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Spescom Limited - Unaudited Interim Results For The Six Months Ended 31 March
2005
Spescom Limited
(Registration number 1987/001083/06)
Share code: SPS ISIN: ZAE000017919
Website: www.spescom.com
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005
INCOME STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31/03/05 31/03/04 30/09/04
R`000 R`000 R`000
Turnover 124 890 175 187 356 517
From continuing operations 114 924 153 308 316 268
From discontinued operations 9 966 21 879 40 249
Cost of sales 58 726 68 541 139 125
From continuing operations 51 377 54 468 113 585
From discontinued operations 7 349 14 073 25 540
Operating (loss)/profit (11 199) 22 361 41 476
From continuing operations (10 716) 20 854 38 467
From discontinued operations (483) 1 507 3 009
Amortisation of goodwill - (3 121) (6 485)
Finance charges (2 564) (2 654) (5 880)
Investment income 1 601 1 308 3 143
Net (loss)/profit before
abnormal items (12 162) 17 894 32 254
Non-trading items - (308) (1 523)
Net (loss)/profit before
tax, after abnormal items (12 162) 17 586 30 731
Taxation (78) (786) (1 682)
Net (loss)/profit after tax (12 240) 16 800 29 049
Minority interests (345) 407 100
(Loss)/Profit for the year (12 585) 17 207 29 149
HEPS (cents) (17.4) 39.1 63.1
EPS (cents) (17.3) 32.5 49.0
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 and Schedule 4 of
the South African Companies Act.
The accounting policies adopted are consistent with those of the previous
financial year.
In line with revised AC 128 (Impairment of Fixed Assets) and revised AC 129
(Intangible Assets), the group has ceased amortising goodwill. From 1 April
2004, the remaining goodwill balance will be tested annually for impairment.
Goodwill amortised during the half year ended 31 March 2004 was R3,1 million
(year ended 30 September 2004: R6,5 million).
The external auditors have not reviewed the results for the period ended 31
March 2005.
2. Information per share
Based on net (loss)/profit after taxation adjusted for capital items included
in abnormal items and 72 590 276 weighted average shares in issue (March 2004:
52 896 922, September 2004: 59 529 071)
Net (Loss)/profit for the period (12 585) 17 207 29 149
Non-trading items - 308 1 523
Amortisation of goodwill - 3 121 6 485
(Profit)/Loss on sale of fixed assets (49) 23 383
(12 634) 20 659 37 540
Earnings per share
Based on a net loss for the period of R12,585 million (March 2004:net profit
of R17,207 million, September 2004: net profit of R29,149 million) and
weighted average shares in issue of 72 590 276 (March 2004: 52 896 922,
September 2004: 59 529 071)
3. Non-trading items
Write down and sale of investments - (308) (308)
Loss on discontinuance of businesses - - (1 215)
- (308) (1 523)
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31/03/05 31/03/04 30/09/04
R`000 R`000 R`000
OPERATING ACTIVITIES
Cash generated by operations (7 189) 26 105 57 439
Working capital changes (3 242) (25 071) (49 147)
Cash generated by
operating activities (10 431) 1 034 8 292
Net finance income (963) (1 346) (2 737)
Taxation received/(paid) 184 (650) (4 077)
Net cash flow from
operating activities (11 210) (962) 1 478
INVESTING ACTIVITIES
Investment to expand and
maintain operations (6 945) (4 381) (10 265)
(6 945) (4 381) (10 265)
FINANCING ACTIVITIES
Proceeds from fresh issue of shares 12 504 - 22 714
Bank financing and facilities 290 (64 730) (68 354)
12 794 (64 730) (45 640)
Net change in cash
and cash equivalents (5 361) (70 073) (54 427)
Effects of foreign exchange (24) - 1 092
Cash and cash equivalents:
- At beginning of period 42 302 95 637 95 637
- At end of period 36 917 25 564 42 302
BALANCE SHEET
Unaudited Unaudited Audited
As at As at As at
31/03/05 31/03/04 30/09/04
R`000 R`000 R`000
ASSETS
Non-current assets
Property, vehicles and equipment 27 736 31 029 29 635
Intangible assets 21 672 19 311 19 898
Goodwill 29 400 30 618 27 064
Investments and loans 18 214 18 975 17 977
Deferred taxation 10 834 7 288 10 834
107 856 107 221 105 408
Current assets 115 893 91 746 109 511
Inventories 8 549 13 304 9 462
Taxation prepaid 499 1 038 560
Accounts receivable 69 928 51 840 57 187
Cash resources 36 917 25 564 42 302
TOTAL ASSETS 223 749 198 967 214 919
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 45 283 23 947 46 661
Non-distributable reserves 15 180 14 412 14 965
Distributable reserves 3 268 3 911 15 853
Ordinary shareholders` equity 63 731 42 270 77 479
Outside shareholders` interest in
subsidiary companies 1 207 556 862
Interest of all shareholders 64 938 42 826 78 341
Non-current liabilities 34 837 38 428 39 474
Contract advances and deferred
maintenance revenue - - 1 153
Interest bearing liabilities 34 837 38 428 38 321
Current liabilities 123 974 117 713 97 104
Current portion of
interest bearing liabilities 3 500 1 750 1 873
Preferred capital and warrants 13 882 - -
Bank finance 3 300 4 793 1
Taxation 1 194 454 992
Trade payables 39 632 50 001 40 760
Provisions, contract advances and
deferred maintenance revenue 62 466 60 715 53 478
Total equity and liabilities 223 749 198 967 214 919
Equity Statement
(Accu-
mulated
loss)/ Non-
Distribu distribu
table Share Share table
