Jasco is in the market for small companies to add to its industry and energy portfolio, as it seeks to boost revenue to R1.5 billion.
CEO Pete Da Silva says Jasco is looking to issue shares through a rights offer to get equity to grow. He says the business will be "good" when turnover hits R1.5 billion, but it will need small bolt-on acquisitions to get to that level.
A potential rights offer could raise between R30 million and R60 million, and would happen in the first half of the current year. It will make an announcement when it is certain it will go ahead with issuing shares.
Jasco has enough cash to invest in growth, but to execute its strategy quicker it will need more to invest, says Da Silva. He says the company is looking for niche agencies and will mostly acquire in its energy and industry portfolios, although it will be cautious.
Da Silva is happy the top line grew 16%. He notes that when he started at the company, it was turning over about R700 million a year and he wanted it to get to more than R1 billion.
Da Silva can now "tick that box" as revenue came in at R1.15 billion in the year to June. It grew the order intake from R800 million two years ago to R1.2 billion, and expanded its national and regional footprint.
Taking the pain
Jasco is also getting out of low-value manufacturing, such as units that bend and weld products, to move to being a high-end technology company that does not play in the commodity space, says Da Silva.
However, selling off units that do not fit into its plan have cost the company, as it booked impairments and losses on the sale of assets amounting to R123 million. Da Silva says Jasco took the heat now and expects the full benefits of its strategy to come through in 2015.
Headline earnings of R500 000 dropped 98% and headline earnings per share dropped 98% to 0.3c.
Jasco is in talks to sell M-TEC, and sold Lighting Structures to LeBlanc International, in December 2012, which also bought Telecommunications Structures, in July.
Stripping out the effects of selling off these units, profit before interest and tax would have grown 19%, showing the core business has turned around and is starting to perform, notes Da Silva. He says there is still a bit of restructuring ahead as it enters the final year of its turnaround, but these are smaller items.
Jasco is set to be structured into two units, from its current three. These will be the ICT vertical and an energy and industry unit. Before the restructuring started, it had four units.
Among its main focus areas in the third and final year of its restructuring programme is selling out of M-TEC. Jasco also wants to improve earnings by consolidating procurement.
Some costs will come through in the current six months and from the second half there will be improvements, says Da Silva.
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