| Thu 18 Nov 2004, 15:20 | | RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 04 |
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SPESCOM LIMITED - PRELIMINARY REVIEWED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
2004 AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
SPESCOM LIMITED
(Registration number 1987/001083/06)
Share code: SPS ISIN: ZAE000017919
PRELIMINARY REVIEWED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2004
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
CONSOLIDATED INCOME STATEMENT
Reviewed Audited
12 months ended 12 months ended
30/09/04 30/09/03
R`000 R`000
Turnover 356 518 355 544
From continuing operations 346 839 353 894
From discontinued operations 9 679 1 650
Cost of sales 139 125 171 580
From continuing operations 134 534 171 145
From discontinued operations 4 591 435
Operating profit 41 476 32 579
From continuing operations 40 665 31 743
From discontinued operations 811 836
Amortisation of goodwill (6 485) (7 192)
Finance charges (5 880) (13 860)
Investment income 3 143 7 018
Net profit before abnormal items 32 254 18 545
Non-trading items (1 523) (7 648)
Net profit before tax, after abnormal items 30 731 10 897
Taxation (1 682) (276)
Net profit after tax 29 049 10 621
Minority interests 100 4 105
Profit for the year 29 149 14 726
HEPS (cents) 63,1 55,9
EPS (cents) 49,0 27,8
Notes to the income statement
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 of South Africa (`JSE`) and Schedule 4 of the
South African Companies Act.
The accounting policies adopted are consistent with those of the previous
financial year except for the change noted below.
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 Spescom Limited`s (`Spescom`)
registered office.
The Group`s annual report will be available by the beginning of March 2005.
2. Prior year adjustment
During the period under review, the Group changed its accounting policy with
respect to the consolidation of the Spescom Limited Share Trust (the `staff
trust`).
In order to conform with the requirements issued by the JSE, the Group now
consolidates the staff trust. The comparative amounts have been appropriately
restated. There has been no effect on the prior year profit as a result of this
change.
3. Information per share
Headline earnings per share
Based on net profit after taxation adjusted for capital items included in non
trading items and 59 529 071 weighted average shares in issue (2003: 52 896
922)
Net profit for the period 29 149 14 726
Non-trading items 1 523 7 648
Amortisation of goodwill 6 485 7 192
Loss/(Profit) on sale of fixed assets 384 (11)
37 541 29 555
Earnings per share
Based on a net profit for the year of R29 149m (2003: R14 726m) and weighted
average shares in issue of 59 529 071 (2003: 52 896 922)
4 . Non-trading items
Write down and sale of investments (308) (4 430)
Capitalisation restructuring costs - (788)
Loss on discontinuance of businesses (1 215) (2 430)
(1 523) (7 648)
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
12 months ended 12 months ended
30/09/04 30/09/03
R`000 R`000
OPERATING ACTIVITIES
Cash generated by operations 57 439 66 860
Working capital changes (49 147) 98 655
Cash generated by operating activities 8 292 165 515
Net finance income (2 737) (6 842)
Taxation paid (4 077) (738)
Net cash flow from operating activities 1 478 157 935
INVESTING ACTIVITIES
Investment to expand and maintain operations (10 265) (9 212)
(10 265) (9 212)
FINANCING ACTIVITIES
Proceeds from fresh issue of shares 22 714 -
Bank financing and facilities (68 354) (97 456)
(45 640) (97 456)
Net change in cash and cash equivalents (54 427) 51 267
Effects of foreign exchange 1 092 330
Cash and cash equivalents:
- At beginning of period 95 637 44 040
- At end of period 42 302 95 637
CONSOLIDATED BALANCE SHEET
Reviewed Audited
As at As at
30/09/04 30/09/03
R`000 R`000
ASSETS
Non-current assets
Property, vehicles and equipment 29 934 32 569
Intangible assets 19 599 19 971
Goodwill 27 064 34 406
Investments and loans 17 977 18 986
Deferred taxation 10 834 7 709
105 408 113 641
Current assets 109 511 164 670
Inventories 9 462 11 849
Taxation prepaid 560 1 986
Accounts receivable 57 187 55 198
Cash resources 42 302 95 637
TOTAL ASSETS 214 919 278 311
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 46 661 23 947
Non-distributable reserves 14 965 14 534
Distributable reserves/(Accumulated loss) 15 853 (13 296)
Ordinary shareholders` equity 77 479 25 185
Outside shareholders` interest in
subsidiary companies 862 396
Interest of all shareholders 78 341 25 581
Non-current liabilities 39 474 67 515
Contract advances and deferred
maintenance revenue 871 20 047
Interest bearing liabilities 38 603 47 468
Current liabilities 97 104 185 215
Current portion of interest bearing
liabilities 1 750 7 150
Current portion of credit agreement 123 493
Bank finance 1 34 544
Taxation 992 1 686
Trade payables 40 760 41 768
Provisions, contract advances and
deferred maintenance revenue 53 478 99 574
Total equity and liabilities 214 919 278 311
CONSOLIDATED EQUITY STATEMENT FOR THE YEAR ENDED 30 SEPTEMBER 2004
(Accumulated
Loss)/ Non-
Distri- distri-
butable Share Share butable
