Johannesburg — SHARES in technology company Spescom surged 5,77% yesterday to 55c, after it reported headline earnings per share of 12,7c for the year to September -- a rise of 24,5% from the previous year.

A "continued improvement in operating performance and judicious working capital management" saw cash generated from operations rise 23,1% to R33,8m.

Pretax earnings grew 10,5% to R16m, despite retrenchment costs of R2,2m and inflationary pressure on wage costs caused by shortages of appropriately skilled workers.

Revenue remained stable at R362,7m, with services revenue growing 51% to R94,8m.

CEO Jené Palmer said the strong performance in services was the culmination of a three-year strategy. "It's a combination of after-sales support and maintenance, as well as integration skills. We want to make sure we're not just seen as box- droppers," she said.

The economic slowdown had affected Spescom . "We've seen a slowdown in deals; a lot of customers have adopted a holding pattern where spend is concerned," she said.

Spescom's DataFusion division, which specialises in contact centres and enterprise telephony, was the weakest performer, with a 33% decline in revenue. The division's 58% increase in service revenues "was not sufficient to offset the impact of lower discretionary spending among its corporate clients". But the company expected "increased availability and lower bandwidth costs in SA (to) increase the country's appeal as a call centre outsourcing destination".

The Media IT division "reaped the benefits of its business development activities in the Southern African Development Community (Sadc ) region", with revenue up by 48%.

"We've made some significant inroads into the Sadc region," said Palmer. "Being SA-based, we're more cost-effective for those countries than bringing in resources from offshore."

Spescom would now look to expand outside Africa. "We've just concluded an arrangement with a large manufacturer that will enable us to distribute voice-recording solutions, especially in the Middle East."