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SPS
SPS
SPS - Spescom - Summarised Interim Results For The Six Months Ended
31 March 2008
Spescom Limited
Registration number: 1987/001083/06
Share code: SPS
ISIN: ZAE000017919
SUMMARISED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2008
Salient features
- Revenue growth of 11,7% to R162 million
- Recovery of operating performance maintained
- Headline earnings per share increased by 4,9% to 4,3 cents
- Cash generated by operating activities of R13,2 million
- Significant inroads into new strategic customers reflecting relevance of
positioning and capability
- Ongoing investment in intellectual capital to ensure long term revenue streams
- Broad range of technical skills provide capability to deliver converged
solutions
Financial Review
Revenue for the six months ended 31 March 2008 increased by 11.7% to R162
million (2007: R145,0 million), supported by strong growth from voice
transaction management revenues.
Operating profit increased to R4,9 million compared to breakeven in the
comparable period, reflecting an operating margin of 3,2% compared to 0,1% in
2007. Higher margins on revenue from proprietary products and the increased
contribution from service related contracts defended margins against competitive
pressures on third party product sales.
Attributable profit improved by 6,5% to R3,1 million (2007: R2,9 million) in
line with the improved operating performance.
The proceeds of the sale of Enterprise Informatics were used to settle the
foreign denominated debt, resulting in lower net finance charges of R1,1 million
(2007: R1,6 million).
Headline earnings increased by 3.8% to R3,1 million (2007: R3.0 million),
translating into increased headline earnings per share of 4,3 cents (2007: 4,1
cents).
Cash generated by operating activities of R13,2 million versus R0.3 million in
2007 was supported by improved operating performance and effective working
capital management. After repaying debt of R8,8 million, net cash and cash
equivalents decreased by R2,0 million to R20,2 million.
Operating Review
During the period, Spescom focused on harnessing its core competencies to
deliver business communications solutions to customers and thereby entrenched
the improved operating performance underlying the group`s ongoing financial
recovery process.
The group also made progress in leveraging its existing capabilities,
introducing new services that will expand its annuity income base. Spescom`s
skills in voice, video and data reside across the group, and are providing the
capability to deliver converged solutions. The group successfully concluded key
contracts with new customers.
Shortages of specialist technology skills remain a challenge facing the entire
information communication and technology industry. The group will continue to
invest in skills development and mentorship programmes as well as learnerships
to develop skills, while also supporting transformation of the workforce.
Spescom DataVoice delivered a profit, compared to losses in the comparable
period. The benefits of repositioning its product suite to enable effective
workforce optimisation and risk mitigation are starting to emerge. A strategic
contract concluded with a local mobile operator for voice recording and quality
management solutions represents the Group`s first tangible success in the mobile
industry. In line with the division`s aim to access the low end of the market, a
rental distribution model has been introduced, associated with annuity revenues.
DataVoice continues to grow its offshore client base.
Spescom DataFusion grew its revenue by 13,1% by extending its service related
revenues. The division expanded on its offering by concluding a contact centre
managed services contract with a multi-national service provider to provide
services to a major local financial institution. In addition, DataFusion is
capitalising on its strategic contact centre expertise by offering professional
services and consulting as individual lines of business. DataFusion remains
positioned to benefit from growth in the local call centre environment which is
forecast at approximately 10% per annum.
Spescom Media IT`s first half results were impacted by delays in the final
adjudication of parastatal tenders. Upgrades and investments by local
broadcasters to meet international standards ahead of the 2009 Confederations
Cup continues to provide strong fundamentals for growth. Its range of product
and resource pool presents a compelling proposition.
Spescom Telecommunications` successes during the past six months validate its
ability to meet the requirements of the network operators. The division is well-
positioned to benefit from future contracts as the roll-out of Neotel`s network
gains momentum.
Prospects
Notwithstanding the spectre of a global and local economic downturn which is
likely to delay investment decisions in the short term, the trend towards
converged communication infrastructure and solutions will continue to drive
opportunities for Spescom. Investments in telecommunications infrastructure and
deployment of additional bandwidth will drive national demand for business
communications.
Spescom is confident that the positive operational performance is sustainable.
It continues to invest in its proprietary voice transaction management products
and workforce optimisation solutions, which provide foreign currency earnings
and a diversification during recessions. In addition, the group will focus on
broadening its offerings in the hosted and managed services environments,
leveraging off the connectivity opportunities created by deregulation, to
address customers` new business communications requirements and functionality.
