To view the PDF file, sign up for a MySharenet subscription.

JASCO ELECTRONICS HOLDINGS LIMITED - Audited results for the year ended 30 June 2014

Release Date: 17/09/2014 09:00
Code(s): JSC     PDF:  
Wrap Text
Audited results for the year ended 30 June 2014

JASCO ELECTRONICS HOLDINGS LIMITED
Registration number 1987/003293/06
JSE share code: JSC
ISIN: ZAE000003794
("Jasco" or "the company" or "the group")

AUDITED RESULTS
FOR THE YEAR ENDED 30 JUNE 2014

1. INTRODUCTION
Group restructuring
The third and final year of Jasco's restructure is complete, with final costs related to
organisational changes associated with the restructure incurred during the year.

The group has achieved a number of milestones during its restructuring period.
These include:

- creating a single Jasco brand from 23 disjointed brands;
- increasing scale, with order intake and revenue in excess of R1 billion;
- expanding the national footprint and product and market segments;
- the consolidation of 11 businesses to four, the decrease of legal entities from 44 to
  28 and the removal of several management levels;
- the commencement of the disposal of non-core business units, with Lighting and
  Telecommunications Structures sold in 2013 and the recent disposal of the Automotive
  business in January 2014;
- the disposal of the Midrand head office property for R60 million in 2013 and the
  subsequent reduction in debt levels in the first half of 2014;
- the completion of a successful rights issue of R55 million in January 2014 and
  strengthening of Jasco's black ownership to 62%;
- the reduction of interest-bearing debt during the year and the improvement in the
  debt:equity ratio to 62%;
- the 31% operating profit growth to R19,2 million from Electrical Manufacturers; and
- the pleasing growth from Jasco Power, with operating profit up 77% off a low base.

Challenges during the restructuring period include:

- the inability to conclude the disposal of the M-TEC investment. However, the group
  has signed a non-binding heads of agreement for R119 million. An independent
  valuation by BDO South Africa supports the selling price;
- the inability to settle the group's preference shares owing to AfroCentric by
  30 June 2014 and the consequent reclassification to short-term liabilities. Although
  the expected proceeds of the M-TEC sale will be used to settle the preference
  share obligation, a comfort letter was also secured on 27 June 2014 for alternative
  funding to replace the preference shares if required; and
- the operating losses incurred in ICT Networks, particularly during the second half, on
  a significant change in market conditions. Corrective action has since been taken.

Group structure
In line with the group's strategy during the final year of the three-year restructuring
programme and following the divestment of a number of businesses during the year,
the group was structured from three verticals into two.

The ICT Solutions vertical contains the businesses of ICT Carrier, ICT Enterprise and
ICT Networks.

The separate verticals of Industry Solutions and Energy Solutions have been combined
to create the E&I Solutions vertical. This contains Electrical Manufacturers, Security and
Power.

During the second six months to 30 June 2014, the business units that did not achieve
the set minimum target of R150 million annual revenue were integrated into other
businesses.

Rights issue
The group's rights issue was successfully concluded on 21 January 2014 and raised a
net R55 million in funding for the group. The rights offer also introduced new strategic
broad-based black economic empowerment (BBBEE) shareholders, Goldsol II and
Harvibase, to the group. The owners of both partners have a track record in the security
and telecommunications sectors, which has already allowed for cross-selling within
Power Solutions. Initial technical alliance opportunities are in the process of being
evaluated.

2. FINANCIAL OVERVIEW
Statement of comprehensive income
Group revenue decreased by 9% to R1,04 billion (2013: R1,15 billion), following
the disposal of the Lighting and Telecommunications Structures businesses
(R77,5 million) in 2013 and Automotive (R6 million) in January 2014. 2013
also created a high base due to the inclusion of a R65 million once-off project
in Co-locations Solutions. A number of orders that were expected to flow through
in 2014 were delayed, but received post year-end.

The main contributors to revenue were:
 ICT – Carrier        13% decrease to R436,5 million (2013: R498,8 million)
 ICT – Networks       40% decrease to R68,9 million (2013: R114,6 million)
 ICT – Enterprise     4% decrease to R209,8 million (2013: R219,0 million)
 E&I – Industry       2% decrease to R145,8 million (2013: R148,7 million)
 E&I – Energy         6% increase to R194,5 million (2013: R184,3 million)

Operating profit improved significantly from a loss of R93,5 million in 2013 to a profit
of R17,6 million, mainly due to the non-recurrence of once-off impairments and write-
offs. The only headline adjustments were:
- the R4,3 million profit on sale of Automotive to Lumen International; and
- a R0,1 million profit on disposal of fixed assets during the normal course of
  operations.

