RECOVERY SPARKS SPESCOM’S SHARES IN SOUTH AFRICA

Mergers, Acquisitions and Financial Results

Shares in telecoms company Spescom temporarily gained 16% last week to reach a 52-week high of 140c as it posted interim results showing a return to profitability. A year ago Spescom posted a loss of R11,3m for the six months to March, and clocked up a R20m loss for the full year.

In the past six months the company had pulled back to achieve a net profit of R2,9m. Its headline earnings a share came in at 4,1c, reversing the deep loss of 15,7c a year ago. Its turnover rose 44% to R145m, but interest-bearing liabilities also increased, doubling from R10,9,m to R22,2m.

Chief financial officer Jené Palmer said the balance sheet had been restructured after Spescom took on long-term financing so it could repay a substantial portion of its short-term debt.

Palmer said the positive trading trend that had begun during the second half of the previous financial year had continued. The improvement was due to consistent growth by its call centre, voice recording and media technology divisions, she said.

Its profitability was also enhanced by a R4,5m contribution from its associate company, Enterprise Informatics, the US operation that was previously known as Spescom Software. Breaking down the results, Palmer said the call centre division was a leading player in the market with growth spurred on by its drive into the rest of Africa.

The media division was benefiting from large projects in SA and other countries, and Palmer said it expected business to grow as broadcasters and production houses prepared for the 2010 Soccer World Cup. Its DataVoice division was making inroads into Europe and the Middle East after appointing new value-added resellers there.

Activity in the telecoms industry was increasing and although this was expected to translate into improved revenue streams for Spescom's telecoms division, there was still uncertainty on timing. Although the company had returned to profitability, there was not enough cash to pay a dividend, the directors said.

Business Day