JSE-listed Jasco Electronics` profits plummeted in the year to end-February, with the group blaming the decline on a strong rand and a delay in the take-up of orders.
CEO Stuart Robertson says he is disappointed by the results, which were affected by a stronger rand (34% of revenue comes from exports), higher interest charges as a result of taking on an overdraft with the acquisition of Khululeka, losses from discontinued operations, and a deferral of orders in the telecoms and security divisions.
Revenue fell from R307.27 million to R258.54 million, although on a continuing operations basis, revenue rose from R238.91 million to R252.52 million.
An operating profit of R9.76 million from continuing operations was down from R20.7 million the previous year.
On a generally accepted accounting practice (GAAP) basis, headline earnings per share fell by 41.3% from 58.3c to 33.6c.
Financial director Martin Lotz says a net liability of R17.1 million to cover the Khululeka overdraft was reversed when Jasco took over the overdraft. At the same time, the closure of Khululeka`s Alro operation resulted in an impairment of goodwill, also R17.1 million.
In terms of GAAP, the reversal of the net liability forms part of headline earnings, whereas the second transaction does not. Lotz says Jasco`s belief is that the two are related. As a result, the group has also published what it terms "comparative headline earnings". On this basis, headline earnings per share fell from 42c to 4.2c.
Robertson says there was an encouraging turnaround in the second half of the year, when the group incurred a comparative headline loss of 2.8c a share. He says all the core operating divisions are profitable.
He says the group`s prospects are good, with strong growth potential in the telecommunications division as a result of currently low teledensity. Continued electrification augurs well for the manufacturing division as demand for domestic appliances increases. The security division is also seen as a growth industry, particularly in mining, financial and city surveillance.
Robertson says Jasco`s strong black economic empowerment credentials also position it well for future growth.
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Updates from Jasco, Intervid
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