Listed electronics company Jasco Electronic Holdings' earnings per share dropped 72% in the six months to December, after it bought Spescom and impaired an investment.
The company this morning released its interim results and said the first half of the year was “challenging” as the “aftermath of the global economic crisis” continued to negatively impact its trading environment.
Jasco says, however, it did see an improvement in the trading environment, compared to the second half of its last financial year. Revenue gained 20.4%, to R317.9 million, but net profit fell 45.9%, to R6.8 million, from R12.5 million a year ago.
The listed company spent R4 million on acquisition-related expenses, after buying Spescom for R55.8 million. Jasco impaired its investment in cable manufacturer M-TEC by R31.9 million, as it took a “more prudent view” on its recovery. The write down follows an impairment of R21.6 million last June.
The latest impairment takes the total write down to R53.5 million, which is a quarter of the original purchase price when Jasco bought into the company at the “height of the markets during June 2008”.
As a result of the non-operating items, reported group operating profit declined a percent, to R15.9 million. Stripping out the exceptional items, operating profit would have grown 25%, to R20.1 million.
Jasco says headline earnings per share declined 65%, to 3.5c, from 9.9c. Splitting out the Spescom costs, headline earnings per share would have come in at 7.1c. Earnings per share were 72% lower, at 2.8c, from 10c, but would have only declined 35% if the exceptional items are removed.
New deals
Jasco says Spescom's trading results were not included in the half-year numbers, as the deal was only concluded two weeks before the end of the first half. However, the merged entity has already signed up new orders that Jasco would not have been able to conclude on its own.
The company bought Spescom in a bid to create a R1 billion merged entity in the converged telecommunications space. Spescom was delisted at the end of January. The merged entity will combine Jasco's telecommunications experience and Spescom's ICT expertise, to allow the organisations to take part in the growing move towards converged telecommunications.
Jasco says the merger process is proceeding smoothly, and future costs of R9.7 million have already been taken out of the merged company, which will start flowing through.
“Opportunities to cross-sell the broader product and solution offering into the new enlarged customer base has already started to bear fruit,” notes Jasco. The company says, for example, Spescom DataFusion received a R5.6 million order after being introduced to a Jasco security division customer.
Share
