Jasco Electronics, which is in the final year of its three-year restructuring programme, has reported that most of its operational business – with the exception of the Security division – has performed solidly during the six months to 31 December 2013.
The ICT-Carrier business unit delivered a strong profit performance through a combination of improved efficiencies and the positive impact of the disposal of Telecom Structures which took place in the second half of F2013.
In ICT–Networks and ICT-Enterprise the focus on revenue growth and cost containment remains on track. As communicated to shareholders previously, corrective action was implemented in the Security business unit within the Energy & Industry vertical, which resulted in the overhead cost base being aligned to revenue.
In contrast, the Electrical Manufacturers business unit, also part of the Energy and Industry vertical, grew profits strongly in the interim period. It also exited the automotive sector post the interim period end.
At a group level, the three-year restructuring programme is drawing to a close. The company anticipates that the ongoing restructuring costs incurred to date will only continue until the end of the next quarter. Overall improvements in working capital reduced the group’s interest cost during the interim period.
Jasco therefore advises that, for the six months ended 31 December 2013, the company expects earnings per share (EPS) to be between 47% and 57% lower (between 4,3 cents and 5,4 cents per share) than the 10,1 cents per share for the previous corresponding period. The reduction in this reporting period is primarily due to the results of the previous corresponding period to December 2012 incorporating the profit on the disposal of the Midrand property and the loss on disposal of Lighting Structures.
It also expects headline earnings per share (HEPS) to be between 0% and 10% higher (between 5,0 cents and 5,5 cents per share) than the 5,0 cents per share for the six months to December 2012.
The only difference between EPS and HEPS in the current reporting period is a loss on disposal of fixed assets in the normal course of activities.
The weighted average number of shares in issue of 141 272 436 compares to 141 077 161 and has not materially impacted the comparison of EPS or HEPS to the previous corresponding period.
The group has a 51% shareholding in its associate M-TEC, with Taihan Electric Wire of Korea holding the remaining 49% interest. As advised at the June 2013 year-end, this 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 interim period. The company withdrew its cautionary announcement relating to the sale of M-TEC on 20 December 2013 due to protracted delays in the negotiations following unexpected management changes at Taihan.
Jasco’s strategy remains to exit this business. The Directors will continue to discuss the most appropriate next steps at the Board meeting to be held in February 2014.
The group’s rights offer was successfully concluded on 21 January 2014, whereby R57,6-million was raised for the group, before related costs of R2,6-million. The rights offer has also introduced a new strategic shareholder to the group. This partner brings potential cross-selling business and technical alliance opportunities to Jasco.
Although the current period was still impacted by restructuring costs, the improvement in the group’s earnings quality in the last year of restructuring is gratifying. The execution of Jasco’s growth strategy continues and the new base set will allow for the delivery of quality earnings and ensure the sustainability of the core businesses.