Jasco swings to profit, declares dividend

As earnings swung from a loss of R83 million to a profit of R14 million, the board of the JSE-listed Jasco Electronics Holdings declared a dividend for the first time in four years.

A tough second half of the financial year has hurt its full year results, though. The company reports a 4.2% drop in revenue, to R1.076 billion – mostly due to lower volume growth, particularly in the second half.

"South Africa as a country had one of the most challenging years, which resulted in extremely tough conditions. This was even more pronounced in the second half of the year," Jasco said in a SENS announcement this morning.

"The financial year was therefore characterised by a strong first half and a much weaker second half on the sharp downturn in the local economy in 2016, with the volatile exchange rate impacting the group negatively."

Despite this, headline earnings per share (HEPS) rose 164% for the year ended 30 June 2016, to 6.3 cents per share. This was, however, a big contrast to the 783% interim HEPS growth reported. Group revenue for the first half of the year was up 11% to R558 million, in comparison.

"Despite the lower sales volumes in the second half, the overall result for the financial year was pleasing, with the restructured business proving its defensive capability, with all business units contributing to profits," according to Jasco.

Operating profit was R41.7 million compared to the operating loss of R72.5 million in 2015, following once-off impairments and adjustments of R101.1 million in 2015. Headline earnings increased by 175% from R5.1 million in 2015 to R14.1 million at the end of June 2016.

Earnings swung from a loss of R83.3 million last year to a profit of R14.2 million this year.

Earnings per share (EPS) for the year were 6.3 cents per share from a loss of 38.7 cents per share a year ago.

After four years of no dividends, the board has declared a dividend of 2 cents per share for the year.

The Carriers business unit is Jasco's largest profit contributor, and reported flat revenue at R414.2 million for the year. Revenue for the Enterprise business unit was down by 16.4% to R318 million compared to last year. The Intelligent Technologies business continued to deliver good growth, with a 15.8% increase in revenue to R190.7 million for the year. The Electrical Manufacturers business unit was impacted by both the low growth and exchange rate volatility in SA, with a 5.2% decrease in revenue to R165.8 million.

The company's 51% shareholding in M-TEC was sold for R60 million during the year, with the first R20 million in proceeds received in May 2016. The next payment is expected in November 2016, followed by monthly payments of R1.5 million over the next three years. M-TEC had been a continuous drag on Jasco's past results.

The group expects the current economic climate to prevail throughout 2017, but says it has plans for ways to mitigate this and will continue to execute its strategy and focus on key areas. The Enterprise unit will remain on its "watch list" to ensure a return to acceptable and sustainable profitability levels.

The group also plans to reduce financial gearing to less than 50% by utilising the expected proceeds from the M-TEC disposal and cash generated by Jasco's operations. The company will continue its transformation – with black ownership, employment equity and skills development a key priority.

The group plans to continue its expansion into the rest of Africa by leveraging off the recently established base in Kenya. There are also plans to also establish a presence in the UAE based on current customer geographic expansion, with a particular focus on renewable energy in the Middle East market.