To provide a more meaningful comparison, excluding these once-off adjustments, as well
as restructuring costs of R13,0 million (2013: R14,6 million) operating profit declined
by 26% to R26,2 million from R35,6 million in 2013. The decrease is due to the losses
incurred by Security Solutions, mainly in the first half of this year, the unexpectedly
high losses incurred by ICT Networks, mainly in the second half of this year, and final
planned restructuring costs that were incurred on taking the necessary corrective action
in these underperforming businesses.

Net finance costs of R14,5 million decreased from R19,3 million last year. This was
in line with expectations on the receipt of R55 million from the rights issue and cash
generated from operations. The main components of net finance costs were:
- the decrease in interest on bank overdrafts from R11,1 million in 2013 to
  R8,4 million in 2014 on lower utilisation of the group's general short-term facilities;
- the preference dividend paid to the group's black empowerment partner AfroCentric
  of R6,7 million (2013: R6,8 million); and
- the R4,8 million paid on the Cisco loan compared to the R6,8 million received
  from Telecom Namibia in the current year. This related to the five-year Co-location
  Solutions project.

There was no equity accounted earnings from the group's associate M-TEC on its "held-
for-sale" status (2013: R1,6 million loss). M-TEC delivered a break-even PAT result for
2014 compared to a significant loss of R30,1 million in 2013.

The taxation credit of R3,5 million (2013: R7,0 million credit) was lower, mainly due to:
- the benefits from the initial round of restructuring of legal entities allowing for the
  utilisation of historic assessed income taxation losses in other subsidiaries;
- the profitability of subsidiaries in the current year reducing the historic tax losses; and
- the reversal in the previous year of capital gains tax accruals associated with the
  disposal of the Midrand property.

This resulted in an unusual effective rate of 114,1% (2013: 6,1%). The group expects
the sustainable tax rate to return to 28% in the next one to two years.

The profit after tax for the year of R6,5 million is a strong improvement to last year's
loss of R107,4 million. After adding back outside shareholders' interest in profits of
R1,2 million (2013: R2,6 million), which relates to the group's investment in
Co-location Solutions (NewTelco), the profit attributable to ordinary shareholders
was R5,3 million (2013: loss R110,1 million). Earnings per share (EPS) was
3,1 cents per share (2013: loss 77,9 cents per share).

Headline earnings of R0,9 million increased by 85% (2013: R0,5 million) and headline
earnings per share (HEPS) was up 52% to 0,5 cents per share (2013: 0,3 cents per
share). The weighted average number of shares in issue was higher at 172,8 million
shares versus 141,3 million shares following the issue of 72 million shares on
21 January 2014 in terms of the rights issue. This had a material effect on the
calculation of earnings and headline earnings per share in the current year.

Statement of financial position

Significant matters
The most noteworthy change in the statement of financial position as at 30 June 2014
relates to a change in classification of the R90 million preference shares from long term
back into the current category. These shares were allotted on 23 May 2008
to AfroCentric by Jasco Cables Investments (Pty) Ltd and were indirectly secured
by the group's investment in M-TEC. The change in classification was necessary
due to Jasco's intention to redeem or replace the preference shares by
31 December 2014.

Non-current assets and liabilities
Capital expenditure was R14,1 million (2013: R19,4 million). The majority of the
capital spend was in Broadcast (R2,2 million on test equipment related to a
completed broadcast upgrade), Carriers (R2,1 million related to the relocation into
one business premise), Electrical Manufacturers (R2,2 million for new machinery),
Security (R0,6 million on relocating to the head office in Midrand, Power
(R0,3 million on relocating to larger premises), and head office (R2,3 million
on IT infrastructure). The fixed asset disposals during the year were not material.

Intangibles (including goodwill) of R111,3 million increased from R94,1 million
last year as a result of the acquisitions of MV Firecare and Telesto in the second
half. All goodwill components were tested for impairment at 30 June 2014 and no
impairment charges were considered necessary.

The investment in associate of R116,0 million, net of expected selling costs of
R3,0 million, is unchanged, relates to the 51% investment in M-TEC and
represents the fair value of the investment. M-TEC remains "held for sale",
as reported last year. Equity accounting therefore remains suspended.

The net deferred tax asset of R23,9 million (2013: R20,7 million) increased due to
the recognition of previously unrecognised tax losses in two entities that have achieved
consistent profitability since 2012. The conservative approach adopted in the past in
recognition of deferred taxation assets arising from assessed income tax losses remains
unaltered, with less than 50% of available tax losses recognised.

Other non-current financial assets of R41,4 million decreased from R52,5 million
last year and relates to the non-current portion of the finance lease receivable
from Telecom Namibia. Jasco, through its subsidiary New Telco SA, entered into
a five-year Interconnect Services agreement with Telecom Namibia in the previous year.
New Telco SA supplies the exclusive use of dedicated points of presence in London,
Frankfurt, Cape Town and Johannesburg.

