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SPS
SPS
SPS - Spescom Limited - Summarised Interim Results for the Six Months Ended 31
March 2009
Spescom Limited
(Registration number 1987/001083/06)
Share code: SPS
ISIN: ZAE000017919
SUMMARISED INTERIM RESULTS for the six months ended 31 March 2009
SALIENT FEATURES
- Total reported revenue of R168,7 million (2008: R162,0 million)
- Headline earnings per share decreased by 14,0% to 3,7 cents (2008: 4,3 cents)
- Cash generated by operations of R14 million (2008: R10 million)
- Tangible NAV of 58,9 cents per share (2008: 54,7 cents)
- Decisive actions to mitigate impact of economic downturn
SUMMARISED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31/03/2009 31/03/2008 30/09/2008
R`000 R`000 R`000
Total revenue 168 681 162 007 362 932
Continuing operations
Turnover 166 454 155 800 358 196
Cost of sales (86 974) (78 075) (189 332)
Gross profit 79 480 77 725 168 864
Operating expenses after (76 215) (72 790) (152 637)
other income
Operating profit before 3 265 4 935 16 227
interest
Investment income 1 846 966 2 762
Finance charges (2 030) (2 057) (4 543)
Net profit before taxation 3 081 3 844 14 446
Taxation (410) (742) (7 080)
Profit for the period 2 671 3 102 7 366
attributable to equity
holders of the parent
Number of shares in issue 78 768 056 78 768 056 78 768 056
Number of shares on which 72 320 538 72 320 540 72 230 513
earnings per share is
calculated
cents cents cents
Ratio analysis per share per share per share
Earnings per share:
- basic, for profit for 3,7 4,3 10,2
the period attributable to
ordinary equity holders of
the parent
- basic, for profit from 3,7 4,3 10,2
continuing operations for
the period attributable to
ordinary equity holders of
the parent
- diluted, for profit for 3,7 4,3 10,1
the period attributable to
ordinary equity holders of
the parent
Headline earnings per
share:
- Headline earnings per 3,7 4,3 10,3
share from continuing
operations
Net asset value per share 88,3 73,9 85,8
SUMMARISED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31/03/2009 31/03/2008 30/09/2008
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash generated by 14 016 10 101 27 460
operations
Working capital changes (22 684) 3 098 19 708
Cash (utilised)/generated (8 668) 13 199 47 168
by operating activities
Net finance charges (184) (1 092) (1 781)
Taxation paid (1 768) 874 (5 515)
Net cash flow from (10 620) 12 981 39 872
operating activities
INVESTING ACTIVITIES
Investment to maintain (9 607) (6 702) (21 906)
operations
Proceeds from sale of - - 12 457
investment
Net cash flow from (9 607) (6 702) (9 449)
investing activities
FINANCING ACTIVITIES
Bank financing and 533 (8 303) (9 075)
facilities
Net cash flow from 533 (8 303) (9 075)
financing activities
Net change in cash and (19 694) (2 024) 21 348
cash equivalents
Effects of foreign (582) 326 485
exchange
Cash and cash equivalents:
- At beginning of period 43 718 21 885 21 885
- At end of period 23 442 20 187 43 718
SUMMARISED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
As at As at As at
31/03/2009 31/03/2008 30/09/2008
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 44 200 35 551 46 344
equipment
Intangible assets 23 144 15 095 18 952
Investments and loans 5 682 6 651 5 680
Deferred taxation 13 404 14 022 13 404
86 430 71 319 84 380
Current assets 103 310 115 764 129 922
Inventories 17 610 24 242 13 870
Taxation prepaid 310 79 135
Trade and other 61 948 66 012 72 199
receivables
Cash and cash equivalents 23 442 25 431 43 718
TOTAL ASSETS 189 740 187 083 214 302
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 45 283 45 283 45 283
Non-distributable reserves (736) (5 123) (34)
Distributable reserves 24 973 18 038 22 302
Ordinary shareholders` 69 520 58 198 67 551
equity
Non-current liabilities 26 712 24 306 27 832
Deferred taxation 3 377 1 877 3 377
Deferred maintenance 2 965 450 3 291
revenue
Interest bearing 20 370 21 979 21 164
liabilities
