Jasco sets deadline for underperforming assets
Company has been exiting or restructuring some of its struggling units to focus on contracts and businesses with high margins.
Jasco Electronics has placed some of its underperfoming businesses under review and given them until June to deliver an improvement in performance.
“All nonperforming areas of the group were placed under restructure notice. This process is currently under way and will be completed in the second half of this financial year,” said CEO Mark van Vuuren, who was appointed in May 2018.
The focus on high-margin, quality revenue is demonstrated by the “pleasing improvement in gross margins in the first six months by 2.1% to 30.9%”, he said on Friday.
In the past year Jasco has organised its business around four key areas: information and communication technology, which is split into ICT-Carrier and ICT-Enterprise; security and fire; and energy and manufacturing.
Jasco reported operating profit of R26m for the six months to December 2018, a 46% improvement from the previous year.
The company says strong growth in projects is one of the main reasons for the positive performance. “A network infrastructure rollout by a major telecommunications operator” was a major boost to revenue, it said.
Van Vuuren said Jasco delivered a strong improvement in tough economic conditions. “We are very conscious of having to be agile and ensuring the group is innovative and differentiated in these demanding markets.”
With market capitalisation at R57.3m the company is carrying in excess of R350m in debt on its balance sheet, which it plans to reduce. “The group plans to reduce the corporate bond over the next 12 months from any excess cash generated from operations,” it said.
Looking ahead, Jasco says the focus will be on improving operating margins and performance, working capital management, continuing to monitor their transformation progress and address minority shareholders.
A possible area of growth for Jasco is their energy business, which saw the consolidation of Jasco Power and Jasco Renewables. Recent load-shedding by Eskom saw a rise in revenue to the business unit that had otherwise seen overall declines in the period.
Jasco’s Internet of Things (IoT) analytics unit could see good prospects, benefiting from the rollout of 5G in the country, as lower latency and faster speeds will better enable IoT solutions.
The company has not shied away from acquiring businesses for growth. In addition to physical assets, Jasco’s balance sheet has been propped up by intangible assets, including goodwill, rising by as much as R35.7m over the year mainly due to acquisition of RAMM in March 2018.
Van Vuuren said the group has “a clear strategy of shifting from a product development, distributor and reseller model to that of a systems integrator and service provider of choice for our target customer base through the provision of smart infrastructure solutions”.