Mustek to sell Comztek stake

JSE-listed PC distributor Mustek aims to sell its stake in Comztek Holdings and Rectron Australia BV within the next year.

Mustek has started an “active” programme to locate buyers and complete its plan to dispose of the units, it says in its results for the year to June, which were published yesterday. Mustek owns about 42% of Comztek.

Almost two years ago, a bid by London- and Johannesburg-listed Datatec to buy Comztek, for R97 million, fell through. Mustek acquired the Comztek stake when it helped management purchase the company in 1999.

Comztek was established in September 1999, but was initially formed in 1995 as Comzlink, a subsidiary of Centera, which was owned by Siltek and Q Data. Four years after it was initially formed, Leen van der Bijl and current Comztek MD Paul Conradie bought out the distributor with Mustek's assistance.

Mustek founder and CEO David Kan says the reason behind the sale is that Mustek does not have a controlling stake in the distributor. He is confident a deal will be signed in the next 12 months.

During the last 12 months, Mustek grew revenue to R3.5 billion, from R2.9 billion, while profit for the year was lower, at R77.8 million, compared with R96 million in 2011. Cash generated from operating activities of R44.6 million was down from R50.5 million, because of the revenue growth, which led to a need to increase working capital.

The revenue gain was the result of the addition of new products and a renewed focus on its customers. “The addition of Acer and Lenovo to our product range over the past 12 months assisted the revenue growth but negatively impacted margins as these products are typically sold at lower margins,” the group says in its results.

Mustek added that its numbers included a foreign exchange loss of R47.8 million, compared with a R12 million gain last year. It explains that this is due to the volatile rand, which affects its inventory accounting.

As a result, Mustek's headline earnings from continuing operations dropped to 71.37c a share from 82.60c, while basic earnings from continuing operations was lower at 74.89c against last year's 79.59c.

Last July, Mustek Lesotho was incorporated and it bought a 99% stake in the company for a nominal amount.