Rectron performs well in SA, battered offshore

By Iain Scott for Rectron Holdings

Johannesburg, 29 Aug 2001

Technology distributor Rectron Holdings` South African operations performed well in the year to 30 June, although the company took a knock on its offshore activities.

Chairman and CEO Mark Lu says the international operations showed mixed fortunes, with the Australian operation showing an after-tax profit of R364 193, the UK operation incurring a loss of R1.3 million.

The Dutch operation incurred a loss of R4.7 million, leading to divestment.

"The group`s South African business, which is the major segment, delivered the most impressive results," Lu says.

He adds that the group diluted its shareholding in both the Australian and UK operations to 50% at the end of June in response to the weakening rand and negative offshore market influences.

"The net result of this is that Rectron (SA) carries no cross-surety or financial warranties for the group`s offshore operations and has reduced its exposure to further weak performances."

Lu says the Australian operation has proven to be a successful one, as this is the second consecutive year that it has delivered profits.

"These results were achieved in difficult trading conditions which were reflected by a 27^ devaluation of the Australian dollar in the wake of the Olympic Games."

The operation has traded only in Melbourne in the past two years, but Lu says Rectron plans to be national in Australia by the end of 2003.

The UK business`s loss was mainly because of restructuring costs, and the group is confident that on market recovery it will be profitable in the coming year.

"The global IT industry has been suffering from an all-time low demand for PC and peripheral equipment. Management believes there will be growth in the South African IT industry during this coming year, which Rectron will be able to capitalise on," Lu says.

The Rectron share price was unchanged at 52c on the JSE late this morning. The share has risen 15% since last week.