9235 Jasco AR front:final

Transcription

ANNUAL REPORT 2009
Contents
Group highlights
Six-year financial review
At a glance
Board of directors and company secretary
Chairperson’s report
Chief executive officer’s report
Operational review
Sustainability review
Annual financial statements
Shareholders’ diary
Notice of annual general meeting
Corporate partners
Form of proxy
Notes to proxy
2
3
4
6
8
12
16
21
35
81
81
84
85
86
Jasco’s portfolio of businesses
designs, assembles and/or
manufactures and distributes
electronic and electrical products
and solutions.
m
Jasco Electronics Holdings Limited is listed in the Electronic & Electrical Equipment
sector of the JSE Limited.
It has a diversified portfolio of four divisions operating in the growth sectors of
Telecommunications, Security, Domestic Products and Electrical.
Jasco is a black owned group, with 60% of its shares owned by black shareholders
– a strong competitive advantage in its target market sectors.
JASCO ANNUAL REPORT 2009 1
Group highlights
s
s
Continued growth in revenue
and earnings
Strong cash generation
from operations
s
Converted from a black controlled
to a black owned entity
2 JASCO ANNUAL REPORT 2009
Six-year financial review
2009*
R000
2008
R000
2007
R000
2006
R000
2005
R000
Turnover
Net interest (paid)/received
Share of income/(loss) from
joint venture and associate
760 203
(12 290)
513 572
(938)
400 694
40
332 169
(792)
252 574
(3 267)
253 189
(6 133)
6 303
1 136
126
–
–
(2 251)
Profit/(loss) before taxation
Taxation
59 926
(22 423)
49 686
(16 201)
39 754
(13 570)
27 314
(9 177)
16 936
(5 648)
(2 108)
3 327
Profit for the year
Headline earnings adjustments
37 503
485
33 485
17
26 184
–
18 137
1 046
11 288
–
1 219
22 144
Headline earnings for the year
37 988
33 502
26 184
19 183
11 288
23 363
Cash generated from operations
94 202
41 968
47 246
23 373
26 418
24 349
258 008
531 992
103 471
249,4
151 178
276 816
68 404
221,0
125 605
217 067
68 805
182,6
106 944
174 163
69 312
154,3
92 871
136 823
69 214
134,2
66 458
130 651
69 431
95,7
2
3
51,0
5,9
–
54,0
–
–
–
35,5
–
6,0
27
1,0
4
14,5
36,2
22,1
49,0
20,8
38,1
17,0
26,2
12,2
16,3
(3,1)
(3,0)
5
33,7
36,7
81 719
37,0
49,0
56 125
26,5
38,1
44 125
18,3
27,7
33 441
11,4
16,3
24 505
(2,1)
33,6
13 222
6
7,0
12,1
12,1
10,4
8,3
0,1
518
1 468
1 027
498
1 031
556
460
871
472
449
740
388
435
581
315
437
579
299
Note
2004**
R000
Ratios and statistics
Balance sheet
Shareholders’ equity
Total assets
Shares in issue (000)
Net asset value per share (cents)
Liquidity
Debt:equity (%)
Interest cover (times)
Profitability
Return on equity (%)
Earnings/(loss) per share (cents)†
Diluted earnings/(loss)
per share (cents)††
Headline earnings per share (cents)
EBITDA
Return on assets managed
(ROAM) (%)
Human resources
Number of employees
Turnover per employee
Total assets per employee
1
Note:
1. Shares in issue – the weighted average number of shares in issue during each financial year. The 2005, 2006, 2007, 2008 and 2009 figures are net of
treasury shares arising from the consolidation of the Jasco Employee Share Incentive Trust.
2. Debt:equity (%) – interest bearing debt, net of cash, expressed as a percentage of total equity.
3. Interest cover (times) – operating profit before interest divided by net interest paid.
4. Return on equity (%) – earnings per share, based on weighted average number of shares in issue during the year, as a percentage of net asset value
per share.
5. EBITDA – earnings before interest, tax, depreciation and amortisation.
6. Return on assets managed (ROAM) (%) – profit for the year divided by the total assets at the end of the financial year.
† 2009 Earnings per share based on higher number of shares in issue.
†† Refer to note 6.1 on page 54.
* Result for 16 months.
** In terms of South African Statements of Generally Accepted Accounting Practice (SA GAAP).
At a glance
DIVISIONAL CONTRIBUTION TO
OPERATING PROFIT
59%
TELECOMMUNICATIONS
Webb Industries
WebbLeBLANC
TeleSciences
Webb Industries offers complete telecommunications infrastructure capabilities
to the market, which includes a full
range of antennas, pre-packed fullykitted solutions, technical consultancy
and product support services. Webb
Industries is also a leading provider of
a wide range of products used by
the private mobile radio (PMR) market
and owns a number of communication
hi-sites throughout Gauteng.
WebbLeBLANC Communications
undertakes the supply and installation
of self-supporting tubular and angular
towers, guyed lattice masts and both
parallel and tapered self-supporting
lattice towers to the communications
industries. Masts and towers can be
designed to suit individual customer
requirements, from heights as low as
six metres up to 120 metres.
TeleSciences incorporates RapidCloud,
Tasslelane Technologies and Tasslelane
Services. These businesses specialise
in the supply and full integration of
telecommunications equipment to
network operators, including fixed line
and wireless technologies throughout
Africa. TeleSciences’ resources,
extensive deployment experience
in both fixed and wireless networks
and reputable partners ensure that
the division is well positioned to
execute complex projects in the
communications/ICT environment.
Divisional CEO
Paul Richards
webb@webb.co.za
+27(11) 444 2299
CEO
Francois van Zyl
f.vanzyl@leblancgroup.com
+27(11) 814 1404
Divisional CEO
Lloyd Watt
callcentre@telesciences.co.za
+27(11) 848 3900
OPERATING PROFIT
25%
SECURITY
Multivid
Scafell
Integrator of electronic security solutions. Multivid offers design,
installation and maintenance services that include surveillance,
CCTV and access control features for blue-chip customers.
A designer and manufacturer of custom-made security-related
products. These products are supplemented by products
offered as agents for leading international suppliers.
Divisional CEO
Alan Howie
info@multivid.co.za
+27(11) 894 7127
Divisional CEO
Alan Howie
info@multivid.co.za
+27(11) 894 7127
OPERATING PROFIT
14%
DOMESTIC PRODUCTS
Special Cables
T-Components
Supplier of harnesses, components and sub-assemblies to
the domestic products industry, including large and small
domestic appliances, automotive and pool products.
Specialises in steel pressing and electrical plug manufacturing.
These products are used as components in various domestic
appliances and automotive products.
Divisional CEO
Dave Macdonald
macdonald@jasco.co.za
+27(31) 579 4701
Divisional CEO
Dave Macdonald
macdonald@jasco.co.za
+27(31) 579 4701
OPERATING PROFIT
ELECTRICAL
2%
M-TEC
M-TEC manufactures and supplies power cable, fibre optic cable, aluminium overhead conductors, bare copper wire, strip products
and non-ferrous products. Jasco’s fellow shareholder in this business is Taihan Electric Wire Co. Limited, a Korean fibre optic cable
manufacturer and one of the world’s leading power and telecommunications cable manufacturers.
CEO
June Hah
info@mtec.co.za
+27(16) 450 8200
*Divisional contributions to operating profits are as per the Segmental report.
Board of directors and company secretary
Dr ATM (Anna) Mokgokong (52) BSc, MB ChB
Chairperson (non-executive) ^
Dr Anna is the co-founder and executive chairperson of Community Investment Holdings
(Pty) Limited (CIH). Apart from chairing the Jasco board, Dr Anna serves in a nonexecutive capacity on the boards of several companies. Dr Anna is the President of the
International Women’s Forum Business Sciences, Chairperson of the Small Enterprise
Development Agency and also serves as President of the South African Women Entrepreneur’s Network. She served as Deputy Chairperson of the Independent Commission for
the Remuneration of Public Office Bearers appointed by former president Thabo Mbeki
and was the Chairperson of the Council of UNISA during 2003 and 2004. In 2008 she
received the Chancellor’s Medal from the University of Pretoria for her outstanding
entrepreneurship and for her contribution to society. During April 2009 she was awarded
the Degree of Doctor of Commerce (Honoris Causa) by UNISA in recognition of her
entrepreneurial spirit and demonstrated leadership capabilities within the corporate
sector and corporate citizenship.
MJ (Joe) Madungandaba (51) CPA(SA)
Deputy chairperson (non-executive)
Joe is one of South Africa’s leading black entrepreneurs. He co-founded CIH. He serves
on the boards or audit committees of several unlisted companies. Joe also advised the
government on RDP. He studied towards a BCom at the University of the North/Witwatersrand, obtained a Certificate in Taxation (cum laude) from UNISA, and completed
the Management Development Programme at Cranfield. Joe is a past winner of the
BMF/Pretoria News Manager of the Year Award. Joe was appointed to the board of Jasco
as an executive director in July 2003 and became the non-executive deputy chairperson
in July 2006.
MH (Martin) Lotz (48) CA(SA)
Chief executive officer (CEO) (executive)
Martin qualified as a Chartered Accountant in 1987. He spent nine years with BoE Bank
in various managerial positions, ending his time there as a senior manager. Martin joined
Jasco as financial director in July 2000 and was promoted to chief operating officer in
November 2004 and to CEO in July 2006. Martin is a member of the Institute of Directors.
WA (Warren) Prinsloo (37) CA(SA)
Financial director (FD) (executive)
Warren qualified as a Chartered Accountant in 1998. He spent six years with the Massmart
group in various senior financial positions before becoming Jasco’s financial director in
August 2006. Warren is a member of the Institute of Directors.
O (Olga) Seiphemo (35)
Marketing director (executive)
Olga spent 14 years within the Standard Bank group where she held various sales and
marketing positions. Olga was appointed as marketing director in December 2006.
PS (Patrick) Chapwanya (37) CA(SA)
Director (non-executive) º*Δ
Patrick is the general manager of Indlulamthi Consulting Services. Patrick served as the
chief financial officer of CIH until March 2005. He qualified as a Chartered Accountant
in 2002. His previous experience includes four years with the Powertech group in various
auditing and financial management positions. Patrick joined Jasco as a non-executive
director in October 2003.
FE (Ed) Emary (68) BA LLB
Director (non-executive) ^º*
Ed was the legal advisor and company secretary of a large multinational telecommunications group before becoming one of Jasco’s founders in 1976. Ed served as
group managing director from 1982 to 1990 and thereafter as deputy chairperson until
July 2003. He is the chairperson of the remuneration committee.
JC (John) Farrant (69) CA(SA)
Director (non-executive) ^º*
John is a former partner of Ernst & Young and was in charge of Jasco’s audit until his
retirement at the end of 1997. John was appointed to the Jasco board in September 1997
and also serves as chairperson of the audit committee.
Prof JM (Joel) Matsipa (63) MB ChB, MMED
Director (non-executive) *
Joel joined the Jasco board in 2001 as a non-executive director. He holds an MB ChB
from the University of Natal and an MMED from Medunsa. He qualified as an anaesthetist
in 1991.
Dr J (Jon) Rothbart (35) BVSc, MBA
Director (non-executive) ^
Dr Rothbart is the chief operating officer of AfroCentric Investment Corporation Limited
(AfroCentric). Prior to this, he worked at McKinsey & Company. He served clients in the
financial services, energy, parastatal and resource industries. He sits on the boards of
AfroCentric’s portfolio companies. He has an MBA from the Rotterdam School of
Management (Netherlands) and a BVSc from the University of Pretoria.
Chevalier JA (John) Sherry (71) Knight of Malta
Director (non-executive) *
John was one of the founders of Jasco in 1976 and served as chairperson from inception
until he stepped down in August 1998. In recognition of his humanitarian deeds,
John was made a Knight of Malta during 1998 and was granted the title of Chevalier.
MN (Noriah) Sepuru (37) ACIBM
Company secretary
Noriah was appointed as company secretary in February 2009. She is a member of the
Institute of Chartered Company Secretaries Association and an associate member of
the Chartered Institute of Business Management. Noriah spent four years at Barloworld
in various company secretarial positions, her last position being that of assistant
company secretary.
^ Remuneration committee
º Audit committee
* Independent
Δ Zimbabwean
Chairperson’s report
The global economic context will
remain a key influencer for South
African business, and Jasco is
no exception. In managing its
response to the market context,
the group will continue to focus
on ensuring it is structured to
deal with variable conditions
and to take advantage of new
opportunities as they arise.
n
Introduction
While Jasco has delivered good results over the last few years, the group, along with
businesses across the world, has recently faced increasingly challenging operating
conditions. It is, however, in recessionary periods that a business is truly able to assess
the long term validity of its strategy. Against this backdrop, Jasco therefore delivered
solid results over the period. Significantly, the group has been successful in following
its diversification strategy and is structured to negotiate current turbulent global
economic conditions and to continue supplying market-leading products and services
into South African and African companies and organisations.
Macro context
The global economic downturn took root in the period under
review, with economies across the world attempting in varying
ways to create buffers against significantly reduced commercial
activity, including dramatically tightened access to credit.
The “green shoots” narrative predicting a return to economic
stability is currently prevalent across the global economy, but
there is still no real clarity as to how long the global slump
will continue, or as to the dynamics that might inform a return
to normalised activity. There are increasingly positive signs of
improvement in global stock markets, but the timing and
extent of a recovery remains uncertain.
The global economic context will be a key influencer for South
African business in the year ahead, and Jasco is no exception.
In managing its response to the market context as effectively
as possible, the group will continue to focus on ensuring it
is structured to deal with variable conditions and to take
advantage of new opportunities as they arise.
Local context
South Africa has transitioned to a new government, which has
made a largely positive start to its tenure. The new government’s
focus on significantly improving service delivery levels is
welcomed, and bodes well for the sustainable growth of the
local economy.
Significantly, the country’s sovereign credit rating was recently
upgraded by Moody’s Investor Service in its latest credit review.
The upgrade bears testament to the fact that while government faces clear and challenging socio-economic delivery
imperatives, it has nonetheless been largely successful in
communicating policy stability and continuity to the market
through a period of much political change.
While South Africa has been negatively impacted by the global
downturn, the country’s existing infrastructure development
programme has been highly positive, driving much-needed
economic stimulus across key sectors. Most notable has been
ongoing activity in the construction sector in the run-up to the
2010 Soccer World Cup. Government spend also remains
strong in terms of ICT infrastructure development.
South Africa’s current infrastructure development drive mirrors
the growth and development occurring across Africa. The
period under review saw continued wireless infrastructure
expenditure by telecommunications operators across the
continent and strong growth in the electronic security environment in Jasco’s corporate and parastatal customer bases.
Although the timing remains uncertain, there is significant
spend planned in both South Africa and the rest of Africa, as
can be seen from the tables below. However, Jasco will follow
a cautious approach in terms of entering the rest of Africa.
SA GOVERNMENT ICT SPEND
Item
Spend
Department of Home Affairs
R2 billion (over five years)
Global Deployment of VOIP: Department of Foreign Affairs
R112 million
IFMS Project: Department of Public Service and Administration (national
and provincial financial management, HR management, supply chain
management, asset management and business intelligence)
R4 billion
Department of Public Service and Administration: HR business process
management system
R800 million
Department of Education: Learner Tracking System
R136 million (provincial)
R30 million (national)
Cape Town local wireless broadband project
R275 million (phase one, over five years)
Source: IT web
Projected spend
Eskom plans to spend R235 billion over the next five years on its capital expansion programme, while Transnet is planning to
spend R80,5 billion on its infrastructure investment programme, with around R20 billion to be spent by around 2010.
However, delays might be seen in the roll out of the spend.
Sources: I-Africa, RailwaysAfrica; Business Report
CHAIRPERSON’S REPORT CONTINUED
Africa’s ongoing telecommunications development
• 3G mobile services are currently available in Kenya, Tanzania, Uganda and Rwanda, with Ethiopia preparing to launch
• Mobile TV has launched in Kenya and Uganda
• At least six competing WiMax wireless broadband networks are being rolled out in Kenya
• Privatised Gabon Telecom is the country’s fastest growing mobile network operator – Gabon Telecom expanded its fixed
network by 30% within one year
• The Rwandan government bought back the national telecommunications operator for US$12 million – and sold it for
US$100 million three months later
• DRC’s mobile operators claim they generate 30% of total state tax income
• A number of countries in the region have taken a world-leading role by abolishing international mobile roaming surcharges
• More than 10% of Kenya’s GDP now passes through the M-Pesa mobile payment and banking service. This service already
has more cellphone users than bank account holders in the country
Source: Africa Telecommunications research, Budde.com
Corporate governance
Jasco focuses on ensuring it operates ethically and according
to all relevant guidelines and regulations. As is outlined in
more detail in the Corporate Governance review on page 25,
the group is in the process of considering the recommendations made by King III and the implications of the new
Companies Act. An implementation plan is being developed
to ensure compliance during the new financial year end.
division, Telecommunications. During the last four months,
Telecommunications continued on its growth path, while
M-TEC showed a slow improvement. The Security division felt
the impact of the tougher economic environment and lack of
credit, whilst the Domestic Products division continued to trade
in a constricted consumer spend environment. Refer to the
CEO’s report for more information.
Diversity and transformation
Jasco continues to focus strongly on its transformation. As
was clearly articulated in previous reports, the group places
particular emphasis on leveraging the skills of female
employees, who have the ability to positively augment the
group’s traditional skill sets.
Together with the finalisation of the 2003 BEE transaction, the
acquisition of M-TEC in 2008 changed Jasco into a black owned
entity, creating significantly improved access for the group to
South African and African infrastructure spend and supporting the group’s commitment to the national transformation
agenda. This commitment is also reinforced by the group’s
relationship with BEE shareholders CIH and AfroCentric, key
partners to the group moving forward.
During the last few years, Jasco has operated according to a
clear strategy of diversity. According to this strategy, diversity
of structure and people is key to the organisation’s ability to
achieve sustainable growth over the long term. Today, diversity
is increasingly a feature of the group’s intellectual capital,
demographic profile and operational structure. Illustrating this
progression in the period under review was the appointment of
talented black employees in key positions, including in the
positions of HR director and company secretary.
Furthermore, Jasco continued to build on one of its core
strengths – its organisational culture. The group’s employees
and divisions are self-motivated and operate in an environment
that values and rewards strong performance. Jasco’s talent
management and cultural transformation strategies are central
to the group’s ability to harness the strength of its diversity
and play important roles in embedding a dynamic culture
within the group – one where the creative integration of
business units supports strong, productive relationships
with clients, industry partners and other stakeholders.
On a structural level, the group’s diversification allowed Jasco
to negotiate the impact of market pressure on the Domestic
Products division and M-TEC – both of which were buffered
by strong growth in the Security division for the first
12 months and the ongoing solid performance of our largest
Appreciation
I would like to take this opportunity to thank everyone within
the group for their ongoing efforts and commitment to the
Jasco business. Jasco continues to deliver on its strategy and
remains very well placed for sustainable growth, even within
the context of challenging global economic conditions. This
position pays testament not only to the validity of the group’s
long term strategy, but also to the passion and commitment
of our people. Thank you to everyone at the group, at every level,
for your contribution. Specific thanks must go to our CEO,
Martin Lotz, and his team, for their strong leadership. Lastly,
thank you to the members of the board for their support in
turning the group’s thinking into a marketplace reality.
DR ATM MOKGOKONG
Non-executive chairperson
9 September 2009
Chief executive officer’s report
Jasco is sharpening its focus on
servicing and influencing the full
breadth of the communications
supply chain through our
existing operations and carefully
selected niche acquisitions.
This allows us to stay flexible
as the market changes
and cross-sell products and
services, opening up growth
opportunities within the existing
group structure.
t
Introduction
Jasco’s strategy to grow organically on the foundation of a diversified structure enabled it
to negotiate a very variable economic climate during the 16-month period under review.
Results overview
Revenue for the 16 months ended 30 June 2009 increased to
R760 million (12 months to February 2009: R603 million).
Operating profit as per the segmental report increased to
R72 million (February 2009: R62 million). Cash generated from
operations amounted to R8 million for the four months from
February to 30 June 2009 and R94 million for the 16 months
to 30 June 2009.
This result was due to several key market factors that impacted
on Jasco’s performance in the period under review. Most
important were the dramatic slowdown in the cable market,
coinciding with a sharp drop in commodity prices. The Domestic
Products division suffered from a slowdown in consumer
spend, brought about by high fuel prices, high inflation and
high interest rates during the first part of the period.
As reported for the 12-month period ended 28 February 2009
– our second interim period due to our change in year end –
Jasco’s historic businesses continued to show solid growth
at both revenue and operating profit level. However, the
trading environment deteriorated dramatically from March
2009 onwards. Even against the fact that Jasco’s results have
always been seasonal (with the quarter from March to May
traditionally being weakest due to a number of public holidays
that impact negatively on operations), the results for the four
months to 30 June 2009 were disappointing.
Although our Telecommunications division remained resilient,
our Security division was suddenly and severely impacted by the
postponement or cancellation of major projects. This followed
the global deteriorating business environment taking real root
in the South African economy. As reported previously, this
division aims to break even on recurring and annuity business,
while projects increase profits. Our Domestic Products
division’s fortunes were also negatively impacted during the
four-month period due to prolonged strike action at certain
major customers. Pleasingly, the Electrical division started to
show a slow recovery since February.
Strategy review
Jasco implemented a focused strategy five years ago to recalibrate the group after poor results. This refocusing was
successful not only due to our ability to achieve structural
diversity and pursue prudent strategic acquisitions, but also
based on Jasco’s positive approach to its own transformation.
The group’s focus on putting in place a diversified structure,
in every sense of the word, translated into strong BEE credentials which have been central to opening up new markets
and ensuring that Jasco is able to successfully participate in
the infrastructure development drives occurring across South
Africa and the rest of Africa.
To ensure sustained growth in an ever-changing environment,
over the years, Jasco continually added to its product offering,
where necessary starting new operations or acquiring
businesses. For example, in the realm of Telecommunications,
Jasco traditionally only offered products in the professional
mobile radio (PMR) arena, adding GSM products to its portfolio
around 1999. To further build its offering from wireless only
into fixed line, the group acquired TeleSciences and Tasslelane
in 2001 and 2003 respectively.
Two years ago, Jasco acquired RapidCloud, adding broadband
wireless products and technical expertise to the group portfolio.
Where in the past Jasco often only sold products to clients, a
shifting market context has recently seen a rising demand for
value-added services (including logistics, installation and the
maintenance of products into networks). To accommodate
these needs, Jasco started a new business, Tasslelane Services,
in March 2007, effectively expanding its service offering to
operators in the wireless and fixed line arena.
This strategy has enabled Jasco to grow even when one market
was slowing down. Consequently, over the last four years
Jasco has grown revenues at a compounded annual growth
rate of 25%.
Ensuring a relevant strategy
During August to October 2008, a comprehensive strategic
planning process was undertaken. This strategy was approved
by the board at the end of October 2008. Moving forward,
Jasco is sharpening its focus on servicing and influencing the
full breadth of the communications supply chain. This allows
us to stay flexible in terms of evolving our service offering as
the market context changes and to cross-sell products and
services to existing and new clients, opening up significant
growth opportunities within the existing group structure.
