Dynamic Cables, formerly Conlog Holdings, says it was heading for record financial results when it was forced to relocate its plant owing to a zoning matter.
<B>Salient figures</B>
Dynamic Cables results for the year to 31 December 2002.
Previous year`s figures in parentheses, move in square brackets:
Turnover: R99.6m (R73.48m) [+35.6%]
Operating profit before depreciation, amortisation and abnormal items: R10m (R13.37m) [-25.2%]
Profit before tax: R3.15m (R7.97m) [-60.5%]
Net profit: R1.15m (R5.44m) [-78.9%]
HEPS: 5c (11.5c) [-56.5%]
EPS: 2.5c (12.2c) [-79.5%]
Cash flows from operating activities: R4.6m (R31.54m)
Cash generated from operations: R5.3m (R31.54m)
Current assets: R34.69m (R36.33m)
Cash and equivalents: R7.54m (R8.35m)
Current liabilities: R51.47m (R64.3m)
"The year ended December 2002 was a year in which many unforeseen problems arose," says acting chairman Shaun Rai.
He says the first half of the year was characterised by extremely low turnover levels following a general trend in the telecoms industry. The company is a distributor of infrastructure and cabling to the telecommunications sector.
"In the second half of the year turnover levels rose by 56% and the group seemed set for a record year, notwithstanding the lacklustre performance in the first half.
"We were thus extremely frustrated to discover that the premises we were occupying was zoned only for the purposes of the original owner. The immediate effect of this was that our working hours were curtailed to one shift only. This resulted in a greater level of outsourcing at lower margins.
"The second effect of this was that we were forced to relocate the plant at great cost during our busy period."
Rai says the effect on the bottom line has been estimated at more than R5 million.
The company was also hampered by foreign exchange losses in the last quarter of the year as a result of the strengthening of the rand.
"It is a tribute to the inherent viability of the business as well as the management team`s exceptional efforts that the group managed to avoid posting a loss for the year," he says.
While turnover increased 35.6% to R99.6 million, the company`s net profit for the year plunged by 78.9%, from R5.44 million to R1.15 million. Cash generated from operations fell from R31.54 million to R5.3 million.
Trading in the company`s shares has been suspended at the board`s request since March last year when it became apparent that there were possible irregularities regarding the issue of Dynamic shares in previous years. The company said previously that up to 28 million shares might be cancelled as a result.
Rai says Dynamic is in talks with the representative of the vendor consortium of the original Conlog business to settle the aspect of the potentially tainted shares.
"The discussions are taking place in a very co-operative and constructive manner and we look forward to resolving this issue in the not too distant future."
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