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MST - Mustek Limited - Condensed consolidated statement of comprehensive income

Release Date: 29/02/2012 12:00
Code(s): MST
Wrap Text

MST - Mustek Limited - Condensed consolidated statement of comprehensive income Mustek Limited (Incorporated in the Republic of South Africa) (Registration number 1987/070161/06) Share code: MST ISIN: ZAE000012373 ("Mustek" or "the Group") Abridged unaudited financial results for the six months ended 31 December 2011 - Revenue up 21% CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Reviewed Audited 6 months 6 months Year-end
31 Dec 31 Dec 30 Jun 2011 2010 2011 R000 R000 R000 Revenue 1 963 840 1 624 807 3 506 373 Cost of sales (1 675 714) (1 391 629) (2 990 485) Gross profit 288 126 233 178 515 888 Other income 13 727 6 484 2 282 Forex (loss) profit (62 865) 14 650 21 793 Distribution, (196 159) (191 050) (384 826) administrative and other operating expenses Profit from operations 42 829 63 262 155 137 Investment revenues 2 916 3 390 7 302 Finance costs (14 844) (14 869) (28 627) Other losses - - (1 413) Share of profit of 155 - 263 associates Profit before tax 31 056 51 783 132 662 Income tax expense (8 285) (10 642) (36 624) Profit for the period 22 771 41 141 96 038 Other comprehensive income Exchange profits/(losses) 9 707 (1 233) (3 884) on translation of foreign operations Other comprehensive income 9 707 (1 233) (3 884) for the year, net of tax Total comprehensive income 32 478 39 908 92 154 for the year Profit attributable to: Equity holders of the 23 010 39 572 94 623 parent Non-controlling interest (239) 1 569 1 415 22 771 41 141 96 038 Total comprehensive income attributable to: Equity holders of the 30 969 38 339 90 733 parent Non-controlling interest 1 509 1 569 1 421 32 478 39 908 92 154 Earnings and dividend per share (cents) Weighted number of 108 849 109 547 165 109 547 ordinary shares in issue 751 165 Ordinary shares in issue 108 677 165 109 547 165 109 547 165 Basic earnings per 21,14 36,12 86,38 ordinary share Diluted basic earnings per 21,14 36,12 86,38 ordinary share Dividend per ordinary 17,00 12,00 12,00 share - paid Headline earnings per share (cents) Headline earnings per 13,40 36,20 89,39 ordinary share Diluted headline earnings 13,40 36,20 89,39 per ordinary share Reconciliation between basic and headline earnings Basic earnings 23 010 39 572 94 623 attributable to equity holders of the parent Group`s share of (profit) (8 427) 82 1 672 loss on disposal of property, plant and equipment Impairment of distribution - - 1 757 right Impairment of associate - - 2 036 and other loans Foreign exchange gain on - - (2 167) liquidation of foreign subsidiary Headline earnings 14 583 39 654 97 921 Net asset value per share 645,72 586,74 633,27 (cents) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited Reviewed Audited 6 months 6 months Year-end 31 Dec 31 Dec 30 Jun
2011 2010 2011 R000 R000 R000 ASSETS Non-current assets Property, plant and equipment 156 408 137 781 128 333 Intangible assets 67 753 73 469 67 813 Investments in associates 10 207 7 706 8 589 Other investments and loans 32 053 34 909 33 588 Deferred tax asset 23 185 20 370 23 925 Non-current trade and other - 69 - receivables 289 606 274 304 262 248
Current assets Inventories 737 267 586 647 646 023 Trade and other receivables 841 430 579 979 556 134 Foreign currency assets 7 505 1 197 1 620 Tax assets 8 819 4 899 7 727 Bank balances and cash 159 253 166 577 195 787 1 754 274 1 339 299 1 407 291 TOTAL ASSETS 2 043 880 1 613 603 1 669 539 EQUITY AND LIABILITIES Capital and reserves Ordinary share capital 870 877 877 Ordinary share premium 118 495 122 850 122 823 Retained earnings 582 483 519 244 576 181 Non-distributable reserve 810 4 116 2 725 Foreign currency translation (913) (4 329) (8 872) reserve Equity attributable to equity 701 745 642 758 693 734 holders of the parent Non-controlling interest 20 449 25 615 18 940 Total equity 722 194 668 373 712 674 Non-current liabilities Long-term borrowings 320 360 106 374 86 598 Deferred tax liabilities 4 787 3 568 5 243 325 147 109 942 91 841
