AST Group says it expects to report an attributable loss for the six months to 31 December.
Last week the group announced the resignation of CEO Jan van Zyl, who was replaced by sales director John Miller. Miller also retains his previous position.
Other board changes included executive chairman Gerrie de Klerk becoming non-executive chairman.
The new board says it expects the group will post a full-year profit before amortisation of goodwill, although headline earnings per share for the year will be lower than for the previous financial year.
It says that in addition to changes in the executive management and "a more conservative approach to business", it has adopted several other business improvement measures.
The improvement programme, being carried out in conjunction with advisors, is aimed at reducing costs and improving profitability and liquidity by the end of the 2003 financial year. The group is to report on the progress of the programme at the release of its interim results in March.
AST says conditions are still demanding. "The operating environment continues to be highly competitive. As a result, cost inflation is running ahead of price increases and is putting continued pressure on operating margins."
In addition, the group has incurred a number of higher than expected one-off costs related to the business improvement programme. Adjustments and write-offs related to the level of provisions on the balance sheet have also incurred extra costs.
"The expected impact on the income statement will not be more than R45 million for the period July to December 2002," it says.
Debt levels remain high. This, coupled with high interest rates, has resulted in a higher interest cost to the group than in prior periods.
The group says the new management will focus on organic growth and has accelerated the implementation of the cost-cutting programme.
It has settled most of its vendor liabilities, with the remainder of the short-term vendor liabilities to be settled by March.
"The board remains confident that in the medium term prospects are good."
The AST share price was unchanged at 24c on the JSE early this morning after 95 000 shares changed hands in one deal.
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