reserves capital premium reserves Total
R`000 R`000 R`000 R`000 R`000
Balance at
30 September 2003(13 296) 492 23 455 14 534 25 185
Foreign currency
translation loss
arising
on consolidation (122) (122)
Net profit for
the period 17 207 17 207
Balance at 31
March 2004 3 911 492 23 455 14 412 42 270
Foreign currency
translation
profit arising on
consolidation 913 913
Reserve
transferred to
minority
interests (360) (360)
Issue of shares
by 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 11 942 11 942
Balance at 30
September 2004 15 853 693 45 968 14 965 77 479
Foreign currency
translation
profit arising
on consolidation 215 215
Treasury shares
purchases
by Spescom Share
Trust (8) (1 370) (1 378)
Net loss for the
period (12 585) (12 585)
Balance at 31
March 2005 3 268 685 44 598 15 180 63 731
Segmental analysis
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31/03/05 31/03/04 30/09/04
R`000 R`000 R`000
Sector turnover
Enterprise content
management solutions 34 971 73 341 128 892
Communication
integration activities 61 120 87 598 160 847
Services and other 28 799 14 248 66 778
124 890 175 187 356 517
Operating (loss)/profit
Enterprise content
management solutions (5 757) 552 4 148
Communication
integration activities (2 157) 16 559 32 796
Services and other (3 285) 5 250 4 532
(11 199) 22 361 41 476
Geographic turnover
Africa 97 142 104 908 220 447
Europe 17 311 52 098 104 367
USA 10 437 18 181 31 703
124 890 175 187 356 517
Proprietary Technology
Own IP 48 475 91 178 186 916
3rd Party IP 76 415 84 009 169 601
124 890 175 187 356 517
COMMENTARY
Review of operations
The Spescom Group incurred a headline loss of R12,5 million for the six months
ended 31 March 2005. This translates into a headline loss of 17,4 cents per
share and is down on the headline earnings of 39,1 cents per share for the
same period last year.
This underperformance is directly attributable to the unpredictability of the
telecommunications sector specifically with respect to delays in finalising
large contracts.
The most notable outcome of this trading period is the emergence of a more
focused international group with increased channels to market and solid
pipeline opportunities which are expected to contribute to improved
performance in the second half of the year.
During the period under review, the group discontinued its non-core test and
measurement division. The call centre and voice recording divisions were
restructured in order to improve access to local and international markets.
The group invested significantly in refining its intellectual property by
developing applications which are quick to deploy.
Spescom successfully raised US$2,2 million in cash by way of a private
placement of convertible preference shares in its foreign subsidiary, Spescom
Software Inc. This transaction gave rise to a compound financial instrument
which in terms of SA GAAP, is classified as a current liability. Once
converted into ordinary shares, these shares will be reallocated to equity.
Further debt reduction was effected subsequent to the 2005 half year-end.
Prospects
The group has increased its investment in sales and marketing activities
across all divisions, and continues to broaden its international footprint.
This is expected to result in an enhanced performance that should positively
impact on the second half-year financials.
The volatility and unpredictability of the telecommunications arena continues
to affect the ability to manage and formulate meaningful forecasts for this
sector. Telecomms remains a fragmented market characterised by delays in the
awarding of long-term contracts. All of this is augmented by the lack of
clarity and progress on the implementation of proposed deregulation measures,
particularly with respect to the second network operator.
An improvement in performance is expected during the second half of the year.
However, the group expects the results for the financial year ended 30
September 2005 to be substantially lower than the headline earnings of R37,5
million reported for the comparative year. In that regard a trading statement
will be issued as soon as a reasonable degree of certainty exists.
.
Directorate
Mr. C Mostert resigned as an executive director of Spescom Limited with effect
from 1 March 2005, but continues as chief executive officer of Spescom
Software Inc. (USA). In compliance with the recommendations contained in the
King Report, the board will continue to undergo reconstitution as and when
necessary.
Mrs. N Magadze succeeded Mr. AG Johnston as company secretary on 11 March
2005. Mr. AG Johnston resigned from the company and as company secretary with
effect 15 February 2005.
Dividend
Spescom continues with its policy of not declaring a dividend. This policy
remains subject to review.
By order of the board
A Farah J Palmer Johannesburg
Chief Executive Officer Chief Financial Officer 26 May 2005
Directors:
JP Myers* (Chairperson), A Farah, HJ Isaacman, W Kansteiner*, MC Mogase
(alt. C Rezek), L Ogilvy, J Palmer, P Vallet.
*American, Non-executive
Company Secretary:
N Magadze
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.com
Date: 26/05/2005 04:12:58 PM
Produced by the JSE SENS Department
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