Jasco Electronics has announced interim results for the six month period to December 2012, following completion of the first year and a half of its three-year strategy implementation.
Commenting on the results, Jasco’s CEO, Pete da Silva, says: “The core businesses in the group continued to show the benefits of operating as an integrated group, with clear verticals focused on targeted customer segments. We have taken decisive action on the non-performers that dragged profitability down, with Lighting Structures sold, Telecom Structures restructured and our investment in M-TEC under review.
“The group’s sales have improved through a focused performance and delivery culture and the start of cross-selling initiatives. Orders on hand increased by 16% to R159-million at 31 December 2012. We continued to see new orders from businesses working together during the year, as well as further growth in annuity income to around 22% of group revenue.”
Commenting on the outlook, he says: “We will continue to drive our focused strategy through the group. We will further simplify processes, with superfluous legal entities to be closed and deregistered to clean up the group structure and to increase the planned statutory benefits. We have identified clear growth hurdles per business and will continue to divest of non-core assets.
“The restructure in Telecom Structures will ensure a gradual turnaround of this business. Although M-TEC’s operational management did improve, this investment has been placed under review, following the poor performance during the period due to delayed customer orders.
“The group is well advanced in our debt restructuring process. The second phase of our strategy roll out is underway, which will further increase customer centricity and improve business processes to ensure our core businesses are positioned to achieve the group’s medium-term to long-term growth criteria.”
Financial overview:
* Consolidated revenue increased by 12% to R552,1-million (2011: R493,9-million) due to market share growth in most businesses;
* Operating profit decreased by 8% to R19-million (2011: R20,6-million). The profit was impacted by two once-off events: A R8,8-million profit on the disposal of the group’s head office property; a R4,4-million loss on disposal of Lighting Structures;
* Earnings per share (EPS) was up 56% to 10,1 cents per share (2011: 6,4 cents per share);
* Headline earnings (HEPS) was down 27% to R7,1-million (2011: R9,7-million). The main reasons for the decline in HEPS were the two once-off items listed above, as well as the contribution from the group’s associate, M-TEC, which was down 84% to R0,8-million (2011: R4,9-million);
* Net working capital days of 29 improved from the 35 days reported for December 2011. This was largely due to the improvement in stock days from 31 days to 29 days and debtors days from 80 days to 76 days. The creditor days were unchanged at 75 days. The improvement also reflects the impact of the disposal of Lighting Structures;
* The statement of cash flows reflects the utilisation of cash in working capital to fund revenue growth in the period. The net outflow from investing activities reflects the investment in primarily group IT and machinery at Electrical Manufacturers on the back of secured orders.
As a result, Jasco’s net short term borrowings increased from R38,4-million at the start of the period to R65,1-million at the period end. The disposal of the property will improve the debt to equity ratio once the proceeds are applied to the group’s liabilities. A debt restructuring programme is also currently under way to improve financing ratios.
To ensure a more integrated business development focus, the group was restructured last year under one Jasco brand into three verticals:
* Information and Communications Technology (ICT) Solutions;
* Industry Solutions; and
* Energy Solutions.
Commenting on the results, Jasco’s CEO, Pete da Silva, says: “The core businesses in the group continued to show the benefits of operating as an integrated group, with clear verticals focused on targeted customer segments. We have taken decisive action on the non-performers that dragged profitability down, with Lighting Structures sold, Telecom Structures restructured and our investment in M-TEC under review.
“The group’s sales have improved through a focused performance and delivery culture and the start of cross-selling initiatives. Orders on hand increased by 16% to R159-million at 31 December 2012. We continued to see new orders from businesses working together during the year, as well as further growth in annuity income to around 22% of group revenue.”
Commenting on the outlook, he says: “We will continue to drive our focused strategy through the group. We will further simplify processes, with superfluous legal entities to be closed and deregistered to clean up the group structure and to increase the planned statutory benefits. We have identified clear growth hurdles per business and will continue to divest of non-core assets.
“The restructure in Telecom Structures will ensure a gradual turnaround of this business. Although M-TEC’s operational management did improve, this investment has been placed under review, following the poor performance during the period due to delayed customer orders.
“The group is well advanced in our debt restructuring process. The second phase of our strategy roll out is underway, which will further increase customer centricity and improve business processes to ensure our core businesses are positioned to achieve the group’s medium-term to long-term growth criteria.”
Financial overview:
* Consolidated revenue increased by 12% to R552,1-million (2011: R493,9-million) due to market share growth in most businesses;
* Operating profit decreased by 8% to R19-million (2011: R20,6-million). The profit was impacted by two once-off events: A R8,8-million profit on the disposal of the group’s head office property; a R4,4-million loss on disposal of Lighting Structures;
* Earnings per share (EPS) was up 56% to 10,1 cents per share (2011: 6,4 cents per share);
* Headline earnings (HEPS) was down 27% to R7,1-million (2011: R9,7-million). The main reasons for the decline in HEPS were the two once-off items listed above, as well as the contribution from the group’s associate, M-TEC, which was down 84% to R0,8-million (2011: R4,9-million);
* Net working capital days of 29 improved from the 35 days reported for December 2011. This was largely due to the improvement in stock days from 31 days to 29 days and debtors days from 80 days to 76 days. The creditor days were unchanged at 75 days. The improvement also reflects the impact of the disposal of Lighting Structures;
* The statement of cash flows reflects the utilisation of cash in working capital to fund revenue growth in the period. The net outflow from investing activities reflects the investment in primarily group IT and machinery at Electrical Manufacturers on the back of secured orders.
As a result, Jasco’s net short term borrowings increased from R38,4-million at the start of the period to R65,1-million at the period end. The disposal of the property will improve the debt to equity ratio once the proceeds are applied to the group’s liabilities. A debt restructuring programme is also currently under way to improve financing ratios.
To ensure a more integrated business development focus, the group was restructured last year under one Jasco brand into three verticals:
* Information and Communications Technology (ICT) Solutions;
* Industry Solutions; and
* Energy Solutions.