While a diverse set of businesses operates under the Jasco
umbrella, the thread tying the group’s divisions together is their
location within the field of electronic and electrical products and
solutions. Jasco therefore assesses acquisition opportunities
with respect to their fit with this existing group focus, and,
crucially, their ability to open up new sales and relationship
opportunities for the group’s existing divisions and businesses.
During the 16 months, Jasco also successfully concluded the
acquisition of 51% of the ordinary and preference shares in
M-TEC, a major cable manufacturer, for R214,1 million. Through
this acquisition, together with the finalisation of the 2003 BEE
transaction, the group has formally become a black owned
entity, as well as expanded its presence in the transport component of a typical communications network, increased the
diversified nature of its portfolio and enabled access to the
infrastructure side of the electricity and power sectors.
Although the timing of the M-TEC acquisition was unfortunate
as it was made just before the global financial crisis hit, it
remains a very good strategic fit with Jasco. The M-TEC
acquisition was a strategic long term investment and we are
confident it will contribute strongly to Jasco over the long term.
Delivery on Strategy
Entry to GSM
market
(wireless)
Acquisition of
TeleSciences
(fixed line)
Acquisition
of Tasslelane
(fixed line)
Foundation of
WebbLeBLANC
JV (masts and
towers)
Acquisition of
T-Components
(domestic products)
1997
2001
2003
2005
2006
Acquisition of
RapidCloud
(broadband
wireless)
Tasslelane
services start-up
(across the
access network)
2007
Acquisition
of RCW
(wireless)
Acquisition of
Maringo
(converged
ICT)
Acquisition of
34% of M-TEC
(significant cable
manufacturer)
2008
2009
CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED
Jasco’s positioning in the communications supply chain
Transport
network
Supplier to
operators
• M-TEC
• Webb
Access
network
Applications &
customer care
• Webb; RCW
• TeleSciences
Own
• Webb
(Hi-sites)
Service
provision
• Maringo
Value added
services
Content
• TeleSciences
• Multivid
• Maringo
In addition, Jasco made two small bolt-on acquisitions in the
Telecommunications division – that of Radio Communications
Warehouse (RCW) and Maringo (subsequent to year end).
• Maringo
Devices
CRM
• TeleSciences
• Multivid
• Maringo
• Maringo
the 2010 Soccer World Cup, but will extend for several years
beyond 2010.
During November 2008, we acquired the business operations
of RCW for R3 million, which represents the net book value of
the stock and fixed assets. RCW is a small business in Cape
Town supplying components and products to the Private Mobile
Radio industry that complement the traditional product range
offered by Webb Industries in this market sector.
The schematic on page 15 shows the impact continued infrastructure spend will have on Jasco’s diverse business portfolio.
The infrastructure sector has been divided into telecommunications, power, private and public spend and the rest of Africa.
Consumer expenditure directly influences only a small portion
of our business, namely our Domestic Products division,
currently 14% of our business.
The acquisition post year end of a 30% stake in the integrated
communications service provider, Maringo, for an initial consideration of R4 million illustrates another progression in our
strategy. Providing converged information, communications and
technology services – such as converged applications, access
solutions and managed network and hosted services – Maringo
creates a presence for Jasco in the lucrative converged communications services market. The Maringo business offering
also fits neatly with Jasco’s existing presence across the
communications supply chain and has the potential to expand
the provision of Jasco’s products and services with new and
existing clients.
As is evident, expenditure by the telecommunications industry
will benefit both our Telecommunications and Electrical
divisions. Expenditure by the power sector of the economy,
such as the increase in the national capacity and grid, will
benefit the Electrical division and to a lesser extent the Security
division. Expenditure by the private and public sectors on
buildings, prisons and ports will largely benefit the Security
division, while the Telecommunications and Electrical divisions
will benefit from infrastructure expenditure in the rest of
Africa. Jasco is well placed to provide products and services
(see table on page 15 and COO’s report for more detail) into
these programmes.
Growing into new markets
As outlined in our Chairperson’s report, infrastructure development in South Africa and across the continent will play an
important role in the group’s approach to growth. While the
global economy is experiencing a significant slowdown in
consumer spend, infrastructure development continues largely
according to plan in South Africa and the rest of Africa.
Major GSM operators such as MTN, Vodacom and Zain, are
planning further expansion of their network coverage to address
low penetration rates on the African continent, as well as the
increasing availability of broadband wireless solutions such
as WiMax and WiFi, which can normally be employed on the
same infrastructure. In addition, the launch of new submarine
cable systems is likely to further stimulate telecommunications activity across Africa over the long term.
The group is well positioned to take advantage of South Africa’s
infrastructure development programme. Within this context,
it is important to note that South Africa’s infrastructure development programme is not only located within the context of
Talent management and growth
Jasco has achieved much of its recent success through the
ability of its employees. The group’s self-motivated, entrepreneurial culture plays a key role in supporting the evolution
of Jasco’s growth strategy. We continue, therefore, to place
significant focus on ensuring that the group’s talent management and transformation strategies dovetail to create new
opportunities to cross-sell Jasco’s products and services in
existing areas.
Prospects
Jasco has steadily put in place a business structure that
supports successful operations in different markets and allows
the group to manage variable market conditions. Looking
forward, the group’s prospects, as with those of many other
companies, will be significantly influenced by macro- economic
conditions and the manner in which the local economy copes
with a very fluid global context. Given the validity of our strategy
and the strength of our core structures, one can expect the
group to negotiate the current bear market and to deliver
strong results in more favourable conditions.
Medium to long term outlook
Infrastructure spend
Telecoms
Power
Private
Public
Rest of Africa
Consumer
spend
Telecommunications
Continued wireless activity in SA and rest of Africa will compensate for lack of spending in fixed line
Security
Short term consolidation, but multiple opportunities in rental and corporate markets
Domestic Products
Declining interest and inflation rates will gradually have a positive impact
Electrical
Right-sized to benefit from future spend in telecommunications and power markets
Sector
Products provided
Fibre cables, copper telecommunication cables, RF cables, towers and ancillary products to erect a
Telecommunications wireless base station, WiFi and WiMax solutions, installation and maintenance services, integrated
communication services
Security
CCTV, access control, perimeter protection, design, installation and maintenance services
Domestic Products
Plugs, wire harnesses, plastic moulded and pressed steel components
Electrical
Aluminium overhead conductors (including OPGW), contact wire, power cable and copper strip products
Appreciation
The Jasco team put in a great deal of effort over the period under review. The group continues to deliver on its strategy and our
success in doing positive business in challenging times is in large part due to the skills and commitment of our people. Sincere
thanks must go to everyone working within the group for their achievements. Thanks also to the board for their ongoing support
and talent in guiding the company as it progresses.
MH LOTZ
Chief executive officer
9 September 2009
Operational review
bTERTIUS VERMEULEN,
Group COO
bLLOYD WATT, Divisional CEO
bPAUL RICHARDS,
TeleSciences, incorporating
Tasslelane Technologies,
Tasslelane Services and
RapidCloud
Divisional CEO
Webb Industries
bALAN HOWIE,
Divisional CEO
Security
bDAVE MACDONALD,
Divisional CEO
Domestic Products
bFRANCOIS VAN ZYL,
CEO
WebbLeBLANC
bJUNE HAH,
CEO
M-TEC
The 16-month period under review was largely successful. While the onset of the recession during
the latter part of the period made its mark on some of the divisions, Jasco’s strategy of diversification
once again proved its mettle.
The downturn was first felt within the durable goods industry, a
trend which continued to impact on the Domestic Products
division during the second half of this period. The Security
division had a strong period to February, compensating largely
for Domestic Products on turnover and profit. Telecommunications increased its market share despite a very challenging
environment. However, margins remain under pressure
within the context of an increasingly competitive market.
Over the 16-month period under review, revenue generated
by the operating divisions amounted to R760 million (February
2008: R516 million). Operating profit from the operating
divisions only for the same period (including Jasco’s share
of the after tax profit from the WebbLeBLANC joint venture
and associate, M-TEC) was R100 million (February 2008:
R66 million).
In an effort to disclose like-for-like numbers, the group has
also prepared unaudited summarised results for the 12-month
periods ending 30 June 2008 and 2009. This comparison shows
that revenue for the 12 months to June 2009 of R587 million
grew by 8,5% from R541 million, whilst operating profit
for the same period declined by 11,3% from R80 million
to R71 million. This decline confirms the tougher trading
conditions experienced in the last four months since
March 2009.
Telecommunications
Introduction
Telecommunications' portfolio of products, solutions and
service offerings delivers full, integrated turnkey solutions to
the broader communications sector. The division’s expertise
and in-house capability, combined with its relationships with
global strategic suppliers and partners, underpin the delivery
of quality products and services to a market segment increasingly demanding converged fixed line and mobile
services, reinforced by strong customer support.
TeleSciences
During the period, Jasco amalgamated four of its business
units under one umbrella. TeleSciences now incorporates
RapidCloud, Tasslelane Technologies and Tasslelane Services.
Combined, the four businesses bring 35 years’ experience to
Africa’s telecommunications industry. The move allows the
group to offer a wider range of services under one roof and to
deliver a unified offering to customers.
The strengthened and enlarged business will continue to
specialise in the supply and full integration of telecommunications equipment to network operators, including fixed line
and wireless technologies throughout Africa. TeleSciences’
resources, extensive deployment experience in both fixed
and wireless networks and reputable partners (original
equipment manufacturers) ensure that the division is well
positioned to execute complex projects in the communications/
ICT environment.
Webb Industries
Webb Industries offers complete telecommunications infrastructure capabilities to the market, which include:
• A full range of antennas
• Pre-packed, fully-kitted solutions
• Technical consultancy and product support services
• Private mobile radio (PMR) products and services
During the 16 months under review, the Webb Industries
division acquired the business of Radio Communications
Warehouse (Pty) Limited (RCW). RCW supplies components
and products to the PMR industry that complement and expand
the traditional product range offered by Webb Industries.
WebbLeBLANC
Our 50% joint venture with LeBlanc International continued its
solid performance during the period under review. Our after
tax profit share from this venture on a comparable 12-month
basis increased to R3 million (June 2008: R2 million).
WebbLeBLANC specialises in the manufacture and, where
required, the installation and erection of a range of steel masts
and towers. Our relationship with LeBlanc International
allows us access to the latest designs and its international
customer base.
OPERATIONAL REVIEW CONTINUED
Telecommunications continued
Period under review
Rm
Revenue
Operating profit
Operating margin
30 June 2009
406
59
14,5%
29 February 2008
282
41
14,7%
30 June 2009
315
43
13,7%
30 June 2008
296
47
15,9%
Statutory 16 months vs 12 months
Like-for-like pro forma 12 months
margin therefore declined from a very high 15,9% in June
2008 to 13,7% in June 2009.
Telecommunications represented 53% of Jasco’s group
revenue, which is in line with the previous year and the
group’s strategic spread.
On a 12-month comparison, revenue grew by 6,5% to
R315 million (June 2008: R296 million). Operating profit
declined from R47 million to R43 million.
The trend to use wireless technologies in communications
networks continues, with wireless revenue now accounting for
almost 79% of Telecommunications revenue. This compares
to 65% for the 12-month period ended 28 February 2008.
Margins remained under pressure as most operators cut
budgets due to the economic slowdown. More overseas
players are also entering the local and African markets,
increasing competition in what is widely considered to be the
last undeveloped continent for telecommunications. Coupled
with this, a large project in Mozambique was temporarily put
on hold and slower than expected network rollout in other
parts of Africa further impacted the operating margin. The
The expansion into Africa by telecommunications operators
and the need for wireless solutions such as WiMax and WiFi
stood us in good stead, partly compensating for the curtailment of expenditure by fixed-line network operators. The
group is also starting to see benefits from the local rollout of
fibre networks. The cheaper bandwidth to be provided
through the Seacom cable should further enhance telecommunications usage and therefore increase the need for
further infrastructure.
Security
Introduction
Multivid is regarded as one of the main systems integrators, supplying complete turnkey solutions (including the design, supply,
installation and maintenance of electronic security systems). This includes access control, CCTV and other security systems.
Its national footprint allows it to service customers countrywide. It also operates in the rest of Africa on a selective basis.
Period under review
Rm
Revenue
Operating profit
Operating margin
30 June 2009
211
25
12,1%
29 February 2008
95
8
8,7%
30 June 2009
166
21
12,4%
30 June 2008
117
13
11,2%
After a very strong performance, the effect of the recession
was particularly felt during the last four months when a
number of anticipated projects were postponed indefinitely
and the forward order book, although still strong, was
negatively impacted. While the first half of the period was
therefore characterised by a good performance, the second
half suffered from the slowdown in the economy.
Revenue for the 12 months to June 2009 increased by 42% to
R166 million (June 2008: R117 million) on the back of various
large projects secured in the previous financial year and
executed in the period under review. Operating profit increased
by 57% from R13 million in 2008 to R21 million in 2009, with
the operating margin improving from 11,2% in 2008 to 12,4%
in 2009.
Domestic Products
Introduction
Domestic Products operates primarily in the consumer goods industry under Special Cables and T-Components. Products
consist mainly of sub-assemblies and components for original equipment manufacturers of small and large appliances in the
domestic appliances industry. This division also manufactures and supplies components and products for the automotive
industry. In addition, a third business unit manufactures a saltwater pool chlorinator and accessories for the leisure industry.
Period under review
Rm
Revenue
Operating profit
Operating margin
30 June 2009
143
13
9,4%
29 February 2008
139
16
11,5%
30 June 2009
105
11
10,2%
30 June 2008
127
14
11,0%
In addition to the contracted consumer spending, the local
domestic appliances industry remains under threat from
cheap imports. Within this context, Domestic Products'
strategy of diversifying its product portfolio to include a wider
range of products and customer base, buffered the decline to
some extent.
The first sign of the recession was felt in September 2008 in the
consumer goods industry, with sales of domestic products
significantly down over the following months. This was further
exacerbated during the last four months of the year by a twomonth period of industrial action at key customers.
On a comparable 12-month basis, revenue dropped from
R127 million to R105 million. Although the division was very
prudent in its cost management, the further downturn,
coupled with the industrial action, impacted the operating
margin. However, the current margin of 10,2% (compared to
11,0% in 2008) is admirable under the current economic
conditions. We are confident that the margin will pick up
again in the first half of the new financial year due to better
capacity utilisation.
OPERATIONAL REVIEW CONTINUED
Electrical
Introduction
The Electrical division consists of Jasco’s share in cable manufacturer, M-TEC, acquired effective 1 June 2008. M-TEC operates
in the infrastructure build side of the power and telecommunications sectors in South Africa.
As reported in April this year, this division was severely
impacted by the slowdown in the South African economy,
which resulted in a substantial reduction in the demand for
cable products during the fourth quarter of 2008 and the first
quarter of 2009.
During this period, M-TEC was specifically impacted by three
major factors:
• The delay in the awarding of a Telkom fibre and copper
telecommunications cable contract
• The postponement of the rollout of an Eskom aluminium
overhead conductor programme
• The slowdown in the private building industry – major users
of copper power cable
As M-TEC was awarded a substantial portion of Eskom’s
contract to expand their national grid, this business expanded
capacity for the expected take off. However, the 18-month delay
in this project, as well as the continued delay in the awarding
of a major fibre and copper telecommunications contract by
Telkom, negatively affected the demand for aluminium
conductor, fibre and copper telecommunications products.
The drop in volumes was exacerbated by the dramatic drop in
commodity prices during this period. M-TEC therefore had to
write down approximately R21 million of stock on hand in the
copper power cable and aluminium conductor divisions.
However, during the last four months we have seen an improvement in the trading conditions. A marked increase in fibre
volumes was supported by a slow, but steady, recovery in
volumes in the power cable and aluminium products. The result
of this, coupled with cost reduction programmes implemented
during the period, increased our share of the M-TEC profit
after tax for the 13 months to 30 June 2009 to R1,6 million
from the R0,7 million for the nine months to 28 February 2009.
The Telkom fibre and copper telecommunications tenders
were both awarded during the last four months and M-TEC
was successful in securing a significant portion of both
these tenders. We are also confident that during the next
12 months Eskom will commence with the rollout of infrastructure in line with the five-year supply contract awarded
to M-TEC during 2007. The above bodes well for the fortunes
of this division.
T VERMEULEN
Chief operating officer
9 September 2009
Sustainability review
Message from the CEO
Value added statement
Shareholders’ analysis
Human resources
Transformation
22
23
24
25
29
31
JASCO ANNUAL REPORT ’09 21
Message from the CEO
b Jasco’s ability to negotiate variable
market conditions and to cater for
the constant evolution of the market
is central to the group’s business strategy.
Simply put, sustainability is an essential
part of our strategic approach to business.
The group views sustainability from several interlocking perspectives. On a structural level Jasco has
been careful over recent years to develop a group structure that not only caters for current market
dynamics, but one that also positions the group with respect to its ability to maintain positive growth
as markets across South Africa and the rest of Africa evolve.
Stakeholder engagement is of primary concern to the group. Jasco seeks to ensure that it supports
the communities and societies within which it operates by both developing its employees to their
fullest potential and committing to projects and initiatives that strengthen the fabric of the wider
South African society.
The group has also focused strongly on its own transformation. In terms of ownership, Jasco is now
a black owned entity, which opens up key growth opportunities in South Africa and other African
markets. Jasco’s change in ownership also reflects the steady internal transformation of the group’s
talent base and human resources, and, in addition, the ongoing effort Jasco is putting into ensuring
it nurtures the diverse skills of its people as positively as possible.
A central risk facing many companies, locally and globally, is the inability to cope effectively with
ongoing change. Jasco, as a business operating in a fast-evolving market, is particularly exposed to
this risk. In response, the group seeks to achieve the highest levels of governance possible. We view
good governance in its broadest sense, with our ultimate focus placed on the long term sustainability
of the group, which we believe can best be achieved through the proactive development of our people
and business partners.
Jasco seeks to embed sustainable business practices at every level of the organisation, based on
the understanding that this ability is central to ensuring the group remains competitive and profitable
over the long term, during positive and challenging trading conditions. I believe this review reflects
both our ongoing commitment to this agenda and the many successes we have achieved thus far.
MH LOTZ
Value added statement
for the period ended 30 June 2009
Revenue
Net cost of products and services
Value added
2009 (16 months)
R000
%
2008 (12 months)
R000
%
773 250
519 161
(514 090)
(362 185)
259 160
156 976
Other non-trading expense
(485)
(16)
Net loss on disposal of plant and equipment
(485)
(16)
Total wealth created
258 675
156 960
Distributed as follows:
To employees
Salaries, wages and benefits
163 909
63,4
95 246
60,7
To government
Taxation
22 423
8,7
16 201
10,3
To providers of capital
47 456
18,3
15 439
9,8
Interest on borrowings
25 337
9,8
6 527
4,1
Dividends paid*
22 119
8,5
8 912
5,7
Retained in the group
24 887
9,6
30 074
19,2
9 503
3,7
5 501
3,5
15 384
5,9
24 573
15,7
258 675
100
156 960
100
Depreciation of plant and equipment
Retained profit
Total wealth distribution
*2009 includes two dividend payments.
2009 WEALTH DISTRIBUTION
63,4% to employees
8,7% to government
18,3% to providers of capital
9,6% retained in the group
2008 WEALTH DISTRIBUTION
60,7% to employees
10,3% to government
9,8% to providers of capital
19,2% retained in the group
Shareholders’ analysis
VALUE OF SHARES TRADED VERSUS NUMBER OF SHARES TRADED
NUMBER OF SHAREHOLDERS
31,1% 1 to 1 000
33,5% 1 001 to 5 000
15,0% 5 001 to 10 000
17,1% 10 001 to 100 000
3,3% 100 001 and over
CATEGORY OF SHAREHOLDER
58,8% BEE partners
5,4% Jasco directors
0,2% associates of directors
3,1% Jasco employee share trust
32,5% public
Note: details of the analysis of the shareholding are set out on page 80.
NUMBER OF SHARES
0,3% 1 to 1 000
1,9% 1 001 to 5 000
2,2% 5 001 to 10 000
10,0% 10 001 to 100 000
85,6% 100 001 and over
CLASS OF SHAREHOLDER
87,9% individuals
12,1% financial institutions
and corporates bodies
Introduction
Corporate governance guides the management and operation
of Jasco’s systems and structures. On a broader level, the
group’s approach to governance also seeks to ensure that
Jasco effectively embeds a culture of responsible business
operations across every aspect of its business, with the ultimate
aim of ensuring that the group treats all its stakeholders and
the social and environmental context in which it operates,
with due respect.
Statement of endorsement
The directors fully endorse the recommendations of the King
II Report on Corporate Governance (King II), and have approved
a detailed board charter that outlines Jasco’s adherence and
compliance to this code of corporate practices and conduct.
In summary, the board is committed to the principles of
discipline, transparency, independence, social responsibility
and accountability in all its dealings with stakeholders. In
addition, Jasco is in the process of considering the proposals
made by King III and the implications of the new Companies
Act on its governance structures and processes. An implementation plan is being developed to ensure compliance by the
June 2010 financial year end.
The company secretary has assessed the implications of
the Corporate Laws Amendment Act (CLAA) on Jasco’s
structures and communicated the findings to the board. Where
necessary, action has been taken by the board to ensure
ongoing compliance.
Board of directors
Composition
The board charter outlines a clear division of responsibilities.
The board comprises 11 directors, three executive and eight nonexecutive. Five of the non-executive directors are independent.
Non-executive directors are independent of management
to ensure that no one individual has unfettered powers of
decision-making and authority, ensuring that stakeholder
interests are protected. In line with the recommendations of
King II, and as outlined in the JSE Listings Requirements, the
positions of the chairperson and the CEO are separately held,
with a clear division of duties.
Dr Jon Rothbart, the chief operating officer of AfroCentric
Investment Corporation Limited, was appointed to the board
as a non-executive director on 1 April 2009.
Role and function of the board
In line with good corporate governance practices, the Jasco
board charter defines the board’s mission, roles, duties and
responsibilities and, in particular:
•
•
•
•
•
•
•
•
Directors’ fiduciary responsibilities
Leadership of the board
Strategic direction
Induction of new directors
Board evaluation
Remuneration
Board meetings and procedures
Approving the appointment of an independent
registered auditor
• Dealings in securities
• Terms of reference for the board sub-committees
In terms of the board charter, the directors have a responsibility
to become acquainted with all of their duties and the issues
pertaining to the operations and business of the group.
Directors are entitled to seek independent professional advice
concerning the affairs of the group, at the group’s expense,
should they believe this to be in the best interest of the group.
Strategy
The board is responsible to the shareholders and other
stakeholders for setting the strategic direction of the company.
Progress has been achieved with respect to the strategic
initiatives agreed to in October 2008. Divisional executive
management are periodically given opportunity to present
their business unit’s strategy to the board. The strategic plans
are debated by the executive committee following a review
of each division’s internal strategic plan before being consolidated and presented to the board. The board reviews these
presentations twice per annum.
Delegation of authority
The power and authority to lead, control, manage and conduct
the business of Jasco, including the power and authority to
delegate, is vested with the board to ensure that Jasco remains
a sustainable and viable business. This responsibility is
facilitated by a well-developed governance structure, comprising the two board sub-committees and the executive
boards of directors of the subsidiaries.
