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Jasco Electronics Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/003293/06)
("Jasco" or "the company")
Jasco Electronics Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/003293/06)
("Jasco" or "the company")
Audited results for the year ended 28 February 2001
Summarised Income Statements
28 February 29 February
2001 2000
R'000 R'000
Revenue 417 380 394 429
- from continuing operations 148 812 137 842
- from discontinuing operations 268 568 256 587
Operating (loss)/profit before interest (11 810) 17 215
Net interest paid 7 544 5 961
Operating (loss)/profit (19 354) 11 254
- from continuing operations (6 657) 19 141
- non-recurring items from
continuing operations (4 529) -
- from discontinuing operations (8 168) (7 887)
Exceptional items 98 114 15 259
Net loss before taxation (117 468) (4 005)
Taxation - -
Net loss after taxation (117 468) (4 005)
Outside shareholders' interest 1 017 1 834
Net loss attributable to
ordinary shareholders (118 485) (5 839)
Exceptional items 98 114 15 259
Headline (loss)/earnings (20 371) 9 420
Exceptional items 98 114 15 259
- trademark written-off 56 481 -
- loan to Share Incentive Trust
written-off 8 500 -
- amortisation and impairment of
intangibles 22 047 51 610
- loss on disposal 268 11 120
- discontinuing operations 10 818 1 516
- start-up costs - 2 513
- surplus on disposal of trademark - (51 500)
Number of shares in issue ('000) 47 177 47 177
Number of shares on which earnings
per share is calculated ('000) 47 177 46 903
Loss per share (cents) (251) (12)
Headline (loss)/earnings
per share (cents) (43) 20
Net asset value per share (cents) 51 208
Abridged Consolidated Balance SheetS
28 February 29 February
2001 2000
R'000 R'000
ASSETS
Non-current assets 37 272 81 154
Plant and equipment 10 947 11 749
Intangibles 19 215 -
Unlisted investments - 51 500
Loans 7 110 17 905
Current assets 153 037 171 938
Inventories 50 646 62 486
Accounts receivable 81 923 63 280
Pre-payments 489 489
Cash on hand 19 979 45 683
Total assets 190 309 253 092
EQUITY AND LIABILITIES
Equity and minority interest 24 057 98 257
Ordinary share capital and reserves 21 112 96 329
Outside shareholders' interest 2 945 1 928
Non-current liabilities 1 463 2 251
Interest bearing liabilities 1 463 2 251
Current liabilities 164 789 152 584
Interest bearing liabilities 71 169 74 534
Non-interest bearing liabilities 93 620 78 050
Total equity and liabilities 190 309 253 092
StatementS of changes in equity
28 February 29 February
Note 2001 2000
R'000 R'000
Opening balance 137 591 95 972
Attributable loss (118 485) (5 977)
Net shares issued - 6 156
Increase in non-distributable
reserves 2 006 178
Balance before prior
year adjustment 21 112 96 329
Prior year adjustment 1 - 41 262
Closing balance 21 112 137 591
Note:
1. Prior year adjustment
During the previous financial year the Group disposed of some of its
trademarks and realised a profit of R51 500 000. This profit was utilised to
reduce the Group's intangibles to nil. During the current year it became
apparent that the long-term effect of the structure used to finance this
transaction was not commercially viable. As a result the structure was
collapsed and Jasco had, in terms of the agreement, to acquire the
trademarks for R56 481 000.
In line with the Accounting Statement on Business Combinations (AC 131) it
was decided to reinstate the Group's intangibles previously written-off.
The reinstated goodwill amounts to R41 262 000. The trademarks were
therefore also written-off to place the Group in the same position prior to
selling the trademarks.
Abridged Consolidated Cash flow statements
28 February 29 February
2001 2000
R'000 R'000
Cash (utilised in)/generated from
operations (20 850) 19 854
Net financing costs (7 544) (5 961)
Net dividends received/(paid) 4 634 (4 792)
Taxation recouped/(paid) 105 (1 203)
Cash flow from operating activities (23 655) 7 898
Cash flow from investing activities (959) (14 365)
Cash flow from financing activities 1 507 (827)
Decrease in cash resources (23 107) (7 294)
REVIEW OF THE YEAR
The dismal operating results are due to:
* a sharp decline in the operating margins in our data distribution
businesses;
* interest paid on the higher level of borrowings;
* investment in infrastructure and skills to cater for the expected
expansion of the local telecommunications industry;
* the restructure of our image division;
* the high cost of closing and/or scaling down our data distribution
businesses;
* the write-down in the value of assets (stock and debtors) in the
distribution businesses;
* the write-off of trademarks and the amortisation and impairment of
intangibles; and
* a provision against the loan to the Share Incentive Trust.
The following remedial actions have been taken:
* the decision was taken during the second half of the year to exit the low
margin low value-add distribution businesses and rather apply resources to
the more profitable telecommunications, image and manufacturing businesses;
* to that end we sold Pascom and Video Options. We closed Webb Cellular and
sharply scaled down Technology Junction (our largest local data distribution
business) and are currently liquidating surplus stock and collecting
debtors. We have also, subject to the fulfilment of certain suspensive
conditions, sold On Line Distribution Limited our Middle East data
distribution business, which, although a successful business, is demanding
of working capital and operates on thin margins;
* the above actions will substantially reduce our gearing and therefore the
quantum of interest payable and will also result in an improvement in
profitability; and
* we have agreed with our financiers to embark on a structured program to
reduce our gearing and are currently operating within the framework of that
agreement.
Results
The headline loss of R20,4 million (43 cents per share) substantially arose
from:
* finance charges;
* R4,5 million non-recurring items in our continuing operations; and
* R8,2 million in discontinued operations before accounting for outside
shareholders' interests of R1,0 million.
The exceptional items are tabulated in the summarised income statement. The
directors decided that trademarks and a majority of the intangible assets
(valued at R78,5 million) should be written-off. As a result of the latter
decision, the write-down in the value of stock and debtors, the provision
against the loan to the Share Incentive Trust and the operating loss
sustained, the net asset value per share declined from 208 cents to 51
cents.
The write-off of the loan to the Share Incentive Trust pertains to the
difference between the current market value of the shares and options held
by the Trust and the original cost price thereof plus finance costs. No
directors or employees of Jasco derived any benefit from this write-off.
Cash utilisation to fund losses and the costs in shutting down discontinued
operations resulted in an increase in gearing. However, borrowings were at
all times kept strictly within the limits set by our financiers.
The Voice division (Webb Industries) and the Manufacturing division traded
profitably.
Prospects
As a result of the above disposals and actions as well as an ongoing focus
on reducing working capital requirements, Jasco's gearing will be
significantly improved. The restructured Group consisting of higher value-
add operations will have a lower turnover but improved profit margins.
Full provisions have been made for the expected costs pertaining to the
discontinued operations. The business has traded profitably since the
commencement of the new financial year and Jasco is now a sound, higher
margin business with good growth prospects in key niche markets.
Whilst it is expected that full implementation of the new strategic plan
will take at least two years, the benefits of the restructure will flow
through in the near future and management expects Jasco to trade profitably
in the year to 28 February 2002.
Directors
Dr J L (Hannes) Steyn, Bruce Anderson and Gus du Plessis retired as
directors. We wish them well and thank them for their contribution to the
company.
Martin Lotz was appointed to the board as Group Financial Director.
Dividend
The board does not consider a dividend to be prudent at this stage.
On behalf of the board
T B Rutstein S H Robertson M H Lotz
(Chairman) (Chief Executive Officer) (Group Financial Director)
Woodmead
25 May 2001
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