| Thu 16 Apr 2009, 8:51 | | SPS - Spescom Limited - Trading and operational update |
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SPS
SPS
SPS - Spescom Limited - Trading and operational update
Spescom Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/001083/06)
Share code: SPS ISIN: ZAE000017919
("Spescom")
TRADING AND OPERATIONAL UPDATE
Trading Update
In the interests of transparent disclosure and given the rapidity of change in
the current economic climate, the Group has decided to release an update to
advise shareholders of the effects of the global financial crisis and counter
actions being taken to mitigate these impacts.
Shareholders are advised that Spescom is expecting a decrease of between 10% and
15% in net profit for the six months ended 31 March 2009 compared to that of the
previous corresponding period. Likewise, earnings per share and headline
earnings per share for the same period are expected to range between 3,6 cents
and 3,8 cents per share as compared to 4,3 cents for the prior period.
Corporate technology users within the Group`s target market have been affected
by the global uncertainty with discretionary as well as capital investment
spending decisions coming under increased scrutiny and project decisions being
put on hold. While Spescom Media IT has been largely shielded from the downturn,
Spescom`s other divisions have been impacted by the almost immediate slow down
in spending amongst corporate users.
Operational Update
Spescom has not been complacent in dealing with this current financial crisis.
The Group has taken decisive action to ensure its ability to weather the
economic downturn, without compromising the intellectual capital of the
business. While short term counteractive action is a priority, the Group has
also adopted a longer term and proactive view to this economic downturn and has
concentrated on retaining its skills pool and minimising retrenchments among
technical and sales staff. To this end, a general evaluation of overhead costs
has been undertaken across the Group with support structures being streamlined
accordingly. The cost structure relating to the Head Office environment has been
cut by approximately R5m. In addition, employees at the Spescom Head Office as
well as at the divisional level are considering a scheme to take a salary cut.
The retrenchment of approximately 10 positions, representing less than 3% of the
workforce, within the Group as a result of operational requirements is also
being evaluated. As a result, Spescom remains well positioned to grow as
economic conditions improve.
Spescom DataVoice continues to make inroads in the global voice recording market
with its proprietary products which include risk mitigation and workforce
optimisation functionality. However, demand has been affected by the poor
economy, with a negative effect on profitability, although several good
opportunities are being actively pursued. Investments in innovative product
development have continued and the launch of an exciting hosted voice recording
application, which will be distributed on line, is imminent. The division is
also making good progress in developing relationships with global communication
players to establish new routes to market for its product offering.
Spescom DataFusion continues to experience strong levels of interest in its
solution sets, however slower corporate decision making is impacting results.
The division`s diversified product range and intellectual capital should ensure
its ability to participate actively in the market, despite the current slowdown,
especially as the new undersea cable is set to reduce bandwidth costs in South
Africa and stimulate a number of new opportunities such as large outsourced
contact centre projects.
Spescom Media IT is benefiting from the strategy to diversify its revenue base
by servicing the broadcast market in the SADC region. Ongoing contracts in
Namibia and Mauritius have enabled the division to gain recognition of its
unique integration capabilities further afield. Media IT is also well positioned
to take advantage of the infrastructure spend towards the 2010 World Cup.
Spescom Telecommunications continues to investigate various options to extend
its skills and relationships in the telecommunications sector to capitalise on
medium term opportunities in addition to playing an important role in rolling
out network infrastructure for a large network operator. The division has
recently signed a maintenance agreement with this network operator as a result
of its successful participation in their infrastructure roll out.
Notwithstanding the challenging local and global economic outlook which we
believe is set to persist beyond the 2009 financial year, Spescom maintains that
its market positioning is resilient, and is supported by the Group`s pool of
intellectual skills as well as its alliances with leading global technology
players. Despite the current slowdown in deal flow, the qualified medium term
opportunity pipeline remains positive. A number of market drivers are in place
for Spescom to derive shareholder value from providing its enabling technologies
and integration skills, including the 2010 Soccer World Cup and the imminent
commissioning of the Seacom undersea telecommunications cable. In addition, the
Group will evaluate opportunities to build critical mass in its areas of
business in order to fast track its long term growth objectives.
The financial information on which this trading update is based has not been
reviewed or reported on by the group`s auditors. The Group`s results for the 6
months ended 31 March 2009, are expected to be published on or about 15 May
2009.
Midrand
16 April 2009
Sponsor: Investec Bank Limited
Date: 16/04/2009 08:51:00 Produced by the JSE SENS Department.
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