Board evaluation and performance
Jasco undertakes an annual board evaluation, as recommended by King II, which includes an evaluation of the board
as a whole, of each board sub-committee, of the chairperson
and every director. This is done through self-assessments
and peer review processes. In addition, the remuneration
committee facilitates the evaluation of executive management.
Directors’ remuneration
Non-executive directors receive a fee for their contribution to
the board and the sub-committees on which they serve. Fees
are determined by the remuneration committee and approved
by the shareholders at the annual general meeting. Nonexecutive directors are also reimbursed for out-of-pocket
expenses incurred on behalf of Jasco.
The remuneration of executive directors is determined by the
remuneration committee. Remuneration is defined according
to the value added by the directors to the Jasco business and
is compared to salary surveys to ensure market relevance.
Further information on directors’ emoluments appears on
pages 75 and 76.
Appointments to the board
Due to the infrequent changes to the board, the remuneration
committee also acts as the nominations committee for the
election of new directors. The appointment of new directors is
approved by the board as a whole.
Retirement and re-election of directors
All directors are appointed in accordance with Jasco’s articles
of association and are subject to retirement by rotation and
re-election by shareholders at least once every three years.
CORPORATE GOVERNANCE CONTINUED
Consequently, Messrs JM Matsipa, FE Emary and PS Chapwanya
retire by rotation and Dr J Rothbart retires as he was appointed
during this period. Being eligible for re-election they all offer
themselves for re-election to the board.
Orientation and development
New directors are taken through an induction programme
designed to enhance their understanding of Jasco’s legislative
framework, its governance processes and the nature and
operations of the business.
The group is also committed to ongoing director development
to assist directors in building on their expertise and developing
and maintaining an understanding of the businesses and
markets in which Jasco operates. In this regard, all directors
are expected to attend a relevant external training course,
with all executive directors and the company secretary
enrolled to attend the four-day JSE ALTx Director’s Induction
Programme offered by the Wits Business School.
Conflicts of interest
The group has adopted a formal code that deals with the
management of potential conflicts of interest to ensure that
candidate and existing directors are free of any conflicts
between the obligations they have to Jasco and their private
interests. The members of the board are required to disclose
any conflicts at the quarterly board meetings. Other than for the
conclusion of the BEE transaction entered into with Community
Investment Holdings (Pty) Limited during 2003 and the
acquisition of M-TEC, there were no other conflicts of interest
reported during the year under review. Dr ATM Mokgokong
and Mr MJ Madungandaba recused themselves from the
special board meeting held on 18 April 2008 to conclude the
2003 transaction, and excused themselves from voting on
the M-TEC acquisition.
Board meetings
The board meets quarterly and on an ad hoc basis, or as is
deemed necessary. In fulfilling their duties to both Jasco and
its stakeholders, the directors aim to act impartially and independently when considering matters of strategy, performance,
allocation of resources and ensuring the highest levels of
conduct. Non-executive directors play a major role in the audit
and remuneration committees, which operate within the
adopted terms of reference for each of these sub-committees.
An agenda and supporting papers are distributed to all directors
prior to each board meeting to allow members sufficient time
to prepare for the meeting. Appropriate explanations and
motivations are provided for items requiring resolution at the
meeting. This ensures that relevant facts and circumstances
are brought to the attention of the directors. In terms of good
governance, the directors may conduct unrestricted inspections
of all the group’s property, information and records.
Board attendance:
17 Mar
2008
Board
18 Apr
2008
Special*
07 May
2008
Board
12/13 Sep
& 29 Oct
2008
Strategy
01 Oct
2008
Board
11 Feb
2009
Budget
& Board
01 Apr
2009
Board
18 Jun
2009
Strategy
ATM Mokgokong
P
E
A
P
A
P
P
P
MJ Madungandaba
P
E
A
P
P
P
P
P
MH Lotz
P
P
P
P
P
P
P
P
WA Prinsloo
P
P
P
P
P
P
P
P
O Seiphemo
P
A
P
P
P
P
P
P
JC Farrant
P
P
P
P
P
P
P
P
FE Emary
P
P
P
P
P
P
P
P
PS Chapwanya
P
P
P
P
P
P
P
P
JA Sherry
P
P
A
P
P
P
P
P
MJ Matsipa
P
P
P
P
A
P
P
P
J Rothbart
N/A
N/A
N/A
N/A
N/A
N/A
P
P
P – Present, A – Apologies, E – Excused, N/A – Not appointed yet
*Approval of 2003 BEE transaction with Community Investment Holdings (Pty) Limited.
Company secretarial function
The company secretary is appointed by the board on the
recommendation of the executive directors. The company
secretary’s statement of compliance is set out on page 36 of
the annual financial statements. The directors have access to
the advice and services of the company secretary, who is
responsible to the board for ensuring compliance with
procedures and regulations of a statutory nature.
The company secretary is also responsible for alerting
the directors to any relevant changes to the Companies Act,
the Securities Services Act, the JSE Listings Requirements,
all governance reports, as well as any other statutory
regulations or laws affecting them in their capacities as
directors. This includes the recently promulgated Corporate
Laws Amendment Act.
The company secretary also monitors the directors’ dealings
in securities and ensures adherence to prohibited periods for
share trading.
Board committees
The audit and remuneration committees assist the board in
discharging its responsibilities. This assistance is rendered
in the form of recommendations and reports submitted to
board meetings, ensuring transparency and full disclosure of
sub-committee activities. Each sub-committee operates
within the ambit of its defined terms of reference, which set out
the composition, roles, responsibilities, delegated authority and
requirements for convening meetings. The sub-committees
consist solely of non-executive directors.
Audit committee
The audit committee consists of three independent nonexecutive directors. In line with the CLAA, Mr MJ Madungandaba resigned as a member of the audit committee on 1 July
2009 as he is not an independent director.
The audit committee charter, which governs the functions
and responsibilities of the audit committee, underwent a best
practice benchmark review and any shortcomings that were
identified were rectified. The revised audit committee charter
was adopted by the audit committee on 6 May 2008.
The audit committee’s responsibilities include:
• Nominating an independent registered auditor
• Determining the audit fee and the terms of the engagement
• Monitoring compliance with relevant legislation
• Defining the nature and extent of non-audit services provided
by the auditor
• Pre-approving any proposed non-audit services by the auditor
• Evaluating the independence, objectivity and effectiveness
of the external auditors
• Ensuring that an appropriate system of internal control is
maintained to protect Jasco’s interests and assets
• Reviewing the activities of the independent auditor to ensure
internal control is maintained to protect Jasco’s interests
and assets
• Reviewing the activities of the independent internal auditor
and the effectiveness of the internal audit
• Reviewing accounting and auditing concerns identified by
internal and external audit
• Reviewing the accuracy, reliability and credibility of financial
reporting, including the audited annual report, the unaudited
interim results and any reviewed results by the external
auditors, for approval to the board
• Monitoring Jasco’s integrated risk management strategy,
risk accountabilities, major risk exposures and risk management processes
• Ensuring that Jasco’s risk management strategies and
processes are aligned to the recommendations of King II,
and that they are reviewed on a regular basis
Six audit committee meetings were held during the period
under review. These meetings were attended on invitation by
the external auditors, internal auditors, the CEO and the group
financial director. The internal and external auditors have
unrestricted access to the chairperson of the audit committee.
Audit committee attendance:
06 May
2008
22 Jul
2008
30 Sep
2008
10 Feb
2009
31 Mar
2009
17 Jun
2009
JC Farrant
P
P
P
P
P
P
FE Emary
P
P
P
P
P
P
PS Chapwanya
P
P
P
P
P
P
MJ Madungandaba
A
P
P
P
A
A
P – Present, A – Apologies
Remuneration committee
Jasco is committed to the fair and equitable remuneration of
its employees. Remuneration is guided by both general market
forces and the performance of employees, within the context
of their defined roles with the group.
The remuneration committee comprises four non-executive
directors and is chaired by an independent non-executive
director. Meetings are attended on invitation by the CEO and
the human resources director when required. Dr J Rothbart
was appointed to the remuneration committee on 16 April 2009.
The remuneration committee:
• Influences and approves human resources policies and
strategies and monitors compliance with the Employment
Equity Act, No 55 of 1998, as amended
• Makes recommendations to the board, for approval by
the shareholders, on the remuneration policy and the
remuneration for executive and non-executive directors
• Approves the remuneration for the executive management
• Makes recommendations to the board on the appointment
and removal of executive and non-executive directors and
executive management
• Ensures that Jasco demonstrates its commitment towards
organisational integrity in an appropriate manner
• Monitors the ethical conduct of the group, its management
and employees
• Ensures Jasco’s compliance with its code of ethics
• Acts as the custodian of Jasco’s health and safety and
HIV/Aids strategies
CORPORATE GOVERNANCE CONTINUED
Four remuneration committee meetings were held during the period under review.
Remuneration committee attendance:
18 Apr
2008
10 Feb
2009
16 Apr
2009
16 Jun
2009
FE Emary
P
P
P
P
JC Farrant
P
P
P
P
ATM Mokgokong
A
P
P
P
N/A
N/A
P
P
J Rothbart
P – Present, A – Apologies, N/A – Not appointed yet
Internal control
The board carries ultimate responsibility for establishing a
framework for internal control. The controls throughout Jasco
focus on the critical risk areas identified by operational
management and confirmed by the executive management.
Controls are designed to provide a reasonable and not absolute
assurance as to the integrity and reliability of the annual
financial statements to safeguard, verify and maintain accountability of its assets and to detect fraud, potential liability, loss
and material misstatement, whilst complying with applicable
laws and regulations.
Insider trading
Organisational policies, procedures, structures and approval
frameworks provide direction, accountability and segregation
of responsibilities and contain self-monitoring mechanisms.
Both operational and executive management closely monitor
the controls and the action taken to correct weaknesses as
they are identified. Each division has its own finance department headed by a financial executive with appropriate skills
and experience. The divisional financial executives report
directly to the group financial director, who is responsible for
the overall financial control and reporting.
Jasco fully endorses the recommendations of the BroadBased Black Economic Empowerment (BBBEE) Act, No 53 of
2003. The areas addressed by the BBBEE legislation relate
not only to ownership, but also include management and
employee transformation, skills development, preferential
procurement, enterprise development and socio-economic
development to ensure true, broad-based empowerment.
An independent auditing firm performs the internal audit
function and reports to the audit committee. The external
auditors also consider the internal systems as part of their
audit and communicate deficiencies when identified.
Code of ethics
Jasco strives to build a reputation for honesty, integrity,
credibility, reliability and professionalism in the way it conducts
its business. Consequently, the board has adopted a formal
code of ethics and directors and employees are committed to
ensuring that the code is part of the Jasco culture.
The remuneration committee acts as the overall custodian
of the ethics management process and monitors compliance
to Jasco’s code of ethics. The group’s formal disciplinary
codes and procedures are used to ensure compliance with
the underlying policies and procedures underpinning the
code of ethics.
No employee may deal directly or indirectly in Jasco’s ordinary
shares on the basis of unpublished price-sensitive information
regarding its business or affairs. Similarly, no director or
officer may trade in shares of the company during a closed
period, as determined by the board in accordance with the JSE
Listings Requirements. The group’s closed periods are between
the last day of the reporting period and the publication of the
results and during those periods when the group trades
under a cautionary.
Black economic empowerment
In 2003, Jasco entered into a broad-based black economic
empowerment (BBBEE) transaction with Community Investment Holdings (Pty) Limited, a black owned investment group
led by Dr Anna Mokgokong and Mr Joe Madungandaba, which
concluded in 2008. In 2008, the group also entered into a transaction with AfroCentric, a listed black controlled investment
holding company, which converted Jasco from a black controlled entity to being approximately 60% black owned. Both
of these partners add value to the group and have appointed
representatives to the Jasco board of directors.
Jasco’s focus on the other key empowerment areas continues,
in accordance with Jasco’s long term strategy. In February
2008 Jasco was rated BBB by Empowerdex and evaluated
as a satisfactory broad-based BEE contributor (Level Five
Contributor), in terms of the Department of Trade and Industry’s
Codes of Good Practice. Due to the change in financial year end
to June, the next BEE verification audit by Empowerdex will be
conducted during September 2009. Refer to page 31 for further
information around the group’s transformation initiatives.
Human resources
b Jasco’s human resources (HR) strategy has been
developed within the context of the group’s
strategic focus on leveraging the strength of
its talent base, and its aim to grow its position
as a South African employer of choice. People
are our most valuable asset and therefore the
group’s HR strategy, in addition to enhancing
the way we treat our people, supports Jasco’s
focus on providing customer-focused, quality
goods and services to the South African and
other African markets.
ISAAC MAFEREKA, HR director
Introduction
Our HR strategy aims to achieve:
• A motivated workforce with the right skills, knowledge and
attitudes to deliver customer-focused quality services and
maintain the sustainability of the group’s business
• A diverse workforce – relevant to the business now and into
the future
• A performance culture based on a balance of meritocracy,
collaboration and employee development
The HR strategy incorporates uniform policies, procedures
and instructions that have been developed and implemented in the context of current industrial legislation and
employment practices.
The group has a central HR administration department and
standardised policies and procedures across the group, which
ensure consistent and fair treatment of employees.
The group makes use of a standardised payroll software
solution.
A total cost to company remuneration structure for employees
ensures easier cost comparison across the group and other
employers in the market. All recruitment of new and replacement employees is co-ordinated through the Jasco HR
department. Where possible, all positions are filled internally.
Due consideration is given to Jasco’s employment equity plan,
policy and targets when recruiting new employees.
The Jasco talent strategy
During the period under review, Jasco adopted a comprehensive talent strategy, aimed at institutionalising formal elements
of HR to mitigate against the negative impact of the skills shortage within the technology sector. This talent strategy focuses
on the following elements:
Strategy
Recruit and
on board
Engage and
connect
Deploy and
rotate
Strategy
Implement and
embed in culture
Engage and connect
Review and
recognise
Develop
Implement
HUMAN RESOURCES CONTINUED
Recruit and on board
During the period, Jasco also undertook a review of its HR
policies to ensure these are relevant against current legislation,
good governance and the group’s strategy.
Candidates with the appropriate skills and experience are
identified with the assistance of external professionals for
vacancies arising throughout the group, whilst attention is
given to employment equity candidates. This is in line with
Jasco’s endorsement of BBBEE legislation to ensure proper
representation at all levels in the workplace.
In terms of recruiting and bringing new employees on board,
employees follow an induction programme to familiarise
themselves with the Jasco policies, environment and culture.
Review and recognise
Jasco encourages a culture of excellence and performance
by all employees.
A strong performance culture exists in Jasco. Employees’
performances are measured periodically and good performance
is recognised not only through monetary means but also
through other rewards, such as promotion to a higher level in
the group.
To ensure equitable remuneration for services rendered
and to allow Jasco to compete and retain scarce skills, the
group makes use of external market surveys to benchmark
against the market and to incorporate this into a sound,
competitive, remuneration practice. This includes a guaranteed
remuneration package, supplemented with short term
incentives linked to performance. Key employees are further
rewarded through a combination of long term incentives, such
as share ownership, share option schemes and a phantom
share scheme.
Develop
Jasco believes one way of addressing skills shortages is
to develop its own workforce. The group therefore trains
its employees, both internally and externally. The training
initiatives include:
• Adult Based Education and Training (ABET)
• On-the-job training
• External training at recognised institutions (where appropriate, employees qualify for financial support from the group)
• Learnerships and apprenticeships
g
• Supervisory and Management Development Programmes
Jasco conducts a skills assessment exercise on an annual basis
to provide a base for the drafting of an annual training plan.
Over the last few years, the South African workplace has
become a melting pot of different cultures and backgrounds.
To harmonise these cultural backgrounds and use them to
the group’s advantage, Jasco strives to implement a cultural
diversity training programme to help employees from different
backgrounds to understand one another, to tolerate differences
and to use these as a competitive advantage in the workplace.
Deploy and rotate
Employees are afforded the opportunity to develop a career
path in Jasco. Due to the group’s diversified nature and
divisional structure, opportunities exist for employees to
develop, grow and advance their careers through redeployment and rotation to other divisions. This allows for the
maximisation of an employee’s potential, creates opportunities for developing multiple skills and supports the
succession planning process in the group.
Engage and connect
Jasco recognises that an appropriate culture is required to
engage and properly connect with all employees to obtain
their commitment to performance. The Jasco culture includes
the following business value drivers:
• Honesty, credibility and reliability
• Increasing shareholder value
• Commitment to customer satisfaction
• Recognition/reward for creativity, innovation and
good performance
• Good citizenship (including people development)
• Excellence
• Mutual respect
• Diversity
The infusion of the Jasco culture into the group takes place
through the communication of the Jasco values and strategy,
role modelling and capability-building through structured
training programmes.
Regular engagement with employees is an important element
in measuring the success of Jasco’s key HR improvement
programmes, both in terms of employment equity and
skills development.
The Jasco group is affiliated to the Manufacturing, Engineering and Related Services
SETA (Merseta). An annual skills plan is filed with Merseta, which includes details of
the previous year’s training and a plan for the next year. Jasco received a training
refund of R420 000 this year against training expenses of R960 000 incurred in 2008.
82% of all employees received some form of training over the period under review,
whilst 90% of black employees received training.
Transformation
g
Key data
• Women make up over 42% of the overall Jasco team
• The majority – 68% – of the Jasco workforce is black
• 2% (10 employees) of the permanent employees in the group are disabled
• 45% of the workforce is under the age of 35
• The average length of service at Jasco is 7 – 10 years
Ownership
Ownership structure
CIH (BEE)
BEE Trust
Other
AfroCentric
(Listed/BEE)
CIH (BEE)
Other
34,9%
23,9%
Jasco
(Listed/BEE)
Jasco is a black owned group, with approximately 60% of its
shares currently in black hands.
In the first step towards its current black owned status, Jasco
concluded a transaction with Community Investment Holdings
(Pty) Limited, a black owned investment group led by Dr Anna
Mokgokong and Mr Joe Madungandaba, through the acquisition
of Tasslelane Technologies (Pty) Limited during 2003.
In June 2008, Jasco concluded a transaction with AfroCentric,
a listed black controlled investment holding company, led by
successful South African businessmen Michael (Motty) Sacks,
a Netcare Limited board director, Meyer Kahn, chairperson
of SABMiller, and Brian Joffe, CEO of the Bidvest Group. This
transaction transformed Jasco from a black controlled entity
to black owned.
41,2%
Management
Jasco continues to grow a diverse, talented management
team able to guide the group’s evolution. The following key
management appointments were made during the period
under review:
• Tertius Vermeulen, previously employed in various executive
management positions by Siemens, was appointed as the
chief operating officer in November 2008
• Isaac Mafereka was appointed as human resources director
in February 2009. Isaac shares duties between M-TEC
and Jasco
• Noriah Sepuru, previously employed by Barloworld, was
appointed as company secretary in February 2009
TRANSFORMATION CONTINUED
Employment equity
Jasco: demographic profile
Male
Occupational levels
A
Top management
5
C
Senior management
I
Female
W
Total
A
10
15
2
2
23
25
2
C
I
W
Foreign nationals
Total
Male
2
1
2
4
2
12
16
Professionally qualified and
experienced specialists and
mid-management
7
1
6
24
38
2
Skilled technical and
academically qualified
workers, junior management,
supervisors, foremen and
superintendents
40
2
13
35
90
9
2
16
17
44
Semi-skilled and
discretionary decisionmaking
33
8
14
25
80
14
3
14
14
45
Unskilled and defined
decision-making
40
4
3
3
50
32
7
67
Total permanent
125 15
298
61
12
99
Non-permanent employees
Grand total
1
0
126 15
38 120
1
1
39 121
Female
Total
Grand
Total
1
18
29
1
1
134
1
1
106
45
217
55
126
156
2
1
3
518
3
0
0
0
1
1
0
0
0
4
301
61
12
99
46
218
2
1
3
522
Disabled employees: 10
Jasco has consistently progressed its black employee
representation and we are pleased with the current statistics,
indicating that almost 70% of employees are black.
Skills development
The group’s talent strategy, which is being implemented over
a two-year period, will allow Jasco to develop an enabling
culture that fosters and values diversity and allows for the
development of employees’ competencies and capabilities.
According to this strategy, Jasco:
• Ensures that each new employee undergoes an induction
programme to enable the employee to adapt, integrate and
assimilate into the culture of the organisation, and to
familiarise each employee with Jasco’s policies, procedures,
processes and practices
• Offers financial assistance to qualifying employees to further
their studies in a direction that will also benefit the group
Jasco encourages the development of active career paths for
employees, particularly with respect to positions critical to
the business. Active career path development and succession
planning in turn creates the opportunity for the company to
identify future leaders and managers.
The Jasco talent strategy also promotes the recognition and
reward of good performance at all levels. The constant monitoring and review of performance ensures that quality delivery
becomes a group culture embraced by all employees. When
sub-standard performance is identified, the talent strategy
allows for remedial processes, including the assignment of a
mentor to particular employees.
• Ensures that learnerships and apprentice programmes are
in place to improve employees' technical skills
Training programmes
In addition to ongoing internal training, Jasco conducted
Adult Based Education Training (ABET) assessments, in which
approximately 160 employees were assessed. These programmes consist of several skills programmes that are
designed to enable learners to become proficient in literacy and
numeracy. The results of this assessment showed that 19% of
tested employees require basic numeric training and 16%
require literacy training. We believe that this kind of training
adds true value to employees’ personal skills and will improve
efficiencies on the factory floor. We will expand the ABET
assessment and training to all lower level employees who we
believe will benefit from this type of training.
• Is implementing a mentorship programme for employees,
particularly key candidates requiring support and coaching,
to successfully fulfil their roles
Employees will commence with ABET training programmes
soon, depending on their individual need and level of basic
training, which will continue for a period of 24 to 36 months.
• Offers Adult Based Education and Training that enables
employees to become proficient in literacy and numeracy
• Offers vigorous on-the-job training to hone and improve
existing skills
• Ensures that new and prospective front-line managers go
through a Management Development Programme
• Facilitates director training, designed to allow directors
to better understand their roles and to execute their
responsibilities
Preferential procurement and enterprise development
Jasco gives preference to suppliers and service providers with
verifiable evidence that they are regarded as empowered
entities in accordance with the Department of Trade and
Industry’s Codes of Good Practice. Jasco regards this element
of the codes as an important tool to ensure broad-based
empowerment takes place in South Africa and encourages its
suppliers to comply with the codes.
To ensure that the group maximises its procurement from
empowered entities, record is kept of all procurement data
and supplier empowerment status, which is analysed and
regularly assessed. Where necessary, suppliers are contacted
to ensure they validate and/or update their credentials.
Socio-economic development
As a truly South African company, Jasco believes in nation
building and helping improve the lives of the people in our
country. We believe that a sound education, good health and
a supportive social environment are fundamental to people’s
wellbeing. We therefore support and acknowledge that socioeconomic development has a pivotal role to play in bringing
meaningful transformation to benefit all. Contributions to
charitable organisations are therefore considered to ensure
our donations make a real difference. Expenditure for the
period under review amounted to more than 1% of our after
tax income and were in the main focused on educational
assistance (74%), with the rest going to other worthy causes.
These include sponsorships and donations to charitable groups
and institutions, such as the Ithlokomeleng Association and
Blind SA Braille Services.