The long-term interest-bearing loans of R68,9 million (2013: R163,0 million)
decreased due to a change in classification of the R90 million preference shares
and payments made on a term loan of R55,1 million (2013: R68,0 million) entered
into with Cisco Systems Capital to fund the finance lease receivable from Telecom
Namibia. The R20 million loan from TMM Holdings is repayable by December 2015,
or convertible into 25 million ordinary shares at Jasco's election. The only other
long-term liabilities that therefore remain are the loans from minority shareholders
of R2,1 million (2013: R2,7 million) and assets financed in terms of instalment sale
and/or finance lease agreements of R5,1 million (2013: R7,6 million).

Current assets and liabilities
Inventories on hand was R96,7 million (2013: R114,5 million), which was in line with
the lower revenue. The most notable decrease in inventory levels occurred in Carriers
and Electrical Manufacturers. This area will receive greater focus in 2015.

Trade receivables were R206,4 million (2013: R243,6 million) and includes
debtor provisions of R2,0 million (2013: R3,0 million). These provisions are
considered adequate to cover specific risk trade receivables identified and any
impairment required in terms of IAS 39. The decrease was due to the lower revenue
and a good focus on collections, which resulted in a very healthy age profile of the
debtors' book. In the Security business unit, the arbitration against a customer has
commenced where the invoiced rental amounts plus the maintenance and interest
components are being claimed. No additional provisions are considered necessary at
this stage, as the group is confident that the outstanding amount will be recovered.

Other receivables and pre-payments decreased to R66,9 million (2013: R131,9 million) 
due to the proceeds on the disposal of the Midrand property (R60 million) being
received on 5 July 2013, and a reduction in the prepaid service level agreements
relating to the Telecom Namibia project of R9,6 million (2013: R14,2 million).

Current non-interest-bearing liabilities of R259,5 million (2013: R322,6 million) decreased
on lower volumes. This includes trade and other payables (accruals) of R194,1 million
(2013: R248,2 million), provisions of R21,6 million (2013: R48,7 million) and deferred
maintenance revenue of R43,3 million (2013: R24,8 million). Deferred maintenance
revenue relates to service level agreements invoiced and paid in advance. The terms from
Jasco's key trade suppliers are the subject of continuing focus and additional support was
obtained during the year to fund organic growth requirements. This will continue to be a
focus in the next financial year as procurement is a key area to improve gross margins
across the group.

Although net foreign currency contracts are not material, foreign currency risk is
carefully managed through a hedging programme that utilises a blend of the available
instruments. This is dealt with in detail in the related note disclosures.

Current interest-bearing liabilities of R108,1 million (2013: R48,2 million) increased
on the reclassification of the R90 million preference shares into short term (as discussed
earlier in the review).

The team continues to concentrate on Jasco's working capital management, as it is
above the internal target of 30 days. The bank overdraft of R8,1 million decreased from
R56,0 million. This was mainly due to capital raised of R55,0 million and the operating
cash inflows.

Statement of cash flows
The statement of cash flows reflects an inflow in cash generated from operations
before working capital changes of R35,1 million compared to R47,7 million in 2013.
Working capital changes reflect an outflow of R9,7 million (2013: R114,1 million
outflow) on a sharp reduction in receivables and payables.

The net interest payment amounted to R14,5 million (2013: R19,3 million) (including the
preference dividend), while income tax payments increased substantially. No ordinary
dividends were paid (2013: R4,2 million related to 2012). Total cash inflows from
operating activities of R6,5 million was pleasing when compared to the R90,8 million
outflow in 2013.

Investing activities saw a cash inflow of R57,4 million (2013: R42,2 million outflow)
on receipt of the proceeds on the property and Automotive business unit disposals,
offset by capital expenditure of R14,1 million. Financing activities saw an outflow
of R16,0 million (2013: R108,6 million) in spite of the R55 million new equity
raised on the settlement of debt relating to the property and part redemption
of the preference shares.

Accordingly, Jasco's net overdraft decreased by R47,9 million from R56,0 million
at the beginning of the year.

3. OPERATIONAL REVIEW
ICT Solutions
ICT Solutions consists of three closely-linked business units – Carrier, Networks and
Enterprise.

ICT Solutions delivers across the value chain, from design and planning of networks
to the latest broadcasting solutions, Information Technology, telecommunications,
logistics, installation, commissioning, configuration, integration, support and
maintenance. As systems integrator, service provider and distributor, the group's
solutions are proven across the board. This includes delivering comprehensive services
and solutions that add value to the group's customers.

