Johannesburg, 05 Sep 2001
JSE-listed Mustek`s gross profit and operating margins slipped in the year to 30 June 2001, which it says is partly due to tough trading conditions, the consolidation of Rectron, and Mustek Zimbabwe`s performance.
While after-tax profit and the net profit for the year showed good increases, headline earnings per share declined substantially.
CEO David Kan says this is because of the finance costs incurred in the investment portfolio, an increase in the effective taxation rate, the effect of hyper-inflation accounting for Mustek Zimbabwe, and losses incurred by Rectron in its international operations.
Mustek increased its stake in Rectron Holdings to 51.8%, resulting in Rectron becoming a subsidiary and being consolidated in the latest results.
"Rectron`s results show a consistent trend of organic growth in both revenue and profit in addition to eliminating gearing at year-end. The group`s South African business delivered impressive results with profit from operations up 36% to R39 million and revenue up by 16% to R512 million."
Kan attributes Mustek Zimbabwe`s decline in profit and net asset value to the weakening economic climate in Zimbabwe, political instability and the subsequent hyper-inflation accounting of its results.
"Mustek continues to find this a profitable channel and will continue doing business as long as it remains so," he adds.
He expects the group`s margins to improve in the coming year.
Mustek company Comztek acquired the business of Lan Design in March.
The group sold its interest in Sparkle Power International for R18 million, resulting in a capital profit of R9.3 million. It also disposed of the underperforming Mustek Training & Development Group (formerly Torque Training).
Kan says the group`s gearing has improved substantially, with the net debt-to-equity ratio being cut from 49% to 23% by the end of the financial year. The board is planning to improve this further.
The group`s Mecer brand continued to dominate the Southern African PC market for the 10th consecutive year. The BMI-TechKnowledge PC market report showed Mecer`s market share for the first six months at 20.5% with the nearest competitor, a foreign brand, at 8%.
Mecer accounted for R1.3 billion of the total group revenue for the year.
"Mecer`s strategic objective is to capture 30% of the Southern African market share by 2003," Kan says.
Mustek executive director Mike Hennessy has resigned and has been appointed a non-executive director. He is to remain as chairman. Chris Wood has resigned as a non-executive director.
The Mustek share was trading 10c or 4% up at 260c on the JSE by midmorning today.
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