Educational support included a bursary scheme that was
implemented during 2005, which has assisted eight students
to date. During the period under review, Jasco sponsored
three students in the engineering and accounting fields at the
University of KwaZulu-Natal and the Tshwane University of
Technology. The scholarship for a disadvantaged child at Vuleka
in Johannesburg continues. Jasco also contributed to Telkom
SA’s Centre of Excellence initiative and sponsored a programme
in the telecommunications field at the University of Cape Town.
In terms of assistance to the health and wellbeing of underprivileged people, our donations to foundations such as the
Avril Elizabeth Home, Mini Care Centre, Pretoria Care for the
Aged, Thandanani, CANSA, Institute for the Blind, Bethany
House Trust and many other like organisations, will support
the objective of improving the quality of life for the people in
their care.
Similarly contributions to organisations such as MaAfrika
TIKKUN Trust, Abused and Abandoned Kids Educational Excursions, Alex Crisis Centre, the Society of St. Vincent de Paul and
the East Rand Children’s Home, demonstrates Jasco’s support
for the social development of orphans and vulnerable children.
We believe that youngsters should be encouraged to lead
healthier lives, to be disciplined and to pursue excellence in
all they do. A small portion of our support has therefore
been given to activities such as Cross Roads School Golf Day,
Interactive Sports (a ladies soccer team), and SAPS Rugby.
gEmployee wellness
HIV/Aids
HIV/Aids is one of the key challenges facing South African society and business today. While statistics
from the national Department of Health and Population Development Unit reflect only those cases
reported voluntarily to the department, they are nevertheless alarming and clearly demonstrate the
extent of the pandemic facing the country, labour and business.
Jasco has a formal HIV/Aids strategy, which is implemented throughout the group. An HIV/Aids awareness
programme and education campaign was implemented in the group four years ago. From information
provided by the divisions to quarterly employment equity meetings, the current impact of HIV/Aids on
the Jasco labour force is very limited, but slowly on the increase. Jasco continues to monitor the situation.
All divisions within the group participate in the annual HIV/ Aids “bannerthon” to promote awareness,
especially during HIV/Aids awareness week. Office buildings are wrapped with awareness messaging
and employees are encouraged to participate in confidential, voluntary HIV/Aids screening tests. The
group also participated in supporting the HIV/Aids Awareness Badges initiative.
Occupational, health, safety and environment
The group complies with the Occupational Health and Safety Act requirements. We conduct various
training programmes within the group for the purposes of health and safety, such as first aid training,
fire training and safety training.
Pleasingly, no fatalities were experienced during the year.
A registered nurse visits the factory at Webb Industries monthly depending on the need and/or staff
requirements. This service is paid for by Jasco as part of its wellness programme.
Jasco’s operations have a low impact on the environment. Several energy-saving initiatives take place
in the group, as well as recycling programmes where scrap paper is collected at the divisions by
various organisations such as Mondi Waste Paper Recovery and Midrand Recycle.
Directors’ responsibility for financial reporting
Company secretary’s certification
Report of the independent auditors
Report of the directors
Income statements
Balance sheets
Statements of changes in equity
Cash flow statements
Notes to the annual financial statements
Subsidiary companies
Segmental report
Ordinary share performance and shareholding
36
36
37
38
40
41
42
43
44
78
79
80
JASCO ANNUAL REPORT ’09 35
Directors’ responsibility for financial reporting
To the shareholders of Jasco Electronics Holdings Limited
It is the directors’ responsibility to ensure the maintenance of adequate accounting records and to prepare annual financial
statements that fairly present the state of affairs and the results of the company and of the group. The external auditors are
responsible for independently auditing and reporting on the fair presentation of these annual financial statements.
The annual financial statements referred to in this report have been prepared by management in accordance with International
Financial Reporting Standards (IFRS). They are based on appropriate accounting policies which have been consistently applied,
and are supported by reasonable and prudent judgements and estimates. The annual financial statements have been prepared
on a going concern basis and the directors have every reason to believe that the group will be able to continue its operations
for the year ahead.
The annual financial statements which appear on pages 38 to 80 were approved by the board of directors on 9 September 2009,
and are signed on its behalf by:
DR ATM MOKGOKONG
Non-executive chairperson
MH LOTZ
WA PRINSLOO
Financial director
Woodmead, Sandton
9 September 2009
Company secretary’s certification
I, the company secretary, certify that the company has lodged with the Registrar of Companies all such returns as are required
of a public company, in terms of the Companies Act, No 61 of 1973, as amended, and that all such returns are true, correct and
up to date.
MN SEPURU
Company secretary
Woodmead, Sandton
9 September 2009
Report of the independent auditors
To the members of Jasco Electronics Holdings Limited
We have audited the annual financial statements and group
annual financial statements of Jasco Electronics Holdings
Limited, which comprise the directors’ report, the balance
sheets as at 30 June 2009, the income statements, the
statements of changes in equity and cash flow statements for
the 16 months then ended, a summary of significant accounting
policies and other explanatory notes, as set out on pages 38
to 80.
Directors’ responsibility for the financial
statements
The company’s directors are responsible for the preparation
and fair presentation of these financial statements in
accordance with International Financial Reporting Standards,
and in the manner required by the Companies Act of South
Africa. This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation
and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the
circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s
judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all
material respects, the financial position of the company and
group as at 30 June 2009, and of the financial performance
and its cash flows for the year then ended in accordance with
International Financial Reporting Standards, and in the
manner required by the Companies Act of South Africa.
ERNST & YOUNG INC.
Registered Auditor
Johannesburg
9 September 2009
Report of the directors
for the year ended 30 June 2009
The directors have pleasure in submitting their report on
the activities of the company and group for the year ended
30 June 2009.
complementary products and the product range of RCW
complements the product offering of the Telecommunications
division.
Change in year end
Share capital
The company and its subsidiaries have changed its year end
from February to June to coincide with the year end of their
BEE partners, Community Investment Holdings (Pty) Limited
(CIH) and AfroCentric Investment Corporation Limited
(AfroCentric). Due to the consequential 16-month financial
year, the results of the operations and cash flows are not
comparable to the preceding 2008 financial year (12 months).
The authorised share capital is 150 000 000 (2008:100 000 000)
ordinary shares of 1 cent each and 29 884 633 redeemable
preference shares of 1 cent each. The authorised share capital
was increased during the year under review to facilitate the
issue of the shares to AfroCentric.
Nature of business
Financial results
In terms of the original BEE transaction between Jasco and
CIH, the preference shares were redeemed in May 2008 and
17 162 969 ordinary shares were issued at the same time,
based on the extent that Jasco had achieved the set profit
targets. Of the new ordinary shares, 1 316 628 were transferred
to the Jasco Employee Share Incentive Trust based on an
agreement approved at a remuneration committee meeting
held on 20 January 2006. The preference shares were cancelled
following their redemption.
The results of the operations for the year are set out in the
annual financial statements.
For further information on the Jasco ordinary shareholders’
spread, refer to page 80.
Plant and equipment
Directors’ interest in share capital
There were no changes in the nature of the plant and equipment of the group or in the policy regarding their use.
At the close of business on 30 June 2009, the interest of the
directors in the issued share capital of the company
amounted to:
The company holds investments in its subsidiary companies
and provides financial and management services to them and
their trading divisions. The trading activities of the subsidiaries are divided into four main operating divisions, namely
Telecommunications, Security, Domestic Products and Electrical, details of which are given on pages 16 to 20.
Dividend
On 1 June 2008, 27 415 385 ordinary shares were issued to
AfroCentric to raise funds for the acquisition of M-TEC.
Dividend
number
Declaration
date
Record
date
Cents
per share
Ordinary shares
18
1 April 2009
22 May 2009
10
17
7 May 2008
30 May 2008
16
Direct – beneficial
PS Chapwanya
JC Farrant
MH Lotz
WA Prinsloo
Corporate actions
As announced in April 2008, the group acquired a 34%
economic stake in South African cable company, Malesela
Taihan Electric Cable (Pty) Limited (M-TEC), for R214 100 000;
and JSE-listed BEE investment group AfroCentric Investment
Corporation Limited (AfroCentric) acquired a 34,9% stake in
Jasco for R89,1 million from CIH.
The summarised steps of the transaction were:
1. Jasco acquired current BEE shareholder CIH’s 34%
economic stake in M-TEC from its subsidiary, Malesela
Holdings No 1 (Pty) Limited
2. AfroCentric acquired 34,9% in Jasco from CIH
3. CIH acquired 34,7% in AfroCentric and retained a 24,2%
direct shareholding in Jasco
4. AfroCentric subscribed for R100 million preference shares
in a Jasco subsidiary to fund the transaction
The group has also acquired the businesses of Barco in
September 2008 for a total consideration of R874 538 and
Radio Communications Warehouse (RCW) in November 2008
for R2 653 929. Barco provides the Security division with
2009
2008
15 000
150 000
950 000
24 960
15 000
150 000
370 000
24 960
3 038 969
19 163 725
8 213 025
1 895 622
3 038 969
17 093 649
7 325 850
1 895 622
275 000
23 500
505 600
35 000
33 734 801
30 454 650
Indirect – beneficial
MJ Madungandaba
ATM Mokgokong
–
–
20 919 243
8 965 390
Total
–
29 884 633
Indirect – beneficial
FE Emary
MJ Madungandaba
ATM Mokgokong
JA Sherry
Indirect – non-beneficial
FE Emary
JC Farrant
Total
Redeemable
preference shares
The company has not been informed of any material changes
in these holdings as at the date of this report.
Share incentive scheme
Borrowings
The Jasco Employee Share Incentive Trust was formed in
1993 to enable executives of the group to acquire shares in
Jasco to provide them with incentives to advance the
group’s interests. The maximum number of shares and/or
options that may be issued may not exceed 8 098 982 (2008:
5 524 536) shares, being 15% of the issued share capital at
the inception of the Trust and all subsequent capitalisation
issues. The maximum number allowed for any one person
is 2,5% of the issued share capital of the company. In terms
of the scheme rules, 50% of shares issued and options
granted may be exercised after two years, 75% after three
years and 100% after four years. Further details relating to
the Jasco Employee Share Incentive Trust are set out in
notes 17.3 to 17.5 to the financial statements.
In terms of the articles of association, the directors of the
company are permitted to borrow or raise such funds as they
deem necessary for the operation of the group. At the close of
business on 30 June 2009, the total borrowings less cash
resources was R131 638 000 (2008: RNil). At 30 June 2009, the
group had approved general banking facilities of R73 500 000
(2008: R58 000 000).
Subsequent events
Directors and secretary
As announced on 7 July 2009, the group has acquired a 30%
interest in Maringo Communications (Pty) Limited for an
initial consideration of R4 million, with an option to acquire
an additional 20% plus 1 share should Maringo achieve
certain profit targets by 30 June 2011, for an additional
consideration limited to a maximum of R30 million. Further
information is presented in note 36.
Details of the present directorate and secretary of the
company are set out on pages 6 and 7 of this report.
Audit committee assessments
In terms of the articles of association of the company, Patrick
Chapwanya, Joel Matsipa, Ed Emary and Jon Rothbart retire
at the forthcoming annual general meeting and are eligible
for re-election.
Details are given on page 78.
The audit committee has assessed the competence of the
Financial director and is satisfied that he has the appropriate
experience and expertise as required for his role.
The audit committee has performed its functions as per the
audit committee charter, and is satisfied that that the external
auditors, Ernst & Young Inc. are independent and registered
as auditors on the JSE’s Register of Auditors.
Income statements
for the financial year ended 30 June 2009
Group
2009
16 months
R000
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
773 250
519 161
10 599
11 734
13 047
760 203
5 589
513 572
10 599
–
11 734
–
721 219
21 796
17 188
492 805
12 120
8 647
–
–
–
–
–
–
(474 366)
(341 601)
–
–
298 884
26 507
(1 605)
(167 840)
177 560
17 685
(1 265)
(98 251)
10 599
7 576
–
(7 774)
11 734
4 714
–
(4 486)
(76 986)
(40 652)
(838)
(591)
4
9
78 960
(25 337)
4 620
55 077
(6 527)
1 136
9 563
(2 935)
–
11 371
(3 419)
–
10
1 683
4
5
59 926
(22 423)
49 686
(16 201)
6 628
(4 303)
7 952
(3 591)
37 503
33 485
2 325
4 361
36,2
33,7
49,0
37,0
Note
Revenue
Interest received
Turnover
4
3
Sale of goods
Rendering of services
Rental income
Cost of sales
14
Profit before other income and expenses
Other income
Selling and distribution costs
Administrative expenses
Other expenses
Operating profit
Finance costs
Equity accounted share of income from joint venture
Equity accounted share of income from associate
Profit before taxation
Taxation
Profit for the year attributable to
equity holders of the parent†
Earnings per ordinary share (cents) – basic
– diluted
Company
6
6.1
–
–
–
†The subsidiary with a minority interest was in a retained loss position in the previous year, there was consequently no profit/(loss) attributable to
minority shareholders.
Balance sheets
at 30 June 2009
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
360 751
87 003
413 393
291 242
7
8
9
27 867
27 414
11 551
6 931
–
408 271
–
–
285 922
–
10
11
12
13
219 396
45 616
1 957
54 364
–
45 448
5 304
1 906
–
–
–
5 122
–
–
–
5 320
171 241
189 813
3 034
18 995
61 791
96 447
3 328
51 080
97 624
1 581
9 451
224
703
38 825
–
179
–
2 855
–
–
–
331
–
1 401
–
17 263
531 992
276 816
416 427
310 237
258 008
151 178
201 711
131 502
1 145
175 082
(3 711)
4 763
80 729
998
86 310
(3 480)
2 005
65 345
1 145
175 082
–
2 345
23 139
998
86 310
–
740
43 454
108 387
3 282
133 675
145 626
101 530
–
2 884
299
6 857
99
–
–
133 635
40
–
299
145 327
–
165 597
122 356
81 041
33 109
119 703
13 299
2 227
83 159
20 250
804
36
30 332
10 090
8 053
13 768
58
–
19 374
37
47 804
11 506
104
–
12 325
2 434
6 740
531 992
276 816
416 427
310 237
Note
Assets
Non-current assets
Plant and equipment
Investment in subsidiaries
Investment in joint venture
Investment in associate
Goodwill
Deferred income tax
Other financial assets
Current assets
Inventories
Trade and other receivables
Foreign currency contracts
Amounts owing by subsidiaries
Taxation paid in advance
Cash and cash equivalents
14
15
8
16
Total assets
Equity and liabilities
Shareholders’ equity
Share capital
Share premium
Treasury shares
Non-distributable reserves
Retained profit
17.2
17.3
18
Non-current liabilities
Interest bearing liabilities
Non-interest bearing liability
Amounts owing to subsidiaries
Deferred income tax
19
20
8
12
Current liabilities
Trade and other payables
Provisions
Foreign currency contracts
Taxation
Short term borrowings
Total equity and liabilities
21
22
8
23
Statements of changes in equity
Note
Non-distributable
reserves
R000
Retained
profit
R000
Total
equity
R000
(3 334)
(146)
–
–
–
859
–
1 146
–
–
40 772
–
–
(8 912)
33 485
125 605
(146)
1 146
(8 912)
33 485
(3 480)
–
(231)
2 005
–
–
65 345
–
–
151 178
88 919
(231)
2 758
–
–
–
(22 119)
37 503
2 758
(22 119)
37 503
4 763
80 729
258 008
–
–
–
118
622
–
48 184
–
(9 091)
135 610
622
(9 091)
–
–
–
4 361
4 361
998
147
–
–
–
86 310
88 772
–
–
–
–
–
–
–
–
740
–
1 605
–
–
43 454
–
–
(22 640)
2 325
131 502
88 919
1 605
(22 640)
2 325
1 145
175 082
–
2 345
23 139
201 711
Share
capital
R000
Share
premium
R000
998
–
–
–
–
86 310
–
–
–
–
998
147
–
86 310
88 772
–
–
–
–
–
–
–
1 145
175 082
998
–
–
86 310
–
–
–
Treasury
shares
R000
Group
Balance as at 28 February 2007
Treasury shares – Share Incentive Trust
Share-based payment reserve
Dividends paid
Profit for the year
17.3
17.4
24
Issue of share capital and premium
Treasury shares – Share Incentive Trust
Dividends paid
Profit for the year
17.4
24
Balance as at 30 June 2009
–
–
–
(3 711)
Company
Dividends paid
17.4
24
Profit for the year
Issue of share capital and premium
Dividends paid
Profit for the year
Balance as at 30 June 2009
17.4
24
Cash flow statements
Group
Note
Cash flows from operating activities
Cash receipts from customers
Cash paid to suppliers and employees
2009
16 months
R000
Company
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
787 232
(692 830)
502 469
(460 501)
5 290
(4 482)
4 276
(14 185)
94 402
13 047
(25 337)
(27 445)
(3 436)
41 968
5 589
(5 758)
(12 523)
(1 136)
808
10 599
(2 935)
(4 396)
(2 264)
(9 909)
11 137
(2 822)
(629)
(1 136)
(22 119)
(8 912)
(22 640)
(9 091)
29 112
19 228
(20 828)
(12 450)
25.3
(3 142)
(1 085)
–
(2 905)
1 212
(116)
(42 332)
1 355
–
(2 905)
(322)
–
Investment in associate
Increase in subsidiary loan accounts
Raising of finance lease asset
Purchase of plant and equipment
25.4
(27 716)
(1 152)
(52 324)
(10 106)
–
(9 261)
(201)
8 931
–
–
(1 152)
–
–
–
Replacement of plant and equipment
25.5
(2 642)
(1 047)
–
–
Additions to plant and equipment
25.6
(7 464)
(8 214)
–
–
62
–
–
Cash generated from/(utilised in) operations
Interest received
Interest paid
Taxation paid
STC paid
Dividends paid
25.1
25.2
24
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Acquisition of business operations
Non-current debtor loans (granted)/repaid
Investment in joint venture
Proceeds on disposal of plant and equipment
110
Net cash outflow from investing activities
Cash flows from financing activities
Cash flows from treasury shares
Non-current loans (repaid)/raised
(Decrease)/increase in amounts owing to subsidiaries
(94 263)
(12 160)
(32 247)
(4 379)
(470)
(1 354)
(146)
1 754
–
(299)
(11 693)
–
–
43 500
Net cash (outflow)/inflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Revaluation of foreign cash balances
(1 824)
(66 975)
38 825
–
1 608
8 676
30 073
76
(11 992)
(65 067)
17 263
–
43 500
26 671
(9 408)
–
Cash and cash equivalents at end of year
(28 150)
38 825
(47 804)
17 263
16
Bank overdrafts
23
Cash and cash equivalents at end of year
224
38 825
–
17 263
(28 374)
–
(47 804)
–
(28 150)
38 825
(47 804)
17 263
Notes to the annual financial statements
1. Corporate information
The consolidated annual financial statements of Jasco Electronics Holdings Limited for the year ended 30 June 2009 were
authorised for issue in accordance with a resolution of the directors on 9 September 2009. Jasco Electronics Holdings Limited
is a company incorporated in the Republic of South Africa. The company’s shares are publicly traded.
2. Accounting policies
The principal accounting policies applied in the preparation of these consolidated annual financial statements are set out below.
2.1 Basis of preparation
The consolidated annual financial statements set out on pages 38 to 80 have been prepared on a historical cost basis, unless
otherwise stated. The group and company annual financial statements are presented in Rands and are rounded to the nearest
thousand, except where otherwise indicated.
2.2 Statement of compliance
The consolidated annual financial statements of Jasco Electronics Holdings Limited and all its subsidiaries have been prepared
in accordance with International Financial Reporting Standards (IFRS) and the requirements of the South African Companies
Act, and have been consistently applied to all years presented.
2.3 Basis of consolidation
2.3.1 Investment in subsidiaries
The consolidated annual financial statements include those of the company and its subsidiaries. The results of any subsidiaries
acquired or disposed of during the year are included from the dates effective control was acquired and up to the dates effective
control ceased.
At the date of the acquisition of a subsidiary, the cost of the investment is allocated to the group’s share of the net fair value of
individual identifiable assets, liabilities and contingent liabilities of the subsidiary using the same accounting basis as those
adopted by the group. All the subsidiaries have the same year end as the holding company.
Should the cost of the business combination exceed the group’s share in the net fair asset value, the difference is recognised
as goodwill. Where the purchase price is less than the group’s share in the net fair asset value, the difference is recognised in
the income statement.
The carrying value of subsidiaries is compared to their attributable net asset value or market value. At each balance sheet
date, the company assesses whether there is any indication of impairment. If any such indication exists, the recoverable amount
is estimated. Where carrying values exceed the estimated recoverable amount, investments in subsidiaries are written down
to their recoverable amount. The holding company carries its subsidiaries at cost less accumulated impairment.
All inter-company balances and transactions, including income, expenses and dividends, have been eliminated in full.
2.3.2 Investment in associate
The group’s investment in an associate is accounted for under the equity method of accounting. This is an entity in which the
group has significant influence and which is neither a subsidiary nor a joint venture of the group. The investment in an associate
is carried in the balance sheet at cost plus post-acquisition changes in the group’s share of net assets of the associate, less
any impairment in value. The income statement reflects the group’s share of the results of operations of the associate.
All inter-company balances and transactions, including income, expenses and dividends, have been eliminated to the extent
of the group’s interest in the associate.
2.3.3 Investment in joint venture
The group’s investment in a joint venture is accounted for under the equity method of accounting. A joint venture is a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to control, and a jointly controlled
entity is a joint venture that involves the establishment of a separate entity in which each venturer has an interest. The group
recognises its interest in the joint venture under the equity method of accounting. The investment in the joint venture is carried
in the balance sheet at cost plus post-acquisition changes in the group’s share of net assets of the joint venture, less any
impairment in value. The income statement reflects the group’s share of the results of the operations of the joint venture.
All inter-company balances and transactions, including income, expenses and dividends, have been eliminated in full.
2.3.4 Treasury shares
Shares in Jasco Electronics Holdings Limited held by the Jasco Employee Share Incentive Trust that are not allocated to
employees, are classified in shareholders’ funds as treasury shares. These shares are treated as a deduction from the issued
and weighted number of shares and the cost price of the shares is deducted from the shareholders’ equity in the balance sheet.
Dividends received on treasury shares are eliminated on consolidation.
2.4 Significant accounting judgement and estimates
The preparation of annual financial statements requires the use of estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting periods. Although these estimates are based on management’s best
knowledge of current events and actions that the group may undertake in the future, actual results ultimately may differ from
those estimates.
The presentation of the results of operations, financial position and cash flows in the financial statements of the group is
dependent upon and sensitive to the accounting policies, assumptions and estimates that are used as a basis for the preparation
of these financial statements. Management has made certain judgements in the process of applying the group’s accounting
policies. These, together with the key assumptions concerning the future, and other key sources of the estimation uncertainty
at the balance sheet date, are discussed below:
Plant and equipment
The useful lives of assets are based on management’s estimation. Management considers the impact of changes in technology,
customer service requirements, availability of capital funding and required return on assets and equity to determine the
optimum useful life expectation of each individual item of plant and equipment. The estimation of residual values of assets is
based on management’s judgement of whether the assets will be sold and what their condition will be at that time.
