| Tue 20 Nov 2001, 0:00 | | Spescom Ltd - Audited Results For The Year Ended 3 |
|
release
Spescom Limited
(Registration number 1987/001083/06)
Share Code: SPS
ISIN: ZAE000017919
AUDITED RESULTS FOR THE YEAR ended 30 SEPTEMBER 2001
Turnover up 32%
Headline Earnings up 207%
COMMENTS
Group Activities and Review of Operations
The Group's main activities are to provide select eBusiness Solutions and
Communications Solutions to leading organisations throughout the world.
Improved performance during the year, in spite of extremely tough trading
conditions, was largely a result of the focused strategy implemented by the
Group. This strategy is aimed at positioning Spescom as a leading player
both locally and internationally in the Information and Communications
Technology field (ICT).
Spescom's major objective is to globalise its operations using its own
technologies. It now has fully operational offshore businesses in the USA
and UK. To enhance this, certain non-core businesses and activities were
disposed of during the year.
Additionally, the release of new products into international markets has
resulted in distribution agreements being concluded with value-added
resellers (VAR's) in the UK and Europe. These VAR's are exclusively
committed to distributing Spescom products. The Group's activities are
becoming increasingly less reliant on the local market.
Significant investment in the development of Spescom's own products and
technologies has uniquely positioned the Group for offshore growth and the
stated objective of generating at least 50% of revenue and earnings offshore
by 2003 is well under way.
The Group has achieved significant strategic milestones as a direct result
of investments in international markets and product development, positioning
Spescom with a well-defined global roadmap that has resulted in several OEM
alliances. Spescom spends approximately 9% of its revenue on product
development.
In South Africa, the integration of operations in Gauteng is now complete,
with all Divisions being relocated to Spescom Park in Midrand. This has
resulted in a reduction of overhead expenditure through more efficient
centralisation of services.
Operational Performance
The year under review has again been characterised by extremely tough market
conditions. In spite of this, turnover for the year was R489m compared with
R370m for the same period in 2000, reflecting a 32% increase. Headline
earnings were R17,7m translating to 31,9 cents per share (2000 : 10,4 cents
per share), representing a 207% increase on the previous year.
During the year Spescom disposed of its 50% stake in Energy Measurements
(Pty) Ltd. The cash proceeds of R35,7m are expected to be paid in November/
December 2001 upon approval by the Competition Commission, the impact of
which will be to reduce Group debt to R40m.
As disclosed in the Interim Report, Spescom's major investment activities
over the last two years were geared towards product development. Positioning
for globalisation requires on-going expenditure. New product releases have
now enabled the Group to direct its activities to a major global account
programme focusing on its top international customers.
New product availability has resulted in strategic marketing initiatives
facilitating a dynamic focus on opportunities utilising proprietary
technology solutions. Additionally, international branding of the Spescom
name is well under way and Altris Software Inc. has now undergone a name
change to Spescom Software Inc.
Products that were previously under development have now been released onto
the market as follows:
* The existing contract with British Telecommunications (BT) has progressed
to a qualified design of a deployable termination unit for new services
(ADSL). BT has further requested changes in the design in line with newly
identified market requirements. In recognition of its commitment to the
contract, BT has made substantial payments to Spescom in respect of
development milestones achieved. Further project revenues have been
negotiated for payment in April 2002, prior to the roll-out in the latter
part of the financial year. The objective is also to introduce this product
to several other utilities throughout the world. In certain markets, this
will be initiated with BT in terms of a joint international marketing
agreement that has recently been concluded.
* The full integration of Altris' eBr document management suite with
Spescom's proprietary EMS2000 configuration management product, has been
completed. The new product offering is being marketed under the eBr brand.
It is the first product of its kind worldwide that has been certified by the
USA Institute of Configuration Management and has already achieved enormous
success with major customers both locally and internationally.
* A next generation voice transaction management system, having Voice over
IP functionality, is now being marketed both locally and internationally.
The results for the year were affected by a net foreign exchange translation
charge of R6,9m arising on the Group's offshore loans. In addition to this,
delayed shipments in the September period, which should have been reported
in the year under review, were only brought to book subsequent to year end.
A number of initiatives are being explored to eliminate further exposure to
the Group's offshore debt - a result of weakness in our local currency.
The objective of these efforts is to improve liquidity on the balance sheet,
which will also contribute to future funding requirements for the Group's
global expansion programme.
