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SPESCOM LIMITED -
Spescom Limited
Preliminary reviewed results for the year ended 30
September 2003
* Headline earnings up by 145%
* Cash flow improvement from negative R7,6 million to
positive R158,3 million
Income Statement
Reviewed Audited
Year ended Year ended
30/09/03 30/09/02
R"000 R"000
Turnover 355 544 366 238
From continuing operations 353 894 339 291
From discontinued operations 1 650 26 947
Cost of sales 171 580 175 255
From continuing operations 171 145 156 163
From discontinued operations 435 19 092
Operating profit/(loss) 32 579 (55 922)
From continuing operations 31 743 (39 832)
From discontinued operations 836 (16 090)
Amortisation of goodwill (7 192) (6 285)
Finance charges (13 860) (13 203)
Investment income 7 018 4 581
Net profit/(loss) before 18 545 (70 829)
abnormal items
Non-trading items (7 648) (13 767)
Net profit/(loss) before tax,
after
abnormal items 10 897 (84 596)
Taxation (276) (149)
Net profit/(loss) after tax 10 621 (84 745)
Attributable to outside 4 105 (303)
shareholders
Profit/(Loss) for the period 14 726 (85 048)
HEPS (cents) 50.4 (111.5)
EPS (cents) 25.1 (146.1)
Notes
1. Accounting policies
These results have been compiled in accordance with the
South African Statements of Generally Accepted Accounting
Practice, the Listings Requirements of the JSE Securities
Exchange South Africa and Schedule 4 of the South African
Companies Act.
The accounting policies used in the preparation of these
results are consistent in all material respects with
those adopted in the annual financial statements for the
year ended 30 September 2002.
During the year the group adopted AC133, Financial
Instruments: Recognition and Measurement. There has been
no material effect on earnings on the adoption of this
statement.
No material adjusting events have occurred subsequent to
year-end.
These results have been reviewed by Ernst & Young and the
review opinion is available on request from the company
secretary at the company"s registered office.
The group"s annual report will be available by the
beginning of March 2004.
2. Information per share:
Headline earnings per share:
Based on net profit after taxation
adjusted for capital items included
in non-trading items and 58 668 054
weighted average shares in issue
(2002: 58 215 233)
Net profit/(loss) for the year 14 726 (85 048)
Non-trading items 7 648 13 767
Amortisation of goodwill 7 192 6 285
(Profit)/loss on sale of fixed assets (11) 79
29 555 (64 917)
Earnings per share:
Based on a net profit for the year of
R14,726 million
(September 2002: net loss of R85,048
million)
weighted average shares in issue of
58 668 054 (2002: 58 215 233)
3. Non-trading items
Write down and sale of investments (4 430) (2 140)
Capitalisation restructuring costs (788) -
Loss on discontinuance of businesses (2 430) (11 627)
(7 648) (13 767)
Balance sheet
Reviewed Audited
as at as at
30/09/03 30/09/02
R"000 R"000
ASSETS
Non-current assets
Property, vehicles & equipment 32 867 35 828
Intangible assets 19 672 22 989
Goodwill 34 406 41 288
Investments and loans 28 814 42 604
Deferred Taxation 7 709 6 165
123 468 148 874
Current assets 164 670 146 211
Inventories 11 849 16 833
Taxation prepaid 1 986 1 602
Accounts receivable 55 198 83 736
Cash resources 95 637 44 040
TOTAL ASSETS 288 138 295 085
EQUITY AND LIABILITIES
Capital and Reserves
Share capital and premium 33 775 33 775
Non-distributable reserves 14 534 900
Accumulated loss (13 296) (28 022)
Ordinary shareholders" equity 35 013 6 653
Outside shareholders" interest in
subsidiary companies 396 317
Interest of all shareholders 35 409 6 970
Non-current liabilities 67 515 191
Contract advances and deferred
maintenance revenue 20 047 -
Interest bearing liabilities 47 468 191
Current liabilities 185 214 287 924
Current portion of interest
bearing
liabilities 7 643 17 561
Bank Finance 34 544 143 489
Taxation 1 686 219
Trade payables 41 768 66 199
Provisions, contract advances and
deferred maintenance revenue 99 573 60 456
Total equity and liabilities 288 138 295 085
Equity statement for the year ended 30 September 2003
Non-dis-
Accumulated Share Share tributable
loss capital premium reserves Total
R"000 R"000 R"000 R"000 R"000
Balance at 57,026 556 18,336 10,411 86,329
30/9/2001
Issue of 31 5,172 5,203
share capital
Excess share
premium
reduction
transferred
to
share 9,680 (9,680) -
premium
Amortisation
of negative
goodwill (731) (731)
Reserve
arising on
redemption
of 1,000 1,000
preference
shares
Reserve
transferred
to
outside (100) (100)
shareholders
Net loss for (85,048)
the period (85,048)
Balance at (28,022) 587 33,188 900 6,653
30/9/2002
Foreign 13,634 13,634
currency
translation"s
gain
Net profit 14,726 14,726
for the
period
Balance at (13,296) 587 33,188 14,534 35,013
30/9/2003
Cash flow statement
Reviewed Audited
Year ended Year ended
30/09/03 30/09/02
R"000 R"000
OPERATING ACTIVITIES
Cash generated by operations 67,190 (53,315)
Working capital changes 98,655 53,451
Cash generated by operating 165,845 136
activities
Net finance charges (6,842) (8,622)
Taxation (paid)/refunded (738) 834