Impairment of plant and equipment
Management is required to make judgements concerning the cause, timing and amount of impairment. In the identification of
impairment indicators, management considers the impact of changes in current competitive conditions, cost of capital,
availability of funding, technological obsolescence, discontinuance of services and other circumstances that could indicate that
impairment exists. Management’s judgement is also required when assessing whether a previously recognised impairment loss
should be reversed.
Where impairment indicators exist, the determination of the recoverable amount requires management to make assumptions
to determine the fair value less costs to sell or value in use. Key assumptions on which management has based its determination
of value in use include projected revenues, gross margins, average revenue per unit, earnings multiple, capital expenditure,
expected customer bases and market share. The judgements, assumptions and methodologies used can have a material impact
on the fair value and ultimately the amount of any impairment.
Financial assets
At each balance sheet date, management assesses whether there are indicators of impairment of financial assets. If such
evidence exists, the estimated present value of the future cash flows of that asset is determined. Management’s judgement is
required when determining the expected future cash flows.
Impairment of receivables
Impairment is raised for management’s estimates of losses on trade receivables that are deemed to contain a collection risk.
The impairment is based on an assessment of the extent to which customers have defaulted on payments already due and an
assessment of their ability to make payments based on creditworthiness and historical write-offs experienced. Should the
financial condition of the customers change, actual write-offs could differ significantly from the impairment.
Taxation
Management’s judgement is exercised when determining the probability of future taxable profits, which will determine whether
deferred tax assets should be recognised or derecognised. The utilisation of deferred tax assets will depend on whether it is
possible to generate sufficient taxable income, taking into account any legal restrictions on the length and nature of the taxation
asset. When deciding whether to recognise unutilised taxation credits, management needs to determine the extent to which
future payments are likely to be available for set off. In the event that the assessment of future payments and future utilisation
changes, the change in the recognised deferred taxation is recognised in profit or loss.
Employee benefits
The group operates an equity-settled and a cash-settled share-based compensation plan. The related expense and reserve are
determined through an actuarial valuation, which relies heavily on assumptions as disclosed in notes 17.4 and 22. The
assumptions include employee turnover percentages and whether specified performance criteria will be met. The assumptions
could affect the fair value of the shares and compensation expense as calculated by the actuary.
2.5 Foreign currency transactions
Transactions in foreign currencies are recorded at the rates of exchange ruling at the transaction date.
Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the balance
sheet date. Foreign currency gains and losses are charged to the income statement.
The financial statements of foreign subsidiaries are translated for incorporation into the group annual financial statements on
the following basis:
• Assets and liabilities at the rate ruling at the balance sheet date
• The income statement at a weighted average rate for the year
• Exchange rate differences arising on the translation are taken directly to equity
On disposal or deregistration of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular
foreign operation is recognised in the income statement.
Notes to the annual financial statements continued
2. Accounting policies (continued)
2.6 Taxation
Tax expenses
Current and deferred taxes are recognised as income or expenses and are included in the income statement, except to the
extent that it relates to items charged or credited directly to equity. The current tax payable is based on taxable profit. Taxable
profit differs from profit reported in the income statement when there are items of income or expense that are taxable or
deductible in other years and it also excludes items that are never taxable or deductible under existing tax legislation.
Current tax expenses/(income) are measured at the amount expected to be paid to/(recovered from) the tax authorities, using
the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.
Current tax assets and liabilities
Current tax for current and prior periods is, to the extent unpaid, recognised as a tax payable in the balance sheet.
If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is
recognised as a tax receivable in the balance sheet.
Deferred tax assets and liabilities
Deferred taxation is provided, using a balance sheet liability method, on all temporary differences at the balance sheet date
between the carrying amounts for financial reporting purposes and their tax bases.
A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability
arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of
the transaction, affects neither accounting profit/(loss) nor taxable profit/(loss).
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit
will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when
it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time
of the transaction, affects neither accounting profit/(loss) nor taxable profit/(loss).
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled, based on tax rates, and laws, that have been enacted or substantively enacted at the balance
sheet date. The measurement of the deferred tax assets and liabilities reflect the tax consequences that would follow from the
manner in which the company expects to recover or settle the carrying amounts of its assets and liabilities at the balance sheet
date. The effect on deferred taxation of any changes in taxation rates is charged to the income statement, except to the extent
that it relates to items previously charged or credited directly to equity.
The carrying amount of deferred tax assets in the balance sheet are reviewed annually and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are offset for presentation in the balance sheet where the company has a legally enforceable
right to do so and the income taxes relate to the same tax authority.
2.7 Borrowing costs
Borrowing costs are recognised as an expense when incurred.
2.8 Employee benefits
2.8.1 Short term employee benefits
The cost of all short term employee benefits is recognised during the period in which the employee renders the related service.
The provisions for employee entitlements to wages, salaries and annual leave represent the amount that the group has a
present obligation to pay as a result of employees’ services provided to the balance sheet date. The provisions have been
calculated at undiscounted amounts based on current wage and salary rates.
2.8.2 Retirement benefits
The group contributes to defined contribution funds.
Contributions to defined contribution funds are charged against income when the related services are rendered.
2.8.3 Share-based compensation
The group operates an equity-settled and a cash-settled share-based compensation plan. The fair value of the employee
services received in exchange for the shares or options granted is recognised as an expense, and a corresponding entry to
equity for the equity-settled share-based compensation plans and the recognition of a liability for the cash-settled share-based
compensation plans. The total amount to be expensed over the vesting period is determined by reference to the fair value of
the shares or options granted.
Non-market vesting conditions are included in assumptions about the number of shares that are expected to vest or the number
of options that are expected to become exercisable. This recognises the impact of the revision of original estimates, if any, in
the income statement and a corresponding adjustment to equity over the remaining vesting period. At each balance sheet date,
the entity revises its estimates of the number of shares that are expected to vest and the number of options that are expected
to become exercisable.
2.9 Provisions
Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can
be made of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the balance sheet date.
Transactions arising from past events are classified as contingent liabilities where the group has a possible obligation whose
existence will be confirmed only by the occurance or non-occurance of one or more uncertain future events not wholly within
the control of the group, or the group has a present obligation but is not recognised because it is not probable that an outflow
of resources will be required to settle the obligation or the amount cannot be measured with sufficient reliability.
Items are classified as commitments where the group commits itself to future transactions or if the items will result in the
acquisition of assets.
2.10 Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment in value.
Initial and subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period
in which they are incurred.
All plant and equipment is depreciated from the date it is available for use, on a straight-line basis, to write down their cost to
their residual value over their estimated useful life. Depreciation ceases at the earlier of either the date the asset is classified
for sale or the date the asset is derecognised.
Average rates used are:
Plant and machinery
Hi sites
Furniture and office equipment
10% – 20%
10% – 20%
10% – 33,3%
Motor vehicles
Leasehold improvements
Leased furniture and office equipment
25%
20%
10% – 33,3%
Residual values, useful lives and the depreciation method of assets are reviewed, and adjusted if appropriate, at each balance
sheet date.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use
or disposal.
When a decision is taken to dispose of an asset and the requirements of IFRS 5 have been met, the asset is carried at the lower
of its carrying amount and fair value less costs to sell. Depreciation on that asset ceases until it is sold. These assets are
disclosed separately on the face of the balance sheet. Any impairment is recognised directly in profit and loss.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount. These are included in the
income statement.
2.11 Impairment of assets
The group reviews its assets and cash-generating units on an annual basis for any indication of impairment or reversal of
impairment. When indicators, including changes in technology, market, economic, legal and operating environments occur and
could result in changes of the asset’s or cash-generating unit’s estimated recoverable amount, an impairment test is performed.
The recoverable amount of assets or cash-generating units is measured using the higher of the fair value less costs to sell and
its value in use, which is the present value of projected cash flows covering the remaining useful lives of the assets. Impairment
losses are recognised when the asset’s carrying value exceeds its estimated recoverable amount. Where applicable, the
recoverable amount is determined for the cash-generating unit to which the asset belongs.
Previously recognised impairment losses, other than for goodwill, are reviewed annually for any indication that it may no longer
exist or may have decreased. If any such indication exists, the recoverable amount of the asset is estimated. Such impairment
losses are reversed through the income statement if the recoverable amount has increased as a result of a change in the
estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have
been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years. Impairment on
goodwill is not reversed.
2.12 Inventories
Inventories, being components, finished goods and merchandise, are valued at the lower of cost, determined on the weighted
average basis, and net realisable value. The cost of finished goods includes a proportion of overhead expenses as well as direct costs.
Allowance is made for slow moving and obsolete inventories.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and
the estimated costs necessary to make the sale.
2.13 Leases
The determination of whether an arrangement is, or contains a lease, is based on the substance of the arrangement at inception
date of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement
conveys a right to use the asset. If an arrangement is determined to be, or contains a lease, then the normal policies with
regards to lease classification and measurement apply.
Leases, whereby substantially all the risks and rewards of ownership are transferred to the group, are classified as finance
leases. All other leases are classified as operating leases.
Leases of land and buildings are separately assessed for classification purposes.
2.13.1 Operating leases
The group leases certain premises and office equipment under operating leases. The lease charges are charged against income
on a straight-line basis over the period of the lease.
Operating lease income is derived from rental agreements with customers utilising the group’s network of Hi sites.
2.13.2 Instalment sale and finance lease agreements
The group has entered into instalment sale transactions and finance lease agreements to finance the acquisition of certain
assets as well as to provide finance for the sale of its assets. Assets acquired in terms of these transactions are capitalised at
the lower of their fair value and the present value of the minimum lease payments and are depreciated over the estimated
useful lives of the assets.
The capital element of the future obligations under these transactions is included in interest bearing liabilities in the balance sheet.
Finance charges payable are expensed according to the actual amount incurred and are included in finance costs.
The capital repayment reduces the recorded liability to the lessor.
2.14 Goodwill
Goodwill represents the excess of the purchase price of business combinations over the group’s share of the fair value of
identifiable net assets at the date of the acquisition. Goodwill is tested annually for impairment and carried at cost less any
accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of impairment testing.
2.15 Research and development
Research and development costs are recognised as an expense when incurred, except for those development costs which relate
to specific projects where the costs are likely to be recovered from selling the products arising from the projects. In this case,
the expenditure is deferred and amortised over the period of expected future sales from the related project.
2.16 Financial instruments
Initial recognition and classification
Financial instruments are initially recognised at fair value, on the transaction date, and with the exception of financial
instruments classified as at fair value through profit and loss, including transaction costs. The transaction date, being the trade
date, is the date that the group becomes party to the contractual provisions of the instruments.
All financial assets, except derivative financial instruments, are classified as loans and receivables. All financial liabilities,
except derivative financial instruments, are classified as other financial liabilities. Derivative financial instruments are classified
as at fair value through profit and loss.
Subsequent to initial recognition, these instruments are measured as set out below.
Trade receivables, which generally have 30 – 90 day terms, are recognised and carried at amortised cost, using the efffective
interest rate method, less any impairment. An estimate of any impairment is made to an allowance account on individual
debtors when there is an indication (such as the probability of insolvency or significant difficulties of the debtor) that the
collection of the full amount under the original terms of the invoice is no longer probable. Impaired debts are derecognised when
they are assessed as uncollectible. Trade receivables whose terms have been renegotiated are recalculated as a change
in estimate.
Cash and cash equivalents are carried at amortised cost.
Loans receivable
Non-derivative financial assets are recognised at amortised cost, using the effective interest rate method. Amortised cost is
calculated by taking into account any issue costs and any discount or premium on settlement.
Loans payable and Trade and other payables
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal repayments, using
the effective interest rate method. Amortised cost is calculated by taking into account any issue costs and any discount or
premium on settlement.
Derivative instruments
Derivative instruments comprise foreign currency contracts and are used by the group to economically hedge its risks
associated with currency fluctuations.
Derivative financial instruments are held for trading and carried at fair value through profit and loss.
The fair value of foreign currency contracts is calculated through reference to the current forward exchange rates with similar
maturity profiles. Any gains or losses arising from the change in fair value, calculated as the difference between the instrument’s
forward value and the forward value of a current instrument with a similar maturity profile, are taken directly to the
income statement.
Gains and losses on subsequent measurement
Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship, as
well as gains and losses on instruments held at amortised cost, are included in net profit or loss in the period in which the
change arises.
Offset
Financial assets and liabilities are offset and the net amount reported in the balance sheet when the group has a legally
enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle
the liability simultaneously.
Derecognition
The derecognition of a financial instrument occurs when the group no longer controls the contractual rights to receive cash
flows from the asset or the obligation has been extinguished, which is normally the case when the instrument is sold, or all
the cash flows attributable to the instrument are passed through to an independent third party. Any profit or loss on
derecognition is recognised in the income statement.
2.17 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits together with any highly liquid investments readily
convertible to known amounts of cash. For the purpose of the cash flow statement, cash and cash equivalents consist of cash
and cash equivalents as defined above, net of outstanding bank overdrafts.
2.18 Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the group and the revenue can be
reliably measured.
Revenue from the sale of goods is recognised when the significant risk and rewards of ownership have passed to the buyer.
Revenue from services is recognised in the accounting period in which the services are rendered, by reference to completion
of the specific transaction.
Rental income is derived from operating leases and is recognised on a straight-line basis over the period of each lease.
Contracting revenue comprises the value of work done, based on the stage of completion. The stage of completion is measured
by reference to the expenses incurred to date as a percentage of total estimated expenses for each contract. Expected contract
losses are recognised in the income statement when identified.
Interest is recognised as the interest accrues (using the effective interest method that is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
2.19 Segmental information
The group’s operating businesses are organised and managed separately according to the nature of the products and services
provided, with each segment representing a strategic business unit that offers different products and serves different markets.
The principal segments of the group have been identified on the basis of trading activities. The basis is representative of the
internal structure for management purposes and the source and nature of business risks and returns are segmented on the
same basis.
Segmental revenue includes sales to third parties, as well as arm’s length inter-segmental revenue recorded at fair value.
Segmental operating profits exclude interest paid or received and are stated before inter-segmental charges for interest and
administration services between group companies.
2.20 Standards and interpretations issued and not yet effective
The followings Standards and Interpretations or amendments thereto have been issued and are not yet effective at the time of
this report. Only those that may be expected to affect these financial statements have been detailed below:
STANDARD OR INTERPRETATION
Number
Name
Details of amendment
Effective date**
IFRS 2
Amendments to IFRS 2 –
Share-based Payment
There will be an impact relating to the tratment of
the vesting condtions relating to share options issued
to employees
1 January 2009
IFRS 3
Business Combinations
Amendments to accounting for business combinations
1 July 2009
IFRS 5
Amendments to Non-current Plan to sell the controlling interest in a subsidiary
assets held for sale and
Discontinued operations
1 July 2009
IFRS 7
Financial Instruments:
Disclosures
Presentation of finance costs
1 January 2009
IFRS 8
Operating Segments
Presentation of the segment report
1 January 2009
IAS 1
Presentation of Financial
Statements
Additional disclosure required
1 January 2009
IAS 10
Events after the Reporting
Period
Dividends declared after the end of the reporting period
1 January 2009
IAS 16
Property, Plant and
Equipment
Recoverable amount and the Sale of assets held for rental
1 January 2009
IAS 18
Revenue
Costs of originating a loan
1 January 2009
IAS 23
Borrowing Costs
Amendment requiring capitalisation only model
1 January 2009
IAS 23
Borrowing Costs
Components of borrowing costs
1 January 2009
IAS 27
Consolidated and Separate
financial statements
Consequential amendments from changes to Business
Combinations
1 July 2009
IAS 28
Interest in Associates
Consequential amendments from changes to Business
Combinations
1 July 2009
IAS 31
Interest in Joint Ventures
Consequential amendments from changes to
Business Combinations
1 July 2009
IAS 32
Presentation
Certain financial instruments will be classified as equity
whereas, prior to these amendments, they would have
been classified as financial liabilities
1 January 2009
IAS 34
Interim Financial Reporting
Certain changes to EPS disclosures in interim reports
1 July 2009
IAS 36
Impairment of Assets
Disclosure of estimates used to determine
recoverable amount
1 January 2009
IAS 38
Intangible Assets
Advertising and promotional activities
Unit of production method of amortisation
1 January 2009
IAS 39
Recognition and
Measurement
Reclassification of derivatives into or out of the
classification of at fair value through profit or loss
1 January 2009
IFRIC 17
Distribution of non-cash
assets to owners
The changes will result in non-complex changes
to disclosure
1 July 2009
IFRIC 18
Transfers of assets from
customers
The changes will result in non-complex changes
to disclosure
1 July 2009
** Annual periods beginning, unless otherwise indicated.
The group is investigating the impact of these pronouncements and intends to apply them as they become effective, if applicable.
For the most part, the effect of these Standards and Interpretations are not expected to be significant.
Group
Company
2009
16 months
R000
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
760 203
513 572
–
–
Administration, managerial and secretarial fees received
789
144
6 591
4 097
– other
789
144
Note
3. Turnover
Turnover represents net invoiced value of local and export sales,
services and rental income, but excludes value-added tax and
inter-company sales
4. Profit before taxation
The operating profit is stated after allowing for the following:
Income
– from subsidiaries
–
–
6 591
4 097
Profit on disposal of plant and equipment
Foreign exchange gains arising from financial instruments
at fair value through profit and loss
–
25
–
–
22 213
14 532
–
–
– realised
– unrealised arising from change in fair value
16 811
5 402
10 830
3 702
–
–
–
–
Interest received from loans and receivables
13 047
5 589
10 599
11 734
5 214
5 149
3 173
8 561
–
– bank interest
– amounts owing by subsidiaries
– finance lease agreements
7 500
–
1 502
9 082
–
227
106
273
167
–
15
–
–
Administration, managerial and secretarial fees paid
158
93
2 094
1 143
– to subsidiaries
– other
158
93
2 094
–
1 143
–
Auditor’s remuneration
2 926
2 108
584
214
–
–
–
–
2 702
129
95
–
1 625
363
832
(712)
566
(1)
19
–
148
35
743
(712)
Depreciation of plant and equipment
9 503
5 501
–
–
–
–
–
–
–
–
3 762
1 637
2 307
664
602
531
2 372
1 000
1 139
367
222
401
–
–
–
–
–
–
–
–
–
–
–
–
Foreign exchange losses arising from financial instruments
at fair value through profit and loss
25 662
11 635
–
–
– realised
– unrealised arising from change in fair value
22 007
3 655
8 644
2 991
–
–
–
–
– other loans
– other
Expenditure
audit fees (current year)
audit fees (prior year)
consulting and taxation services
capitalised to Capitalised investment costs (refer note 13.2)
plant and machinery
Hi sites
furniture and office equipment
motor vehicles
leasehold improvements
leased furniture and office equipment
Group
Company
2009
16 months
R000
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
Finance costs of other financial liabilities
25 337
6 527
2 935
3 419
Interest paid
23 676
5 970
2 935
3 419
9 631
5 145
13 932
113
822
3
2 463
472
–
–
2 468
354
597
–
Finance charges
804
385
–
–
– instalment sale agreements
168
636
166
219
–
–
–
–
Bonus provision discount adjustment
857
172
–
–
Impairment of investment in subsidiary
Loss on disposal of plant and equipment
Operating lease charges
485
16 970
41
8 586
–
–
–
180
–
–
– rental premises
– equipment
– motor vehicles
10 605
429
5 936
5 176
222
3 188
–
–
–
–
–
–
Research and development costs
Royalties paid
Staff costs
401
462
163 909
284
281
95 246
–
–
3 183
–
–
1 570
• short term benefits
141 256
84 793
1 578
948
–
–
–
–
1 578
5 627
10 892
123 159
948
3 468
7 847
72 530
1 578
–
–
–
948
–
–
–
• equity-settled share-based payment (refer note 17.4)
2 758
1 146
1 605
622
– executive directors
– executive management
– other staff (including other benefits)
1 772
56
930
695
59
392
1 620
–
(15)
622
–
–
• cash-settled share-based payment (refer note 17.4.1)
1 716
1 704
–
–
1 716
1 704
–
–
• post-employment benefits
total amounts contributed to defined contribution funds
6 147
4 202
–
–
– other staff
246
495
5 406
157
376
3 669
–
–
–
–
–
–
• other short term benefits
797
562
–
–
317
480
210
352
–
–
–
–
• other long term benefits
11 235
2 839
–
–
11 235
2 839
–
–
4. Profit before taxation (continued)
Expenditure (continued)
–
–
–
–
bank loans and overdrafts
amounts owing to subsidiaries
other loans
other
non-executive directors
executive directors
executive management
other staff (including other benefits)
Group
Company
2009
16 months
R000
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
South African normal taxation
Current
8 643
15 627
1 999
2 432
– Current year charge
– Prior year over provision
8 789
(146)
15 644
(17)
1 999
–
2 434
(2)
5. Taxation
Deferred
10 344
(562)
40
23
– relating to origination and reversal of temporary differences
– relating to the change in corporate tax rate
10 344
–
(750)
188
40
–
22
1
Total normal tax
Secondary tax on companies (STC)
18 987
3 436
15 065
1 136
2 039
2 264
2 455
1 136
Total taxation
22 423
16 201
4 303
3 591
2 760
–
–
–
Estimated taxation losses available for set off against
future taxable profits
The reconciliation of the effective rate of the tax charge to
the company tax rate is as follows:
Standard taxation rate
Prior year over provision
Non-deductible expenses
Non-taxable income
%
28,0
0,2
7,8
(3,3)
%
29,0
–
2,3
(0,7)
%
28,0
–
6,9
(4,2)
%
29,0
–
4,2
(2,3)
Income tax incentives
Secondary tax on companies
Difference in tax rate for Trusts
Change in corporate tax rate
(1,1)
5,7
0,1
–
(0,7)
2,3
–
0,4
–
34,2
–
–
–
14,3
–
–
Effective taxation rate
37,4
32,6
64,9
45,2
6. Earnings per ordinary share
The calculation is based on earnings of R37 503 643 (2008: R33 484 598) and 103 471 452 (2008: 68 404 120) shares, being the
weighted average number of shares in issue during the year, less the treasury shares.
Headline earnings per ordinary share
The calculation is based on headline earnings of R37 988 632 (2008: R33 502 003) and 103 371 452 (2008: 68 404 120) shares,
being the weighted average number of shares in issue during the year, less the treasury shares.
Group
Reconciliation of headline earnings:
Net profit attributable to ordinary shareholders
Adjusted for
– net loss on disposal of plant and equipment
– capital gains tax on disposal of plant and equipment
Headline earnings
Company
2009
R000
2008
R000
37 503
485
33 485
17
485
–
16
1
37 988
33 502
2009
R000
2008
R000
6. Earnings per ordinary share (continued)
6.1 Diluted earnings per ordinary share
The calculation is based on 111 352 315 (2008: 90 557 875) shares, being the weighted average number of shares in issue during
the year, less the treasury shares, and the 2 889 863 (2008: 17 162 969) shares that were issued to CIH and the Trust in May 2008.
The same earnings and headline earnings as per note 6 were used.
The earnings will be further diluted by the 4 990 786 shares that can be issued to the CEO in terms of the Jasco Share Option
Scheme as set out in the circular dated 31 May 2007, provided certain profit targets are met.
There will be no dilution in the earnings per share as a result of the 3 425 000 (2008: 1 970 000) share options as per note 17.5,
as the Share Incentive Trust will acquire shares on the market to fulfil the group’s obligations, should the options be exercised.
