| Tue 21 May 2002, 0:00 | | Spescom Limited - Unaudited Interim Results |
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Spescom Limited - Unaudited Interim Results
Spescom Limited
(Registration number 1987/001083/06)
Share Code: SPS ISIN: ZAE000017919
Unaudited Interim Results for the Six Months ended 31 March 2002
INCOME STATEMENT
Six Six Audited
Months Months Year
ended ended ended
31/03/02 31/03/01 30/09/01
R`000 R`000 R`000
Turnover 170 937 230 726 489 387
From continuing operations 170 937 197 698 426 246
From discontinued operations - 33 028 63 141
Cost of sales 86 315 113 431 252 763
From continuing operations 86 315 87 799 203 911
From discontinued operations - 25 632 48 852
Operating (loss)/profit (46 777) 22 219 41 198
From continuing operations (46 777) 21 744 40 081
From discontinued operations - 475 1 117
Amortisation of goodwill (672) - (2 504)
Foreign exchange losses (18 419) (4 326) (12 899)
Finance charges (4 276) (8 702) (12 936)
Investment income 1 788 2 284 5 248
Net (loss)/ profit before
abnormal items (68 356) 11 475 18 107
Abnormal items (1 800) - 10 194
Net (loss)/profit before
tax, after abnormal items (70 156) 11 475 28 301
Taxation (178) (734) (2 873)
Net (loss)/profit
after tax (70 334) 10 741 25 428
Attributable to outside
shareholders (688) (2 825) (14)
(Loss)/profit for the year (71 022) 7 916 25 414
HEPS (cents) (118.91) 14.24 31.9
EPS (cents) (123.20) 14.24 45.7
No of shares in issue 58 668 054 55 607 322 55 607 322
BALANCE SHEET
Audited
At At at
31/03/02 31/03/01 30/09/01
R`000 R`000 R`000
ASSETS
Non-current assets
Property, vehicles and
equipment 40 886 47 594 37 576
Intangible assets 29 450 19 573 28 142
Goodwill 46 901 50 048 48 304
Investments and loans 21 122 22 180 15 235
Deferred taxation 5 626 6 029 5 626
143 985 145 424 134 883
Current assets 138 403 195 632 206 253
Inventories 25 154 23 990 23 922
Taxation prepaid 4 074 4 272 3 412
Accounts receivable 84 843 113 898 131 993
Cash resources 24 332 53 472 46 926
TOTAL ASSETS 282 388 341 056 341 136
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 33 775 18 892 18 892
Non-distributable reserves - 9 680 10 411
(Accumulated loss)/
distributable reserves (13 996) 39 527 57 026
Ordinary shareholders`
equity 19 779 68 099 86 329
Outside shareholders`
interest in subsidiary
companies 1 702 3 825 1 014
Interest of all
shareholders 21 481 71 924 87 343
Non-current liabilities 91 861 73 607 73 122
Deferred taxation - 152 -
Unsecured loans - 4 076 -
Interest bearing
liabilities 91 861 67 724 73 122
Interest free liabilities - 1 655 -
Current liabilities 169 046 195 525 180 671
Current portion of
liabilities 61 67 1 839
Bank finance 29 793 53 589 49 775
Taxation 382 - 507
Accounts payable 75 713 61 851 78 070
Provisions 63 097 80 018 50 480
Total equity and
liabilities 282 388 341 056 341 136
EQUITY STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2002
Non-dis-
Accumulated Share Share Translation tributable
loss capital premium reserve reserves Total
R`000 R`000 R`000 R`000 R`000 R`000
Balance at
30/9/2001 57 026 556 18 336 - 10 411 86 329
Issue of share
capital 31 5 172 5 203
Excess share
premium reduction
transferred to
share premium 9 680 (9 680) -
Amortisation of
negative goodwill (731) (731)
Currency
translation
difference 8 565 8 565
Currency translation
written off (8 565) (8 565)
Net loss for
the year (71 022) (71 022)
Balance at
31/3/2002 (13 996) 587 33 188 - - 19 779
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
The financial statements are prepared on the historical cost basis and
incorporate accounting policies which conform to the South African
Statements of Generally Accepted Accounting Practice. These policies are
applied on bases consistent with the previous period, other than where
modified to comply with revised South African Accounting Statements.
2. Information per share
Headline (loss)/earnings per share
Based on net profit after taxation adjusted for capital items included in
abnormal items and 57 647 810 weighted average shares in issue
(2001: 55 607 322)
Six Six Audited
Months Months Year
ended ended ended
31/03/02 31/03/01 30/09/01
R`000 R`000 R`000
Net (loss)/profit
for the year (71 022) 7 916 25 414
Abnormal items 1 800 - (10 194)
Amortisation of goodwill 672 - 2 504
(68 550) 7 916 17 724
(Loss)/earnings per share
Based on a net loss for the period of R71,022m (March 2001: net profit of
R7,916m and September 2001: net profit of R25,414m) weighted average shares
in issue of 57 647 810 (2001: 55 607 322)
3. Abnormal items
Write down of investments (1 800) - (9 553)
Profit on disposal of
business interests - - 19 747
(1 800) - 10 194
CONSOLIDATED CASH FLOW STATEMENT
Six Six Audited
Months Months Year
ended ended ended
31/03/02 31/03/01 30/09/01
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash (utilised)/generated
by operations (57 343) 25 746 57 002
Working capital changes 56 178 10 867 (4 682)
Cash (utilised)/generated
by operating activities (1 165) 36 613 52 320
Net finance charges (2 488) (6 418) (7 688)
Taxation paid (965) (6 622) (8 316)
Net cash flow from
operating activities (4 618) 23 573 36 316
INVESTING ACTIVITIES
Investment to expand and
maintain operations (14 955) (34 955) (39 466)
(14 955) (34 955) (39 466)
FINANCING ACTIVITIES
Bank financing and
facilities (3 021) 8 673 (6 105)
(3 021) 8 673 (6 105)
Net change in cash and
cash equivalents (22 594) (2 709) (9 255)
Cash and cash equivalents:
- At beginning of period 46 926 56 181 56 181
- At end of period 24 332 53 472 46 926
COMMENTS
Group Activities and Review of Operations
The period under review has for the Spescom Group, been the most challenging
in its 25 year history. The reported headline loss for the period amounted
to R68,5m (2001: profit R7,9m). This performance was mainly attributable to
the following factors:
Translated foreign exchange loss on offshore debt, amounting to R18m;
Trading losses incurred by US subsidiary, Spescom Software Inc., amounting
to R48m (US$3,9m);
Continued investment and write off of long term project costs and product
development expenses, amounting to R11m;
Delays in closing new business, as well as delays in executing long term
orders, resulting in reduced revenues and associated operational cash flows.