Current liabilities Short-term borrowings 1 110 117 230 58 741 Trade and other payables 778 169 522 686 723 604 Provisions 11 439 11 040 21 244 Foreign currency liabilities 4 097 21 961 2 185 Deferred income 29 967 19 306 22 479 Tax liabilities 7 157 8 261 5 066 Bank overdrafts 164 600 134 804 31 705 996 539 835 288 865 024 Total liabilities 1 321 686 945 230 956 865 TOTAL EQUITY AND LIABILITIES 2 043 880 1 613 603 1 669 539 CONDENSED CONSOLIDATED CASH FLOW STATEMENT Unaudited Reviewed Audited 6 months 6 months Year-end 31 Dec 31 Dec 30 Jun 2011 2010 2011
R000 R000 R000 Operating activities Cash receipts from 1 678 544 1 638 578 3 531 452 customers Cash paid to suppliers (1 959 239) (1 755 178) (3 405 and employees 981) Net cash (used in) from (280 695) (116 600) 125 471 operations Investment revenues 2 916 3 390 7 302 received Finance costs paid (14 844) (14 869) (28 627) Dividends paid (18 623) (13 146) (13 146) Income taxes paid (6 662) (6 611) (40 507) Net cash (used in) from (317 908) (147 836) 50 493 operating activities Net cash used in (23 291) (8 093) (12 749) investing activities Net cash from (used in) 304 665 62 553 (101 910) financing activities Net decrease in cash and (36 534) (93 376) (64 166) cash equivalents Cash and cash equivalents 195 787 259 953 259 953 at beginning of the period Cash and cash equivalents 159 253 166 577 195 787 at the end of the period CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Ordinary Ordinary
share share Retained capital premium earnings R000 R000 R000 Balance at 30 June 2010 877 122 484 492 818 Profit for the period - - 39 572 Other comprehensive income - - - Recognition of share-based - 366 - payments Dividends paid - - (13 146) Investment in subsidiary - - - Balance at 31 December 2010 877 122 850 519 244 Profit for the period - - 55 051 Other comprehensive income - - - Premium on acquisition of - - - additional shareholding in a controlled entity Recognition of share-based - (27) - payments Disposal of subsidiary - - - Realisation of foreign exchange - - 985 gains on liquidation of foreign subsidiary Other adjustments - - 901 Balance at 30 June 2011 877 122 823 576 181 Profit for the period - - 23 010 Other comprehensive income - - - Recognition of share-based - 26 - payments Dividends paid - - (18 623) Realisation of non-distributable - - 1 915 reserve Buy back of ordinary shares (7) (4 354) - Balance at 31 December 2011 870 118 495 582 483 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Foreign Attributable Non-dis- currency to equity
tributable translation holders of reserve reserve the parent R000 R000 R000 Balance at 30 June 2010 4 116 (3 096) 617 199 Profit for the period - - 39 572 Other comprehensive income - (1 233) (1 233) Recognition of share-based - - 366 payments Dividends paid - - (13 146) Investment in subsidiary - - - Balance at 31 December 4 116 (4 329) 642 758 2010 Profit for the period - - 55 051 Other comprehensive income - (2 657) (2 657) Premium on acquisition of (1 391) - (1 391) additional shareholding in a controlled entity Recognition of share-based - - (27) payments Disposal of subsidiary - - - Realisation of foreign - (985) - exchange gains on liquidation of foreign subsidiary Other adjustments - (901) - Balance at 30 June 2011 2 725 (8 872) 693 734 Profit for the period - - 23 010 Other comprehensive income - 7 959 7 959 Recognition of share-based - - 26 payments Dividends paid - - (18 623) Realisation of non- (1 915) - - distributable reserve Buy back of ordinary - - (4 361) shares Balance at 31 December 810 (913) 701 745 2011 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Non- controlling
interest Total R000 R000 Balance at 30 June 2010 24 552 641 751 Profit for the period 1 569 41 141 Other comprehensive income - (1 233) Recognition of share-based payments - 366 Dividends paid - (13 146) Investment in subsidiary (506) (506) Balance at 31 December 2010 25 615 668 373 Profit for the period (154) 54 897 Other comprehensive income 6 (2 651) Premium on acquisition of additional - (1 391) shareholding in a controlled entity Recognition of share-based payments - (27) Disposal of subsidiary (6 527) (6 527) Realisation of foreign exchange gains on - - liquidation of foreign subsidiary Other adjustments - - Balance at 30 June 2011 18 940 712 674 Profit for the period (239) 22 771 Other comprehensive income 1 748 9 707 Recognition of share-based payments - 26 Dividends paid - (18 623) Realisation of non-distributable reserve - - Buy back of ordinary shares - (4 361) Balance at 31 December 2011 20 449 722 194 CONDENSED SEGMENT ANALYSIS Total Mustek