7. Plant and equipment
Hi
sites
R000
Furniture
and
office
equipment
R000
17 797
2 172
28 436
(10 639)
8 739
(6 567)
(674)
(391)
Plant
and
machinery
R000
2009
Net book value – beginning
of year
– cost
– accumulated depreciation
Group
Current year movements
– additions
– acquisition of
business operations
– net disposals
– depreciation
Motor
vehicles
R000
Leasehold
improvements
R000
Leased
furniture
and office
equipment
R000
Total
plant
and
equipment
R000
3 888
1 998
588
971
27 414
10 256
(6 368)
2 655
(657)
1 275
(687)
2 116
(1 145)
1 070
(503)
1 416
(465)
53 477
(26 063)
453
3 505
1 246
3 211
26
2 043
76
10 107
6
(423)
(3 762)
–
–
(1 637)
286
(120)
(2 307)
153
(18)
(664)
–
(25)
(602)
–
(10)
(531)
445
(596)
(9 503)
27 867
End of year
Made up as follows
17 123
1 781
4 958
1 495
2 004
506
– cost
31 636
(14 513)
9 985
(8 204)
12 873
(7 915)
2 816
(1 321)
3 234
(1 230)
2 147
(1 641)
Net book value
17 123
1 781
4 958
1 495
2 004
506
27 867
2008
Net book value – beginning
of year
14 925
3 033
3 299
693
528
1 084
23 562
– cost
23 705
(8 780)
8 611
(5 578)
8 941
(5 642)
1 090
(397)
1 304
(776)
1 828
(744)
45 479
(21 917)
2 872
(861)
589
1 305
60
(113)
3 852
– additions
– net disposals
– depreciation
5 301
(57)
(2 372)
139
–
(1 000)
1 762
(34)
(1 139)
1 659
13
(367)
282
–
(222)
288
–
(401)
9 431
(78)
(5 501)
End of year
Made up as follows
17 797
2 172
3 888
1 998
588
971
27 414
– cost
28 436
(10 639)
8 739
(6 567)
10 256
(6 368)
2 655
(657)
1 275
(687)
2 116
(1 145)
53 477
(26 063)
Net book value
17 797
2 172
3 888
1 998
588
971
27 414
62 691
(34 824)
Certain motor vehicles and equipment are secured as per note 19. The assets indicated above and previously included in the
Telecommunications and Domestic Products segments were disposed of and replaced to improve the group’s operating capacity.
Group
2009
R000
Company
2008
R000
2009
R000
2008
R000
162 833
245 438
31 885
254 037
408 271
2 855
(133 635)
(19 374)
285 922
1 401
(145 327)
(12 325)
8. Investment in subsidiaries
Unlisted shares at cost less amounts written off
Amounts owing by subsidiaries on loan account
Amounts owing by subsidiaries on current account
Amounts owing to subsidiaries on loan account
Amounts owing to subsidiaries on current account
The loans to subsidiaries attract interest at a rate which is agreed upon between both parties on an annual basis. Repayment
of the non-current accounts has been deferred until at least 30 June 2011 (2008: 28 February 2010).
For details of subsidiaries refer to page 78.
9. Investment in joint venture
The group has a 50% interest in WebbLeBLANC Communications (Pty) Limited, a jointly controlled entity that is involved in the
manufacturing of masts and towers.
The 50% share of the assets, liabilities, income and expenses of the jointly controlled entity as at 30 June 2009 and 29 February
2008 and for the years then ended, which are included in the consolidated financial statements, are as follows:
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
20 160
12 101
–
–
18 205
1 955
9 837
2 264
–
–
–
–
(8 609)
(5 170)
–
–
(8 576)
(4 948)
–
–
(33)
(222)
–
–
11 551
6 931
–
–
46 385
(35 617)
(4 757)
795
(392)
22 106
(17 258)
(2 930)
100
(225)
–
–
–
–
–
–
–
–
–
–
6 414
(1 794)
1 793
(657)
–
–
–
–
4 620
1 136
–
–
Balance sheet
– current assets
– non-current assets
– current liabilities
– non-current liabilities
Income statement
Revenue
Cost of sales
Finance income
Finance costs
Taxation
Net profit
10. Investment in associate
The group has acquired a 34% economic interest in its associate, Malesela Taihan Electric Cable (Pty) Limited (M-TEC), with
effect from 1 June 2008. M-TEC is involved in the manufacture of cables for the power and telecommunications industry.
The purchase price of R214,1 million (excluding net transaction costs of R3,2 million) was settled through the issue of
27,4 million shares at 325 cents per share to the CIH group and a cash payment of R125 million. A portion of this payment was
funded by the issue of R100 million in preference shares by Jasco Cables Investments (Pty) Limited. These preference shares
are redeemable after five years, but not before three years at the instance of the group. The dividend coupon rate is 80% of the
prime interest rate and is payable monthly in arrears.
The 34 % interest in M-TEC’s assets and liabilities at 30 June 2009 and the income and expenses for the 13 months then ended,
which are included in the consolidated financial statements, are as follows:
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
255 602
–
–
–
99 772
155 830
–
–
–
–
–
–
(36 206)
–
–
–
(26 519)
(9 687)
–
–
–
–
–
–
219 396
–
–
–
276 881
(239 971)
(31 321)
–
–
–
–
–
–
–
–
–
536
(3 649)
–
–
–
–
–
–
Taxation
2 476
(793)
–
–
–
–
–
–
Net profit
1 683
–
–
–
Balance sheet
– current assets
– non-current assets
– current liabilities
– non-current liabilities
Income statement
Revenue
Cost of sales
Finance income
Finance costs
10.1 Assessment of carrying value
The carrying value of the Investment in the associate, M-TEC, has been tested for impairment due to the occurrence of the
following impairment indicators:
• The company experienced a notable decline in operating profitability in the current financial year following the unexpected
drop in copper and aluminium prices;
• The de-stocking of the supply chain in the power cable industry in South Africa caused by the economic recession
The recoverable amount of the investment in M-TEC has been determined based on a value in use calculation using cash flow
projections from financial budgets approved by the board of directors covering a one-year period. The appropriate discount
rate applied to cash flow projections is 14,54% and cash flows beyond the two-year period are extrapolated using a 7,5% growth
rate. The directors believe that these assumptions are in line with the industry.
10. Investment in associate (continued)
10.1 Assessment of carrying value (continued)
Key assumptions used in value-in-use calculations
The calculation of value-in-use for the investment in M-TEC is most sensitive to the following assumptions:
• Discount rates;
• Budgeted and forecast turnover and earnings before interest, tax, depreciation and amortisation (EBITDA) growth; and
• Growth rate used to extrapolate cash flows beyond the budget period.
Discount rate
Discount rates reflect the current market assessment of the risks specific to the investment in M-TEC. The discount rate was
estimated based on the weighted average cost of capital for M-TEC, taking market conditions into account. This rate includes
adjustments to reflect the market assessment of any risk specific to the investment in M-TEC for which future estimates of
cash-flows have not been adjusted.
Budgeted and forecast turnover growth
Budgeted and forecast turnover growth is based on historic levels of growth achieved in the investment in M-TEC, as well as
management’s understanding of future development of the market and client base. The turnover is budgeted to return to
historic levels in the second year, with a constant growth rate of 7,5% used for the next three years. No growth was assumed
into perpetuity. The EBITDA margins assumed during the first five years fall with historic ranges for particular turnover levels.
Growth rate used to extrapolate cash flows beyond the budget period
The growth rate in turnover of 7,5% is based on management’s assessment of the current state of the base of clients within
M-TEC as well as the position of the market at present.
Sensitivity analysis
With regard to the assessment of the value-in-use of the investment, management believes that the most notable possible
change in any of the above key assumptions would result from a change to the discount rate. The second most sensitive
assumption is the constant growth rate applied to the budgeted turnover and the third most sensitive factor is the time taken
for M-TEC to return to historic turnover levels.
The impact on the valuation of changes in any one of the above assumptions, with all other variables held constant is as follows:
Change in key assumption
Discount rate changes by 1%
Constant growth rate in years 2 to 5 changes by one third
Time taken to return to historic turnover levels changes by 1 year
Decrease
R000
Increase
R000
(14 952)
(4 865)
17 318
5 074
(3 624)
4 084
Conclusion
The estimated value-in-use of the 34% interest, compared to the carrying value of the investment does not result in
an impairment.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
45 448
168
36 570
8 878
–
–
–
–
8 878
–
–
–
–
–
45 448
–
–
11. Goodwill
Beginning of year
– additions
– adjustment to initial recognition
End of year
594
(426)
45 616
The adjustment to the initial recognition relates to the final adjustment to the purchase price of the Tasslelane Technologies
acquisition.
The addition in goodwill in 2009 related to the acquisition of Barco (R344 000) in September 2008 and RCW in November 2008
(R250 000). Barco provides complementary products to the Security division and the RCW operations complement the product
range offered by the Telecommunications division.
The addition in goodwill in 2008 related to the acquisition of RapidCloud in April 2007.
An assessment of future expected cash flows was performed, resulting in no impairment of goodwill for the current or prior year.
Group
2009
R000
Company
2008
R000
2009
R000
2008
R000
12. Deferred income tax asset/(liability)
Beginning of year
Change in corporate tax rate
Utilisation/(raising) of tax asset
5 205
–
(10 105)
4 643
(188)
750
–
–
(40)
23
(1)
(22)
End of year
(4 900)
5 205
(40)
–
Deferred tax asset
Deferred tax liability
1 957
(6 857)
5 304
(99)
–
(40)
–
–
Net deferred tax (liability)/asset
(4 900)
5 205
(40)
–
920
5 677
11
–
(609)
(362)
(459)
230
7 538
24
2
(587)
(188)
(129)
–
–
–
–
–
(40)
–
–
–
–
–
–
–
–
(292)
224
(8 755)
(1 839)
(218)
241
57
(1 765)
–
–
–
–
–
–
–
–
(4 900)
5 205
(40)
–
Made up as follows –
–
–
–
–
–
–
–
taxation losses
provisions
assets capitalised
payments received in advance
impairment of receivables
prepayments
retentions
deferred gains and losses on foreign
currency contracts
– deferred lease payments and income
– accelerated depreciation
Group
2009
R000
Company
2008
R000
2009
R000
2008
R000
9 240
(4 319)
9 442
(5 274)
4 921
4 168
13. Other financial assets
13.1 Loan to the Jasco Employee Share Incentive Trust
Loan
Allowance for impairment
The loan attracts interest at a rate which is agreed upon between
the parties on an annual basis and has no fixed terms of repayment.
During the current year, interest was charged on the loan.
The directors are of the opinion that after the allowance for
impairment, the loan is fairly stated. The impairment provision
is calculated as the difference between the fair value of the
Trust’s net assets and the loan. The decrease of R955 000 relates
to a reversal of the provision required.
13.2 Capitalised investment costs
201
1 152
201
1 152
1 839
754
–
–
52 324
–
–
–
54 364
1 906
5 122
5 320
Raw materials
Work in progress
Finished goods and merchandise
14 821
7 707
39 263
13 737
2 918
34 425
–
–
–
–
–
–
– at cost
– provision for obsolete and slow moving inventories
42 925
(3 662)
37 538
(3 113)
–
–
–
–
61 791
51 080
–
–
Inventory expensed, included in cost of sales
425 603
308 797
–
–
– inventory expensed during the year
424 108
307 687
–
–
1 495
1 110
–
–
These are transaction expenses incurred in the acquisition of the
investment in Maringo (2008: M-TEC) up to the year end that will be
included in the investment in the associate in the next financial year.
13.3 Other loans
R750 000 of the loan to WebbLeBLANC bears interest at 4% and
the remaining portion of the loan bears interest at the prime
interest rate plus 2% and has no fixed terms of repayment.
13.4 Finance lease receivable (refer note 30)
14. Inventories
– inventory written off during the year
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
Trade receivables
88 912
91 469
35
–
– trade receivables
– impairment
90 714
(1 802)
94 040
(2 571)
35
–
–
–
1 893
1 638
74
3 930
1 644
462
216
3 833
144
–
–
–
3
–
–
328
96 447
97 624
179
331
2 571
1 279
(512)
(1 536)
3 690
479
(488)
(1 110)
–
–
–
–
–
–
–
–
1 802
2 571
–
–
15. Trade and other receivables
Prepayments
Retentions
Deferred lease income
Other (including rental deposits and VAT refundable)
Trade receivables are non-interest bearing and generally
between 30 – 90 day terms.
The movements in the allowance for impairment of receivables
were as follows:
At the beginning of the year
Charge for the year
Amounts written off
Unused amounts reversed
At the end of the year
As at year end the analysis of trade receivables past due but not impaired is as follows:
Neither
Carrying
value of
Total
R000
past
due nor
impaired
R000
impaired
trade
receivables
R000
GROUP
2009
88 912
62 427
2008
91 469
66 573
Past due but not impaired
30 to 60
days
R000
60 to 90
days
R000
90 to 120
days
R000
>120
days
R000
3 781
9 873
5 082
2 736
5 013
3 961
12 711
2 263
2 823
3 138
Included in “neither past due nor impaired” are debtors with a carrying amount of Rnil (2008: R2 329 570) whose terms have
been renegotiated during the year.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
–
69
155
36 492
2 242
91
–
–
–
15 135
2 128
–
224
38 825
–
17 263
1 500
1 000
1 500
1 000
299
299
299
299
1 799
1 299
1 799
1 299
699
446
–
699
–
299
699
446
–
699
–
299
1 145
998
1 145
998
16. Cash and cash equivalents
Current accounts
Call accounts
Cash on hand
Cash at banks earn interest at floating rates based on daily bank
deposit rates.
The fair value of the cash and cash equivalents for the group is
R224 000 (2008: R38 825 000) and the company is
R Nil (2008: R17 263 042).
At year end, the group had R73,5 million (2008: R58 million) of
general banking facilities available.
17. Share capital
17.1 Authorised
150 000 000 (2008: 100 000 000) ordinary shares of 1 cent each
29 884 633 redeemable preference shares of 1 cent each
17.2 Issued
114 509 435 (2008: 69 931 081) ordinary shares of 1 cent each
Beginning of year
Issue of share capital
Shares for future issue
End of year
During the year, Jasco issued 27 415 385 ordinary shares to AfroCentric Investment Corporation Limited to raise funds for the
acquisition of M-TEC (refer note 10).
During 2004, 20 919 499 shares were issued at an issue price of 145 cents per share to acquire Tasslelane Technologies (Pty)
Limited from CIH. In terms of the agreement with CIH, a further 17 162 969 ordinary shares were issued to them and the Trust
in May 2008, based on the extent that certain profit targets had been met.
The unissued shares are under the control of the directors until the forthcoming annual general meeting.
17.3 Treasury shares
The Jasco Employee Share Incentive Trust owns 2 912 738 (2008: 1 526 961) unallocated ordinary shares in Jasco Electronics
Holdings Limited. These shares are recorded in the balance sheet as treasury shares at a cost of R3 711 176 (2008: R3 479 949).
17.4 Share-based payments
The Jasco Employee Share Incentive Trust was formed in 1993 to enable executives of the group to acquire shares in Jasco to
provide them with incentives to advance the group’s interests. The maximum number of shares and/or options that may be
issued may not exceed 8 098 982 (2008: 5 524 536) shares, being 15% of the issued share capital at the inception of the Trust
and all subsequent capitalisation issues. The maximum number of shares and/or options allowed for any one person is 2,5%
of the issued share capital of the company. In terms of the scheme rules, 50% of the shares/options issued may be traded after
two years, 75% after three years and 100% after four years. The shares/options vest at the beginning of the trading period.
17. Share capital (continued)
17.4 Share-based payments (continued)
Jasco has implemented a share option scheme for the benefit of the CEO. In terms of the scheme, the CEO will be awarded an
option to subscribe for Jasco ordinary shares at the end of each financial year, commencing from 28 February 2007.
The value of the options to be awarded will be calculated using a predetermined formula that measures the performance delivered
by the CEO against preset targets. The maximum number and value of the options is limited to the lower of 4 990 786 options or
R8 138 400. In terms of the scheme rules, 33,3% of the options vest after two years, three years and four years respectively.
The income statement charge for equity-settled share-based payments is as follows (refer note 4):
Group
Equity-settled share-based payment
Company
2009
R000
2008
R000
2009
R000
2008
R000
2 758
1 146
1 605
622
Equity-settled share-based payment transactions are valued at grant date, with the expense being recognised over the
vesting period.
Fair values for the Share Incentive Trust are calculated at the date of the grant using the Binomial Model. To test the
reasonableness of these results, the Black-Scholes-Merton formula has also been applied.
The key assumptions used in the calculations are detailed below:
Maximum term of grant
Exercise multiple
Volatility
– two years vesting
– three years vesting
– four years vesting
Dividend yield
Risk free rate
Forfeiture rate
Performance expectation
Maximum term of grant
Exercise multiple
Volatility
Dividend yield
Risk free rate
Interest on loan
Forfeiture rate
Performance expectation
Options to CEO
2009
Options to employees
Shares to employees
10 years
1,5
5 years
1,5
–
–
40,84%
43,30%
48,32%
51,12%
50,92%
52,55%
6,82%
–
–
–
–
7,58%
7,66%
7,81%
10,00%
100%
–
–
–
–
–
3,23%
2,92%
2,44%
9,55%
9,08%
8,86%
25,00%
100%
Options to CEO
2008
Options to employees
10 years
1,5
5 years
1,5
Shares to employees
42,02%
45,21%
35,77%
3,11%
42,02%
45,21%
35,77%
3,11%
5 years
1,5
60%
–
–
–
5%
7,87%
7,69%
7,61%
–
25,00%
100%
7,87%
7,69%
7,61%
–
10,00%
100%
–
–
–
9%
3%
100%
Group
Company
2009
000
2008
000
2009
000
2008
000
92,2
(17,0)
(75,2)
–
204,5
(6,3)
(102,2)
(3,8)
92,2
(17,0)
(75,2)
–
204,5
(6,3)
(102,2)
(3,8)
17.4 Share-based payments (continued)
Reconciliation of number of outstanding shares/options
Shares issued to employees
Beginning of year
Shares lost through resignation
Shares vested by rules of scheme
Shares vested by agreement and sold
End of year
–
92,2
–
92,2
Options issued to employees
Beginning of year
Allocated during the year
Lost through resignation
Options vested by rules of scheme
1 725
1 455
(145)
(790)
–
1 725
–
–
–
–
–
–
–
–
–
–
End of year
2 245
1 725
–
–
Options issued to CEO
Beginning of year
Allocated during the year
2 117
401
–
2 117
2 117
401
–
2 117
End of year
2 518
2 117
2 518
2 117
17.4.1 Share appreciation rights – cash-settled
Certain key employees have been granted share appreciation
rights during the year. Further information is included in note 22.
17.5 Jasco Employee Share Incentive Trust
Number of ordinary shares reserved
8 099
Total number of unforfeited options granted
3 280
5 525
1 970
– Beginning of year
– Allocation of options to employees during the year
– Forfeiture of options during the year
1 970
1 455
(145)
245
1 725
–
Total number of shares allocated
600
779
– Net forfeiture/acquisition by/allocation of shares to employees
during the year
779
941
(179)
(162)
Number of unallocated shares in respect of which options
and shares have not been granted
4 219
2 776
417 000 shares were allocated effective 6 May 2004 at 70 cents per share. 50% of these shares may be traded after 5 May 2006,
a further 25% after 5 May 2007 and the remaining 25% after 5 May 2008. As at 30 June 2009, 190 500 (2008: 276 050) shares
remained allocated but not yet traded. All of these shares may be traded by the tenth anniversary of the acceptance date.
736 300 shares were allocated effective 1 March 2002 at 60 cents per share. 50% of these shares may be traded after 29 February
2004, a further 25% after 28 February 2005 and the remaining 25% after 28 February 2006. As at 30 June, 2009 103 250
(2008: 125 250) shares remained allocated but not yet traded. All of these shares may be traded by the tenth anniversary of the
acceptance date.
17.5 Jasco Employee Share Incentive Trust (continued)
2 742 800 shares were allocated effective 1 June 2001 at 27 cents per share. 50% of these shares may be traded after
31 May 2003, a further 25% after 31 May 2004 and the remaining 25% after 31 May 2005. As at 30 June 2009, 306 050 (2008: 377
675) shares remained allocated but not yet traded. All of these shares may be traded by the tenth anniversary of the acceptance date.
250 000 options were granted on 1 March 2009 at 155 cents per share. 50% of these options are exercisable after 1 March 2011,
a further 25% after 1 March 2012 and the remaining 25% after 1 March 2013. All these options must be exercised before
1 March 2019.
480 000 options were granted on 13 November 2008 at 210 cents per share. 50% of these options are exercisable after
13 November 2010, a further 25% after 13 November 2011 and the remaining 25% after 13 November 2012. All these options
must be exercised before 13 November 2018.
725 000 options were granted on 1 March 2008 at 242 cents per share. 50% of these options are exercisable after 1 March 2010,
1 March 2018.
1 725 000 options were granted on 1 March 2007 at 298 cents per share. 50% of these options are exercisable after 1 March 2009,
1 March 2017.
245 000 options were granted on 28 October 1999 at 140 cents per share. 50% of these options were exercisable on 27 October 2001,
a further 25% were exercisable after 27 October 2002 and the remaining 25% after 27 October 2003. All these options must be
exercised before 27 October 2009.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
Post-acquisition profit of subsidiary
741
4 022
741
1 264
–
2 345
–
740
– Arising during year
1 264
2 758
118
1 146
740
1 605
118
622
4 763
2 005
2 345
740
677
1 177
–
–
870
(193)
1 502
(325)
–
–
–
–
18. Non-distributable reserves
19. Interest bearing liabilities
Secured
Principal amounts owing in respect of finance lease
agreements on furniture and office equipment
– gross minimum lease payments
– finance charges
Principal amounts owing in respect of instalment sale
agreements on motor vehicles and equipment
2 811
3 020
–
–
– gross minimum lease payments
– finance charges
3 454
(643)
3 375
(355)
–
–
–
–
–
–
–
Other loans
100 000
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
–
6 740
–
6 740
103 488
10 937
–
6 740
19. Interest bearing liabilities (continued)
Unsecured
Other loans
Current portion transferred to short term borrowings
(refer note 23)
(1 958)
(8 053)
–
(6 740)
– instalment sale agreements
– other loans
(413)
(1 545)
–
(438)
(875)
(6 740)
–
–
–
–
–
(6 740)
2 884
–
–
101 530
Particulars
The finance lease agreements bear interest at the prime overdraft interest rate, and are repayable in equal instalments over
periods between one to three years. These liabilities are secured over furniture and equipment with a net book value of
R505 698 (2008: R970 689).
The instalment sale agreements bear interest at the prime overdraft interest rate, and are repayable in equal instalments over
periods between one to three years. These liabilities are secured over motor vehicles and equipment with a net book value of
R2 772 865 (2008: R704 856) and will be paid within 36 months.
