Communications company Jasco Electronics, which has reported a poor set of results for its latest financial year, has scaled back operations in a bid to reduce gearing.
Despite an increase in turnover to R417.38 million for the year to 28 February 2001, from R394.43 million the previous year, Jasco incurred an operating loss of R19.35 million (2000: R11.25 million profit).
CE Stuart Robertson says the dismal operating results are due to, among other things, a sharp decline in the operating margins in the data distribution businesses, interest paid on a higher level of borrowings, investment in infrastructure and skills, the restructure of the image division, and the high cost of closing or scaling down the data distribution businesses.
Other factors included a write-down in the value of assets in the distribution businesses, the write-off of trademarks and the amortisation and impairment of intangibles, and a provision against a loan to the Share Incentive Trust.
A net loss of R117.47 million before tax compares with a previous loss of R4.01 million, while a net attributable loss of R118.49 million compares with a loss of R5.84 million previously.
A previous headline earnings figure of R9.42 million turned into a R20.37 million headline loss. This translated into a headline loss of 43c per share, compared with headline earnings of 20c a share in the previous year.
The group`s net asset value fell from 208c to 51c per share at the end of the period.
The balance sheet shows current assets of R153.04 million compared with current liabilities of R164.79 million. Previously, current assets of R171.94 million outweighed current liabilities of R152.58 million.
"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," Robertson says.
"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 current liquidating surplus stock and collecting debtors."
The company has also sold United Arab Emirates-headquartered On Line Distribution to Datatec subsidiary Westcon Network Enablers for $3.2 million, with $1.4 million of that payable on the achievement of certain profit targets or on a pro rata basis.
The proceeds of the sale will be used to reduce gearing, Robertson says.
He adds that although On Line is a successful business, it is demanding of working capital and operates on thin margins.
The disposals, as well as other actions taken to reduce gearing, are expected to improve the group`s profitability.
"The restructured group consisting of higher value-add operations will have a lower turnover but improved profit margins," Robertson says. He adds that the business has traded profitably since the start of the new financial year.
"While 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."
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