New product costs hit Dynamic

Dynamic Cables has reported a 57% plunge in attributable earnings for the six months to end-June as a result of the cost of bringing new products to the market.

Dynamic commissioned a fibre optic termination laboratory at a cost of more than R3 million.

Acting chairman Shaun Rai says expenditure involved, among other things, set-up costs, staff recruitment and training, rental and research and development.

The costs were expensed in the period and the company believes the expenditure will result in new markets.

Dynamic has tendered for a large contract with Telkom, and Rai says the results of the tender will be announced shortly.

"If this expenditure were to be excluded, the results would indicate a significant improvement over the previous year," he says.

The company has also spent at least R500 000 on legal expenses relating to shares issued irregularly in 1997, 1998 and 1999. Rai says the expenditure is necessary to protect the public from dealing in shares that may be tainted.

The new businesses started last year, MEC Energy and Dynatech Telecoms, have started contributing to the bottom line and Rai expects them both to be profitable by the year-end.

He says the telecommunications industry has experienced an upturn in activity since the half-year, and the group is positioned to take advantage of this.

"The company will continue to adopt a conservative approach in considering future acquisitions and our strategy is to preserve our cash-positive base and to grow the operations under our control rather than to make new acquisitions."