ICT – Carrier
Spend in the fixed-line and mobile markets continued to be restrained. Revenue
decreased by 13% to R436,5 million (2013: R498,8 million). 2013 included
the results from Telecommunications Structures, which was sold with effect from
1 July 2013. Excluding this, revenue decreased by 3% from 2013, mainly due
to delayed orders from a major telecommunications operator. These orders have
subsequently been received.

Due to the above, operating profit decreased by 17% to R46,9 million (2013:
R56,5 million), although the business unit maintained a pleasing margin of 10,8%
(2013: 11,3%). This was achieved on good overhead reductions against gross
margin pressure.

ICT – Networks
This business unit consists of the Converged Solutions and the Co-locations Solutions
businesses, as well as the newly-established Property Technology Management (PTM)
business.

As expected, revenue decreased by 40% to R68,9 million (2013: R114,6 million),
mainly due to the high base created in 2013 from a major project in Co-location
Solutions. This project resulted in once-off revenue on the sale of equipment of
R65,3 million under an interconnect services and finance lease agreement. In addition,
some anticipated new customer orders were delayed during the year.

Converged Solutions' revenue remained flat following the disposal of the core network
platform portfolio on 1 April 2014. This product range was disposed of due to the
decrease in the mobile termination rates as announced by ICASA, which resulted in
a drop in revenue and margins. Management took the opportunity to restructure this
business. In addition, investments were made into the newly-established PTM business.

Consequently, and contrary to management's initial plans, the operating loss
deteriorated to a very disappointing R11,1 million from the R3,4 million reported in
2013. Corrective action has been taken.

ICT – Enterprise
Revenue decreased by 4% from R219,0 million in 2013 to R209,8 million due to
delayed customer orders in difficult trading conditions in South Africa. Albeit from
a low base, the business experienced good volume growth in new African markets,
as the group's regional strategy is starting to bear fruit.

Due to the loss in revenue, operating profit declined by 27% to R10,1 million (2013:
R13,8 million). The overhead cost base was further realigned in the second half of the year.

E&I Solutions
E&I Solutions consists of Industry Solutions and Electrical Manufacturers. The business
units were combined under one vertical following the divestment of Lighting Structures
in 2013.

Industry Solutions consists of Security and Power Solutions. This business unit offers
complete end-to-end solutions for facilities, including electronic security solutions, such
as surveillance, CCTV, access control and fire detection and prevention solutions.
In addition, the business unit is a complete provider of secure low-voltage power
solutions, including uninterruptable power supplies (UPS), voltage regulators, transformers
and lighting protection, as well as building management solutions. These offerings are
supported by a highly-skilled team of engineers and systems integrators.

Electrical Manufacturers is a key player in the electrical "white goods" or appliance
market. This business unit delivers end-to-end solutions across a wide variety of industries
and sectors that require extensive electrical cabling and other appliances. Electrical
Manufacturers houses the cable and component manufacturing offering of Jasco.

E&I – Industry Solutions
Security Solutions
Revenue declined by 8% to R109,8 million (2013: R118,9 million), mainly due
to a lack of major projects and pricing pressure from key customers due to strikes
in the mining sector.

Although an improvement was seen compared to the first six months, the business
unit suffered an operating loss of R1,9 million compared to the R3,6 million profit
in 2013 on the combination of lower volumes and margins. Once-off costs were
incurred in the second half of the year in relocating the business to the group's
Midrand head office and restructuring its headcount.

Power Solutions
Revenue increased by 20% to R36,0 million (2013: R29,9 million) due to new customers
and cross-selling initiatives. Accompanying the healthy revenue growth, the operating profit
increased by 77% from R2,2 million in 2013 to R3,9 million, in spite of relocation costs
incurred in moving to bigger premises to accommodate the organic growth experienced
since acquisition in January 2012, which is expected to continue going forward.

E&I – Energy Solutions
Since the disposal of Lighting Structures in 2013, only Electrical Manufacturers is
reported under Energy Solutions.

Electrical Manufacturers
Revenue growth of 26% was achieved during the year to R194,5 million from
R133,7 million on significantly higher volumes.

The strong growth in volumes from the group's major customer more than compensated
for the lower gross margin percentage and justified the move to the bigger premises
and the investment in new plant and machinery in previous years. Consequently,
the operating profit grew by 31% to R19,2 million (2013: R14,7 million), improving
the operating profit margin to 9,9% (2013: 9,6%). During the second half, the
Automotive business was sold for R12,5 million before selling costs.

4. LOOKING FORWARD
Divisional prospects
Each business unit had to reach a minimum revenue of R150 million after the
three-year restructure, or be incorporated into other businesses within the stable.

Consequently, the business units that have not met the R150 million target were
combined as lines of business into larger business units. ICT Networks, Security
Solutions and Power Solutions were restructured during the second half of the year.
From July 2014, these lines of business form part of two larger business units,
which meet the R150 million minimum requirement.