6 months 6 months 6 months 6 months 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010 Business segments R000 R000 R000 R000 Revenue 1 963 840 1 624 807 1 106 438 692 283 EBITDA* 54 187 75 614 37 607 36 431 Depreciation and (11 358) (12 352) (5 915) (7 085) amortisation Profit (loss) from 42 829 63 262 31 692 29 346 operations Investment revenues 2 916 3 390 1 563 660 Finance costs (14 844) (14 869) (1 886) (110) Other gains - - - - Share of profit of 155 - - - associates Profit (loss) before 31 056 51 783 31 369 29 896 tax Income tax (expense) (8 285) (10 642) (9 361) (5 765) benefit Profit (loss) for 22 771 41 141 22 008 24 131 the period Attributable to: Equity holders of 23 010 39 572 22 008 24 113 the parent Minority interest (239) 1 569 - 18 22 771 41 141 22 008 24 131 *Earnings before interest, taxation, depreciation and amortisation. CONDENSED SEGMENT ANALYSIS (continued) Rectron Comztek 6 months 6 months 6 months 6 months 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010
Business segments R000 R000 R000 R000 Revenue 681 462 728 499 244 809 236 892 EBITDA* 18 581 35 532 3 392 9 185 Depreciation and (4 098) (4 134) (1 345) (1 133) amortisation Profit (loss) from 14 483 31 398 2 047 8 052 operations Investment revenues 1 485 5 725 3 437 1 615 Finance costs (6 654) (9 613) (6 304) (5 136) Other gains - - - - Share of profit of - - - - associates Profit (loss) before tax 9 314 27 510 (820) 4 531 Income tax (expense) (1 559) (6 512) 169 (1 208) benefit Profit (loss) for the 7 755 20 998 (651) 3 323 period Attributable to: Equity holders of the 7 977 19 553 (634) 3 217 parent Minority interest (222) 1 445 (17) 106 7 755 20 998 (651) 3 323 *Earnings before interest, taxation, depreciation and amortisation. CONDENSED SEGMENT ANALYSIS (continued) Group Eliminations 6 months 6 months 6 months 6 months 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010
Business segments R000 R000 R000 R000 Revenue - - (68 869) (32 867) EBITDA* (5 393) (5 534) - - Depreciation and - - - - amortisation Profit (loss) from (5 393) (5 534) - - operations Investment revenues 194 153 (3 763) (4 763) Finance costs (3 763) (4 773) 3 763 4 763 Other gains - - - - Share of profit of 155 - - - associates Profit (loss) before (8 807) (10 154) - - tax Income tax (expense) 2 466 2 843 - - benefit Profit (loss) for the (6 341) (7 311) - - period Attributable to: Equity holders of the (6 341) (7 311) - - parent Minority interest - - - - (6 341) (7 311) - - *Earnings before interest, taxation, depreciation and amortisation. CONDENSED SEGMENT ANALYSIS (continued) Total South Africa 6 months 6 months 6 months 6 months 31 Dec 31 Dec 31 Dec 31 Dec
2011 2010 2011 2010 Geographical R000 R000 R000 R000 segments Revenue 1 963 840 1 624 807 1 823 490 1 505 820 Profit (loss) before 31 056 51 783 30 645 50 359 tax Income tax (expense) (8 285) (10 642) (7 228) (10 003) benefit Profit (loss) for 22 771 41 141 23 417 40 356 the period Attributable to: Equity holders of 23 010 39 572 23 430 39 624 the parent Minority interest (239) 1 569 (13) 733 22 771 41 141 23 417 40 356 CONDENSED SEGMENT ANALYSIS (continued) Mustek East Africa Rectron Australia 6 months 6 months 6 months 6 months 31 Dec 31 Dec 31 Dec 31 Dec 2011 2010 2011 2010
Geographical R000 R000 R000 R000 segments Revenue 19 144 10 835 75 015 62 413 Profit (loss) before (248) (490) 90 2 219 tax Income tax (expense) 74 - (534) (312) benefit Profit (loss) for (174) (490) (444) 1 907 the period Attributable to: Equity holders of (174) (490) (222) 954 the parent Minority interest - - (222) 954 (174) (490) (444) 1 907 CONDENSED SEGMENT ANALYSIS (continued) Comztek Africa
6 months 6 months 31 Dec 31 Dec 2011 2010 Geographical segments R000 R000 Revenue 46 191 45 739 Profit (loss) before tax 569 (305) Income tax (expense) benefit (597) (327) Profit (loss) for the period (28) (632) Attributable to: Equity holders of the parent (24) (515) Minority interest (4) (117) (28) (632)
