Mustek roars in with 75% profit rise

By Iain Scott for Mustek
Johannesburg, 02 Sep 2002

IT supplier Mustek performed strongly in the year to June, increasing its net profit by more than 300%.

<B>Salient figures</B>

Mustek results for the year to 30 June 2002
Previous year`s figures in parentheses, move in square brackets:

Revenue: R2.83b (R2.13b) [+32.8%]
EBITDA: R221.83m (R150.94m) [+47%]
Profit from operations: R199.76m (R109m) [+83.3%]
Profit after tax: R91.21m (R27.53m) [+28%]
Net profit: R77.36m (R18.52m) [+317.8%]
HEPS: 97.95c (55.98c) [+75%]
Current assets: R1.03b (R819.36m)
Bank balances and cash: R229.21m (R109.38m)
Current liabilities: R632.79m (R619.92m)
Net cash from operations: R207.23m (R206.54m)

Mustek, which produces the Mecer PC brand, says focused management and cost controls resulted in all its divisions, subsidiaries and associates improving revenue and profitability.

The group structure underwent several changes over the year. Among other things, Mustek acquired the minority shares in subsidiary Rectron, which was subsequently delisted from the JSE.

Thirty percent of Brother Business Machines was acquired by management and Mustek cancelled about 2.14 million shares that were to be issued to acquire that part of the total investment.

The interest in Comztek was cut to about 45% and Mustek Training & Development was disposed of.

Subsequent to the year-end, Mustek also disposed of 50% of its interests in Preworx, Surecom and Wavetrend, and subscribed for 40% of the equity in Gijima Support Services. It is also in talks regarding a management buy-out of Mustek Zimbabwe.

CEO David Kan says Mecer, which accounted for 60.4% of total revenue, will continue its drive to capture more market share in new market sectors, while maintaining margins.

"Mecer`s strong corporate and public market strategy has resulted in several significant multimillion-rand deals being awarded," he says. "These market sectors will continue to be a strong focus for the group going forward."

A number of export initiatives have been implemented by structuring a focused division and appointing dealers in various African countries.

Kan says forecast growth in PC demand in southern Africa and Africa remains positive.

"Growth in PC demand should accelerate when government initiatives around education start to roll out in the near future. These initiatives will not only be a boost for PC sales in southern Africa, but increase computer literacy, which will also result in increased demand from the home-user market."

The Mustek share, which rose 50c or 13.9% to 410c on the JSE on Friday, was trading another 10c or 2.4% up at 420c this morning.