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JASCO ELECTRONICS HOLDINGS LIMITED - Trading Statement

Release Date: 24/03/2020 10:45
Code(s): JSC     PDF:  
 
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Trading Statement

JASCO ELECTRONICS HOLDINGS LIMITED
Incorporated in the Republic of South Africa
Registration Number 1987/003293/06
Share code: JSC     ISIN: ZAE000003794
(“Jasco” or “the company” or “the group”)

TRADING STATEMENT


Period under review
Against continued challenging market conditions, as anticipated
and planned, Jasco met its commitment to improve its
profitability compared to the immediately preceding six-month
period to June 2019 although the profitability was lower than
the comparative six-month period to December 2018.
Jasco therefore advises that, compared to the comparative six-
month period ended December 2018, it expects:
    •   Revenue growth for the six months to 31 December 2019 to
        be between 5,0% and 6,0% lower than the R576,7 million
        (between R542.1 million and R547.9 million)for the six
        months to 31 December 2018;
    •   Earnings Loss per share (“EPS”) to be in excess of 100%
        lower (between 6,1 cents and 5,9 cents per share)
        compared to the 1,30 cents profit per share for the six
        months to 31 December 2018; and
    •   Headline earnings Loss per share (“HEPS”) to be in
        excess of 100% lower (between 5,3 cents and 5,1 cents
        per share) than the 1,3 cents profit per share for the
        six months to 31 December 2018.
Jasco further advises that, compared to the preceding six-month
period ended June 2019, it expects:
    •   Revenue growth for the six months to 31 December 2019 to
        be between 2,0% and 3,0% lower than the R560,6 million
        (between R543.8 million and R549.4 million)for the six
        months to 30 June 2019;
    •   Earnings Loss per share (“EPS”) to be between 52% and
        62% lower (between 6,7 cents and 5,3 cents per share)
        compared to the 14,0 cents loss per share for the six
        months to 30 June 2019; and
    •   Headline earnings Loss per share (“HEPS”) to be between
        58% and 68% lower (between 6,0 cents and 4,5 cents per
        share) than the 14,2 cents loss per share for the six
        months to 30 June 2019.
The difference between earnings and headline earnings growth
relates to a loss on disposal of a partly owned subsidiary and
fixed assets.
The weighted average number of shares in issue for the period
was slightly up from 226 659 782 to 226 281 191 due to an
increase in the number of treasury shares. No shares have been
issued since the previous financial year ended 30 June 2019.


The key features of the performance in the last six months are
outlined below:
  •   ICT –Carriers revenue and profit performance decreased
      significantly due to lower spend in the telecommunications
      sector. Consequently the Carriers business commenced a
      restructure in the second quarter which will be completed
      by March 2020 and is expected to achieve annualised cost
      savings estimated between R4 million and R5 million per
      annum;
  •   ICT – Enterprise revenue increased due to a good performance
      from the Channel business and Reflex Solutions, however the
      profit performance decreased on the conclusion on a major
      contract in the prior financial year;
  •   Security & Fire’s revenue increased substantially on
      projects from its new customers and the profit performance
      improved from a loss to a profit;
  •   Power & Renewables’ revenue declined following a change in
      the business model for the photo-voltaic (solar) solutions
      to an annuity based PPA and RTO;
  •   Electrical Manufacturers’ revenue and profit increased due
      to good growth from its major customer and the ongoing
      diversification strategy. This business is classified as a
      discontinuing operation due to its pending sale as detailed
      in recent SENS announcements; and
  •   The Head office costs remain a focus area with a further
      restructure completed in February 2020, which is expected
      to achieve annualised cost savings estimated between R10
      million and R12 million per annum.


Subsequent event - Disposal of Electrical Manufacturers
The suspensive conditions of the sale of the Electrical
Manufacturers division are on track to be met and the effective
date of the transaction is expected to be 1 April 2020. The total
proceeds are expected to flow by the end of April 2020 and will
be used to reduce debt. This is expected to result in annualised
interest cost savings estimated between R4 million and R6 million
per annum.
Subsequent event – Purchase of Midrand Property
The Midrand head office is expected be purchased by another third
party during the fourth quarter of this financial year. Jasco
will continue as a tenant in the property for the remaining 5
year period of the lease. This will result in annualised rental
and associated cost savings estimated between R4 million and R5
million per annum.


Conclusion
Despite the uncertain economic outlook for 2020, now compounded
by the extraordinary circumstances arising from the Covid-19
pandemic,   Jasco  will   continue  its   focus  on   improving
profitability through its strategy of targeting higher-margin
revenue, from a much lower overhead cost base.
The information in this trading statement has not been reviewed
or reported on by the company’s external auditors.

Jasco’s unaudited interim results for the six months ended 31
December 2019 will be announced on or about 31 March 2020.


Midrand
24 March 2020


Sponsor
Grindrod Bank Limited

Date: 24-03-2020 10:45:00
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