Jasco warns its listing may be compromised through plans to another raise of more capital

JASCO Electronics Holdings yesterday warned the viability of its listing may be compromised due to the possibility of it not meeting the free float requirements of the JSE in the event of a further capital raise.

“Shareholders will be updated on the board’s decision in this regard,” the company said in its results for the year to June 30, 2022.

“Jasco’s most pressing issue remains its high levels of debt and its financial underperformance. Further debt reduction will be required, either through another capital injection by its major shareholders or the potential disposal of another profitable business,” it said.

“In the event of another capital raise, and if the group’s major shareholder invests further, either with limited or no equity contributions from the rest of the shareholders, the free float trading on the stock exchange may fall to unacceptably low levels in terms of the JSE Listings Requirements,” the company said.

During the past year Jasco raised R47.2 million through a rights issue, increased its cash and cash equivalents by R9m and improved its debt-toequity ratio to 118.2%.

Headline earnings per share decreased to a 6.4 cents loss per share, from a 0.6c loss per share for 2021. The weighted average number of shares in issue increased to 278.6 million shares from 224.2 million shares.

Due to operating losses in its Manufacturing business caused by strikes, it began a review to reposition the operation in response to customer demand and market conditions.

To prevent ongoing pressure on the rest of Jasco, a decision was taken to restructure Security & Fire business and to exit the loss-making fire segment.

Jasco sold its investment in Jasco Property Solutions (JPS) to Reach Group, with effect from June 1, 2022.

Gross misconduct by the leadership team was uncovered in the Security & Fire Solutions business. Immediate action was taken, with the team members no longer at the group.

Manufacturing was severely affected by the social unrest, the national strike in October last year and a plant-level strike, between March and June 2022, resulting in significant losses, the company said.

Operating profit fell by 40.1% to R3.2m, mainly due to the losses suffered by Security & Fire, and Manufacturing.

Net finance costs of R16.5m decreased from the corresponding period’s R24m, following a reduction in debt. The closing cash balance of R29.4m increased from R20.4m on June 30, 2021.

As at June 30, 2022, the group had accumulated losses of R268.5m (R252.2m), with the group reporting an annual loss of R16.3m (R6.5m).