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SPS
SPS
SPS - Spescom - Preliminary Reviewed Results For The Year Ended
30 September 2007
SPESCOM LIMITED
(Incorporated in the Republic of South Africa)
(Reg No 1987/001083/06)
Share Code: SPS & ISIN: ZAE000017919
("Spescom")
Preliminary Reviewed Results For The Year Ended 30 September 2007
Summarised Consolidated Income Statements
Reviewed Audited
year year
ended ended
30/09/07 30/09/06
R`000 R`000
Total Revenue 385 171 210 049
Continuing operations
Turnover 380 085 202 164
Cost of sales (241 427) (101 268)
Gross profit 138 658 100 896
Operating expenses after other income (134 433) (111 780)
Operating profit/(loss) before 4 225 (10 884)
impairments and interest
Impairment adjustments - (2 506)
Operating profit/(loss) before 4 225 (13 390)
interest
Investment income 1 737 1 595
Finance charges (4 626) (4 280)
Operating profit/(loss) before non- 1 336 (16 075)
trading items
Income from non-trading activities (20 053) -
Operating profit/(loss) before 21 389 (16 075)
taxation
Taxation (610) 355
Net profit / (loss) after tax 20 779 (15 720)
Profit/(loss) from associate 3 826 (2 861)
Net profit/(loss) for the period from 24 605 (18 581)
continuing operations
Discontinued operation
Loss for the period from discontinued - (1 822)
operation
Profit/(loss) for the year 24 605 (20 403)
attributable to equity holders of the
parent
Reconciliation of headline
earnings/(loss)
Net earnings/(loss) attributable to 24 605 (20 403)
ordinary shareholders
Headline earnings adjustments (19 630) 2 404
- Profit/(loss) on sale of property, 423 (102)
plant & equipment
- Write down in investment - 2 506
- Profit on sale of Enterprise (20 503) -
Informatics
Headline earnings/(loss) 4 975 (17 999)
Number of shares in issue 78 768 056 78 768 056
Number of shares on which earnings 72 314 237 72 320 538
per share is calculated
Number of shares on which diluted 75 632 951 72 320 538
earnings per share is calculated
Ratio analysis cents per cents per
share Share
Earnings/(loss) per share:
- basic, for the profit / (loss) for 34.0 (28.2)
the year attributable to ordinary
equity holders of the parent
- basic, for the profit / (loss) from 34.0 (25.7)
continuing operations for the year
attributable to ordinary equity
holders of the parent
- basic, for the loss from - (2.5)
discontinued operations
- diluted, for the profit for the 32.5 (28.2)
year attributable to ordinary equity
holders of the parent
Headline earnings/(loss) per share:
- Headline earnings/(loss) per share 6.9 (24.9)
from continuing operations
Net asset value per share 75.2 78.0
Statement of changes in equity
Attributable to equity holders of the parent
Distri- Share Non-
butable capital distri-
reserves R`000 reserves
R`000 R`000
Share
premium Total
R`000 R`000
Balance at 10 733 684 44 599 15 210 71 226
30 September
Revaluation of 5 954 5 954
land and
buildings net of
depreciation
Share based 191 191
payments reserve
Foreign currency (553) (553)
translation loss
arising on
consolidation
Net loss for the (20 403) (20 403)
period
Balance at (9 670) 684 44 599 20 802 56 415
30 September 2006
Revaluation of (90) (90)
land and
buildings net of
depreciation
Share based 441 441
payments reserve
Foreign currency
translation
profit realised
on sale of
investment (26 896) (26 896)
Foreign currency (73) (73)
translation loss
arising on
consolidation
Net profit for 24 605 (24 605)
the period
Balance as at 14 935 684 44 599 (5 816) 54 402
30 September 2007
Summarised Consolidated Balance Sheet
Reviewed Audited
As at As at
30/09/07 30/09/06
R`000 R`000
ASSETS
Non-current assets
Property, plant & equipment 35 522 37 399
Intangible assets 14 789 14 528
Investments and loans 7 151 30 941
Deferred taxation 13 972 13 142
71 434 96 010
Current assets 186 690 79 621
Inventories 18 617 10 278
Taxation prepaid 66 65
Trade and other receivables 146 122 53 905
Cash and cash equivalents 21 885 15 373
TOTAL ASSETS 258 124 175 631
EQUITY AND LIABILITIES
Capital and Reserves
Share capital and premium 45 283 45 283
Non-distributable reserves (5 816) 20 802
Distributable reserves/(accumulated 14 935 (9 670)
losses)
Ordinary shareholders` equity 54 402 56 415
Non-current liabilities 25 042 2 010
Contract advances and deferred
maintenance revenue 450 -
Deferred taxation 1 876 2 010
Interest bearing liabilities 22 716 -
Current liabilities 178 680 117 206
Current portion of interest bearing 9 626 40 231
liabilities
Bank finance - 16
Taxation 4 221 2 503
Trade and other payables 120 184 47 314
Provisions and deferred maintenance 44 649 27 142
revenues
Total equity and liabilities 258 124 175 631
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
Year ended year ended
30/09/07 30/09/06
R`000 R`000
OPERATING ACTIVITIES
Cash generated/(utilised) by
operations 13 355 (4 910)
Working capital changes 2 633 4 249
Cash generated by operating activities 15 988 (661)
Net finance costs paid (2 889) (2 686)
Taxation refunded/(paid) 1 366 (956)
14 465 (4 303)
INVESTING ACTIVITIES
Investment to maintain operations (12 401) (10 761)
Repayment of loans 12 465 -
64 (10 761)
FINANCING ACTIVITIES
Bank financing and facilities (7 905) 1 429
(7 905) 1 429
Net change in cash and cash equivalents 6 624 (13 635)
Effects of foreign exchange (112) (719)
Cash and cash equivalents:
- At beginning of period 15 373 29 727
- At end of period 21 885 15 373
SEGMENTAL ANALYSIS
Reviewed Audited
30/09/07 30/09/06
R`000 R`000
Sector turnover
Business and content management 261 146 149 611
solutions
Communication integration activities 85 082 28 840
Services and other 33 857 23 713
380 085 202 164
Operating profit/(loss)
Business and content management 2 208 (6 131)
solutions
Communication integration activities 488 (4 026)
Services and other 1 529 (727)
4 225 (10 884)
Geographic turnover
Africa 369 636 184 269
Europe 8 306 14 133
USA 1 643 3 038
Other 500 724
380 085 202 164
Proprietary Technology
Own IP 79 374 52 967
3rd Party IP 300 711 149 197
380 085 202 164
NOTES TO THE SUMMARISED FINANCIAL STATEMENTS
Basis of presentation
The financial statements have been prepared in terms of International Financial
Reporting Standards (IFRS) applicable at 30 September 2007.
