JSE-listed Jasco will take a breather on merger and acquisition activity, as it focuses on adding new agencies to expand its range and growing its customer base.
The group yesterday reported revenue 12% higher, at R552.1 million, while profit after tax increased 21%, to R13.6 million, and profit attributable to ordinary shareholders was 57% up, to R14.2 million. Earnings per share were up 56%, to 10.1c, but a net negative headline earnings adjustment of R7.2 million decreased headline earnings by 27%, to R7.1 million.
Its 12% revenue gain was mostly thanks to market share gain, although headline earnings per share lost 27%, mostly due to M-TEC, as the contribution from the unit was 84% lower.
CEO Pete da Silva says the economic climate is a "bit rough" and Jasco is watching its cash flow. He says the company is taking a breather from mergers and acquisitions, although there will be bolt-on deals, and is focusing on expanding its range and adding new customers.
Jasco notes in its results presentation that it has signed up new agencies and clients, and its total order pipeline on hand is up 16%, to R159 million.
ICT Solutions is still Jasco's biggest unit, as it contributed 68% of consolidated revenue, with ICT Carrier Solutions contributing 48%. Da Silva says it will remain the largest contributor for a while as Jasco builds up its other units.
ICT Solutions includes Jasco's carrier and enterprise solutions businesses.
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Da Silva says the group's ICT carrier unit grew 25% in a competitive market as it gained new customers and has signed up new agencies, which expands its range. Jasco has been restructured into three verticals: ICT Solutions, Industry Solutions, and Energy Solutions. Previously, the group had four units.
ICT Solutions grew its market share during the half-year and added five new blue chip customers, including Sentech, for which Jasco is working on the digital television rollout, says Da Silva. The unit added three new agencies and is growing into three new business sectors.
Da Silva says the group is focusing on new elements, such as WiFi. However, he adds that this is not coffee shop connectivity, but rather connectivity across entire shopping malls. The group has also started managing rooftop sites for property developers, he adds.
As long-term evolution takes off in SA, there will be a rush to deploy new sites, and Jasco will handle and maintain these sites on rooftops on behalf of property developers and share in annuity revenue, says Da Silva. ICT Solutions is focusing on growing its annuity income, which is currently less than 30% of its revenue, and has been pushing into voice and data annuity income.
Telecom Structures made a R1.7 million loss and was the only section within ICT Structures that did not grow its market share during the six months, but has now been restructured. In its ICT Enterprise segment, Jasco expects market conditions to remain competitive, but its cloud solutions expertise is gaining traction, and it is growing its IT capacity and capability.
Telecom Structures experienced significant market changes, including site sharing by major mobile operators and a slowdown in infrastructure roll-out. The business model was changed to accommodate these impacts.
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