Jasco Electronics Holdings’ headline earnings and headline earnings per share increased by 6% for the six months ended 31 December 2013, as it enters the last six months of its three-year strategy implementation.
Most of Jasco’s businesses performed well and partly compensated for the high revenue base of the previous period, which included Lighting Structures and Telecom Structures that were sold in the previous year.
Major milestones achieved during the group’s restructuring programme include:
* The consolidation of a number of businesses and the removal of management levels;
* Creating a single Jasco brand from numerous disjointed brands;
* Increasing scale, with order intake and revenue in excess of R1-billion;
* Expanding the national footprint and product and market segments;
* Reducing customer dependency, with no customer being more than 10% of group revenue;
* The commencement of the disposal of non-core business units with Lighting and Telecom Structures sold in F2013 and the recent disposal of the Automotive business in January 2014. However, the process of exiting the group’s associate, M-TEC, has been slower than anticipated;
* The disposal of the Midrand head office property in F2013 and the subsequent reduction in debt levels in the first half of F2014; and
* The completion of a successful rights issue in January 2014.
Jasco’s CEO Pete da Silva comments: “We are pleased with the progress we have achieved during our restructuring. Although the current results were still impacted by the costs of restructuring and we have some remaining challenges to address, the key growth levers are in place to ensure the full benefits of our restructuring will come through in F2015.
“Our order intake increased from the start of our restructure from R800-million to over R1-billion currently and we continued to see new orders from businesses working together, with cross-selling improving and annuity income still growing strongly.”
He adds: “The group’s main focus areas in the last six months of our restructuring programme will be on addressing the remaining non-performing business of Security, further developing annuity business, continuing to drive negotiations to exit our investment in our associate M-TEC, settling the group’s AfroCentric preference shares and exiting non-core businesses in a systematic way.
“We will concentrate on improving the quality of the group’s earnings by completing the restructure programme, consolidating procurement and reducing inventory levels.
“During the restructure, decisive action was taken on non-performing areas and the new business base is positioned for growth. The rights offer also improved Jasco’s financial position. The second half of F2014 is therefore expected to show further improvement, with the full benefits of the three-year restructure to be seen from F2015.”
During the six months, group revenue decreased by 4% to R526,7-million. Excluding the R45-million revenue contribution from Lighting Structures and Telecommunications Structures that was sold last year, revenue on a like-for-like basis, increased by 5%.
Core operating profit before interest and taxation (excluding all once-off impacts and restructuring costs) increased by 2% to R21,2-million, while group profit before interest and taxation decreased by 33% from R19-million in December 2012 to a R12,8-million. This was mainly due to the once-off impacts and restructuring.
Headline earnings and headline earnings per share increased by 6% to R7,5-million and 5,3 cents per share respectively. Due to once-off impacts and restructuring costs in the prior year and this period, earnings per share (EPS) was down 51% to 4,9 cents per share.
Net working capital days improved and is back at the group’s target of 30 days due to strong effort to improve collections. The statement of cash flows reflects an inflow in cash generated from operations before working capital changes of R23,6-million compared to R19,5-million in December 2012.
During the last six months to 31 December 2013, the majority of the group’s operational businesses, with the exception of the Security business, performed solidly.
In line with the group’s strategy during the final year of the three-year restructuring programme and following the divestment of a number of businesses, the group was structured from three verticals into two with effect from F2014.
The ICT Solutions vertical contains the telecommunications and information technology businesses of ICT-Carrier, ICT-Enterprise and ICT-Networks.
The separate verticals of Industry Solutions and Energy Solutions have been combined to create the E&I Solutions vertical. This contains Electrical Manufacturers, Security and Power.
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, the group has decided to exit this investment and it is therefore categorised as “held-for-sale” for IFRS reporting purposes. Accordingly, Jasco has stopped equity accounting this investment in its consolidated results.
The performance from M-TEC has therefore had no impact on the earnings reported for the current interim period.