Jasco takes aim at electricity sector in bid to transform business focus
JASCO Electronics is eyeing business in the provision of transmission and distribution solutions to the energy sector and is bulking up its competency in this regard that could result in it evolving into a predominantly electrical and engineering firm, according to Pete da Silva, the chief executive.
Da Silva told shareholders at the company’s results presentation yesterday that the next “bubble” was expected to be in power transmission and distribution. Opportunities abounded not only at its existing customer, Eskom, which contributed 30 percent to the revenues of Jasco subsidiary M-Tec, but also in municipalities and with independent power producers (IPPs).
He told Business Report: “What is clear is that we want to develop the other industries to become as big as the ICT [information and communications technology] segment. All of a sudden we’ll become an electrical engineering company first and foremost. At the moment we are predominantly in ICT with energy wishes for capacity in the future.”
He said the firm had established a division, Jasco Transmission & Distribution, and also intended to acquire at least one or two niche companies to boost its energy transmission and distribution competency.
Discussions with Jasco’s South Korean partners in M-Tec – of
Discussions with Jasco’s Korean partners in M-Tec will be key to the growth of the group’s energy ambitions.
which Jasco owns 51 percent while the Koreans hold management rights – would be key to the growth of Jasco’s energy ambitions. Jasco aims to gain control of the telecoms and power cables manufacturer.
“There is a real need to transport and distribute power that has been generated. I see it everywhere. I see it in businesses and in residential-type developments because we’re not distributing this power to the points that we need to. We already manufacture the cable. We can install the cable and we are setting up our competency in being able to supply transformers.”
He said that Jasco had not set aside a specific amount for acquisitions during the 2013 fiscal year but these acquisitions would be of a bolt-on nature.
It was also in discussion with about 30 IPPs to cross-sell Jasco solutions in electrical fencing, access control and camera surveillance and data centre hosting.
Cross-selling and aligning Jasco subsidiaries under one Jasco brand has been key to the turnaround strategy that was implemented when Da Silva took over as chief executive last year after Jasco acquired and merged with technology company Spescom.
The company said that as a result R25 million in new orders from four businesses working together was realised during the year to June.
Annuity income increased from R400 000 a month to R2.1m a month as another benefit of the new strategy.
Group revenue grew 28 percent to R990m from the same period last year. Headline earnings jumped 38 percent to R23.7m. Headline earnings a share leapt 20 percent to 16.8c a share. Cash generated from operations improved to R24.5m for the latest year, compared with R3m for the year to June 2011. The shares lost 1.91 percent to R1.54 yesterday.