Net cash flow from operating 158,265 (7,652)
activities
INVESTING ACTIVITIES
Investment to maintain and (9,212) (31,738)
expand operations
(9,212) (31,738)
FINANCING ACTIVITIES
Bank financing and facilities (97,456) 36,504
(97,456) 36,504
Net change in cash and cash 51,597 (2,886)
equivalents
Cash and cash equivalents:
- At beginning of period 44,040 46,926
- At end of period 95,637 44,040
Segmental analysis
Reveiwed Audited
Year ended Year ended
30/09/03 30/09/02
R"000 R"000
Turnover
eBusiness 106 065 157 670
Communications 169 855 114 969
Services and other 79 624 93 599
355 544 366 238
Operating profit/(loss)
eBusiness 6 515 (16 742)
Communications 24 967 (7 830)
Services and other 1 097 (31 350)
32 579 (55 922)
Geographic Turnover
Africa 201 856 253 283
Europe 113 076 73 988
USA 40 612 38 967
355 544 366 238
Proprietary Technology
Own IP 193 052 155 168
3rd Party IP 162 492 211 070
355 544 366 238
COMMENTS
Review of Operations
Spescom achieved a return to profitability with
attributable profit of R14,7 million as opposed to a loss
of R85,1 million in the previous year. Headline earnings
at R29,5 million reflect a 145% increase translating to
50,4c headline earnings per share (HEPS) in contrast to a
headline loss of 111,5c per share in the 2002 financial
year.
Allowing for discontinued operations, turnover reflected
a 4% increase despite the strengthening Rand that
effectively reduced revenues by 10%.
Products from proprietary technology accounted for 54% of
turnover and a 12% increase on the previous year. Africa,
including South Africa, accounted for 57% of Group
turnover, whilst 43% emanated from the USA and Europe.
The Group"s net cash position changed from a negative
R100 million to a positive R16 million as at September
2003. This was achieved as a result of prudent management
of operations, working capital and projects.
The Group remains committed to the reduction of gearing
levels. Significant progress has been made in 2003, which
is substantiated by the sizeable reduction of debt
subsequent to the year end.
The remaining debt has been renegotiated with more
favourable longer-term repayment periods, at competitive
interest rates.
Foreign exchange movements with the strengthening Rand,
have had the effect of reducing turnover and profits from
international operations. On the positive side, offshore
loan facilities, which previously resulted in large
foreign exchange translation losses, have been converted
into a gain. The net effect of foreign exchange
movements, after adjusting for trading anomalies and debt
conversion, is a 36% positive contribution to headline
earnings.
Prospects
Spescom"s proprietary technologies are gaining
international recognition and relationships have been
forged with leading industry players. Channel
partnerships, and ongoing product development, will
continue to form a major part of the Group"s strategy.
Spescom has recently identified and concluded several key
strategic alliances which will position the Group to take
full advantage of the anticipated new opportunities in
the ICT sector. This includes an international marketing
agreement with British Telecommunications (BT).
Spescom"s US operation has embarked upon a fund raising
initiative which is intended to unlock the value of the
Group"s technologies for greater penetration into the
global market. The first phase of this fund raising has
been successful.
While global economies are predicting recovery based on a
slow turnaround in the USA, markets are still not
buoyant. However, management remains optimistic that
progress will continue in 2004.
Governance
Subsequent to year-end and in line with the
recommendations of King II, the Spescom board has been
reconstituted to reflect the appropriate balance between
executive and non-executive directors. With effect from
23 October 2003, the roles of chairman and chief
executive officer have been split. Dr Jim Myers has been
appointed as non-executive chairman and Tony Farah
continues as chief executive officer of the Group.
Black Economic Empowerment
Spescom continues to prioritise the enhancement of its
black economic empowerment (BEE) programme. Negotiations
to further increase BEE ownership at the holding level
are in progress. In addition the Group is at an advanced
stage with regards to the conclusion of a BEE deal at
subsidiary level.
Dividend
Spescom continues with its policy of not declaring a
dividend. This policy will be reviewed in the future.
By order of the board
A Farah J Palmer Johannesburg
Chief Executive Chief Financial 20 November 2003
Officer Officer
Directorate:
J Myers*+ (Chairperson), A Farah, H J Isaacman, V Leas, M
Mogase+, L Ogilvy+, J Palmer, P Vallet+.
* American, + 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:
GS Registrars (Pty) Limited, 108 Johan Avenue, Sandton,
2146. Tel: +27 (11) 775 3456.
Spescom Limited
(Registration number 1987/001083/06)
Share Code: SPS ISIN: ZAE000017919
Website: www.spescom.com
Make contact
Date: 20/11/2003 02:40:08 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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