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Spescom - Preliminary Reviewed Results For The Year Ended 30 September 2002
Spescom Limited
(Registration number 1987/001083/06)
Share Code: SPS
ISIN: ZAE000017919
PRELIMINARY REVIEWED RESULTS for the year ended 30 September 2002
Income Statement
Year Year
ended ended
30/09/02 30/09/01
R`000 R`000
Turnover 366 238 489 387
From continuing operations 339 291 380 845
From discontinued operations 26 947 108 542
Cost of sales 175 255 252 763
From continuing operations 156 163 176 114
From discontinued operations 19 092 76 649
Operating (loss)/profit (57 781) 28 299
From continuing operations (41 692) 24 048
From discontinued operations (16 089) 4 251
Amortisation of goodwill (6 285) (2 504)
Finance charges (11 265) (12 936)
Investment income 4 581 5 248
Net (loss)/profit before abnormal items (70 750) 18 107
Abnormal items (13 846) 10 194
Net (loss)/profit before tax, after (84 596) 28 301
abnormal items
Taxation (149) (2 873)
Net (loss)/profit after tax (84 745) 25 428
Attributable to outside shareholders (303) (14)
(Loss)/profit for the year (85 048) 25 414
HEPS (cents) (111.5) 31.9
EPS (cents) (146.1) 45.7
No. of shares in issue 58 668 054 55 607 322
Notes
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 a basis
consistent with that of the previous
financial year, other than where modified
to comply with revised South African
Accounting Statements.
Ernst & Young, the company`s auditors,
have reviewed the financial results. A
copy of their report is available for
inspection at the company`s registered
office.
2. Information per share:
Headline (loss)/earnings per share:
Based on net (loss)/profit after taxation
adjusted for capital items included in
abnormal items and 58 215 233 weighted
average shares in issue
(2001: 55 607 322)
Net (loss)/profit for the year (85 048) 25 414
Abnormal items 13 846 (10 194)
Amortisation of goodwill 6 285 2 504
(64 917) 17 724
(Loss)/earnings per share:
Based on a net loss for the period of
R85,048m (September 2001: net profit of
R25,414m) and weighted average shares in
issue of 58 215 233 (2001: 55 607 322)
3. Abnormal items (2 140) (9 553)
Write down and sale of investments
Loss on discontinuance of businesses (11 627) -
Loss on sale of fixed assets (79) -
Profit on disposal of business interests - 19 747
(13 846) 10 194
Balance Sheet
As at As at
30/09/02 30/09/01
R`000 R`000
ASSETS
Non-current assets
Property, vehicles and equipment 36 127 37 576
Intangible assets 22 690 28 142
Goodwill 41 288 48 304
Investments and loans 42 604 15 235
Deferred taxation 6 165 5 626
148 874 134 883
Current assets 146 211 206 253
Inventories 16 833 23 922
Taxation prepaid 1 602 3 412
Accounts receivable 83 736 131 993
Cash resources 44 040 46 926
TOTAL ASSETS 295 085 341 136
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 33 775 18 892
Non-distributable reserves 900 10 411
(Accumulated loss)/distributable reserves (28 022) 57 026
Ordinary shareholders` equity 6 653 86 329
Outside shareholders` interest in subsidiary 317 1 014
companies
Interest of all shareholders 6 970 87 343
Non-current liabilities 191 93
Interest bearing liabilities 191 93
Current liabilities 287 924 253 700
Current portion of liabilities 84 1 839
Interest bearing liabilities 17 477 -
Bank finance 143 489 122 804
Taxation 219 507
Accounts payable 66 199 78 070
Provisions and deferred revenue 60 456 50 480
Total equity and liabilities 295 085 341 136
Equity Statement for the year ended 30 September 2002
Accumulated Share Share
loss capital premium
R`000 R`000 R`000
Balance at 30/9/2001 57 026 556 18 336
Issue of share capital 31 5 172
Excess share premium reduction 9 680
transferred to share premium
Amortisation of negative goodwill
Reserve arising on redemption of
preference shares
Reserve transferred to outside
shareholders
Currency translation difference
Currency translation transferred to
income
Net loss for the year (85 048)
Balance at 30/9/2002 (28 022) 587 33 188
Non-dis-
Translation tributable
reserve reserves Total
R`000 R`000 R`000
Balance at 30/9/2001 - 10 411 86 329
Issue of share capital 5 203
Excess share premium reduction (9 680) -
transferred to share premium
Amortisation of negative (731) (731)
goodwill
Reserve arising on redemption 1 000 1 000
of preference shares
Reserve transferred to outside (100) (100)
shareholders
Currency translation difference (318) (318)
Currency translation 318 318
transferred to income
Net loss for the year (85 048)
Balance at 30/9/2002 - 900 6 653
Consolidated Cash Flow Statement
Year Year
ended ended
30/09/02 30/09/01
R`000 R`000
OPERATING ACTIVITIES
Cash (utilised)/generated by operations (55 253) 57 002
Working capital changes 53 451 (4 682)
Cash (utilised)/generated by
operating activities (1 802) 52 320
Net finance costs (6 684) (7 688)
Taxation refunded/(paid) 834 (8 316)
Net cash flow from operating activities (7 652) 36 316
INVESTING ACTIVITIES
Investment to expand and maintain operations (31 739) (39 466)
(31 739) (39 466)
FINANCING ACTIVITIES
Bank financing and facilities 36 505 (6 105)
36 505 (6 105)
Net change in cash and cash equivalents (2 886) (9 255)
Cash and cash equivalents:
- At beginning of period 46 926 56 181
- At end of period 44 040 46 926
Segmental Analysis
Year ended Year ended
30/09/02 30/09/01
R`000 R`000
Turnover
eBusiness 159 137 200 285
Communications 114 970 199 456
Services and other 92 131 89 646
366 238 489 387
Operating (loss)/profit
eBusiness (57 764) 11 960
Communications (16 610) 7 027
Services and other 16 593 9 312
(57 781) 28 299
Geographic Turnover
Africa 253 284 360 137
Europe 73 988 75 543
USA 38 966 52 878
Other - 829
366 238 489 387
COMMENTS
Review of Operations
The Spescom Group generated a headline profit of R3,6m in the second six months
of the financial year, compared to a headline loss of R68,5m reported at interim
stage. Revenues for the year are R366m compared to R489m for the same period in
2001. Headline loss for the year, at R64,9m - translating to a loss of 111,5
cents per share, is significantly down on last year`s profit of 31,9 cents per
share.