The other secured loan represents the 40 000 fully paid up cumulative redeemable preference shares that were issued to AfroCentric as part of the purchase consideration for M-TEC (refer note 10). The loan is secured by the investment in M-TEC, bears
interest at 80% of the prime overdraft interest rate and is redeemable after five years, but not before three years. The other
unsecured loan represented the present value of the amount payable to the vendors of RapidCloud Technologies (Pty) Limited. The
amount was limited to R10 million, subject to profit targets being met, bears interest at 10,6% per annum and was repayable in April
2008 and April 2009. During the current year, the group renegotiated the purchase price to R9,6 million, repaid in April 2008.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
–
299
–
299
84 012
876
34 815
64 982
1 077
17 100
7
–
13 761
6
–
11 500
119 703
83 159
13 768
11 506
20. Non-interest bearing liability
Redeemable preference shares
Nil (2008: 29 884 633) redeemable preference shares
of 1 cent each
During 2004, 29 884 633 preference shares were issued to
acquire Tasslelane Technologies (Pty) Limited from CIH. These
shares were redeemed during the year.
21. Trade and other payables
Trade payables
Deferred lease payments
Other payables (including outstanding cheques)
Trade payables are non-interest bearing and are normally settled on 30 – 90 day terms.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
1 014
2 820
(2 436)
(11)
1 460
1 437
(1 883)
–
94
627
(679)
–
95
129
(130)
–
1 387
1 014
42
94
15 450
25 829
(37 298)
(555)
857
9 904
15 782
(10 408)
–
172
–
–
–
–
–
–
–
–
–
–
4 283
15 450
–
–
3 444
3 858
(2 363)
2 390
2 524
(1 470)
–
–
–
–
–
–
4 939
3 444
–
–
150
168
(168)
150
299
(299)
–
–
–
–
–
–
150
150
–
–
192
3 993
(1 645)
–
485
216
(456)
(53)
10
25
(19)
–
138
32
(152)
(8)
2 540
192
16
10
22. Provisions
Audit fees
Beginning of year
Arising during year
Utilised during year
Unused amount reversed
End of year
Bonus
Beginning of year
Arising during year
Discount rate adjustment
End of year
Leave pay
Beginning of year
Arising during year
End of year
Warranties
Beginning of year
Arising during year
End of year
Other
Beginning of year
Arising during year
End of year
Total provisions
Beginning of year
Arising during year
Discount rate adjustment
End of year
20 250
36 668
(43 910)
(566)
857
14 389
20 258
(14 516)
(53)
172
104
652
(698)
–
–
233
161
(282)
(8)
–
13 299
20 250
58
104
Certain key employees in the group are granted share appreciation rights which can only be settled for cash. These rights will
vest when certain growth targets within individual business units have been achieved. The contractual life of these rights is five
years. The fair value of these rights is measured on the grant date of 1 March 2007, taking into account the terms and conditions
on granting of the rights. The services received, and the liability to pay for those services, are recognised over the expected
vesting period. Until the liability is settled, it is remeasured to fair value at each reporting date with the changes recognised in
profit and loss.
The carrying amount of the liability relating to these rights at the year end is R1 594 830 (2008: R3 716 069) and is recorded in
the bonus provision. A third of the rights have vested at the year end.
The warranty provision is for product warranties given to customers on the sale of certain products. Other provisions include
provisions for contractual future service obligations.
The utilisation of these provisions, other than for leave pay, which is expected to be utilised within three years, and the share
appreciation rights, are expected to occur within a year.
Group
Company
2009
16 months
R000
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
1 958
28 374
8 053
–
–
47 804
6 740
–
30 332
8 053
47 804
6 740
11 191
–
11 451
–
10 928
8 912
11 189
9 091
22 119
8 912
22 640
9 091
–
10 945
–
11 189
11 191
10 945
11 451
11 189
Adjustments for:
– Depreciation of plant and equipment
– Equity-settled share-based payment
– Unrealised foreign exchange gains
– Unrealised foreign exchange losses
– Net loss on sale of plant and equipment
– Reversal of allowance for impairment
– (Waiver)/impairment of subsidiary loan
– Income from joint venture
– Income from associate
– Net interest paid/(received)
59 926
49 686
6 628
7 952
9 503
2 758
(5 402)
3 655
485
–
5 501
1 146
(3 702)
2 991
16
–
(4 620)
(1 683)
12 290
(1 136)
–
938
–
1 605
–
–
–
(955)
(29)
–
–
(7 664)
–
622
–
–
–
–
180
–
–
(8 315)
Operating profit/(loss) before working capital changes
Working capital changes
76 912
17 490
55 440
(13 472)
(415)
1 223
439
(10 348)
–
–
–
–
(8 055)
522
(3 297)
(28 787)
–
152
(1 454)
–
(34)
(404)
25 023
18 612
(4 524)
7 049
844
(10 754)
94 402
41 968
Note
23. Short term borrowings
Short term borrowings comprise:
– current portion of non-current interest bearing
liabilities (refer note 19)
– bank overdrafts
The bank overdrafts are secured by a cession over trade
receivables of the group.
24. Dividend per ordinary share
Dividend number 18 of 10 cents per ordinary share declared
and paid during the year
Final dividend number 17 (2008: 16) of 16 cents (2008: 13 cents)
per ordinary share declared and paid during the year
Total dividends paid during the year, net of dividends received
by the Share Incentive Trust
Final dividends proposed per ordinary share
Total dividends relating to income for the year
25. Notes to the cash flow statement
25.1 Reconciliation of profit before taxation to
cash generated from/(utilised in) operations
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase in amounts owing by subsidiaries
Increase/(decrease) in trade and other payables, provisions
and current portion of long term liabilities
– Increase/(decrease) in amounts owing to subsidiaries
Cash generated from/(utilised in) operations
808
(9 909)
Group
Note
2009
16 months
R000
Company
2008
12 months
R000
2009
16 months
R000
2008
12 months
R000
25. Notes to the cash flow statement (continued)
25.2 Taxation paid
Taxation payable at beginning of year
Amounts charged per income statement, excluding
deferred taxation
Taxation (refundable)/payable at end of year
(9 387)
(6 283)
(2 434)
(631)
(8 643)
(9 415)
(15 627)
9 387
(1 999)
37
(2 432)
2 434
(27 445)
(12 523)
(4 396)
(629)
Plant and equipment
Investments
Inventories
Accounts payable
Goodwill
Total purchase price
Raising of subsidiary loan account
Less: shares issued as part of purchase price
Less: future payments
445
–
2 598
(109)
467
3 401
170
–
–
–
8 878
9 048
127
(386)
–
(6 143)
–
131 251
–
–
(127)
131 124
–
(88 792)
–
–
–
–
–
–
–
9 048
–
(6 143)
Cash flow on acquisition
3 142
2 905
42 332
2 905
216 762
(89 046)
(100 000)
1 152
–
–
201
–
–
1 152
–
–
27 716
1 152
201
1 152
Cash amounts paid
25.3 Acquisition of business operations
25.4 Acquisition of associate
Investments
Less: shares issued as part of purchase price
Less: preference shares issued as part of purchase price
Cash flow on acquisition
25.5 Replacement of plant and equipment
Plant and machinery
Hi sites
Motor vehicles
(231)
(1 246)
(879)
–
(286)
(194)
(139)
(352)
(192)
(170)
–
–
–
–
–
–
–
–
–
–
Replacement of plant and equipment
(2 642)
(1 047)
–
–
Plant and machinery
Motor vehicles
Leased furniture and office equipment
(3 274)
(2 332)
(26)
(1 756)
(76)
(5 107)
(1 337)
(1 370)
(7)
(393)
Additions to plant and equipment
(7 464)
(8 214)
25.6 Additions to plant and equipment
–
–
–
–
–
–
–
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
4 163
11 000
6 402
7 092
–
–
–
–
–
129
–
–
15 163
13 623
–
–
Future minimum rentals under non-cancellable
leases receivable within:
– one year
– after one year, within five years
– after five years
15 340
13 673
745
661
2 727
2 353
–
–
–
–
–
–
Total
29 758
5 741
–
–
26. Operating leases
26.1 Operating lease commitments
Future minimum rentals for premises under non-cancellable
leases payable within:
– one year
Total
26.2 Operating lease income
The operating lease income is derived from rental agreements with customers utilising the group’s network of Hi sites.
27. Contingent liabilities
Banking facilities
Bank overdrafts of subsidiaries are guaranteed by the holding company. The net overdrafts of subsidiaries as at 30 June 2009
amounted to R Nil (2008: R Nil).
The company has provided suretyship for the WebbLeBLANC general banking facility of R13,5 million (2008: R10,5 million).
At year end the joint venture had utilised R1 843 103 of the facility (2008: R462 688).
Receiver of revenue
During the year under review, SARS revised its assessment of income taxation for Jasco Electronics Holdings Limited for the
years ended 29 February 2004 and 28 February 2005 by R0,5 million and R1,0 million respectively. Based on professional advice
received from two independent, non-related parties, the directors believe that the reassessments are invalid, and the possibility
of an outflow of economic resources is so remote that a provision is not deemed necessary for the reassessments.
28. Capital commitments
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
–
1 499
–
–
Plant and machinery
4 854
6 361
–
–
Total
4 854
7 860
–
–
Capital expenditure contracted for at balance sheet date but not
yet incurred will be financed using existing banking facilities.
Plant and machinery
Capital expenditure approved but not contracted for at balance
sheet date will be financed using existing banking facilities.
Group
Company
2009
R000
2008
R000
2009
R000
2008
R000
Interest bearing borrowings
101 530
2 884
–
–
– non-current liabilities (refer note 19)
101 530
2 884
–
–
Short term borrowings
30 332
8 053
47 804
6 740
– current portion of non-current interest bearing
liabilities (refer note 19)
– bank overdrafts (refer note 23)
1 958
28 374
8 053
–
–
47 804
6 740
–
153 009
157 652
200 813
164 392
29. Borrowings
The company’s borrowing powers are not limited by its articles
of association and are at the directors’ discretion.
Interest free borrowings
– amounts owing to subsidiaries (refer note 8)
Total
131 862
10 937
30. Finance lease receivable
Future minimum rentals under the finance leases
receivable within:
– one year
20 312
–
–
–
59 789
–
–
–
–
–
–
–
80 101
(27 777)
–
–
–
–
–
–
52 324
–
–
–
Total
Less: amounts representing finance income
Present value of minimum lease receivables (refer note 13.4)
The finance lease receivable relates to the leasing of security equipment for a period of five years, escalating at 2% per annum.
The effective rate of interest is 22,8% and the lease is repayable by 30 April 2013.
Foreign amount
2009
R000
2008
R000
Rand amount
2009
R000
2008
R000
31 828
21 358
505
31 212
111
551
10 158
10 649
32 023
28 359
748
19 075
12 200
–
20 923
7 436
31. Foreign currency contracts
Foreign currency contracts open at year end, related to the
following specific balance sheet items:
Foreign currency:
– Pound sterling
– US dollar
– Euro
39
3 573
10
36
1 404
969
Foreign currency:
– Pound sterling
– US dollar
– Euro
57
2 277
1 022
9
2 856
688
32. Related parties
The subsidiaries of the group are identified on page 78.
All purchasing and selling transactions with related parties are concluded at arm’s length. Outstanding balances at year end
are unsecured, bear interest at 6% (2008: 6%) and settlement occurs in cash.
Details of inter-group revenue are disclosed in the segmental report on page 79.
Amounts owing between subsidiaries are set out on page 78.
Amounts owing from the joint venture are set out in note 13.3.
Directors’ emoluments are disclosed in note 35 on pages 75 and 76.
Administration, managerial and secretarial fees between related parties are disclosed in note 4 on page 51. No other
transactions were entered into between the holding company and its subsidiaries.
Key management personnel comprises directors and executive management. Refer to notes 4 and 35 for the required disclosures.
33. Financial instruments
The group’s principal financial instruments, other than foreign currency contracts, comprise loans, redeemable preference
shares, short term borrowings, bank balances and cash. The main purpose of these financial instruments is to raise finance
for the group’s operations. The group has various other financial instruments such as trade receivables and trade payables,
which arise directly from its operations.
The group also enters into foreign currency contracts. The purpose is to manage the currency risk arising from the group’s
operations and its sources of finance.
The main risks arising from the group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit
risk. The board reviews and agrees policies for managing each of these risks, which are summarised below.
No changes were made to the objectives, policies or processes during the years ended 30 June 2009 and 29 February 2008.
33.1 Fair values
The fair values of all recognised financial instruments are not materially different from the carrying amounts reflected in the
balance sheet.
The fair value of financial instruments has been calculated by discounting the expected future cash flows at prevailing
interest rates.
33.2 Foreign currency risk
The group incurs currency risk as a result of transactions which are denominated in a currency other than the group entities’
functional currency. The currencies, giving rise to currency risk, in which the group primarily deals, are Pound sterling, US
dollar, Euro and Japanese yen.
The group entities hedge trade payables, trade receivables and cash on hand, denominated in foreign currencies, by entering
into foreign currency contracts or foreign currency option contracts. It is the group’s policy not to enter into foreign currency
contracts or option contracts until a firm commitment is in place. The forward currency contracts must be in the same currency
as the hedged item.
It is the group’s policy to negotiate the terms of the hedge derivatives to match the terms of the hedged items to maximise hedge
effectiveness. The group does not apply hedge accounting as per IAS 39.
The principal or contract amounts of foreign currency contracts and option contracts outstanding at balance sheet date are
detailed in note 30 to the financial statements.
The following table demonstrates the sensitivity to a reasonable possible change in exchange rates based on management’s
most recent expectations, with all other variables held constant, of the group’s profit before tax due to changes in the fair value
of forward exchange contracts and option contracts.
Increase/(decrease)
in basis points
Group
Company
R000
R000
33. Financial instruments (continued)
33.2 Foreign currency risk (continued)
2009
– Pound sterling
– US dollar
– Euro
2008
– Pound sterling
– US dollar
– Euro
+10c
-10c
+10c
-10c
+10c
-10c
6
(6)
(212)
212
(197)
197
–
–
–
–
–
–
+10c
-10c
+50c
-50c
+10c
-10c
8
(8)
(1 010)
1 010
108
(108)
–
–
–
–
–
–
33.3 Interest rate risk
The group’s exposure to market risk for changes in interest rates relates to the group’s long term and short term debt.
The group generally adopts a policy of ensuring that its exposure to changes in interest rates is on a variable rate basis.
The following table demonstrates the sentitivity to a reasonably possible change in interest rates, with all other variables held
constant, of the group’s profit before tax through the impact on variable rate borrowings.
Group
Company
R000
R000
+0,5%
-0,5%
(641)
641
345
(345)
+1,0%
-0,5%
388
(194)
1 304
(651)
Increase/(decrease)
in basis points
2009
Profit before tax
2008
Profit before tax
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest
rate risk:
Total
R000
Within
1 year
R000
1 to 2
years
R000
2 to 3
years
R000
3 to 4
years
R000
Group
2009
Fixed rate
Other loans
Provisions – share appreciation rights
Variable rate
Net cash and cash equivalents
(3 488)
1 840
(1 595)
(1 958)
1 840
(1 063)
(100 000)
(28 150)
–
(28 150)
–
–
–
–
2008
Fixed rate
Other loans
Provisions – share appreciation rights
(10 937)
754
(3 716)
(8 053)
754
(1 239)
(1 442)
–
(1 239)
(1 442)
–
(1 238)
–
–
–
Variable rate
38 825
38 825
–
–
(765)
–
(354)
–
(765)
–
(177)
–
–
–
(100 000)
–
33.3 Interest rate risk (continued)
Total
R000
Within
1 year
R000
1 to 2
years
R000
2 to 3
years
R000
3 to 4
years
R000
–
–
–
–
–
–
–
–
Company
2009
Variable rate
Loans due by subsidiaries
Loans due to subsidiaries
Loan to Jasco Employee Share Incentive Trust
Net cash and cash equivalents
2008
Fixed rate
Other loans
245 438
(133 635)
4 921
(47 804)
–
–
4 921
(47 804)
245 438
(133 635)
–
–
(6 740)
754
(6 740)
754
–
–
–
–
–
–
254 037
(145 327)
4 168
17 263
–
–
4 168
17 263
254 037
(145 327)
–
–
–
–
–
–
–
–
–
–
Variable rate
Loans due by subsidiaries
Loans due to subsidiaries
Loan to Jasco Employee Share Incentive Trust
33.4 Credit risk management
The group’s main exposure to credit risk arises from the group’s normal credit sales to customers.
The group has a credit risk policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations
are performed on all customers requiring credit over a certain amount. Ownership of goods only passes on receipt of payment.
In addition, receivable balances are monitored on an ongoing basis with the result that the group’s exposure to bad debts is
not significant.
The maximum exposure to credit risk is represented by the carrying value of each financial asset in the balance sheet. At year
end, management considered that it had sufficient provisions to cover any significant risk exposure in relation to trade
receivables. There is no significant concentration of credit risk, due to the spread of the trade receivables.
Apart from the loan to the share incentive trust (note 13.1) and the trade receivables (note 15), no financial assets are past due,
but not impaired.
33.5 Capital management
The primary objective of the group’s capital management is to ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximise shareholder value.
The group manages its capital structure and makes adjustments to it, in light of changing economic conditions. To maintain or
adjust the capital structure, the group may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares.
The group’s capital consists of its equity and the non-current loans from the subsidiaries for capital management purposes.
Management believes the group has met its capital management objectives for the year under review.
33.6 Liquidity management
The group is exposed to liquidity risk as a result of incurring liabilities, giving rise to the risk of becoming unable to settle
obligations as they become due. The group manages this risk through the management of working capital and cash flows.
The cash flows from trade receivables and trade payables are reasonably well matched in that payments are made to suppliers
on the same terms and conditions given to customers. It is anticipated that the year end position will be settled within a
45 – 60 day timeframe.
The table below summarises the maturity profile of the Group’s financial liabilities at year end based on contractual
undiscounted payments.
Total
R000
On demand
R000
Less than
3 months
R000
3 to 12
months
R000
1 to 5
years
R000
103 488
118 827
2 227
–
118 827
–
490
–
2 227
1 468
–
–
101 530
–
–
28 150
28 150
–
–
–
252 692
146 977
2 717
1 468
101 530
10 937
299
82 082
804
–
–
82 082
–
6 740
299
–
804
1 313
–
–
–
2 884
–
–
–
94 122
82 082
7 843
1 313
2 884
47 804
13 768
153 009
47 804
13 768
19 374
–
–
–
–
–
–
–
–
133 635
214 581
80 946
–
–
133 635
6 740
299
–
–
6 740
299
–
–
–
–
Group
2009
Interest bearing loans and borrowings
Derivative financial instruments
Bank overdraft
2008
Derivative financial instruments
Company
2009
Bank overdraft
2008
11 506
11 506
–
–
–
157 652
12 325
–
–
145 327
176 197
23 831
7 039
–
145 327
34. Retirement benefits
All employees of the group, other than those required by legislation to be members of an industrial fund, are members of a
comprehensive pension and/or provident fund, which provides comparable retirement, death and disability benefits. The funds
are registered with, and are governed by, the Pension Funds Act, 1956. Because they are defined contribution funds, whereby
the benefits are determined solely by the contributions thereto together with resultant investment earnings on those
contributions, the funds are independent of the finance of the group and there is no responsibility for any future unfunded
obligations arising therefrom.
35. Directors’ emoluments
Short term benefits
Fees for
services
as a
director
R
2009
Non-executive
(paid by Jasco
Electronics
Holdings Limited)
ATM Mokgokong
MJ Madungandaba
PS Chapwanya
Bonuses
and
performanceBasic
related
salary
payments
R
†R
Sums paid
by way of
expense
allowance
R
Total
short
term
benefits
R
Contributions
to defined
contribution
funds
R
Contributions
under any
other
benefit
scheme
R
Sharebased
payments
R
Total
R
334 834
344 400
183 680
–
–
–
–
–
–
–
–
–
334 834
344 400
183 680
–
–
–
–
–
–
–
–
–
334 834
344 400
183 680
JM Matsipa
145 413
–
–
–
145 413
–
–
–
145 413
FE Emary
JC Farrant
JA Sherry
208 936
215 059
145 413
–
–
–
–
–
–
–
–
–
208 936
215 059
145 413
–
–
–
–
–
–
–
–
–
208 936
215 059
145 413
–
–
–
–
–
–
–
–
1 577 735
–
–
– 1 577 735
–
–
– 1 577 735
–
–
–
–
–
–
– 1 619 867 1 619 867
–
–
–
–
–
–
– 1 619 867 1 619 867
– 1 917 525
– 1 228 398
–
848 648
759 098
587 258
200 000
31 372 2 707 995
39 080 1 854 736
15 706 1 064 354
135 959
66 844
43 622
128 478
114 024
74 820
– 2 972 432
93 015 2 128 619
58 568 1 241 364
– 3 994 571
1 546 356
86 158 5 627 085
246 425
317 322
151 583 6 342 415
1 577 735 3 994 571
1 546 356
86 158 7 204 820
246 425
317 322 1 771 450 9 540 017
J Rothbart
Executive
(paid by Jasco
Electronics
Holdings Limited)
MH Lotz
Executive
(paid by Jasco
Trading (Pty)
Limited)
MH Lotz
WA Prinsloo
O Seiphemo
Total
†Based on 2008 audited results.
35. Directors’ emoluments (continued)
Short term benefits
Fees for
services
as a
director
R
2008
Non-executive
(paid by Jasco Electronics
Holdings Limited)
ATM Mokgokong
204 000
MJ Madungandaba
181 200
PS Chapwanya
93 000
JM Matsipa
87 000
Bonuses
and
performanceBasic
related
salary
payments
R
†R
–
–
–
–
–
–
–
–
Contributions
under any
other
benefit
scheme
R
Sharebased
payments
R
Total
R
Sums paid
by way of
expense
allowance
R
Total
short
term
benefits
R
Contributions
to defined
contribution
funds
R
–
–
–
–
204 000
181 200
93 000
87 000
–
–
–
–
–
–
–
–
–
–
–
–
204 000
181 200
93 000
87 000
FE Emary
141 600
–
–
–
141 600
–
–
–
141 600
JC Farrant
JA Sherry
142 800
98 400
–
–
–
–
–
–
142 800
98 400
–
–
–
–
–
–
142 800
98 400
948 000
–
–
–
948 000
–
–
–
948 000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
622 000
622 000
622 000
622 000
948 000
–
–
–
948 000
–
–
622 000 1 570 000
– 1 272 583
–
786 642
–
568 597
611 358
146 125
37 500
13 957 1 897 898
17 142
949 909
14 064
620 161
87 808
41 299
28 216
88 695
69 986
51 366
– 2 074 401
36 452 1 097 646
36 452
736 195
– 2 627 822
794 983
45 163 3 467 968
157 323
210 047
72 904 3 908 242
948 000 2 627 822
794 983
45 163 4 415 968
157 323
210 047
694 904 5 478 242
Executive
(paid by Jasco Electronics
Holdings Limited)
MH Lotz
Executive
(paid by Jasco Trading
(Pty) Limited)
MH Lotz
WA Prinsloo
O Seiphemo
Total
†Based on 2007 audited results.
36. Acquisition of Maringo subsequent to year end
On 7 July 2009, Jasco has announced the acquisition of a 30% interest in Maringo Communications (Pty) Limited for an initial
consideration of R4 millon, with an option to acquire an additional 20% plus 1 should Maringo achieve certain profit targets, for
an additional consideration limited to a maximum of R30 million.
The investment will be treated as an associate and equity-accounted even though Jasco could obtain a majority shareholding
in Maringo. This is due to the uncertainty associated with the profit targets that need to be achieved for Jasco to take control.
