Coming off a three-year restructuring that saw the group cull seven of its eleven business units, commodity merchandiser Jasco said on Wednesday that its order intake had increased from R800-million a year at the start of its restructuring period to over R1-billion, but was not enough to offset a 9% slump in revenue for the twelve months ended June 30 to R1.04-billion.

“Our order intake increased over this period and we continued to see new orders from businesses working together, with cross-selling improving and annuity income growing over the last three years by over 100%.

“Although the 2014 financial year continued to be impacted by planned restructuring costs and very difficult market conditions, the three-year programme is now complete and the sound execution of Jasco’s strategy continues,” CEO Pete da Silva said during a results presentation on Wednesday.

He attributed the revenue slump to Jasco’s disposal of its lighting and telecommunications businesses last year for R77.5-million, as well as the sale of its automotive division for R6-million in the 2014 fiscal period.

The 2013 financial year had also created a high base owing to the inclusion of a R65-million one-off project, while several orders that were expected to flow through in 2014 were delayed, but received post year-end.

Operating profit, meanwhile, improved 119%, from a loss of R93.5-million in the 2013 financial year, to a profit of R17.6-million, as a result of the nonrecurrence of one-off impairments and write-offs

Adjusting for the restructuring costs of R13-million, the adjusted operating profit declined 26%, from R35.6-million in 2013, to R26.3-million in 2014.

This drove earnings a share of 3.1c, while headline earnings finished the year up 52% at 0.5c apiece.

“The weighted average number of shares in issue, at 172.8-million, was higher than that of last year following the issue of 72-million shares on January 21 in terms of the rights issue. This had a material effect on the calculation of earnings and headline earnings a share in the current year,” Da Silva explained.

Meanwhile, in line with the group’s strategy during the final year of the three-year restructuring programme and following the divestment of a number of businesses, the group restructured into an information and communication technology (ICT) solutions division, as well as an energy and industrial (E&I) division.

The ICT division now contained the businesses of the ICT carriers, ICT enterprises and ICT networks, while the E&I division contained the electrical manufacturers, security and power businesses.

“During the second six months to June 30, the business units that did not achieve the set minimum target of R150-million in yearly revenues were integrated into other businesses,” he commented.

Elaborating on achievements over the period, Da Silva said the restructuring had increased scale, with order intake and revenue now in excess of R1-billion.

The group had further expanded its national footprint, product and market segments, decreasing its legal entities from 44 to 28 and removing several management levels.

The disposal of the Midrand head office property for R60-million and the completion of a successful rights issue of R55-million in January had also strengthened the group.

“Our restructuring journey has focused our delivery and aided cross-selling initiatives. In the past, our performance was driven by the respective business units, with limited emphasis placed on selling the entire Jasco basket of products and services.

“The new structure has enabled us to strengthen our operations and moved us from a product-focused to a solutions-driven and customer-focused group,” he added.

Commenting on the group’s outlook, Da Silva believed the group’s home market of South Africa would continue to remain challenging, with low growth and a volatile labour environment.

“Against this, further costs will be cut and geographic and market diversification will continue. The group will also finalise its exit of low-margin manufacturing.,” he noted.

Jasco expected the full benefits of its restructuring to flow through from the 2015 financial year.

“Although the first six weeks of the 2015 fiscal period were strongly impacted by strike action, the impact will be somewhat buffered by the contribution from projects delayed in 2014, the nonrecurrence of one-offs and no further restructuring costs,” he concluded.