Jasco eyes opportunities

By Nicola Mawson for Jasco

Johannesburg, 05 Oct 2006

Although a large acquisition failed to materialise in its half-year, JSE-listed telecoms, manufacturing and security firm Jasco Electronics continues to seek opportunities.

Its interim results to end-August indicate revenue increased by 18% to R178.1 million, up from R150.9 million. Most of this growth is attributed to an increase in volumes with only 6% of the growth attributable to an increase in selling prices.

During the half-year, the company spent R1.4 million in due diligence on an acquisition that failed to materialise as the value/reward ratio was felt to be unacceptable.

Excluding this once-off expense, the growth in earnings per share would have been 43%, it states.

Despite the deal falling through, the company is intent on growing organically and through acquisitions.

"Jasco remains committed to implementing a responsible acquisition strategy that will lead to long-term growth in shareholder value. The group has no gearing, which places it in a solid position to capitalise on relevant market opportunities as they arise," it says.

One small acquisition took place during the period. Had the other deal been successful, the company says it would have almost doubled in size and been converted "into an unconditionally black-owned entity", as well as increasing its customer base and offerings.

Bottom line growth

Earnings per share moved up 23.5% to 12.1c a share, which follows the 61% increase in earnings per share seen in the last financial year and is in line with the company`s trading update.

Revenue for this six-month period excludes the company`s Mast & Towers division, which is now part of a joint venture, WebbLeBLANC, and is equity accounted. "Like-for-like growth in revenue was therefore 26.4%," the company says.

Its operating margin, before interest, improved from 7.6% to 8.1% as a result of "continued increased efficiencies". Pre-tax profit moved up 26.8% and headline earnings per share improved 14.2%.

Cash from operations amounted to R14.8 million, up from R4.1 million, which is 114% of operating profit before net financing costs. This was attributed to a decrease in average net working capital days to 31 days from 39 days.

CEO Martin Lotz says in a statement that the "group did very well and delivered strong results, with increases in our key financial drivers of turnover, profitability and margins. Although we are disappointed with the performance from security, we have already put actions in place to address the situation."