COMMENTARY 1. Statement of compliance These abridged financial statements for the six months ended 31 December 2011 are prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to interim financial reporting (IAS 34), the Listings Requirements of the JSE Limited and the Companies Act of South Africa. 2. Accounting policies The accounting policies applied in the preparation of these abridged unaudited financial results, which are based on reasonable judgements and estimates, are in accordance with IFRS. These are consistent with those applied in the annual financial statements for the year ended 30 June 2011. 3. Audit report Neither the consolidated financial results for the six months ended 31 December 2011, nor this set of summarised financial information has been audited by the Group`s auditors, and thus no audit report was issued. 4. Corporate governance The Group subscribes to and complies in all material aspects with the Code on Corporate Governance Practices and Conduct as contained in the King III Report on Corporate Governance. 5. Transformation Management has continued to meaningfully extend its initiatives in employment equity, skills development and corporate social investment during the period. The Group is committed to a process of further transformation and economic empowerment of its stakeholders, such that an acceptable balance between the operatives and commercial benefits of such a process can be achieved, thereby ensuring the sustainability of the Group in a competitive market sector. 6. Board of directors No changes were made to the board during the period under review. Total remuneration paid to directors for the six months under review amounted to R3,8 million (31 December 2010: R3,3 million) and no share-based payments (31 December 2010: R0,2 million) were expensed relating to directors. 7. Cash flow Inventory and receivables increased in line with historic trends while revenue growth and the weaker Rand also contributed to the R280,1 million cash used in operations (31 December 2010: R116,6 million). This was funded by our long-term borrowing facilities and is expected to reverse in the period through to June 2012, in line with historic trends. 8. Operating results Revenue increased by 20,9% to R1,964 billion (31 December 2010: R1,625 billion) and the gross profit percentage increased to 14,7% (31 December 2010: 14,4%). Included in profit from operations is R62,9 million relating to realised and unrealised foreign exchange losses (31 December 2010: R14,7 million foreign exchange profits). A significant portion of these losses will be recovered when the related inventory is sold and by settling certain foreign creditors at lower levels than the R8,10 used at 31 December 2011 to revalue foreign creditors. Mustek uses the Rand/USD spot rate at the beginning of each month to determine its selling prices with adjustments made during the month should the exchange rate change substantially. As a result of the sharp and sudden depreciation of the Rand against the USD during September 2011, a substantial amount of inventory is accounted for at lower levels compared to where the Rand has depreciated to. Accounting standards do not allow the fair valuation of inventory, but require the corresponding foreign accounts payable to be stated at the closing spot rate. As long as this is the case and the Rand remains as volatile as it currently is, reported earnings will be in line with the volatilities of the Rand. As a result, Mustek`s headline earnings is 13,40 cents per share (31 December 2010: 36,20 cents per share) and basic earnings is 21,14 cents per share (31 December 2010: 36,12 cents per share). Mustek grew its revenue by 59,8% after adding new products and a renewed focus on its customers ensured growth in all sectors. Rectron`s revenue declined slightly after the departure of its CEO caused uncertainty amongst staff. This was short-lived and the company has regained its focus, growing its revenue after the appointment of Lindi Shortt as the new CEO. Distribution, administrative and other operating expenses (excluding foreign exchange profits and losses) were well controlled and increased by only 2,7%. 