Jasco has concluded the final year of its three-year restructuring programme, with revenue growing from R800-million to over R1-billion per year over the last three years, and annuity income growing by over 100%.
Although group revenue has exceeded the R1-billion target set at the start, market conditions remained tough over the three-year period.
As indicated at interim stage, planned final restructuring costs impacted negatively on earnings. Nevertheless, the results are a marked improvement on the previous financial year, largely due to the non-recurrence of once-off items in that year.
However markets remained depressed during the second half of the financial year to 30 June 2014. This, together with stiff competition to maintain market share and customer orders delayed into the new financial year, impacted negatively in the period.
The Electrical Manufacturers business, which delivered a very strong performance, was the notable exception.
In line with previously set targets, the group continued to reduce overheads, including further relocations of certain businesses to Jasco’s Midrand head office. Further management layers were removed in line with our productivity measures, which resulted in the consolidation of some businesses.
Against these market conditions, Jasco therefore advises that, for the year ended 30 June 2014, it expects:
* Earnings per share (EPS) to be between 100% and 110% higher (between 0,0 cents and 7,8 cents per share) compared to the 77,9 cents loss per share for the previous financial year, where once-off costs of R114-million were incurred; and
* Headline earnings per share (HEPS) to be between 45% and 55% higher (between 0,4 cents and 0,6 cents per share) than the 0,3 cents per share for the previous year.
The difference between EPS and HEPS in the current reporting period is:
* The profit on disposal of the Automotive business to Lumen of R4,3-million; and
* A R0,2-million profit on disposal of fixed assets in the normal course of activities.
The weighted average number of shares in issue for the year increased from 141 272 436 to 172 831 580. An additional 72-million shares were issued in the rights issue of 21 January 2014. This has materially impacted the comparison of EPS or HEPS to the previous financial year.
The group has a 51% shareholding in its associate, M-TEC, with Taihan Electric Wire Company of Korea holding the remaining 49% interest. As advised previously, the investment is categorised as “held-for-sale” for IFRS reporting purposes.
Accordingly, Jasco has stopped equity accounting this investment in its consolidated accounts. The performance from M-TEC has therefore had no impact on the earnings reported for the current financial year. Negotiations to sell the group’s stake in M-TEC continue.
Although the 2014 financial year continued to be impacted by planned restructuring costs and very difficult market conditions, the three-year programme is now complete and the sound execution of Jasco’s strategy continues.
The new cost base, the more efficient group structure, and the sustainability of the core businesses – after exiting various non-core assets – indicate that the group is now better positioned to face the prevailing market conditions and to deliver results.