Rand's fall, US downturn hurt Spescom

Spescom Group has reported a headline loss of R68.5 million for the six months to 31 March, a period which it describes as the most difficult in its 25-year history.

The loss compares with a profit of R7.9 million for the same period the previous year.

Executive chairman Tony Farah says the two main causes of the poor results were beyond the company's control.

"We have just come through a very bad patch specifically brought about by the depreciation of the rand and the downturn in the US economy that followed the events of 11 September.

"We suffered an R18 million translated foreign exchange loss on offshore debt plus a R48 million trading loss was incurred by the group's US subsidiary."

Management at the US subsidiary, Spescom Software, has implemented a plan to curtail the current level of losses there and to achieve a breakeven trading position by the fourth quarter of the current year.

Farah says the group's results "are very much in line with what we cautioned in the trading statement issued earlier this year".

He adds that the group has entered the second half of its financial year in the strongest position in its history, with a R700 million order book.

Farah says prior investments and the planned strategy now being implemented will position Spescom for offshore growth with the aim of generating at least 50% of revenue and earnings offshore by next year.

He expects the next six months' performance to show a return to profitability. Should the rand continue to strengthen in line with the current trend, it could result in a positive write-back on foreign exchange losses incurred in the first half.

The Spescom share was trading 14c or 11.29% down at 110c on the JSE this morning.