Prospects for the Future
Although we expect the sluggishness in the South African economy to
continue, and that this may be compounded by uncertainty and weakness in
overseas markets, we are confident that the positive trend achieved during
2001 will continue.
* Spescom has, over the last two years, attained significant international
milestones resulting in long term contracts being concluded.
* The order book for the new year is healthy, and pipeline opportunities in
all operations are at their highest levels in many years. This endorses the
focused activities of the Group and the strategic investment programmes
implemented over the last two years.
* New products have been developed and released into the local and overseas
markets resulting in OEM agreements and distribution agreements with VAR's
overseas that will result in foreign currency earnings being generated for
the Group.
* In South Africa Spescom DataFusion (Pty) Ltd, through alliances with major
international companies like Cisco, has made a significant impact in the
market. The Company has successfully concluded large contracts with leading
companies in South Africa against stiff competition from other well
established suppliers. Based on these achievements, Spescom was recently
recognised as the Cisco New World Partner of the Year for the Eastern EMEA
(Europe, Middle East and Africa) Region. We are confident that this trend
will continue and plans are being implemented to expand this operation.
* Local activity in the telecommunications area (Telkom, new fixed line and
cellular operations) is expected to be buoyant over the next few years and
Spescom is well positioned to benefit from this.
Awards and New Alliances since March 2001
Avaya Gold Business Partner
The first company in Africa to achieve Gold Certification. Avaya (previously
Lucent) is the world leader in customer contact centre (call centre)
technology.
CMII Certification for eBr CM
eBr CM, Spescom's powerful configuration management product, has received
Configuration Management II (CMII) certification. CMII is a best-practices
process standard that has been developed and implemented over a number of
years by the prestigious Institute of Configuration Management (ICM) based
in the USA.
Cisco Specialisation Certification
Under Cisco's new partner programme, Spescom is the first company to be
certified in Voice Access, IP Telephony and Wireless LAN.
Spescom Telecommunications awarded Quetel Recognition
Telkom has awarded Spescom Telecommunications Quetel certification which
checks the standard of supplied products against the overseas standard.
Quetel is achieved only after an exhaustive quality and service audit has
been conducted.
DMC Stratex
An exclusive distributorship agreement between DMC Stratex and Spescom
Telecommunications. DMC Stratex are world leaders in microwave wireless
technology.
Major New Customer Engagements and Contracts
Cell C
The supply and installation of a contact centre solution to support its
client-facing communications.
Eskom
The supply and installation of seven Avaya Definity call centres in various
regions around the country. These call centres will make use of DataVoice
recorders.
Telecommunication Facilities Management Company (TFMC)
Installation and commissioning of the first Avaya IP call centre in South
Africa.
Prestasi
The implementation of DataVoice systems at Prestasi branches countrywide.
Telkom
The expansion of Telkom's existing voice management system for all telephone
fault-reporting and directory enquiries.
20twenty Financial Services
The implementation of a complete Cisco-based Internet Protocol (IP)
telephony and integrated contact centre communication system.
MNet "Big Brother"
The acquisition of a post-production broadcasting solution utilising AVID
technology in order to bring `Big Brother' to South African viewers.
TV Malawi
Upgrade of television studios.
South African Rail Commuter Corporation (SARCC)
The supply of eBr software and consulting.
Telkom
Trial of eBr software for Telkom. The successful deployment of this will
allow 20 000 Telkom employees rapid access to accurate information in
context to customers, assets, products and processes.
Non-core Businesses
During the year under review, certain non-core businesses were sold as
follows:
* Spescom disposed of its 50% equity stake in Energy Measurements (Pty) Ltd
to its joint venture partner, Siemens Ltd, for a gross consideration
amounting to R35,7m. The purchase price is payable in cash upon the
approval by the Competition Commission. Had the proceeds been received in
the current financial year, the Group's net debt situation would have
reduced to R40m.
* Analysis Management and Systems (Pty) Ltd disposed of its entire Defence
business.
* The Group disposed of its 39% equity stake in Quante Spescom (Pty) Ltd to
3M.
Dividends
Spescom will continue with its policy of not declaring a dividend, thereby
conserving its cash which will be used for global expansion and the
development of international activities.
Spescom Black Empowerment and Social Responsibility Initiatives
With effect from 1 October 2001, Leseding Electronics Investments (Pty) Ltd,
Spescom's internal Black Empowerment company, has exercised its option to
acquire an additional 20% equity stake in Spescom Telecommunications (Pty)
Ltd effectively increasing its stake to a 30% interest. Leseding has also
acquired Spescom's Knowledge Management Division which markets eBr software
for the African territory.