By order of the board
M.C. Mogase J. Palmer
Chairman Chief Executive Officer
Johannesburg
21 May 2008
Summarised Consolidated Income Statement
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/2008 31/03/2007 30/09/2007
R`000 R`000 R`000
Revenue 162,007 145,062 385,470
Continuing operations
Turnover 155,800 139,031 380,085
Cost of sales (78,075) (78,013) (241,427)
Gross profit 77,725 61,018 138,658
Operating expenses (72,790) (60,881) (134,433)
after other income
Operating profit before 4,935 137 4,225
interest
Investment income 966 798 1,737
Finance charges (2,057) (2,472) (4,626)
Operating profit/(loss) 3,844 (1,537) 1,336
before non-trading
items
Non-trading items - - 20,054
Operating profit/(loss) 3,844 (1,537) 21,390
before taxation
Income tax expense (742) (26) (611)
Net profit/(loss) after 3,102 (1,563) 20,779
taxation
Profit from associate - 4,474 3,826
company
Net profit for the 3,102 2,911 24,605
period from continuing
operations
Discontinued operations - - -
Profit for the period 3,102 2,911 24,605
attributable to equity
holders of the parent
Number of shares in 78,768,056 78,768,056 78,768,056
issue
Number of shares on 72,230,513 72,320,538 72,314,237
which earnings per
share is calculated
Ratio analysis cents cents
cents
per share per share per share
Earnings per share
- basic and diluted,
for profit for the
period attributable to
ordinary equity holders 4.3 4.0 34.0
of the parent
- basic and diluted,
for profit from
continuing operations
for the period
attributable to 4.3 4.0 34.0
ordinary equity holders
of the parent
Headline earnings per
share
- Headline earnings per 4.3 4.1 6.9
share from continuing
operations
Net asset value per 80.6 75.3 69.1
share
Summarised Consolidated Balance Sheet
Unaudited Unaudited Audited
As at As at As at
31/03/2008 31/03/2007 30/09/2007
R`000 R`000 R`000
ASSETS
Non-current assets
Property,plant & equipment 35,551 36,896 35,522
Intangible assets 15,095 14,831 14,789
Investments and loans 6,651 24,716 7,151
Deferred taxation 14,022 13,143 13,972
71,319 89,586 71,434
Current assets 115,764 87,565 186,690
Inventories 24,242 17,260 18,617
Taxation prepaid 79 212 66
Trade and other receivables 66,012 51,596 146,122
Cash and cash equivalents 25,431 18,497 21,885
TOTAL ASSETS 187,083 177,151 258,124
EQUITY AND LIABILITIES
Capital and Reserves
Share capital and premium 45,283 45,283 45,283
Non-distributable reserves (5,123) 20,810 (5,816)
Distributable 18,038 (6,759) 14,936
reserves/(accumulated losses)
Ordinary shareholders` equity 58,198 59,334 54,403
Non-current liabilities 24,306 24,714 25,042
Deferred taxation 1,877 2,010 1,877
Deferred maintenance revenue 450 458 450
Interest bearing liabilities 21,979 22,246 22,715
Current liabilities 104,579 93,103 178,679
Current portion of interest 1,560 14,648 9,626
bearing liabilities
Bank finance 5,244 2,558 -
Taxation 4,509 3,285 4,221
Trade and other payables 57,871 47,314 120,183
Provisions and deferred 35,395 25,298 44,649
maintenance revenues
Total equity and liabilities 187,083 177,151 258,124
Statement of Changes in Equity
ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Non-
Distri- Share Share distri-
butable butable
reserves capital premium reserves Total
R`000 R`000 R`000 R`000 R`000
Balance at 30 (9,670) 684 44,599 20,802 56,415
September 2006
Share based 10 10
payments
Foreign currency (2) (2)
translation
profit arising
on consolidation
Net profit for 2,911 2,911
the period
Balance as at (6,759) 684 44,599 20,810 59,334
31 March 2007
Share based 431 431
payments
Revaluation of (88) (88)
land and
buildings
Foreign currency (73) (73)
translation
profit arising
on consolidation
Foreign currency (26,896)
translation (26,896)
profit realised
on sale of
investment
Net profit for 21,694 21,694
the period
Balance as at 30 14,936 684 44,599 (5,816) 54,403
September 2007
Share based 568 568
payments
Foreign currency
translation
profit arising 125 125
on consolidation
Net profit for 3,102 3,102
the period
Balance as at 31 18,038 684 44,599 (5,123) 58,198
March 2008
Summarised Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/2008 31/03/2007 30/09/2007
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash generated by operations 10,101 6,830 30,042
Working capital changes 3,098 (6,487) (14,053)
Cash generated by operating 13,199 343 15,989
activities
Net finance income (1,092) (1,674) (2,889)
Taxation paid 874 609 1,366
Net cash flow from operating 12,981 (722) 14,466
activities
INVESTING ACTIVITIES
Investment to maintain (6,702) 4,264 (12,401)
operations
Repayment of loans 500 - 12,465
Net cash flow from investing (6,202) 4,264 64
activities
FINANCING ACTIVITIES
Bank financing and facilities (8,803) (336) (7,905)
Net cash flow from financing (8,803) (336) (7,905)
activities
Net change in cash and cash (2,024) 3,206 6,625
equivalents
Effects of foreign exchange 325 (82) (112)
Cash and cash equivalents:
- At beginning of period 21,886 15,373 15,373
- At end of period 20,187 18,497 21,886
Segmental Analysis
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
31/03/2008 31/03/2007 30/09/2007
R`000 R`000 R`000
SECTOR TURNOVER
Enterprise Application and 122,644 116,960 262,665
Intergration Solutions
Communication Integration 11,366 6,106 86,098
Activities
Services 21,790 15,965 36,707
155,800 139,031 385,470
SECTOR OPERATING
PROFIT/(LOSS) BEFORE INTEREST
Enterprise Application and 2,453 1,064 2,208
Intergration Solutions
Communication Integration (2,530) (4,667) 488
Activities
Services 5,012 3,740 1,529
4,935 137 4,225
GEOGRAPHIC TURNOVER
Africa 149,489 133,190 375,020
Europe 6,311 5,477 8,306
USA 0 83 1,644
Other 0 281 500
155,800 139,031 385,470
PROPRIETARY TECHNOLOGY
Own IP 29,267 26,518 79,374
3rd Party IP 126,533 112,513 306,096
155,800 139,031 385,470
Notes to the summarised financial statements
Basis of presentation
The interim financial statements have been prepared in terms of International
Financial Reporting Standard (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 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 2008.
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
Company secretary: A. Van der Merwe
Directors: M.C. Mogase(Chairman) (Alt, C. Lister-James*), J. Palmer, P. Fick, T.
Makore, L. Ogilvy*, P. Vallet*(* Non-executive)
Website: www.spescom.com
Date: 22/05/2008 07:30:09 Produced by the JSE SENS Department.
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