The Spescom Group`s revenue from continued operations declined by 14%,
mainly as a result of difficult trading conditions experienced by Spescom
Software Inc. in the US market, as well as delays experienced by the
Communications Solutions group in concluding new business in the period
reported.
Communications Solutions Group
The cyclical nature of the telecommunications market has resulted in delays
with respect to orders anticipated for the period under review. Management
is, however, pleased to announce that Spescom`s Telecommunications division
has been the successful bidder on a number of contracts, the most important
of which is a R250m tender for an advanced information management system for
testing and monitoring to be used throughout Telkom`s network of services.
This is expected to have a positive impact on the earnings of the Spescom
Group in the short and near term. Despite the slow-down in the general
economy, other operations in the Communications Solutions group remained
profitable. The British Telecommunications ("BT") contract for the network
termination device is on schedule. This contract is generating cash,
although the major roll-out is expected to commence during the first quarter
of the Spescom Group`s new financial year.
eBusiness Solutions Group
The turnover and profitability of the eBusiness group for the period under
review, was marginally up on that for the comparable period of the previous
year, with the exception of the Internet Business solutions ("IBS") division
where margins and new business were under considerable pressure. Corrective
action has been taken by integrating the IBS division with other eBusiness
activities under a single operation locally. The positive trend in the Call
Centre activities is expected to continue.
Spescom`s DataVoice division remains the leader in voice transaction
management solutions in South Africa. This operation continues to exceed
expectations, both locally and internationally.
Spescom Software Inc. (US)
Spescom Software Inc. released its second quarter results on 15 May 2002.
These results have had an adverse impact on the Spescom Group`s consolidated
accounts, particularly in view of the deterioration of the ZAR/US Dollar
exchange rate. Spescom Software Inc.`s management has implemented a plan of
action to immediately curtail the current level of losses and to achieve a
breakeven trading position by the fourth quarter of the current financial
year.
Prospects
As disclosed in last year`s annual report, the Spescom Group`s major
investment activities over the previous two years were geared towards
product development and market positioning. Recently significant
international initiatives have been implemented, resulting in key milestones
being achieved.
Prior investments and the planned strategy currently being implemented will
uniquely position the Spescom Group for offshore growth with the objective
of generating at least 50% of revenue and earnings offshore by 2003. This
will be achieved through the strategic positioning of the offshore
businesses, to be aligned with global leading industry players. These
initiatives will position the Spescom Group with a well-defined roadmap that
is designed to achieve the following:
Substantially improve liquidity on the balance sheet, thereby eliminating
debt and further exposure to weakness in the ZAR;
Position the Spescom Group with leading industry players offshore,
resulting in joint ventures and alliances, to penetrate new markets,
enhancing growth opportunities;
Substantially reduce associated funding costs.
Although delays in concluding pipeline opportunities were experienced by the
Communications Solutions group in the March period, the Spescom Group as a
whole has secured an order book, both locally and offshore, in excess of
R700m. This is the highest it has ever been in Spescom`s history.
All associated costs to date have been written off. The execution of these
contracts will begin in the last quarter of this financial year, with full
roll-out expected in the new financial year. In the Communication Solutions
group, local activity is expected to be positive over the next few years and
the Spescom Group is well positioned to benefit from this.
The major problems experienced by Spescom Software Inc. (US), have now
largely been addressed.
The next six months` performance is expected to show a return to
profitability.
Should the ZAR continue to strengthen, as is the current trend, this could
further result in a positive write-back on foreign exchange losses incurred
in the first half-year period.
Dividend
In line with current Spescom Group policy, no dividend will be declared.
When the Spescom Group returns to profitability, this policy may be
reviewed.
Directorate
During the period under review, two directors resigned from the Spescom
Limited board. Mr Israel Skosana, who represented SARHWU, resigned from
SARHWU and therefore relinquished his appointment on the Spescom Limited
board. Mr Alan Holloway resigned from the Spescom Group to pursue other
interests.
Spescom Limited is undergoing a process of reconstituting its board to bring
it in line with the recommendations contained in King II.
A Farah H J Isaacman Johannesburg
Executive Chairman Chief Financial Officer 21 May 2002
Directors:
A Farah (Chairman), KWBaker*, SP Blagden MBE (British),
VJ Crone, HJ Isaacman, LA Kallmeyer*, V Leas, Dr JR Leitner,
CH Mostert *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:
Computershare Investor Services Limited, 11 Diagonal Street, Johannesburg,
2001. Tel: +27 (11) 370 5000.
Spescom Limited
(Registration number 1987/001083/06)
Share Code: SPS ISIN: ZAE000017919
Website: www.spescom.com
Innovation for a better world
Date: 21/05/2002 04:04:00 PM Produced by the SENS Department