The accounting policies used in the preparation of the results are consistent in
all material respects with those adopted in the annual financial statements for
the year ended 30 September 2007.
Listing requirements
The financial statements have been prepared in accordance with the listing
requirements of the JSE Limited.
Auditors` review
The external auditors have reviewed the preliminary results for the year end 30
September 2007.
Post balance sheet event
The sale of investment in Enterprise Informatics (previously trading as Spescom
Software Incorporated), was concluded on 30 September 2007, with cash flow
settlements on 11 October 2007. Part of the proceeds generated from the sale was
utilized to settle the foreign denominated loan with ABSA of US$1,15m on the
same date. The loan is classified as short term at year end, and the proceeds
were included in Trade and other receivables.
These results have been reviewed by Ernst & Young Inc. and their review opinion
is available on request from the company secretary at Spescom`s registered
office.
The group`s annual report will be available by the beginning of March 2008.
SPESCOM COMMENTRY
Chief Executive Officer`s Review:
On behalf of the board of directors of Spescom Limited the preliminary results
for the year ended 30 September 2007 are hereby presented:
Salient features:
- Revenue has increased by 88% to R380m (2006: R202m)
- Earnings attributable to equity holders of the parent have increased to 34c
per share (2006: loss per share of 28,2c)
- Headline earnings have improved to R5m (2006: headline loss of R18m)
- Group gearing has improved by 15,5%
The positive trend in trading results has been consistent for the past 18
months and is attributable to a more focused approach to market aimed at
leveraging the group`s core competencies. Spescom`s expertise enables the
provision of ICT infrastructure that empowers customers with the means to
effectively enhance the management of their businesses. This is achieved by
maximizing the value of video, voice and data communication technologies.
The sale of the US operation, Enterprise Informatics, was in line with the
group`s decision to exit from non-core operations and generated a R20m profit.
The proceeds from this transaction were received subsequent to year end and have
enabled the group to repay its foreign debt, favourably impacting on the gearing
position.
Review of operations:
The improvement in operations is evident across all divisions.
Continued growth is being experienced in the call centre arena. Revenue grew by
41% which exceeds the average currently reflected in the South African call
centre market. A number of new prominent customers were secured in this area.
The broadcast division`s change in strategic direction, from supplier to
integrated solutions provider, is yielding results. This operation has boosted
its presence in the Southern African region which has contributed to a doubling
of revenues.
Telecoms has gained momentum. The supply and installation of equipment to the
second network operator is well under way. However, trading in this environment
remains difficult due to low margin contracts giving rise to the need for high
volume orders.
Greater penetration of the SA voice recording market was achieved with local
sales growing by 47%. Annuity revenue has also grown.
Prospects:
The telecoms stalemate is now broken as evidenced by the rollout of contracts.
The open market scenario is promoting investment in new technology with the ever
increasing need for faster and more cost effective broadband access. From the
suppliers` perspective it is anticipated that the newly competitive environment
will also translate into enhanced spending on services from the incumbent
operator.
The factors driving growth in the call centre sector remain unchanged. This
includes SA`s bid to seize a greater portion of the global Business Process
Outsourcing (BPO) opportunity.
Spescom`s voice division is expected to continue to make inroads into the local
arena. New product entrants for application in the low end of the market are
being explored.
The growth in the media industry remains promising as broadcasters and
production houses gear up for 2010. The drive to gain maximum benefit from the
rollout of large turnkey projects in and around the Southern African region,
will be maintained.
The group will persist in its rebuilding process by remaining focused on
executing its strategy through exposing the wealth and depth of its intellectual
property (IP) and skill, to the market. Greater emphasis will be placed on
projects requiring the application of the combined expertise resident throughout
all divisions. Spescom will continue to invest in its people and enabling
technologies so as to strengthen the group`s key account management plus its
integration and support service offerings.
Directorate:
With effect 9 July 2007 Mr. A. Farah resigned as CEO and was succeeded by Ms. J.
Palmer. On the same date Dr. J. Myers resigned as non-executive chairman and was
succeeded by Mr. Mutle Mogase. Dr J Myers resigned from the board on 31 July
2007 and Mr A Farah`s resignation from the board was effective on 30 September
2007.
In addition, Mr. P. Fick was appointed to the Board on 12 April 2007 and Ms. H.
Sonn with effect 21 November 2007.
Dividend:
It is important that cash generated from operations be reinvested in the
business and as such the board does not believe it is appropriate at this stage
to declare a dividend
By order of the board
22 November 2007
Sponsor: Investec Bank
Date: 22/11/2007 07:45:59 Produced by the JSE SENS Department.
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