30 August 2013
JASCO ELECTRONICS HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration Number 1987/003293/06
Share code: JSC ISIN: ZAE000003794
(“Jasco” or “the company” or “the group”)
Jasco has concluded the second year of its three-year restructuring programme. The majority of the operational businesses performed in line with expectations, with good revenue and profit growth.
However, the consolidated results for the year to 30 June 2013 are mainly impacted by the following areas:
• The underperformance from Jasco’s associate M-TEC, now categorised as “Held for Sale”.
• The disposal of the Lighting Structures’ business in December 2012.
• The underperformance of the Telecommunications Structures’ business, now categorised as “Held for Sale”.
• The cost of corrective actions to exit these three businesses.
• The expected short term costs relating to the group’s restructuring programme.
Jasco therefore advises that for the year ended 30 June 2013, the company expects:
• A loss per share of between 76,3 cents and 79,4 cents compared to the 15,6 cents earnings per share (“EPS”)for the previous financial year.-
• Headline earnings per share (“HEPS”) to be between a loss of 1,3 cents and a profit of 2,0 cents per share compared to the 16,8 cents per share for the previous financial year.
The difference between the EPS and HEPS is due to a number of once-off adjustments:
• A R72,2 million fair value impairment of M-TEC. Refer below.
• A loss on the exit from Lighting Structures of R4,8 million, as well as a R12,1 million impairment of the loan to Lighting Structures, now subordinated at 30 June 2013.
• A loss of R9,8 million on the decision to exit the Telecommunications Structures business and a R24,2 million impairment of related goodwill.
• An after tax profit of R12,5 million on disposal of the group’s Midrand property.
The weighted average number of shares in issue of 141 272 436 compares to 141 272 436 and has not impacted the comparison of EPS or HEPS to the prior financial year.
Impact of M-TEC
The group has a 51% shareholding in its associate M-TEC. As indicated to the market at interim results time in February 2013, management committed to take firm action based on the continued underperformance of this investment. M-TEC’s performance suffered in very difficult trading conditions that prevailed throughout the year in a market where the majority of competitors were similarly impacted by delays at Eskom and the marked slowdown in the construction and mining sectors.
Jasco has therefore classified the investment in M-TEC as “Held for Sale” and has stopped equity accounting its share.
The board has engaged a number of parties for the planned sale of Jasco’s interest in M-TEC. To date, Jasco has advanced the process sufficiently to allow for a reasonably certain estimate of the likely proceeds expected to be realised from the disposal after estimated transaction costs. As the investment is currently held at R188,2 million, based on the estimated proceeds, the group has taken a further fair value impairment on this investment of R72,2 million. Shareholders are referred to the separate Cautionary Announcement issued today.
Shareholders are reminded of Jasco’s preference share obligation to AfroCentric Investment Corporation Limited (AfroCentric”) which partly funded the original investment in M-TEC in May 2008, and accordingly the proceeds expected from the transaction, if successfully concluded, will first be applied to the full settlement of this obligation, notwithstanding the extension provided and announced on 22 August 2013.
The corrective actions taken in this set of results are in line with the group’s three-year restructuring programme. The execution of Jasco’s growth strategy is evident in the strong revenue performance achieved and the new base set will allow a greater focus on improving the quality of earnings and ensuring the sustainability thereof in its core businesses.
The information in this trading statement has not been reviewed or reported on by the Company’s external auditors.
Shareholders are advised that Jasco’s audited abridged results will be announced on 18 September 2013.
30 August 2013
Grindrod Bank Limited