Spescom Limited announces year-end results

Financial results for Spescom Limited, for the period ending 30 September, disclose the conversion of a R100 million net cash deficit to a R16 million net cash positive with headline earnings of R29.5 million.

This represents a 145% increase over the same period last year, translating to headline earnings per share (HEPS) of just over 50c in contrast to 111c HEPS loss for the 2002 financial year.

Allowing for discontinued operations, turnover reflected a 4% increase, despite the strengthening rand, which effectively resulted in a 10% reduction in revenues.

Spescom's chief financial officer, Jene Palmer, notes that last year the group returned a substantial forex translation loss but this year there is a translation gain.

"The foreign exchange situation has been somewhat of a double-edged sword with the stronger rand producing lower than expected revenues, specifically from the offshore operations which report in rands. However, previous forex translation losses on loan facilities have been converted into a sizeable gain," says Palmer.

"Revenues from global operations have increased. Proprietary technologies accounted for 54% of turnover, versus 42% last year. In the 2002 financial year 69% of revenues were attributable to African operations, whereas this year that figure has reduced to 57% with the balance being accounted for by Europe and the US."

Commenting on the British Telecom (BT) contract, Palmer confirms that to date, roll-out has generated positive cash flow and more recent agreements with the telco have served to extend Spescom's reach into European utilities.

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Spescom's CEO, Tony Farah, says the most significant aspect of this year's results is the transformation of the company's gearing profile.

"The debt equity and cash situation has improved considerably. This was achieved by various means including the prudent management of operations, working capital and other assets, enabling us to generate a large amount of cash."

Farah says all South African operations performed well.

"Internationally, despite tough trading conditions, proprietary technology continued to gain market share. The US operation will persist with its capital raising endeavours, which in recent months, have proven to be successful."

Farah says extremely tough trading conditions are expected to persist in the new financial year.

"While global economies are predicting recovery based on a slow turnaround in the US, markets are still not buoyant. Forecasts must obviously be tempered by realism in light of a harsh trading milieu. However, Spescom has successfully embarked on a carefully devised strategic pathway and with this in place, we remain optimistic that the progress reflected in this year's results will continue."