The total and 30% interest in Maringo’s assets and liaibilites at 31 March 2009 and the income and expenses for the nine months
then ended are as follows:
30%
Total
interest
Balance sheet
Assets
Non-current assets
1 092
328
227
68
1 319
396
Capital and reserves
Non-current liabilities
Current liabilities
(2 138)
2 392
1 065
(642)
718
320
Total equity and liabilities
1 319
396
340
(211)
98
(3 046)
102
(63)
29
(914)
8
(160)
2
(48)
Loss before tax
Taxation expense
(2 971)
832
(892)
250
Loss for the period
(2 139)
(642)
Current assets
Total assets
Equity and liabilities
Income statement
Sales
Cost of sales
Other income
Other expenses
Investment revenue
Finance costs
at 30 June 2009
Information in respect of interest in subsidiary companies
Name
Issued share
capital
Jasco Trading (Pty) Limited
Jasco Cables Investments (Pty) Limited
Effective
percentage
Carrying value
of shares
Indebtedness by/
(to) subsidiaries
2009
%
2008
%
2009
R000
2008
R000
2009
R000
2008
R000
4 180
543 780
100
100
100
100
877
131 378
877
–
85 179
–
91 800
–
500
100
100
100
100
100
100
100
72
–
–
–
–
–
–
9 687
10 727
3 000
9 124
10 043
–
4 000
100
100
30 574
31 000
(6 105)
(5 943)
1 000
100
100
–
–
(7 204)
(7 204)
4 000
100
100
4
4
–
–
Jasco Tasslelane (Pty) Limited (formerly
TeleSciences (Pty) Limited)
Plumbago Technologies 53 (Pty) Limited
Tasslelane Services (Pty) Limited
Telesciences (Pty) Limited (formerly Tasslelane
Technologies (Pty) Limited)
Jasco Shelf Co TSC (Pty) Limited (formerly
Multivid (Pty) Limited)†
Jasco Shelf Co SASP (Pty) Limited (formerly Special
Cables (Pty) Limited)†
Multivid (Pty) Limited (formerly Jasco Shelf
Co TSC (Pty) Limited)†
100
100
100
–
–
–
–
Special Cables (Pty) Limited (formerly Jasco
Shelf Co SASP (Pty) Limited)†
Webb Industries (Pty) Limited†
500
100
100
100
100
100
–
–
–
–
–
–
–
–
Webb Masts and Towers (Pty) Limited†
100
100
100
–
–
–
–
–
–
100
–
4
–
(34)
162 833
31 885
95 284
97 786
Jasco International (Pty) Limited (deregistered)
Aggregate amounts owing to subsidiaries – loans
Aggregate amounts owing to subsidiaries – current accounts
Aggregate amounts owing by subsidiaries – loans
Aggregate amounts owing by subsidiaries – current accounts
(133 635) (145 327)
(19 374) (12 325)
245 438 254 037
2 855
1 401
95 284
97 786
50 763
(14 272)
29 918
(358)
All the subsidiary companies are registered in South Africa.
†Dormant company.
Attributable profits/(losses) of subsidiaries
Aggregate profits
Aggregate losses
Segmental report
at 30 June 2009
Sub-total Other nonDomestic
operating operating
Products Electrical divisions divisions
R000
R000
R000
R000
Telecommunications
R000
Security
R000
2009
Revenue
406 531
210 898
145 402
–
762 831
23 701
786 532
– external
– inter-group
406 477
54
210 620
278
143 107
2 295
–
–
760 204
2 627
13 046
10 655
773 250
13 282
4 620
58 988
–
25 410
–
13 489
1 683
1 620
6 303
99 507
–
(27 289)
6 303
72 218
4 577
904
3 838
–
9 319
184
9 503
Revenue
282 592
94 554
140 238
–
517 384
10 754
528 138
– external
– inter-group
282 034
558
94 554
–
139 306
932
–
–
515 894
1 490
3 267
7 487
519 161
8 977
1 136
41 453
–
8 254
–
16 081
–
–
1 136
65 788
–
(15 164)
1 136
50 624
2 722
443
2 253
–
5 418
83
5 501
143 848
55 852
5 678
78 202
36 981
752
47 868
3 473
3 282
219 399
100 022
–
489 317
196 328
9 712
42 675
17 655
394
531 992
273 984
10 106
125 6249
32 197
62 929
–
220 750
56 066
276 816
68 386
2 739
16 425
1 008
20 112
5 628
–
–
104 923
9 375
20 715
57
125 638
9 432
Total
R000
1. Based on industry sector
1.1 Income statement
Share of income from joint
venture/associate
Operating profit/(loss)†
Depreciation of plant
and equipment
2008
Share of income from
joint venture
Operating profit/(loss)†
Depreciation of plant
and equipment
1.2 Balance sheet
2009
Assets
Liabilities
Capital expenditure
2008
Assets
Liabilities
Capital expenditure
†Operating profit of the operating divisions includes the share of the income from the joint venture (Telecommunications) and the associate (Electrical),
presented as an after tax number, but excludes interest paid or received and is stated before making adjustments for inter-group interest and
administration fees.
No secondary information is disclosed as the group mainly operated in one geographical segment during the year.
Ordinary share performance and shareholding
Statistical highlights for the six years ended 30 June 2009
2009
2008
2007
2006
2005
2004
113
360
168
278
450
300
230
350
295
195
260
247
65
250
224
70
172
80
Analysis of Jasco share transactions
Total number of transactions recorded on JSE
Total number of shares traded (000)
2 226
21 008
3 206
25 137
3 044
17 557
1 998
13 925
1 619
19 324
1 376
10 918
Total number of shares traded as a
percentage of issued shares (%)
Total value of shares traded (R000)
18,4
47 601
35,9
95 753
25,3
48 507
20,0
31 271
27,8
26 558
15,7
11 902
Jasco share price
Lowest share price (cents)
Highest share price (cents)
Closing share price (cents)
Analysis of Jasco shareholding at 30 June 2009
Number of
shareholders
% of
total
Number of
shares
% of
total
653
704
316
360
31,1
33,5
15,0
17,1
351 844
2 130 311
2 572 425
11 426 203
0,3
1,9
2,2
10,0
70
3,3
98 028 652
85,6
2 103
100
114 509 435
100
1 849
254
87,9
12,1
25 408 536
89 100 899
22,2
77,8
2 103
100
114 509 435
100
39 963 793
27 376 750
34,9
23,9
Size of shareholding
1 – 1 000
1 001 – 5 000
5 001 – 10 000
10 001 – 100 000
100 001 and over
Analysis of shareholders
Class
– individuals
– financial institutions and corporate bodies
Major shareholders (5% or more of shares in issue)
– AfroCentric Investment Corporation Limited
– Community Investment Holdings (Pty) Limited (CIH)*
Jasco ordinary shareholders’ spread at 30 June 2009
Non-public
– BEE partners
– Jasco directors†
– Associates of Jasco directors
– Jasco Employee Share Incentive Trust
Public
3
6
2
1
0,1
0,3
0,1
0,1
67 340 543
6 156 351
298 500
3 512 438
58,8
5,4
0,2
3,1
12
2 091
0,6
99,4
77 307 832
37 201 603
67,5
32,5
2 103
100
114 509 435
100
†Refer to the directors’ report on page 38 for detailed information of the directors’ interest in share capital.
*CIH’s shares are held by Malesela Holdings No 1 (Pty) Limited and the Inkonkoni Trust.
Shareholders’ diary
Annual general meeting
14 October 2009
Reports
Interim for half-year to August 2008
Interim for 12 months to February 2009
Published 1 October 2008
Published 2 April 2009
9 September 2009
Notice of annual general meeting
Notice is hereby given that the twenty first annual general
meeting of the members of the company will be held in the
company’s boardroom, Woodmead Office Park, 8 Saddle Drive,
Woodmead, on Wednesday, 14 October 2009, at 11:00 for the
purpose of considering the following business and if deemed fit,
to pass, with or without modification, the following resolutions:
As ordinary resolutions
1. To receive and consider the group financial statements
together with the financial statements of the company for
the year ended 30 June 2009.
2. To elect Merrs PS Chapwanya, FE Emary and JM Matsipa
who retire in terms of the articles of association, Article 77
and J Rothbart who retires in terms of Artile 93, but are
eligible for re-election. Merrs PS Chapwanya, FE Emary,
JM Matsipa and J Rothbart’s curriculum vitaes are detailed
on pages 6 and 7 of the annual report.
3. To review the general authority of the directors in terms of
sections 221 and 222 of the Companies Act, No 61 of 1973,
as amended (the Act), until the next annual general meeting,
to allot and issue, at their discretion but limited to 10% of
the authorised share capital of the company and in terms
of the regulations of the JSE Limited (the JSE), the unissued
shares of the company.
4. To resolve that the directors have the powers to allot and
issue any shares of any class already in issue in the capital
of the company for cash when the directors consider it
appropriate in the circumstances, subject to the following:
• this authority shall not endure beyond the earlier of the
next annual general meeting of the company or beyond
15 (fifteen) months from the date of passing of this
ordinary resolution
• there will be no restrictions in regard to the persons to
whom the shares may be issued, provided that such shares
are to be issued to public shareholders (as defined by the
JSE Listings Requirements) and not to related parties
• upon any issue of shares which, together with prior
issues during any financial year, will constitute 5% (five
percent) or more of the number of shares of the class in
issue, the company shall, by way of a paid press
announcement in terms of paragraph 11.22 of the JSE
Listings Requirements, give full details thereof, including
the effect on the net asset value of the company and
earnings per share, the number of securities issued and
the average discount to the weighted average traded
price of the securities over the 30 days prior to the date
that the price of such issue was determined or agreed by
the company’s directors
• that issues in the aggregate in any one financial year
may not exceed 15% (fifteen percent) of the number of
that class of the company’s issued shares (including
instruments which are compulsorily convertible into
shares of that class) at the date of application less any
shares of that class issued, or to be issued in the future
arising from options/convertible securities issued during
the current financial year, plus any shares to be issued
pursuant to an announced, irrevocable and fully underwritten rights offer or to be issued pursuant to any
acquisition for which final terms have been announced
• the maximum discount at which securities may be
issued is 10% (ten percent) of the weighted average
traded price of those securities over the 30 (thirty)
business days prior to the date that the price of the issue
is determined or agreed by the directors
• a 75% (seventy-five percent) majority is required of votes
cast by the shareholders present or represented by
proxy at the general meeting to approve the resolution
5. To authorise the directors to approve the auditor’s
remuneration.
6. To approve the directors’ emoluments for the year under
review, as per note 35 to the annual financial statements.
As special resolutions
1. To resolve that the company hereby approves, as a general
approval contemplated in sections 85(2), 85(3) and 89 of the
the Companies Act, No 61 of 1973, as amended (the Act)
and in terms of the company’s articles of association, the
acquisition by the company or any of its subsidiaries from
time to time of the issued ordinary shares of the company,
upon such terms and conditions and in such amounts as
the directors of the company may from time to time
determine. All such acquisitions of shares will be subject
to: the articles of association of the company; the provisions
Notice of annual general meeting continued
of the Act and the JSE Listings Requirements (as presently
constituted and which may be amended from time to time);
and provided that:
• any such acquisition of ordinary shares shall be effected
through the order book operated by the JSE trading
system and done without any prior understanding or
arrangement between the company or any of its subsidiaries and the counterparty
• this general authority shall only be valid until the
company’s next annual general meeting provided that it
shall not extend beyond 15 (fifteen) months from the
date of passing of this special resolution
• a paid press announcement will be published as soon
as the company or its subsidiaries has/have acquired
ordinary shares constituting, on a cumulative basis, 3%
(three percent) of the number of ordinary shares in
issue, prior to the acquisition pursuant to which the 3%
(three percent) threshold is reached, and in respect of
every 3% (three percent) thereafter, which announcement
shall contain full details of such acquisitions
• acquisitions by the company and its subsidiaries of
ordinary shares in any one financial year may not
exceed 20% (twenty percent) of the company’s issued
ordinary share capital from the date of the grant of this
general authority
• subsidiaries of the company may acquire, in aggregate,
no more than 10% (ten percent) of the company’s issued
ordinary share capital at any one time
• in determining the price at which the company’s ordinary
shares are acquired by the company or any of its subsidiaries in terms of this general authority, the maximum
price at which such ordinary shares may be acquired will
be at a premium of no more than 10% (ten percent) of
the weighted average of the market price at which such
ordinary shares are traded on the JSE, as determined
over the 5 (five) business days immediately preceding
the date of repurchase of such ordinary shares by the
company or any of its subsidiaries
• the company may at any point in time only appoint one
agent to effect any repurchase(s) on its behalf
• the company or any of its subsidiaries may only undertake
a repurchase if, after such a repurchase it shall still
comply with the spread requirements of the JSE Listings
Requirements
• the company or any of its subsidiaries may not repurchase
securities during a prohibited period, as defined in the
JSE Listings Requirements
The reason for special resolution number 1 is to grant the
company or any of its subsidiaries a general authority in terms
of the Act for the acquisition by the company or any of its
subsidiaries of shares issued by the company, which authority
shall be valid until the earlier of the next annual general
meeting of the company or the variation or revocation of such
general authority by special resolution by any subsequent
general meeting of the company, provided that the general
authority shall not extend beyond 15 (fifteen) months from
the date of this annual general meeting. The passing and
registration of this special resolution will have the effect of
authorising the company or any of its subsidiaries to acquire
shares issued by the company.
Information required in terms of the JSE Listings Requirements with regard to this general authority for the company
or any of its subsidiaries to repurchase the company’s
securities appears in the annual financial statements, to
which this notice of annual general meeting is annexed, as
indicated below:
• Directors and management of the company: pages 6 and 7
• Major shareholders: page 80
• Share capital: page 61
• Directors’ interest in share capital: page 38
The directors, whose names are given on pages 6 and 7 of the
annual report, collectively and individually accept full
responsibility for the accuracy of the information given and
certify that to the best of their knowledge and belief there are
no facts that have been omitted which would make any
statement false or misleading, and that all reasonable
enquiries to ascertain such facts have been made and that the
annual report and notice of annual general meeting contains
all information required by the JSE Listings Requirements.
There has been no material change in the financial or trading
position of the company or any of its subsidiaries since
30 June 2009.
Except for the reassessments from SARS as explained in note
27, page 69, there are no legal or arbitration proceedings,
either pending or threatened against the company or its
subsidiaries, of which the directors are aware, which may
have, or have had in the last 12 months, a material effect on
the financial position of the company or its subsidiaries.
Pursuant to and in terms of the JSE Listings Requirements,
the directors of the company hereby state:
i That the intention of the company and/or any of its subsidiaries is to utilise the authority if at some future date
the cash resources of the company are in excess of its
requirements. In this regard the directors will take into
account, inter alia, an appropriate capitalisation structure
for the company, the long term cash needs of the company,
and will ensure that any such utilisation is in the interest
of shareholders
ii That the method by which the company and/or any of its
subsidiaries intends to repurchase its securities and the
date on which such repurchase will take place, has not yet
been determined
iii That after considering the effect of a maximum permitted
repurchase of securities, the company and its subsidiaries
are, as at the date of this notice convening the annual
general meeting of the company, able to fully comply with
the JSE Listings Requirements. Nevertheless, at the time
that the contemplated repurchase is to take place, the
directors of the company will ensure that:
• The company and the group will be able in the ordinary
course of business to pay its debts for a period of
12 months after the date of the notice of the annual
general meeting
• The assets of the company and the group will be in
excess of the liabilities of the company and the group for
a period of 12 months after the date of the notice of the
annual general meeting. For this purpose, the assets
and liabilities will be recognised and measured in
accordance with the accounting policies used in these
audited annual group financial statements
• The share capital and reserves of the company and the
group will be adequate for ordinary business purposes
for a period of 12 months after the date of the notice of
the annual general meeting
• The working capital of the company and the group will be
adequate for ordinary business purposes for a period of
12 months after the date of the notice of the annual
general meeting
• The company will provide its sponsor and the JSE with
all documentation as required in Schedule 25 of the JSE
Listings Requirements, and will not commence any
repurchase programme until the sponsor has signed off
on the adequacy of its working capital, advised the JSE
accordingly and the JSE has approved this documentation
attend the meeting, in terms of the custody agreement
entered into between such shareholders and their CSDP
or broker.
Proxies
Each shareholder is entitled to appoint one or more proxies
(who need not be shareholders of Jasco) to attend, speak and
vote in his/her stead. On a show of hands every shareholder
who is present in person or by proxy shall have one vote, and,
on a poll, every shareholder present in person or by proxy
shall have one vote for each share held by him/her.
Shareholders who hold their shares in certificated form or
who are own-name registered dematerialised shareholders
who are unable to attend the annual general meeting, but who
wish to be represented thereat, are required to complete and
return the attached form of proxy so as to be received by the
transfer secretaries, Link Market Services South Africa (Pty)
Limited, 11 Diagonal Street, Johannesburg, by no later than
11:00 on Tuesday, 13 October 2009.
Shareholders who have dematerialised their shares through
a CSDP or broker, other than by own-name registration,
who wish to vote by way of proxy, should provide their CSDP
or broker with their voting instructions, in terms of the
custody agreement entered into between such shareholders
and their CSDP or broker. These instructions must be provided to their CSDP or broker by the cut-off time or date
advised by their CSDP or broker for instructions of this nature.
By order of the board
Voting
Each shareholder, whether present in person or represented
by proxy, is entitled to attend and vote at the annual general
meeting. Shareholders who have dematerialised their shares
through a Central Securities Depository Participant (CSDP)
or broker, other than by own-name registration, who wish to
attend the annual general meeting, should instruct their
CSDP or broker to issue them with the necessary authority to
MN SEPURU
Company secretary
Woodmead, Sandton
9 September 2009
Corporate partners
Secretary and registered office
Sponsor
MN Sepuru
Woodmead Office Park
8 Saddle Drive
Woodmead 2157
PSG Capital (Pty) Limited
Building 8, Woodmead Estate
1 Woodmead Drive
Woodmead 2198
Woodmead 2157
Transfer secretaries
Link Market Services South Africa (Pty) Limited
11 Diagonal Street
Johannesburg 2001
Commercial bankers
The Standard Bank of South Africa Limited
Corporate and Investment Banking
3 Simmonds Street
Johannesburg 2001
Auditors
Ernst & Young Inc.
Registered Auditor
Wanderers Office Park
52 Corlett Drive
Illovo 2196
First National Bank of South Africa Limited
FNB Corporate
Corner Pritchard and Simmonds Streets
Johannesburg 2001
Form of proxy
Jasco Electronics Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/003293/06)
Share code: JSC ISIN: ZAE000003794
(“Jasco”)
For use ONLY by certificated shareholders and own-name dematerialised shareholders at the annual general meeting of
Jasco shareholders to be held in the company’s boardroom, Woodmead Office Park, 8 Saddle Drive, Woodmead, Sandton,
at 11:00 on Wednesday, 14 October 2009, or such later time that may be applicable (“the annual general meeting”).
Dematerialised shareholders, other than with own-name registration, must NOT complete this form of proxy and must provide
their Central Securities Depository Participant (CSDP) or broker with their voting instructions in terms of the custody agreement
entered into between such shareholders and their CSDP or broker.
I/We
(Please print name in full)
being the registered holder/s of
of
(address)
ordinary shares in Jasco, hereby appoint (refer note 1):
1.
or failing him/her,
2.
or failing him/her,
3. the chairperson of the annual general meeting,
as my/our proxy to attend, speak and vote on my/our behalf at the annual general meeting which will be held for the purpose
of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any
adjournment thereof and to vote for or against the resolutions or to abstain from voting in respect of the shares in the issued
capital of Jasco registered in my/our name/s, in accordance with the following instruction (refer note 2):
In favour of*
Against*
Abstain*
As ordinary resolutions:
1. Resolution to approve and adopt the financial statements and group
financial statements.
2. (a) Resolution to re-elect PS Chapwanya as director.
(b) Resolution to re-elect JM Matsipa as director.
(c) Resolution to re-elect FE Emary as director.
(d) Resolution to re-elect J Rothbart as director.
3. Resolution to place the unissued shares under the directors’ control in
accordance with sections 221 and 222 of the Act.
4. Resolution to renew the general authority to directors to issue shares for cash.
5. Resolution to approve the auditor’s remuneration.
6. Resolution to approve the directors’ emoluments.
As special resolutions:
1. Resolution to renew the general authority granted to directors to repurchase shares.
* Insert an “X” in the relevant spaces above according to how you wish your votes to be cast. If you wish to cast your votes in respect
of a lesser number of shares than you own in Jasco, insert the number of shares held in respect of which you desire to vote
(refer note 2).
Signed at
on
2009
Signature
Assisted by me (where applicable)
Any Jasco shareholder entitled to attend and vote at the annual general meeting and at any adjournment thereafter may appoint
one or more proxies to attend, speak and to vote in place of such Jasco shareholder. A proxy so appointed need not be a
Jasco shareholder.
Please read the notes on page 86.
Notes to proxy
1. A Jasco shareholder may insert the name of a proxy or the names of two alternative proxies of the Jasco shareholder’s choice
in the space/s provided, with or without deleting “the chairperson of the annual general meeting”, but any such deletion
must be initialled by the Jasco shareholder concerned. The person whose name appears first on the form of proxy and
who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.
2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast
your votes in respect of a lesser number of shares than you own in Jasco, insert the number of ordinary shares held in
respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to
abstain from voting at the annual general meeting as he/she deems fit in respect of all the shareholder’s votes exercisable
thereat. A Jasco shareholder or his/her proxy is not obliged to use all the votes exercisable by the Jasco shareholder or by
his/her proxy, but the total of the votes cast and in respect whereof abstentions recorded may not exceed the total of the
votes exercisable by the shareholder or by his/her proxy.
3. The date must be filled in on this proxy form when it is signed.
4. The completion and lodging of this form of proxy will not preclude the relevant Jasco shareholder from attending the annual
general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. Where
there are joint holders of shares, the vote of the senior joint holder who tenders a vote, as determined by the order in which
the names stand in the register of members, will be accepted.
5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity
must be attached to this form of proxy unless previously recorded by the transfer secretaries of Jasco or waived by the
chairperson of the annual general meeting of Jasco shareholders.
6. Any alterations or corrections made to this form of proxy must be initialled by the signatory/ies.
7. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity
are produced or have been registered by the transfer secretaries of Jasco.
8. Forms of proxy must be received by the transfer secretaries, Link Market Services South Africa (Pty) Limited, at
11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000), by no later than 11:00 on Tuesday,
13 October 2009.
9. The chairperson of the annual general meeting may accept or reject any form of proxy, in her/his absolute discretion, if it
is completed other than in accordance with these notes.
10. If required, additional forms of proxy are available from the transfer secretaries of Jasco.
11. Dematerialised shareholders, other than with own-name registration, must NOT complete this form of proxy and must provide
their CSDP or broker with their voting instructions in terms of the custody agreement entered into between such shareholders
and their CSDP or broker.
9235
JASCO ANNUAL REPORT 2009
Jasco 8 Saddle Drive Woodmead Office Park Woodmead 2157 South Africa
Tel No +27 11 802 8933 Fax No +27 11 802 8931
www.jasco.co.za

9235 Jasco AR front:final

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