Spicer has stated its intention to sell off some or part of an asset in an attempt to damage-control its interest-bearing debt. The announcement comes amid a below par set of interim results.
Spicer reported a fall in operating profit from R9.6 million to R4.7 million, despite increasing revenue by 53% for the six months to 31 December 1999. This is in line with the profit warning issued in mid-February.
Headline earnings for the period fell from R10.9 million to R1.5 million. Headline earnings per share also tumbled from 3.2c to 0.4c. Executive chairman Sas du Toit says the company is implementing "strong corrective measures to prevent the recurrence of these events".
Du Toit describes the "gross irregularities at senior management level" at MIS-CDS, Spicer's UK-based information security company in which it has taken a majority investment, as one of the main contributors to the dismal performance.
"Because of these irregularities, MIS-CDS has fallen significantly short of its profit warranties," Du Toit says. "As recently as the last few weeks of 1999, we had every reason to believe the company was on track to meet its warranted profits and make a material contribution to our results for the six months to December. We have begun major steps to improve the situation, including the termination of the current MD's services."
In an effort to rectify the situation, Du Toit assumed the reigns as MIS-CDS's MD and Spicer's shareholding in MIS-CDS will climb from 53.5% to 61.7%, at no cost.
During the past 12 months, Spicer invested about R100 million in MIS-CDS and SPS, resulting in investment income falling from R4.8 million interest earned to R713 000 interest paid.
Du Toit has also announced Spicer's intent to dispose of some or part of an asset in the short-term to reduce interest-bearing debt. The board is considering its options in the light of the underperformance of the company and the termination of merger with the IQ Business Group, and will be communicating with shareholdings in the near future.
Spicer issued a profit warning in mid-February, and shortly afterwards the embattled IT services company announced the canning of the R1.4 billion merger with the IQ Business Group.
The Spicer share picked up 6.45c yesterday to close at 33c after a sharp drop on the announcement of the failed IQ deal.
No dividends were declared for the period under review.
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