The new 2015 Jasco structure will therefore comprise of:
- Carrier – no change as this business unit has met the minimum requirements;
- Enterprise – now also includes Security Solutions and Unified Communications;
- Electrical Manufacturers – no change as this business unit has met the minimum
  requirements; and
- Intelligent Technologies – a new business unit which encompasses Broadcast,
  Property Technology Management, Power Solutions and Data centres (Co-location).

Carrier
The group remains cautious about the ongoing "price war" between the larger
telecommunications operators, which may necessitate a restructure of their
existing cost base. At the same time, Jasco is encouraged by tier-two players
in the market that compete on a niche level, but would require the group's total
solutions set. Jasco expects to continue its market share growth through new
markets in southern Africa and focusing on growing its service revenue through
innovative offerings.

Enterprise
The group expects to continue with its East African expansion in terms of unified
communications and contact centres. The group's cloud solutions are maturing,
with Software as a Service (SaaS) gaining market acceptance. The Security line of
business falls under the new management team that will focus on continuing to turn this
business around. Particular emphasis will be placed on growing the newly-acquired
Fire Solutions business, with regional expansion.

Intelligent Technologies
The group expects growth in Intelligent Technologies to come from the continued
shift within corporate South Africa to a managed services and hosted solutions model.
Jasco will take advantage of this shift through its professional services offering and
combined products. In Smart Buildings, the group will continue to grow annuity
income and expand Jasco Power. Property Technology Management will continue to
drive rooftop and off-grid solutions. The Data Centres line of business will evaluate
joint ventures to drive growth and will take advantage of growing demand for Data
Connectivity and Infrastructure and Platform as a Service (IaaS and PaaS).

Electrical Manufacturers
The prospects for Electrical Manufacturers are encouraging, even though this business
unit was severely impacted by the strike action during July 2014. Demand in domestic
appliances on growing exports from its major customer is expected to increase. This
should support the operating profit, in spite of input cost pressures on raw materials and
upward pressure of direct labour and electricity costs in the local market.

The small domestic appliances market should benefit from the weaker Rand, as
Jasco's manufactured cost becomes competitive compared to the landed cost of
imported product. However, the enforcement of the importing of non-compliant
products is very poor and does not allow for a level playing field for local
manufacturers. Consequently, this business unit divested of its Automotive business
and deliberately reduced its production of the Snapper range of plugs and
adaptors and components into the local small appliance manufacturers. However,
in a weak Rand environment, the business has the ability to increase production
back to historic levels in a relatively short timeframe.

Group prospects and opportunities
The group's home market of South Africa will continue to remain challenging, with
low growth and a volatile labour environment. Against this, further costs will be
cut and geographic and market diversification continued. The group will also finalise
its exit of low-margin manufacturing.

The full benefits of the restructuring will flow through from 2015, although the
first half has been strongly impacted by strike action in the metals industry.

Management has identified the following areas to increase revenue and profits going
forward:

New group structure
 The group is targeting cost savings on a more efficient overhead structure, combined
 with revenue and profit assurance plans to increase operating profit at a business
 unit and consolidated level.

Increased products and services
  The group will continue to increase the range of products and services sold into its
  existing customer base as part of its cross-selling activities.

Strategic selling
 The group will target strategic large corporate and public (SOE) entities, with a
 particular focus on energy optimisation.

African expansion
 Good progress was seen in east African countries, with projects already won in
 Zimbabwe, Tanzania, Kenya and Mozambique. The group will continue to develop
 its regional strategy on a measured basis.

Strategic procurement
 The group will aim to improve gross margins through quality service delivery to
 customers and by improving the efficiency of Jasco's resources executing theses
 services. The group will engage with Jasco's key suppliers to extract improved
 procurement.

Bolt-on acquisitions
 Close to year-end, the group enhanced the Security portfolio with the acquisition
 of Firecare, a fire detection and suppression solutions company, and the
 Enterprise portfolio with the acquisition of Telesto, a supplier of telephony and
 contact centre solutions, offering a leading software dialler as a part of the
 all-in-one contact centre suite.

 Jasco will continue to investigate bolt-on acquisition opportunities to ensure that they
 are value-adding to the group.

Shareholders are advised that any forward looking information or statements contained
in this announcement have not been reviewed or reported on by Jasco's independent
auditors.

5. GOING CONCERN
The board has considered all operational and financial related activity and forecasts
for the ensuing twelve months from the approval of these annual financial statements.
This consideration included the status of the disposal of the investment in M-TEC,
currently treated as a non-current asset held for sale. At the year end, a non-binding
heads of agreement was entered into for the disposal of the investment in M-TEC,
the proceeds of which will be used for the extinguishment of the preference shares
which falls due for repayment to the holder at 31 December 2014, should
a transaction be concluded. It is the board's view that a sale transaction will be
concluded in this regard.