Current liabilities 93 508 104 579 118 919
Current portion of 1 631 1 560 1 631
interest bearing
liabilities
Bank finance 1 330 5 244 -
Taxation 3 252 4 509 5 332
Deferred maintenance 26 683 25 395 26 546
revenue
Trade and other payables 60 612 67 871 85 410
TOTAL EQUITY AND 189 740 187 083 214 302
LIABILITIES
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited
six months six months Year
ended ended ended
31/03/2009 31/03/2008 30/09/2008
R`000 R`000 R`000
Sector turnover
Enterprise application and 108 246 119 165 273 841
integration solutions
Communication integration 18 914 8 618 22 725
activities
Services 39 294 28 017 61 630
166 454 155 800 358 196
Sector operating
profit/(loss) before
interest
Enterprise application and 626 5 958 12 440
integration solutions
Communication integration 85 (2 564) 119
activities
Services 2 554 1 541 3 668
3 265 4 935 16 227
Geographic turnover
Africa 159 877 149 489 345 981
Europe 6 577 6 311 12 215
166 454 155 800 358 196
Proprietary Technology
Own IP 57 847 29 267 104 140
3rd Party IP 108 607 126 533 254 056
166 454 155 800 358 196
STATEMENT OF CHANGES IN EQUITY
Distributable Share Share
reserves capital premium
R`000 R`000 R`000
Balance as at 30 September 14 936 684 44 599
2007
Share based payments
Foreign currency
translation profit arising
on consolidation
Net profit for the period 3 102
Balance as at 31 March 18 038 684 44 599
2008
Share based payments
Revaluation of land and
buildings
Deferred tax arising on
revaluation of land and
buildings
Foreign currency
translation profit arising
on consolidation
Net profit for the period 4 264
Balance as at 30 September 22 302 684 44 599
2008
Share based payments
Foreign currency
translation profit arising
on consolidation
Net profit for the period 2 671
Balance as at 31 March 24 973 684 44 599
2009
Non-distributable
reserves Total
R`000 R`000
Balance as at 30 September (5 816) 54 403
2007
Share based payments 568 568
Foreign currency 125 125
translation profit arising
on consolidation
Net profit for the period 3 102
Balance as at 31 March (5 123) 58 198
2008
Share based payments 127 127
Revaluation of land and 6 584 6 584
buildings
Deferred tax arising on (1 636) (1 636)
revaluation of land and
buildings
Foreign currency 14 14
translation profit arising
on consolidation
Net profit for the period 4 264
Balance as at 30 September (34) 67 551
2008
Share based payments (48) (48)
Foreign currency (654) (654)
translation profit arising
on consolidation
Net profit for the period 2 671
Balance as at 31 March (736) 69 520
2009
NOTES TO THE SUMMARISED FINANCIAL STATEMENTS
These summarised consolidated interim financial statements for the six month
period ended 31 March 2009 have been prepared in accordance with with Interim
Financial Reporting (IAS) 34, the JSE Listing Requirements and in the manner
required by the Companies Act of South Africa.
The summarised consolidated interim financial information should be read in
conjunction with the annual financial statements for the year ended 30 September
2008, which have been prepared in accordance with International Financial
Reporting Standards (IFRS). The accounting policies applied are consistent with
those of the annual financial statements for the year ended 30 September 2008,
as described in those financial statements.
This report was not audited or reviewed by the company`s auditors.
COMMENTARY
Financial review
The Group reported a 4,1% increase in revenue to R168,7 million for the six
months ended 31 March 2009 (2008: R162,0 million). Media IT and Spescom
Telecommunications, which both delivered strong revenue growth, mitigated the
impact of slower demand in Spescom DataVoice and Spescom DataFusion.
Gross profit for the Group increased by 2,3% to R79,5 million (2008: R77,7
million). Those divisions which are traditionally associated with higher
margins, being Spescom DataVoice and Spescom DataFusion, were more severely
affected by the economic downturn.
