POWERS AHEAD WITH HALF YEAR RESULTS
JASCO ELECTRONICS HOLDINGS POWERS AHEAD WITH HALF YEAR RESULTS TO 31 AUGUST 2007
4 October 2007
Financial highlights
- Revenue up 42% to R252,9 million (2006: R178,1 million)
· 28% organic growth, 8% from the group’s three new businesses, T-Components, RapidCloud and Tasslelane Services
· Only 6% came from an improvement in selling prices, continuing the trend of strong volume growth established over the previous two financial years
- Earnings per share (EPS) and headline earnings per share (HEPS) for the six months increased by 40% to 16,9 cents per share (2006: 12,1 cents per share)
- Net profit before taxation grew by 35% to R17,3 million (2006: R12,8 million)
- Operating profit increased by 24% to R16,2 million (2006: R13,0 million)
- Operating margins before interest reduced to 6,7% (2006: 7,3%).
- Margins were affected by the increased contribution to revenue from the two new telecommunications businesses, which was not yet supported by profits and by once-off expenses in the Domestic Products business
- Excluding these factors, like-for-like margins increased from 7.3% to 7.6%
- Margins are expected to improve during the second half of the year
- Continued generation of cash
· Cash generated from operations before working capital increased by 35% to R18,9 million (2006: R14,0 million).
· The strong cash generation was also reflected in a further decrease in average net working capital days to 22 days (2006: 29 days)
Operational highlights
- The Telecommunications division remained the largest division in the group, contributing 58% to revenue from operating divisions (2006: 56%) and 73% (2006: 66%) to operating profit from the divisions
o Revenue increased by 46% to R144,5 million (2006: R98,7 million), whilst operating profit grew by 40% to R18,9 million (2006: 13,6 million)
§ The growth was mainly due to strong growth in GSM roll-outs into
o During the period, Jasco increased its product offering through the acquisition of RapidCloud Technologies and the establishment of Tasslelane Services, which offers technical, installation and maintenance services
o The operating margin decreased slightly to 13,1% (2006: 13,7%) due to the increased contribution to revenue from the new businesses while operating profits haven’t started to flow through yet. These businesses have increased Jasco’s access to the African market, enhanced its broadband product range and strengthened its technical and marketing expertise. They will contribute to operating profit in the coming year
· Revenue in the second largest division, Domestic Products (previously Manufacturing), contributed 28% (2006: 30%) of revenue from operating divisions and 22% (2006: 29%) of operating profit from divisions
o Revenue increased by 34% to R70,5 million (2006: R52,7 million)
§ The continued growth in this division resulted from the increase in product lines, new customers and the inclusion of T-Components’ results for the full period
o Although revenue increased strongly, operating profit decreased by 3% to R5,7 million (2006: R5,9 million) due to once-off expenses in the expansion of the pool business’ distribution network and a reversal of prior year income following a change in the revenue accounting
o Operating margins came under pressure, as the increase in raw material costs was absorbed. However, product selling prices were increased during August 2007 and the group expects to see an improvement in the margins going forward
· The smallest division, Security, showed a strong improvement in results following its restructuring and contributed 14% to revenue from operating divisions
o Revenue increased by 41% to R35,7 million (2006: R25,4 million). Operating profit increased by 30% to R1,3 million (2006: R1 million), which was a pleasing turnaround from the loss in the second half of last year
o Although the increase in costs incurred to bolster the infrastructure in this division and lack of large projects during the period resulted in a drop in margins to 3,7% (2006: 4,0%), the division secured in excess of R50 million worth of contracts to be executed over 18-months post the half year. This, together with the base income, will ensure a full recovery of this division during the second half of the year
Commenting on the results, Jasco CEO Martin Lotz, said:
“This year is a milestone year for the group, as we are celebrating our 20 years as a listed company. Over the years, we have remained close to our core strategy of building a portfolio of businesses that can distribute, assemble and/or design and manufacture electronic and electrical products and solutions. We have also pro-actively structured our businesses to tap into growth opportunities through the acquisition of new businesses, the appointment of technical personnel and the increase in our product offering. I am therefore extremely pleased with the continued performance by Jasco. Our 40% increase in earnings per share during the six months follows the solid performances during the previous two full financial years, showing sustainable growth in Jasco.”
Going forward, Lotz said:
“We recognise that it is essential to build critical mass. Whilst it is proving difficult to find appropriate large-scale acquisitions, we did acquire RapidCloud and started Tasslelane Services during this period. We are therefore still committed to a responsible acquisition strategy and continue to have no gearing, which makes us nimble to quickly capitalise on relevant market opportunities as they arise. On the organic growth side, all our businesses are on a solid footing, with strong growth prospects. We therefore expect to continue on our growth trajectory during the second half of the year.”
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