Spescom has designed a Social Responsibility Programme aimed at developing
technology skills within the industry and concentrating on previously
disadvantaged students. The following educational institutions are the
identified beneficiaries: Technikon Pretoria and Institute of Software and
Satellite Application (ISSA). In addressing the social economic imbalances
relating to children, Spescom has targeted the Mayang Childrens Education
Foundation. In addition, there is the Schools Online project that Spescom
is facilitating and which will benefit South African schools. The initial
site for this programme is to be based in the Eastern Cape Province.
Spescom has also designed a procurement framework that has made it possible
to continuously outsource and develop business for small, medium and micro
enterprises (SMME's).
A Farah V Leas
Executive Chairman Chief Financial Officer
Johannesburg
20 November 2001
Income Statement
for the year ended 30 September
2001 2000
R'000 R'000
Turnover 489 387 370 337
From continuing operations 426 246 298 322
From discontinued operations 63 141 72 015
Cost of sales 252 763 229 717
From continuing operations 203 911 174 216
From discontinued operations 48 852 55 501
Operating profit 27 698 16 726
From continuing operations 26 581 23 029
From discontinued operations 1 117 (6 303)
Finance charges (12 366) (6 143)
Investment income 5 280 4 305
Net profit before abnormal items 20 612 14 888
Associated companies - (6 817)
Amortisation of goodwill (2 504) -
Abnormal items 10 194 (25 252)
Net profit/(loss) before tax,
after abnormal items 28 302 (17 181)
Taxation (2 873) 1 327
Net profit/(loss) after tax 25 429 (15 854)
Attributable to outside shareholders (14) (3 768)
Profit/(loss) for the year 25 415 (19 622)
HEPS 31,9 10,4
EPS 45,7 (36,1)
Balance Sheet
as at 30 September
2001 2000
R'000 R'000
ASSETS
Non-current assets
Property, vehicles & equipment 41 256 41 871
Intangible assets 24 462 29 939
Goodwill 48 304 -
Investment and loans 15 235 43 917
Deferred taxation 5 626 6 029
134 883 121 756
Current assets 206 253 176 272
Inventories 23 922 33 120
Taxation prepaid 3 412 -
Accounts receivable 131 993 86 971
Cash resources 46 926 56 181
TOTAL ASSETS 341 136 298 028
EQUITY AND LIABILITIES
Capital and reserves
Share capital 18 892 9 836
Non-distributable reserves 10 411 9 680
Distributable reserves 57 026 31 611
Ordinary shareholders' equity 86 329 51 127
Outside shareholders' of subsidiary
companies 1 014 1 000
Interest of all shareholders 87 343 52 127
Non-current liabilities 73 122 65 441
Deferred taxation - 152
Unsecured loans - 3 890
Long term liabilities 73 122 59 744
Interest free liabilities - 1 655
Current liabilities 180 671 180 460
Current portion of long term liabilities 1 839 11 496
Bank finance 49 775 54 143
Taxation 507 1 616
Accounts payable 78 070 71 329
Provisions 50 480 41 876
Total equity and liabilities 341 136 298 028
Statement of changes in equity
for the year ended 30 September
Non-
Trans- distri-
Retained lation Share Share butable
profit reserve capital premium reserves Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at
30/9/1999 51 233 20 543 193 976 245 772
Issue of share
capital 2 1 539 1 541
Currency translation
difference (725) (725)
Currency translation
written off 705 705
Applied to write
down goodwill (176 544) (176 544)
Excess share premium
not utilised (9 680) 9 680 -
Net loss for the
year (19 622) (19 622)
Balance at
30/9/2000 31 611 - 545 9 291 9 680 51 127
Issue of share
capital 11 9 045 9 056
Currency translation
difference (1 716) (1 716)
Currency translation
written off 1 716 1 716
Acquisition of
subsidiaries 769 769
Amortisation of
negative goodwill (38) (38)
Net profit for the
year 25 415 25 415
Balance at
30/9/2001 57 026 - 556 18 336 10 411 86 329
Abridged Cash Flow Statement
for the year ended 30 September
2001 2000
R'000 R'000
Net cash flow from operating
activities 11 675 (4 539)
Net cash flow from investment to
expand and maintain operations (14 824) (81 813)
Net cash flow from financing
activities (6 106) 79 082
Net change in cash and cash
equivalents (9 255) (7 270)
Cash and cash equivalents:
- At beginning of period 56 181 63 451
- At end of period 46 926 56 181
notes to the financial statements
for the year ended 30 September
2001 2000
R'000 R'000
1. Abnormal items
Write down of investments (9 553) (25 252)
Profit on disposal of business interests 19 747 -
10 194 (25 252)
2. Information per share
2.1 Headline earnings per share
Based on net profit after taxation
adjusted for capital items included
in abnormal items and 55 607 322
(2000: 54 321 724) weighted
average shares in issue
Net profit/(loss) for the year 25 415 (19 622)
Abnormal items (10 194) 25 252
Amortisation of goodwill 2 504 -
17 725 5 630
2.2 Earnings per share
Based on a net profit for the year of R25,415m (2000: loss for the year of
R19,622m) and a weighted 55 607 322 (2000: 54 321 724) shares in issue.
