover
Africa 133 190 86 113 184 269
Europe 5 477 9 703 14 133
USA 83 285 3 038
Other 281 237 724
139 031 96 338 202 164
Proprietary technology
Own IP 26 518 28 230 52 967
3rd Party IP 112 513 68 108 149 197
139 031 96 338 202 164
COMMENTARY
Review of operations
The positive trend in trading results highlighted during the second half
of the 2006 financial year has continued.
The Group has achieved an overall 44% increase in turnover when compared
to that reported for the comparative prior period. After taking into
account foreign exchange losses, the Group reported an operating profit
of R0,1 million as compared to an operating loss of R7,4 million for the
prior period. Profitability was enhanced by a positive contribution of
R4,5 million from the Group`s investment in its associate company,
Enterprise Informatics Inc. (formerly Spescom Software Inc.). Overall,
the Group reported headline earnings per share of 4,1 cents which
compares favourably to the headline loss of 15,7 cents per share
generated during the first half of the 2006 financial year.
The improved trading position can be attributed to consistent growth
being achieved by the call centre, voice recording and media-IT divisions
with positive movement expected in the telecommunications industry.
The trading profits converted into an improved cash position with cash
generated by operating activities reflecting a R9,6 million increase.
Gearing and liquidity levels were also favourably impacted by the
restructuring of the balance sheet. In this regard, the Group secured
alternative long-term financing which enabled it to repay a substantial
portion of its short-term debt.
Prospects
The call centre division remains a leading player in the market with
growth also emanating from its drive into the rest of Africa.
Spescom`s media division is benefiting from the rollout of large turnkey
projects in and around South Africa. The growth in this industry holds
much promise as broadcasters and production houses gear up for the 2010
Soccer World Cup.
DataVoice is maintaining the momentum created during the second half of
the 2006 financial year. The division continues to make inroads into the
European and Middle Eastern markets with the appointment of new value-
added resellers in these regions.
As previously reported, activity in the telecommunications industry is
increasing and although this is expected to translate into improved
revenue streams for Spescom`s telecoms division, there is still a measure
of uncertainty with respect to timing.
Company secretary
Ms J Caddy resigned as company secretary on 31 March 2007 and was
succeeded by Ms A van der Merwe on 1 April 2007.
Directorate
On 20 February 2007 Mr C Rezek resigned as alternate director and was
succeeded by Mr C Lister-James on 28 February 2007.
Mr W Kansteiner resigned from the Spescom board on 28 February 2007.
With effect from 12 April 2007, Mr P Fick was appointed to the board.
Dividend
Current profitability levels do not justify the payment of dividends and
as such no interim dividend is declared.
By order of the board
A Farah J Palmer Johannesburg
Chief Executive Chief Financial 17 May 2007
Officer Officer
Directors:
J P Myers+* (Chairperson), A Farah, P Fick, T Makore, M C Mogase+, (alt.
C Lister-James+), L Ogilvy+, J Palmer, P Vallet+ *American +Non-
executive
Registered Office:
Spescom Park, Cnr Alexandra Avenue and Second Road,
Midrand, 1685.
Tel +27 (11) 266 1500
Registrar:
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg, 2001.
Tel: +27 (11) 370 5000
www.spescom.com
Date: 17/05/2007 13:39:27 Produced by the JSE SENS Department.
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