6. SUBSEQUENT EVENTS
There were no material subsequent events to report.

7. CHANGES TO THE BOARD
Mr Dewald Dempers, CEO of AfroCentric Investment Corporation Limited, was
appointed as a non-executive member to the board on 16 January 2014.

Mr Shaheen Bawa, director of Harvibase Investments, was appointed as a non-
executive member to the board on 1 July 2014.

Sir John Sherry has been reclassified as an independent non-executive director with
effect from 1 July 2014.

8. NOTICE OF AGM
Notice is hereby given that the Annual General Meeting
of Jasco shareholders will be held in the company's boardroom, Jasco Office Park,
Corner Alexandra Avenue and Second Street, Midrand, on 31 October 2014, at
11:00, to transact the business as stated in the notice of the Annual General Meeting
to be posted to shareholders on or about 30 September 2014.

For and on behalf of the board

Dr ATM Mokgokong (Non-executive chairman)

AMF da Silva (Chief executive officer)

WA Prinsloo (Chief financial officer)

16 September 2014

Basis of preparation
The audited summarised consolidated preliminary results have been prepared
in accordance with International Financial Reporting Standards ("IFRS"),
IAS 34 Interim Financial Reporting Standards, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council,
the South African Companies Act, 71 of 2008, as amended and the Listings
Requirements of the JSE Limited. The accounting policies and methods of computation
used in the preparation of this report are consistent with those of the previous year.
These summarised consolidated financial statements, which were derived from
the underlying audited consolidated financial statements for the year ended
30 June 2014, have not been audited. The directors take full responsibility
for the preparation of the abridged report and the financial information has been
correctly extracted from the underlying audited financial statements. The auditors,
Ernst & Young Inc, have audited the consolidated annual financial statements
for the year ended 30 June 2014 from which this summarised report has been
derived and on which an unmodified opinion was expressed. These are available at
Jasco's registered office.

Fair value of financial instruments
The fair values of financial instruments are determined using appropriate valuation
techniques, including recent market transaction and other valuation models,
have been applied and significant inputs include exchange rates. The group only
has assets that are carried at fair value in level 2. There is no difference between
the fair value and carrying value of financial instruments not presented below
due to either the short-term nature of these items, or the fact that they are priced
at variable interest rates.

Fair value hierarchy
Financial instruments carried at fair value in the statement of financial position (R'000):
- Financial assets at fair value through profit or loss                          323
- Financial liabilities at fair value through profit or loss                     398

Audit opinion
The consolidated annual financial statements have been audited by the group's
independent auditors, Ernst & Young Inc. A copy of their unmodified report is available
for inspection at Jasco's registered office.

SUMMARISED CONSOLIDATED STATEMENTS
OF COMPREHENSIVE INCOME

                                                                 Audited     Audited              
                                                                 30 June     30 June              
(R'000)                                                             2014        2013   % change   
Revenue                                                        1 043 185   1 151 035      (9,4)   
Turnover                                                       1 035 382   1 146 034      (9,7)   
Finance income                                                     7 803       5 001       56,1   
Operating profit/(loss) before                                                                    
interest and taxation                                             17 594    (93 486)      118,8   
Finance income                                                     7 803       5 001       56,0   
Finance cost                                                    (22 347)    (24 331)      (8,2)   
Equity accounted loss from associate                                   –     (1 586)    (100,0)   
Profit/(loss) before taxation                                      3 050   (114 402)      102,7   
Taxation                                                           3 480       6 974     (50,1)   
Profit/(loss) for the year                                         6 530   (107 428)      106,1   
Other comprehensive income                                                                        
(will subsequently be reclassified
to profit or loss)                                                     –           2              
Total comprehensive income                                                                        
for the year                                                       6 530   (107 426)      106,1   
Profit/(loss) attributable to:                                                                    
–  non-controlling interest                                        1 224       2 632     (53,5)   
–   equity holders of the parent                                   5 306   (110 060)      104,8   
Profit/(loss) for the year                                         6 530   (107 428)      106,1   
Total comprehensive income                                                                        
attributable to:                                                                                  
–  non-controlling interest                                        1 224       2 632     (53,5)   
–   equity holders of the parent                                   5 306   (110 058)      104,8   
Total comprehensive for the year                                   6 530   (107 426)              
Reconciliation of headline earnings                                                               
Net earnings attributable to                                                                      
equity holders of the parent                                       5 306   (110 060)      104,8   
Headline earnings adjustments                                    (4 444)     110 525    (104,0)   
–   profit on disposal of Automotive                                                              
business unit                                                    (4 289)           –              
–   loss on disposal of LeBlanc Jasco                                  –       4 758              
– loss on available for sale
    financial asset                                                    –      12 089              
–   loss on re-measurement of                                                                     
associate held for sale – M-TEC                                        –      72 209              
–   impairment of goodwill                                             –      24 178              
–   loss on re-measurement of                                                                     
disposal group held
for sale                                                               –       9 769              
–   profit on disposal of fixed assets                             (155)    (12 478)              
Headline earnings                                                    862         465       85,4   
Number of shares in issue ('000)                                 218 399     146 399              
Treasury shares (‘000)                                             5 129       5 127              
Weighted average number of
 shares on which earnings                                              
per share is calculated ('000)                                   172 832     141 272              
Weighted average number of
 shares on which diluted earnings                                      
per share is calculated (‘000)                                   172 832     141 272       22,3   
Ratio analysis                                                                                    
Attributable earnings                                              5 306   (110 060)      104,8   
Earnings per share (cents)                                           3,1      (77,9)      103,9   
Diluted earnings per share (cents)                                   3,1      (77,9)      103,9   
Headline earnings per share (cents)                                  0,5         0,3       51,9   
Diluted headline earnings
 per share (cents)                                                   0,5         0,3       51,9   
EBITDA                                                            34 769      45 318     (23,3)   
Net asset value per share (cents)                                  134,3       159,7     (15,9)   
Net tangible asset value                                                                          
per share (cents)                                                   82,1        93,1     (11,8)   
Dividend per share – final (cents)                                     –         3,0    (100,0)   
Debt: Equity (%)                                                    71,2       100,4     (29,1)   
Interest cover (times)                                               0,9         0,8       13,0   
EBITDA interest cover (times)                                        2,4         2,3        2,0   