9. Retirement benefit plan The Mustek Group Retirement Fund is a defined contribution fund and payments to the plan are expensed as they fall due. The majority of the Group`s employees belong to this fund. The Group does not provide additional post-retirement benefits. 10. Industry outlook Internet connectivity costs - particularly in the mobile arena - continue to decline in South Africa, lowering the total cost of ownership for notebooks and desktop computers and driving users to seek more value from their purchases. As these costs continue to drop, the landscape will become more attractive for large international content owners and distributors to make their entry, only increasing the usage case for owning a home computer. This we believe over the coming six to 12 months will make all-in-one computers with big screens and high-end components, as well as Ultrabooks, the new category of ultrathin, super-powerful and power conscious mobile computers, more attractive to a larger audience of buyers. The market has also begun paying close attention to the upcoming release of Microsoft`s Windows 8 operating system. With its intuitive user interface, support for touch-based input and its cloud centricity, Windows 8 could be the operating system that finally blurs the line between individuals` professional and personal lives on the conventional computer. 11. Company outlook The company is focusing on increasing volumes as it remains a driver of performance across our operations. The Group is placing increased focus on working capital management in order to reduce finance costs further. With the addition of Acer and Lenovo to Toshiba and Mecer products over the past 12 months, Mustek has become one of the most preferred distributors for the local reseller community to do business with. Not only does the company now have an expanded product portfolio to offer its customers, it is finally in a position to offer customers increased choice. For customers that have relatively generic technology requirements, but are not prepared to compromise on quality there is Acer, Lenovo and Toshiba - three of the world`s top brands - to choose from. For customers that have more specific requirements and want to exercise a deeper level of control over their hardware platforms, Mustek can build configurations to exact customer requirements through the Mecer brand. The company believes this strategy will serve it well over the coming years. Mustek`s outlook remains focused on sustainable growth. Opportunities for further optimisation, improved production, further consolidation and cost management are being pursued. Enhanced cash flow will be used prudently to further reduce our debt. 12. Dividend The declaration of cash dividends will continue to be considered by the board in conjunction with an evaluation of current and future funding requirements, and will be adjusted to levels considered appropriate at the time of declaration. Mustek`s continued commitments to optimal cash utilisation will mean that cash generated by the operations will be used to fund our growth and reduce our debt. In line with the dividend policy, no interim dividend will be paid. 13. Post balance sheet events There have been no significant events subsequent to period end up until the date of this report that requires adjustment or disclosure. On behalf of the board of directors David Kan Neels Coetzee Chief Executive Officer Financial Director (preparer of abridged Group results) 29 February 2012 Corporate information: www.mustek.co.za Company secretary: Neels Coetzee Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg, 2001 PO Box 61051, Marshalltown, 2107, South Africa. Telephone: +27 (0) 11 370-5000 Registered office: 322 15th Road, Randjespark, Midrand, 1685 Postal address: PO Box 1638, Parklands, 2121 Contact numbers: Telephone: +27 (0) 11 237-1000 Facsimile: +27 (0) 11 314-5039 Email: ltd@mustek.co.za Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd Date: 29/02/2012 12:00:05 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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