SPESCOM'S CHAIRMAN SEES A BRIGHT FUTURE
He says firm has put its woes behind it
Information Technology Editor
TECHNOLOGY company Spescom is bucking the trend of predicting another gloomy year ahead, with chairman Tony Farah saying the company is heading for a bright future after putting its woes behind it with the close of the previous financial year.
The year ending September 30 was a miserable period, culminating in a net loss of R85m, down from last year's profit of R25m.
The headline loss a share of 111,5c was far worse than the previous 31,9c profit. Turnover was also down from R489m to R366m, with R26,9m of that coming from an SA division, which has since been sold. That division was losing money, contributing to Spescom's overall operating loss of R57,7m.
Farah points out that most of the damage was suffered in the first half, when the net loss had already reached R71m. Losses were stemmed in the second half to leave a profit before exceptional items of R3,6m for the period.
"It's been a bad year because the market conditions went down at the same time as we embarked on an 8m globalisation programme to develop markets and make acquisitions," he said.
The expansion saw Spescom buy 51% of a US company, which "was on its knees", and begin building it up again. That business, Spescom Software, is listed on the Nasdaq, and while it caused heavy losses in the past, it had already signed enough new business to see it through the coming year profitably, said Farah.
The division has developed proprietary software to integrate islands of information within a company and give users easy access to their data. Spescom also built up a UK division and won a contract to develop fault detection software for British Telecommunications (BT).
That project has finally reached the production stage and cash has begun to roll in. A joint marketing agreement with BT is seeing them talk to other European operators and could lead to potentially huge sales, he said.
"We have had a tough year, but we have turned around the whole company in the last six months. What we have to show for our efforts is a company in the US which should produce $10m in revenue with an acceptable profit level, and a business in the UK which will give us about $12m in revenue."
More money was spent developing markets for its SA-based voice technology arm, DataVoice, which should earn 40% of its business in Europe and clock up sales of $25m in the coming year. Negotiations are also under way to sign a distribution deal in the US for the DataVoice products. The expansion was funded by a dollar-based loan, however, and the fluctuating exchange rate has hurt the company.
Spescom has current liabilities of R287m, including bank financing of R143m. Farah said the debt must be repaid to reduce high gearing, and that may be achieved by selling some equity in Spescom Software. "We want to reduce our debt by 50% in the next few months."
Most of Spescom's business is still conducted in Africa, although turnover in the region has dipped in line with falling demand for technology services and equipment.
In the next few months Spescom needs to announce an empowerment deal to sustain its momentum in SA, where Telkom and government are among its customers. Farah says that will be achieved by selling 20% to 50% of the equity in its SA based arms to one blackowned company that can add value to the business. |