Although operating profit declined by 33,8% to R3,3 million (2008: R4,9
million), judicious cost controls across the Group limited overall cost
increases to 4,7%. In addition, Spescom is currently implementing several
measures to minimise its cost base without compromising the intellectual capital
of the business (as outlined in a trading update issued on 16 April 2009).
The gearing position of the Group improved to 33,5% when compared to 49,5%
reported at 31 March 2008. As a result, net finance charges have reduced to R184
000 compared to R1,1 million in the comparable period.
Attributable profit of R2,7 million was reported (2008: R3,1 million),
translating into headline earnings per share of 3,7 cents (2008: 4,3 cents).
The Group reported a net outflow of R19,7 million in cash and cash equivalents
since September 2008, with R9,6 million being invested to maintain operations.
These investments reflect Spescom`s long-term commitment to product development
and capacity building. Cash and cash equivalents at 31 March 2009 amounted to
R23,4 million. Net asset value per share increased by 19,5% to 88,3 cents per
share (2008: 73,9 cents per share).
Operational review
Spescom DataVoice reported a 14% decline in revenue as demand was affected by a
poor economy, which also impacted profitability. However, the division preserved
its offshore revenue streams and continues to make inroads in the global voice
recording market with its proprietary products which include risk mitigation and
workforce optimisation functionality. Despite the tighter environment, several
good opportunities are being actively pursued. DataVoice has maintained its
investments in innovative product development while it is also making good
progress in developing relationships with global communication players to
establish new routes to market for its products.
Although Spescom DataFusion continues to experience strong levels of interest in
its solution sets, revenue showed a 14% decrease as a result of slower corporate
decision making in the client environment. Its managed services capability is
also benefiting from increased awareness. The division`s diversified product
range and intellectual capital ensures 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 delivered a 43% increase in revenue, as it successfully
extended its reach into the broadcast market in the SADC region and gained
recognition of its unique integration capability further afield as a result of
its ongoing contracts in Namibia and Mauritius. Media IT is also well positioned
to take advantage of increased infrastructure spend ahead of the 2010 Soccer
World Cup.
Spescom Telecommunications reflected an 86% increase in revenue, supported by
the ongoing network infrastructure roll out for a large network operator. The
division subsequently signed a maintenance agreement with this major client
following from the pivotal role it has played in the network`s roll out. Spescom
Telecommunications continues to investigate a number of options to extend its
skills and relationships in the telecommunications sector in order to capitalise
on medium-term opportunities.
Prospects
Spescom`s market positioning is resilient, underpinned by its strong management
team and extensive pool of intellectual skills as well as its alliances with
leading global technology players.
The uncertain local and global economic environment is expected to persist
beyond the 2009 financial year. Against this backdrop, the Group anticipates a
muted performance in the second half of the year in light of the slowdown in
deal flow.
However, Spescom remains well positioned to grow as economic conditions improve
while a number of market drivers are in place which will enable it to derive
value from providing enabling technologies and integration skills to clients.
These include the 2010 Soccer World Cup and the imminent commissioning of the
Seacom undersea telecommunications cable. Spescom continues to capitalise on its
intellectual capital and the launch of an application for people conducting
business from their mobile phones is imminent. Spescom will maintain its ongoing
evaluation of opportunities to build critical mass in its areas of business in
order to expedite its growth objectives.
Directorate
Ms D Sinivasan has tendered her resignation as a director and will be leaving
Spescom on 31 May 2009. The board wishes to express its appreciation for Ms
Sinivasan`s valuable contribution to Spescom and wishes her every success in her
future endeavours. Spescom is currently seeking a suitable replacement and a
further announcement will be made on the conclusion of that process.
By order of the board
J Palmer
Chief Executive Officer
18 May 2009
Directors:
M C Mogase+ (Chairperson), P Fick, T Makore, C Nkosi+,
L Ogilvy+, J Palmer, D Sinivasan, P Vallet +
+ Non-executive
Registered Office:
Spescom Park,
Cnr Alexandra Avenue and Second Road,
Midrand, 1685.
Tel +27 (11) 266 1500
Secretary:
A van der Merwe
Registrar:
Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001.
www.spescom.com
Sponsor: Investec Bank Limited
Date: 18/05/2009 07:05:02 Produced by the JSE SENS Department.
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