Listed electrical and telecoms company Jasco is halfway through its three-year repositioning programme and will continue to simplify its group structure.
The company, which this morning published its results for the six months to December, says it has wrapped up regrouping its units into three focused verticals, and the benefits of operating as an integrated group are starting to flow through.
Jasco 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.
The group was restructured into three verticals: Information and Communication Technology (ICT) Solutions, Industry Solutions, and Energy Solutions. Previously, the group had four units.
ICT Solutions contains the telecommunications and information technology businesses of Jasco, Spescom, ARC Telecoms, as well as the telecommunications arm of associate M-TEC. Industry Solutions contains the security business and recently-acquired FerroTech, with Energy Solutions containing Electrical Manufacturers and the since sold Lighting Structures, as well as the energy arm of M-TEC.
Jasco announced in September 2010 that it would buy Spescom for R11.8 million and 31.9 million new shares, to create a R1 billion merged entity in the converged telecommunications space.
The second part of its strategy is being rolled out and focuses on increasing customer centricity. Jasco says "superfluous legal entities will continue to be closed and deregistered to further simplify the group structure and to increase the planned statutory benefits".
Bigger share
Jasco wants to increase its market share in the ICT Solutions vertical, "with a focus on new customer acquisition and an increased share of wallet with existing customers".
The group will also continue to move up the value chain through continuing to sign new agency agreements to add to its integration expertise and full turnkey capabilities. Investment in the annuity voice and data connectivity business is also expected to continue.
ICT Solutions, as a whole, contributed 68% of consolidated revenue, with ICT Carrier Solutions contributing 48%. Carrier Solutions saw revenue 25% higher to R292.4 million and gained market share, with the exception of its Telecoms Structures business.
"Telecoms Structures experienced significant market changes, which included site sharing by major mobile operators and a slowdown in infrastructure roll-out. The business model was changed to accommodate these impacts. The restructure was completed during the period," notes Jasco.
ICT Carrier won orders from five new blue-chip groups, but its consolidated operating profit was flat at R20.9 million mostly because of investments in its voice and data annuity connectivity business.
ICT Enterprise Solutions, which accounted for 20% of consolidated revenue, turned over R96.7 million, a slight gain on the first half of the last financial year. Jasco says this was against continued slow corporate spend.
"The defensive nature of the large annuity revenue base in enterprise solutions cushioned the impact of this slowdown in spend."
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