Website:
www.spescom.com
Directors:
A Farah (Chairman), KW Baker*, SP Blagden MBE (British), VJ Crone, A
Holloway, HJ Isaacman, LA Kallmeyer*, V Leas, Dr JR Leitner, CH Mostert, IB
Skosana*
*Non-executive
Company Secretary:
AG Johnston
Registered Office:
Spescom Park, Cnr. Alexandra Avenue and Second Road, Halfway House, 1685,
Midrand. Tel: +27 (11) 266 1500
Transfer Secretaries:
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg, 2001. Tel:
+27 (11) 370 5000.
Innovation for a better world
NEWS RELEASE
EMBARGOED - NOT FOR RELEASE UNTIL 12:00 ON TUESDAY 2001-11-20
SPESCOM RETURNS EXCEPTIONAL PERFORMANCE IN TOUGH TIMES
In the midst of tough trading conditions, Spescom Limited, the JSE listed
Information and Communications Technology (ICT) group, has returned an
exceptional operating performance for the year ending September 2001.
Revenues for the year are reported at R489m, compared with R370m for the
same period in 2000, and headline earnings are R17,7m, translating to 32
cents per share. This represents a 207% increase on the previous year.
According to Spescom executive chairman, Tony Farah, the company's goal to
generate 50% of earnings from offshore activities by 2003, is well under
way, due to significant investment in the development of proprietary
products and technologies.
"9% of revenues are devoted to product and technology development. We are
continually upgrading and launching new products onto local and
international markets resulting in OEM and distribution agreements with
value added resellers overseas. This is expected to boost future foreign
currency earnings.
"Spescom's proprietary eB software suite is already making significant
market impact. In the telecommunications arena we are very much a leader in
our field and remain one of the top ten providers in the country."
He notes that the group continued to divest of non-core activities with the
sale of its 50% stake in Energy Measurements (Pty) Ltd to Siemens Limited.
The cash proceeds of R35.7m will serve to reduce group debt to R40m.
Farah emphasises that the past year has been one of significant achievement
in terms of Spescom's globalisation plans.
"We are now a much more focused group. We boast fully-fledged operations on
three continents - the USA, Europe and Africa. We have a healthy order book
with long term contracts in place and pipeline opportunities are at the
highest level in many years."
Farah says that the past year has been a difficult one especially for
companies operating in the IT sector. "During this period we have
experienced the predicted global economic
downturn with the IT sector particularly taking a hard knock. This can be
explained to a degree by the exaggerated hype surrounding the industry and
it can now be said to be in the midst of a levelling out process. The
players left standing will unquestionably be the market differentiators in
terms of product offering. Spescom is uniquely positioned in its core
activity areas, with an exceptional team of people, world leading
proprietary technologies, plus strong alliances with global market leaders
like Cisco."
Farah says that while there is always the risk of a further downturn in the
South African economy and uncertainty in overseas markets, indications are
that the positive trend achieved during 2001 will continue.
ends
For further information contact:
Mr. Tony Farah,
Spescom executive chairman,
Tel: (011) 266 1700
Cell: 082 825 6791
Ms. Barbara Kruger,
Spescom chief communications officer,
Tel: (011) 266 1701
Cell: 082 456 0328
Deirdre Blain
BLAIN & ASSOCIATES
tel: +27 11 789 8548
fax:+27 11 789 8567
cell: 083 305 8859
