Taiwanese agent costs Rectron R9m

Mustek-controlled computer components solution company Rectron boosted profit from operations by 41% in the six months to end-December 2001.

However, the company incurred a one-off loss of R9.94 million, reflected as an exceptional item on the income statement.

"In December 2001, management became aware of certain transactions undertaken by the Taiwanese procurement house which was acting as an agent for the Rectron group," the company says.

"These actions resulted in an expense of R9.94 million being incurred by Rectron, which is reflected separately in the interim results.

"Management have taken appropriate action with the assistance of legal counsel."

CEO Mark Lu says the group demonstrated its ability to withstand tough economic conditions during the review period, focusing on its core business in computer components and peripherals.

Rectron says it continues to strengthen its product range, increasing market share, while improving operating efficiencies and effective overhead control, improving operating margings.

"Additional sales resources have been engaged to realise this potential."

It adds that significant alliances established over the past few years continue to play a major role in growth initiatives, with new agreements including Rectron`s appointment as an official Intel distributor.

It has also acquired distributorships from Maxtor, Logitech and Toshiba.

"Rectron is well positioned to take advantage of the recent restructuring of the South African computer components distribution industry which has left a gap of approximately R3 billion.

"Management is of the opinion that this advantage could start appearing as early as the second half of this financial year."

It adds that sales and earnings are traditionally better in the second half of the financial year.