SUMMARISED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

                                                                             Audited    Audited   
                                                                             30 June    30 June   
(R'000)                                                                         2014       2013   
ASSETS                                                                                            
Non-current assets                                                           241 190    227 073   
Plant and equipment                                                           59 541     56 200   
Intangible assets                                                            111 286     94 143   
Investment in associates                                                           –          –   
Deferred income tax                                                           28 994     24 246   
Other non-current assets                                                      41 369     52 484   
Non-current asset held for sale                                              116 000    139 611   
Current assets                                                               388 951    510 521   
Inventories                                                                   96 722    114 522   
Trade and other receivables                                                  273 298    377 291   
Taxation paid in advance                                                       1 659      1 118   
Short-term portion of other non-current assets                                11 896     10 510   
Cash and cash equivalents                                                      5 376      7 080   
Total assets                                                                 746 141    877 205   

EQUITY AND LIABILITIES                                                                            
Shareholders' equity                                                         287 582    238 068   
Non-current liabilities                                                       75 533    168 167   
Interest-bearing liabilities                                                  68 887    163 030   
Deferred maintenance revenue                                                   1 568      1 578   
Deferred income tax                                                            5 078      3 559   
Non-current liability held for sale                                                –     36 175   
Current liabilities                                                          383 026    434 795   
Interest-bearing liabilities                                                 108 093     48 209   
Bank overdraft                                                                13 486     60 602   
Non-interest-bearing liabilities                                             216 531    297 797   
Deferred maintenance revenue                                                  43 308     24 821   
Taxation liability                                                             1 608      3 366   
Total equity and liabilities                                                 746 141    877 205   

SUMMARISED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                                                                             30 June    30 June   
(R'000)                                                                         2014       2013   
Attributable to equity holders of the parent                                                      
Opening balance                                                              225 656    339 842   
Issue of new shares                                                           55 100          –   
Treasury shares - Share Incentive Trust                                         (1)        192   
Equity-settled share-based payment                                               410       (83)   
Total comprehensive income                                                     5 306  (110 056)   
–  Profit/(loss) for the year                                                  5 306  (110 058)   
–  Other comprehensive income                                                      –          2   
Dividends paid                                                                     –    (4 239)   
Closing balance                                                              286 471    225 656   
Non-controlling interests                                                                         
Opening balance                                                               12 412     14 590   
Subsidiaries disposed during the year                                       (12 525)    (4 810)   
Total comprehensive income                                                     1 224      2 632   
–  Profit for the year                                                         1 224      2 632   
–  Other comprehensive income                                                      –          –   
Closing balance                                                                1 111     12 412   
Total shareholders' equity                                                   287 582    238 068   

SUMMARISED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                             Audited    Audited   
                                                                             30 June    30 June   
(R'000)                                                                         2014       2013   
Cash generated from operations before
 working capital changes                                                      35 139     47 717   
Working capital changes                                                      (9 766)  (114 083)   
Cash generated from operations                                                25 463   (66 366)   
Net financing costs                                                         (14 544)   (19 330)   
Net taxation paid                                                            (4 379)      (895)   
Dividends paid                                                                     –    (4 239)   
Cash flow from operating activities                                            6 540   (90 830)   
Cash flow from investing activities                                           57 393   (42 213)   
Cash flow from financing activities                                         (15 997)    108 645   
Increase/(decrease) in cash resources                                         47 936   (24 398)   