reserves capital premium reserves Total
R`000 R`000 R`000 R`000 R`000
Balance at 30 September 2002 (28 022) 587 33 188 900 6 653
Foreign currency translation
gain arising on consolidation 13 634 13 634
Prior year adjustment arising
on consolidation of
Spescom Share Trust - (95) (9 733) - (9 828)
Net profit for the period 14 726 14 726
Balance at 30 September 2003 (13 296) 492 23 455 14 534 25 185
Foreign currency translation
profit arising on consolidation 791 791
Outside shareholders`s
interest in capital redemption
reserve (360) (360)
Issue of shares by the Spescom
Share Trust 83 83
Fresh issue of shares 201 23 938 24 139
Share issue expenses (1 508) (1 508)
Net profit for the period 29 149 29 149
Balance at 30 September 2004 15 853 693 45 968 14 965 77 479
CONSOLIDATED SEGMENTAL ANALYSIS FOR THE YEAR ENDED 30 SEPTEMBER 2004
Reviewed Audited
12 months ended 12 months ended
30/09/04 30/09/03
R`000 R`000
Sector turnover
Information content management solutions 128 893 107 064
Communication integration activities 160 847 169 855
Services and other 66 778 78 625
356 518 355 544
Operating profit
Information content management solutions 4 147 6 515
Communication integration activities 32 796 24 967
Services and other 4 533 1 097
41 476 32 579
Geographic turnover
Africa 220 448 202 760
Europe 104 367 112 914
USA 31 703 39 870
356 518 355 544
Proprietary technology
Own IP 186 916 193 052
3rd Party IP 169 602 162 492
356 518 355 544
COMMENTARY
Review of operations
Spescom achieved headline earnings of R37,5m which translates into 63,1 cents
per share (cps) despite a marginal increase in revenues for the year. This
represents a 12,9% increase when compared to the previous financial year.
The Group reported a noteworthy 76,3% increase in earnings per share from 27,8
cps to 49,0 cps.
Operating income from continued operations has increased by 28,1% as a result of
improved trading conditions and effective cost management.
There is a significant improvement in the consolidated balance sheet. This can
be attributed to superior performance, substantial debt repayments and a cash
injection resulting from the fresh issue of shares.
The gearing level has substantially improved to 50% of equity and the Group`s
liquidity position has likewise strengthened.
Subsequent to the 2004 year end, the Group has successfully raised US$2,2m
through a private placement of shares in its US-based subsidiary.
PROSPECTS
Spescom remains focused on the global information content management arena. This
is validated by the increase in revenues attributable to this market. Strategic
alliances and channel partnerships will continue to form a major part of the
Group`s strategy.
An increased focus will be placed on sales and marketing activities in the USA
and Europe.
With respect to the Group`s telecommunication activities, these remain very
challenging as the nature of this business is fragmented with reliance on large
deals with a small customer base.
The impact of recent deregulation announcements remains largely unknown until
the process unfolds, particularly with respect to the second network operator.
The Group will continue to dispose of activities that are either non - core, or
do not meet desired profitability levels.
Black Economic Empowerment
During the year under review, Spescom concluded a BEE transaction with Vantage
Capital Fund Managers (Pty) Ltd that raised R24m through a fresh issue of
shares. In keeping with the Group`s commitment to meaningful transformation at
all levels, a second BEE initiative was concluded during the year, at subsidiary
level, that saw the sale of 40% of the Group`s investment in Spescom
Telecommunications (Pty) Ltd., to Puisano Telecommunications (Pty) Ltd (formerly
Momotheka Trade 16 (Pty) Ltd).
Spescom will continue to prioritise its black-economic empowerment programmes
within the Group.
Directorate
Subsequent to the 2003 year end, Messrs J Myers, W Kansteiner, V Leas, M Mogase,
C Mostert, J Palmer, C Rezek and P Vallet were all appointed to the Spescom
board. Mr V Leas resigned as an executive director of Spescom with effect from
20 August 2004.
In line with the recommendations of King II, the Spescom board is currently
constituted by more non-executive directors than executive directors and the
roles of Chairperson and Chief Executive Officer have been separated.
Withdrawal of Cautionary Announcement
Shareholders are referred to the cautionary announcements dated 6 August, 17
September and 8 November 2004 and are advised that as the negotiations have been
terminated caution is no longer required to be exercised by shareholders when
dealing in their securities on the JSE.
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 Officer Chief Financial Officer 18 November 2004
Directors:
JP Myers*+ (Chairperson), A Farah, HJ Isaacman, W Kansteiner*+, MC Mogase+ (alt.
C Rezek+), C Mostert, 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, Midrand, 1685
. Tel +27 (11) 266 1500
Registrar:
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001. Tel: +27 (11) 370 5000
Spescom Limited
(Registration number 1987/001083/06)
Share code: SPS ISIN: ZAE000017919
Website: www.spescom.
