Last week Jasco reported its unaudited interim results for the period ended December 2009.  The Group has changed its year end from February to December, thus this reporting period's comparative for the six months ended 31 August 2008.

The Group continues to feel the effects of the recessionary drop in general economic fixed asset expenditure.  Its business segment specialises in integrated build, operate and maintenance solutions to the telecommunications and electronic security industry in Africa and, although all segments remained profitable, operating profit decreased by 34%.

EPS and HEPS dropped 57% to 10c and 10.1c respectively from August 2008's interim EPS and HEPS of 23,4c and 23,5c respectively.

While when revenues are compared to August 2008, they are up 6%, when compared to December 2008 revenues have actually dropped by 18%.  The directors blame "..significant delays in Security contracts, as well as the lack of fixed-line spend and the postponement of wireless African roll outs in Telecommunications."

The Group has had some working capital reshuffling, but bottom line cash generation was R27,4 million.

Following Jasco's massive acquisition of MTec, it is interesting to see that MTec contributed some R2,9 million to the results and the "Electrical" segment has now overtaken the "Telecoms" segment as the major driver of Group results.

During this period Jasco also made an acquisition into this segment of 51% stake in Lighting Structures that has helped contribute.

Overall, debt remains stable, but relatively high at a D:E of 0.54.  Albeit with an comfortable interest cover of 6.74 times.  Quick and Current Ratios have improved, but the operating and net profit margins have been squeezed.

In closing the directors have the following to say about the coming six months:

"The group expects continued pressure over the short term in Telecommunications; however, to counter this, management will focus on the reduction in overheads and tight cost management. The outlook over the longer term remains positive, as low penetration in Africa will necessitate spend on voice and data.

Although Security will continue to experience project delays due to market pressure, its business model will continue to cover overheads. Management has implemented a more formalised sales network to drive annuity and recurring income, as well as further cost-cutting and efficiency programmes without losing capacity for an eventual upturn. The group will also focus on expanding its product range and diversifying its service offering.

Domestic Products should continue to see an improvement. Although job cuts that occurred during 2009 will pressure consumers, a gradual increase is expected on the back of current lower interest rates.

In Electrical, Jasco will continue to focus on costs and efficiencies. The project flow appears more positive, with orders placed on M-TEC for the next 12 months under an existing aluminium overhead conductor contract.

Jasco has a focused medium to long term growth plan in place, with a clear strategy being driven by the senior management team to enhance organic growth and to bulk up. Although market visibility remains unclear, management is focused on taking pro-active action to protect profitability and grow the group."

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