After taking into account abnormal items relating to amortisation of goodwill
and losses incurred on discontinued businesses, the Group incurred a loss for
the year of R85m, compared to a profit of R25,4m for the corresponding year.
While the results for the full year under review remain negative, as previously
indicated, it is rewarding to note the vast improvement reflected in the last
six-month period. This positive trend is expected to continue into the new
financial year.
The year under review was characterised by unexpected and unpredictable
occurrences, which negatively affected world markets and trading conditions.
Spescom Limited`s most notable outcome of this tough period is the emergence of
the Spescom Group as truly international with a Nasdaq listing, operations in
US, UK and SA, and channels to market throughout the world. This growth and
transformation was achieved organically and most importantly, through the
development of the Group`s proprietary technology.
New BEE initiatives were undertaken whereby strategic aspects of Spescom`s Cisco
networking business have been moved to Sourcecom; and the eB document management
software suite is now being distributed in South Africa by TSS (Tactical
Software Systems).
SA operations have been consolidated and are anticipated to be profitable in the
new financial year.
Prospects
The US operation, Spescom Software Inc., continued with the momentum shown in
its third and fourth quarter results with a number of major deals being closed
recently. Due to the continued enhanced market demand and recognition of the
company`s flagship product, eB, this trend is expected to continue during 2003,
with revenues expected to grow by approximately 35% to 40%.
In the UK, the contract with BT for the NTelite network termination device has
commenced roll-out of the initial 2m units with a possible roll-out projected
for 23m units. As previously mentioned, a joint marketing agreement with BT is
in place for this device to be marketed throughout the world.
Spescom DataVoice holds in excess of 70% of the SA market and is recognized as a
leading global innovator in multi-media transaction recording. It has increased
its worldwide distribution network and now attributes 35% to 40% of its revenues
to European deals.
Spescom Limited`s investment in global expansion was mainly financed through
direct debt amounting to US$8m at low international interest rates. This
investment has resulted in strategic businesses for the Spescom Group, which are
well positioned to generate revenues in excess of US$25m during the coming
financial year.
Reducing or restructuring the debt remains a priority and in this regard the
Spescom Group is exploring a number of initiatives designed to unlock the value
inherent in its offshore operations. It is hoped that these actions will lead to
the attainment of the twofold objectives of raising capital through the sale of
equity, and repositioning the Spescom Group`s operations in joint ventures with
strategic global industry players. An example of the success of this approach is
the ongoing benefit being reaped from the Spescom Limited and Siemens joint
venture, initiated in 1994.
Dividends
Spescom Limited continues with its policy of not declaring a dividend. This
policy may be reviewed in the future.
Directorate
In line with good corporate governance the board of directors was reconstituted
in the last six months. This necessitated the resignation of Messrs K Baker, S
Blagden, V Crone, C Mostert, V Leas, and Dr J Leitner, all of whom retain
executive management positions within the Spescom Group. Mr S Pityana and Ms L
Ogilvy were appointed to the board as independent non-executive directors.
By order of the board
A Farah H J Isaacman Johannesburg
Executive Chairman Chief Financial Officer 22 November 2002
Directors:
A Farah (Chairman), HJ Isaacman, LA Kallmeyer*, L Ogilvy*,
SM Pityana* *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
Registrar:
Stakeholder Data Services (Pty) Limited, 108 Johan Avenue, Sandton, 2146. Tel:
+27 (11) 775 3456.
Website: www.spescom.com
Innovation for a better world
Date: 22/11/2002 03:30:00 PM Produced by the JSE SENS Department
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