Jasco Electronics Holdings has reported significant operational performance improvements for the six months ended 31 December 2015, with all businesses contributing to profits despite difficult market conditions.
Commenting on the results, Jasco’s CEO Pete da Silva says: “We are extremely pleased with the improvement in results, especially against the tough market conditions. We have focused on driving sales, with our order book up 24% from December 2014 and a focus on cost cutting resulting in 6% cost savings. The majority of our businesses delivered strong results, with all businesses now profitable, including the previously under-performing Enterprise.
“We continue to focus on a number of key initiatives to ensure continued improvement. Although the gearing ratio improved from 73,3% at June 2015 to 64,8% at December 2015, we want to see a further improvement, which is expected after receipt of the M-TEC sale proceeds. Enterprise is now profitable after strong action taken, but we will focus on the execution of large projects to achieve the required revenue. We remain focused on improving working capital. During the first six months, the main drive was on volume and profitability in the Carrier business, which necessitated a greater investment in working capital. This investment will translate into cash inflows in the second half. A close watch will remain on the inventory and accounts receivable levels in the group.”
Commenting on the outlook, he adds: “The South African economic and market conditions have deteriorated dramatically in recent months. The dramatic volatility of the rate of exchange has made trading more difficult, with the full impact not experienced yet. The recent interest rate hikes by the South African Reserve Bank will see a further tightening of growth in 2016. Against this market context, we will continue to execute against our strategy and focus on continuing to grow our regional and African footprint and adding new products and services to our portfolio.
“Following the anticipated conclusion of the M-TEC disposal, our primary focus will be on delivering sustained profits, enabled by the more efficient group structure established over the last few years.”
Group revenue of R558,1-million increased by 11,1% from R502,3-million. Both the Carrier and Intelligent Technologies businesses grew revenue strongly. Electrical Manufacturers’ revenue was flat compared to December 2014 due to lower than expected demand from its major customers. The Enterprise business was 11% down on last year due to the delay of two major projects into the second half of the financial year.
Group profit before interest and taxation (PBIT) increased by 290% to R30,1-million from R7,7-million in December 2014, with all the businesses contributing to profits.
Headline earnings per share (HEPS) increased by 783% to 5,74 cents per share (Dec 2014: 0,65 cents per share); earnings per share (EPS) was similarly up by 810% to 5,73 cents per share (Dec 2014: 0,63 cents per share). The weighted average number of shares in issue increased from 213,3-million shares to 224,2-million shares following the general issue of 10,9 million shares in April 2015 to the investor in the group’s corporate bond. This increase in the number of shares had a 5% dilutionary impact on EPS and HEPS.
The statement of cash flows reflects an improvement of 106,3% in cash generated from operations before working capital flows of R39,1-million compared to R18,9-million in December 2014. Working capital flows reflect an outflow of R15-million (December 2014: R3,4-million inflow). This outflow related to the increase in accounts receivable and inventory levels in the Carrier and Intelligent Technologies businesses on the higher first half volumes. Net working capital days of 38 days were above the target of 35 days, predominantly due to the higher asset values in Carrier at the end of the period.
All business units now comply with the minimum revenue threshold of R150-million per annum in line with the group’s strategy.