M-Tec clouds Jasco results
Having wrapped up a three-year turnaround plan, and tidied up its balance sheet, the only dark cloud facing Jasco now is the sale of its stake in M-Tec.
|||Johannesburg - Having wrapped up a three-year turnaround plan, and tidied up its balance sheet, the only dark cloud facing Jasco now is the sale of its stake in M-Tec.
The company on Thursday reported its results to the ned of June and notes that, although it took an impairment hit - having written down M-Tec and other aspects by 118.3 million, its core business has improved.
This follows it now having finished one year of its three-year restructuring plan, which was initiated when current CEO Pete da Silva took the reins. Da Silva notes the company’s second half improvement of 312 percent year-on-year was “most pleasing”.
Da Silva is confident the gains the company reaped in the second half, which was not marred by a month-long strike in the metalworking section, will continue next year.
Jasco reported revenue up 21 percent to R621.5 million in the second half. Overall, revenue climbed 7.7 percent to R1.1 billion. Although the company made an operating loss because of the impairments, headline earnings per share came in at 137c a share, an increase of 428.5 percent.
Da Silva says the impairments represent a cleaning up of the balance sheet to better represent the company’s financial position, a decision the board felt was “prudent”. “There are now no historical skeletons in our closet.”
However, a big issue that the company still needs to resolve is selling out of M-Tec. The group has been trying to sell out of this unit for some time as it has shifted its focus and is no longer keen on being involved in manufacturing.
Da Silva says the unit is a good company, but does not fit with Jasco’s vision and would do better in another company that has the capacity and cash to right size it.
Its stake in M-Tec was impaired by R57.4 million and is now selling for R60 million, which Da Silva says is fair based on an external evaluation.
Jasco has entered into discussions with a number of parties during the year in an attempt to sell its stake, which has yet to result in a successful sale.
Subsequently, Community Investment Holdings, a related party, offered R60 million to purchase Jasco’s share in M-Tec and the deal now just needs shareholder approval.
Da Silva is trying to secure the votes needed to sell the company, and will go as far as to request proxy votes from those who cannot attend, he says. He notes the company wants to move up the value chain and needs to focus on those growth opportunities.
“I hope by the end of November we’ll have enough votes to see the end of that [process].”
IOL