Spescom focuses on global expansion plans

By Staff Writer for Spescom

Johannesburg, 07 Jun 2000

Spescom is relatively unmoved by its 35% drop in revenue for the first six months of the year, choosing rather to look forward to global expansion plans.

Spescom's revenues for the first six months of this financial year dropped to R149 million from R228 million for the corresponding period last year. Earnings before exceptional items declined from R23 million to R15.9 million.

According to Spescom, costs escalated due to the group's ongoing major investment in offshore operations. In February, the second phase of transactions with US-based Altris Software were concluded, yielding Spescom a 48% controlling interest in the US operation and 100% of the UK company, now known as Spescom UK.

According to Tony Farah, Spescom's executive chairman, increased costs are inevitable if the group is to implement its global expansion plans.

"If we are to realise our vision of making Spescom a multi-national player, we must unlock the value of our own technology and this can only be achieved with offshore growth. We believe that the South African investment scenario is earnings-driven with little or no worth being attached to intellectual property," says Farah.

"If one compares the capital value of non-SA-based companies possessing almost identical proprietary technology and development capabilities to that of Spescom, the market capitalisation of these concerns is far higher."

Farah attributes the diminished turnover to two main factors. "Firstly, Telkom placed virtually no business with the group for this period, in spite of the existence of long-term supply agreements. Secondly, there was a major reduction in spending by corporate business, government and parastatals due to the hype surrounding Y2K.

"Our forecasts are very positive for the second half of this financial year with exciting prospects with world leading companies, which we anticipate will yield an increase in revenue over the same period last year," Farah concludes.