SUMMARISED CONSOLIDATED SEGMENTAL REPORTS

CURRENT STRUCTURE                                     30 June 2014                30 June 2013   
                                                   Total       Operating       Total       Operating   
(R'000) (Audited)                                revenue   profit/(loss)     revenue   profit/(loss)   
ICT – Carrier                                    436 485          46 934     498 811          56 468   
ICT – Networks                                    68 922        (11 076)     114 570         (3 442)   
ICT – Enterprise                                 209 787          10 124     218 988          13 824   
E&I – Industry                                   145 822           2 020     148 742           5 760   
E&I – Energy                                     194 453          19 188     184 258          11 802   
Sub-total operating
 divisions                                     1 055 469          67 190   1 165 369          84 412   
Other                                                948        (51 145)       9 817        (61 267)   
Adjustments                                     (13 232)           1 549    (24 151)       (116 631)   
Total                                          1 043 185          17 594   1 151 035        (93 486) 
  
REVENUE BREAKDOWN                         
                                                External          Inter-    External          Inter-   
(R'000)                                          revenue         segment     revenue         segment   
ICT – Carrier                                    435 350           1 135     497 396           1 415   
ICT – Networks                                    63 318           5 604     110 187           4 383   
ICT – Enterprise                                 206 739           3 048     211 814           7 174   
E&I – Industry                                   143 636           2 186     147 587           1 155   
E&I – Energy                                     193 194           1 259     181 876           2 382   
Sub-total operating
 divisions                                     1 042 237          13 232   1 148 860          16 509   
Other                                                948               –       2 175           7 642   
Adjustments                                            –        (13 232)           –        (24 151)   
Total                                          1 043 185               –   1 151 035               –   

SEGMENTAL FINANCIAL POSITION      
(R'000)                                           Assets   Liabilities      Assets     Liabilities   
ICT – Carrier                                    166 342        65 063     241 123         138 904   
ICT – Networks                                    96 214        73 743     100 907          84 286   
ICT – Enterprise                                  75 309        73 397      78 744          69 832   
E&I – Industry                                    70 745        17 717      82 123          24 487   
E&I – Energy                                      85 453        20 244     110 490          45 496   
Sub-total operating
 divisions                                       494 063       250 164     613 387         363 005   
Other                                            164 697       208 272     386 243         401 821   
Adjustments                                       87 381           123   (122 425)       (125 689)   
Total                                            746 141       458 559     877 205         639 137   

NEW SEGMENTS                                                      30 June 2014                   
                                                External        Inter-       Total       Operating   
(R'000)                                          revenue       segment     revenue   profit/(loss)   
Carriers                                         370 644         1 012     371 656          46 123   
Enterprise                                       347 978         4 191     352 169         (1 602)   
Intelligent                                                                                          
Technologies                                     130 421         4 317     134 738           3 481   
Electrical                                                                                           
Manufacturers                                    193 194         1 259     194 453          19 188   
Sub-total operating
 divisions                                     1 042 237        10 779   1 053 016          67 190   
Other                                                948             –         948        (51 145)   
Adjustments                                            –      (10 779)    (10 779)           1 549   
Total                                          1 043 185             –   1 043 185          17 594   

SEGMENTAL FINANCIAL POSITION                                             
(R'000)                                                                     Assets     Liabilities   
Carriers                                                                   149 833          53 322   
Enterprise                                                                 149 208          96 826   
Intelligent Technologies                                                   109 569          79 772   
Electrical Manufacturers                                                    85 453          20 244   
Sub-total operating divisions                                              494 063         250 164   
Other                                                                      164 697         208 272   
Adjustments                                                                 87 381             123   
Total                                                                      746 141         458 559   

Directors and secretary
Dr ATM Mokgokong (Chairman)
MJ Madungandaba (Deputy Chairman)
JC Farrant*, Sir JA Sherry*, M Malebye*, H Moolla*
D Dempers, S Bawa (Non-executives), AMF da Silva (CEO)
WA Prinsloo (CFO) (Executives), S Lutchan (Company Secretary)
*Independent

Registered office
Jasco Park, c/o 2nd Street and Alexandra Avenue, Midrand, 1685

Transfer secretaries
Link Market Services SA (Pty) Limited
13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001

Sponsor
Grindrod Bank Limited
Fourth Floor, Grindrod Tower, 8A Protea Place, Sandton, 2146

More information is available at: www.jasco.co.za
Date: 17/09/2014 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story