Wrap Text
Abridged audited financial results for the year ended 30 June 2012
Mustek Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/070161/06)
Share code: MST
ISIN: ZAE000012373
("Mustek", "the company"or "the Group")
ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2012
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2012 2011
R000 R000
(Restated)
Continuing operations
Revenue 3 502 543 2 896 924
Cost of sales (3 002 190) (2 464 136)
Gross profit 500 353 432 788
Other income 17 980 4 908
Foreign currency (losses) profits (47 813) 12 025
Distribution, administrative and other operating expenses (333 591) (314 145)
Profit from operations 136 929 135 576
Investment revenues 4 668 6 274
Finance costs (25 337) (19 804)
Other losses (5 613) (1 413)
Share of profit of associates 1 686 263
Profit before tax 112 333 120 896
Income tax expense (32 515) (34 366)
Profit for the year from continuing operations 79 818 86 530
Discontinued operations
(Loss) profit for the year from discontinued operations (2 019) 9 508
Profit for the year 77 799 96 038
Other comprehensive income
Exchange profits (losses) on translation of foreign operations 7 883 (3 884)
Other comprehensive income for the year, net of tax 7 883 (3 884)
Total comprehensive income for the year 85 682 92 154
Profit attributable to:
Owners of the parent 80 181 94 623
Non-controlling interest (2 382) 1 415
77 799 96 038
Total comprehensive income attributable to:
Owners of the parent 86 196 90 733
Non-controlling interest (514) 1 421
85 682 92 154
Earnings and dividend per share (cents)
Weighted number of ordinary shares in issue 108 831 677 109 547 165
Ordinary shares in issue 108 469 165 109 547 165
Dividend per ordinary share - paid 17,00 12,00
Dividend per ordinary share - proposed 17,00 17,00
From continuing and discontinued operations
Headline earnings per ordinary share 70,15 89,39
Basic earnings per ordinary share 73,67 86,38
From continuing operations
Headline earnings per ordinary share 71,37 83,98
Basic earnings per ordinary share 74,89 80,97
From discontinuing operations
Headline earnings per ordinary share (1,22) 5,40
Basic earnings per ordinary share (1,22) 5,40
Reconciliation between basic and headline earnings
Basic earnings attributable to owners of the parent 80 191 94 623
Group's share of (profit) loss on disposal of property, plant and equ (7 762) 1 672
Impairment of distribution right 3 445 3 445
Non-controlling interest in impairment of distribution right (1 688) (1 688)
Impairment of associate and other loans 2 168 2 036
Foreign exchange gains on liquidation of foreign subsidiary - (2 167)
Headline earnings from continuing and discontinued 76 344 97 921
operations
Less Group's share of loss (profit) for the year from discontinued op 1 325 (5 918)
Headline earnings from continuing operations 77 669 92 003
Basic earnings attributable to owners of the parent 80 181 94 623
Less Group's share of loss (profit) for the year from discontinued op 1 325 (5 918)
Basic earnings from continuing operations 81 506 88 705
Net asset value per share (cents) 696,73 633,27
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2012 2011
R000 R000
ASSETS
Non-current assets
Property, plant and equipment 122 625 128 333
Intangible assets 60 240 67 813
Investments in associates 8 737 8 589
Other investments and loans 31 733 33 588
Deferred tax asset 15 666 23 925
239 001 262 248
Current assets
Inventories 773 619 646 023
Trade and other receivables 596 447 556 134
Foreign currency assets 14 389 1 620
Tax assets 666 7 727
Bank balances and cash 224 413 195 787
1 609 534 1 407 291
Assets classified as held for sale 268 664 -
TOTAL ASSETS 2 117 199 1 669 539
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 868 877
Ordinary share premium 117 257 122 823
Retained earnings 639 655 576 181
Non-distributable reserve 809 2 725
Foreign currency translation reserve (2 857) (8 872)
Equity attributable to owners of the parent 755 732 693 734
Non-controlling interest 18 426 18 940
Total equity 774 158 712 674
Non-current liabilities
Long-term borrowings 4 712 86 598
Deferred tax liabilities 2 409 5 243
7 121 91 841
Current liabilities
Short-term borrowings 143 160 58 741
Trade and other payables 930 255 723 604
Provisions 13 593 21 244
Foreign currency liabilities 2 585 2 185
Deferred income 28 078 22 479
Tax liabilities 3 963 5 066
Bank overdrafts 20 055 31 705
1 141 689 865 024
Liabilities directly associated with assets classified as held for sale 194 231 -
Total liabilities 1 343 041 956 865
TOTAL EQUITY AND LIABILITIES 2 117 199 1 669 539
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
2012 2011
R000 R000
Operating activities
Cash receipts from customers 3 983 731 3 531 452
Cash paid to suppliers and employees (3 863 800) (3 405 981)
Net cash from operations 119 931 125 471
Investment revenues received 5 591 6 711
Finance costs paid (34 241) (28 627)
Dividends received 788 591
Dividends paid (18 623) (13 146)
Income taxes paid (28 844) (40 507)
Net cash from operating activities 44 602 50 493
Net cash used in investing activities (37 188) (12 749)
Net cash from (used in) financing activities 65 196 (101 910)
Net increase (decrease) in cash and cash equivalents 72 610 (64 166)
Cash and cash equivalents at beginning of the year 195 787 259 953
Cash and cash equivalents at end of the year 268 397 195 787
CONDENSED SEGMENT ANALYSIS
Total Mustek Rectron
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Business segments (Restated) (Restated) (Restated)
Continuing operations
Revenue 3 502 543 2 896 924 2 317 393 1 636 460 1 401 274 1 315 620
EBITDA* 155 830 156 184 128 734 114 551 40 440 54 160
Depreciation and amortisation (18 901) (20 608) (11 335) (13 142) (7 566) (7 466)
Profit (loss) from operations 136 929 135 576 117 399 101 409 32 874 46 694
Investment revenues 4 668 6 274 8 899 10 547 1 706 4 733
Finance costs (25 337) (19 804) (13 205) (8 168) (12 132) (11 196)
Other losses (5 613) (1 413) (3 445) (1 278) - -
Share of profit of associates 1 686 263 - - - -
Profit (loss) before tax 112 333 120 896 109 648 102 510 22 448 40 231
Income tax (expense) benefit (32 515) (34 366) (33 665) (28 906) (4 249) (11 546)
Profit (loss) for the year from continuing operations 79 818 86 530 75 983 73 604 18 199 28 685
Discontinued operations
(Loss) profit for the year from discontinued operations (2 019) 9 508 - - (1 392) 2 742
Profit (loss) for the year 77 799 96 038 75 983 73 604 16 807 31 427
Attributable to:
Owners of the parent 80 181 94 623 77 671 75 780 17 590 28 615
Non-controlling interest (2 382) 1 415 (1 688) (2 176) (783) 2 812
77 799 96 038 75 983 73 604 16 807 31 427
*Earnings before interest, taxation, depreciation and amortisation.
CONDENSED SEGMENT ANALYSIS (CONTINUED)
Comztek Group Eliminations
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Business segments (Restated) (Restate)
Continuing operations
Revenue - - - - (216 124) (55 156)
EBITDA* - - (13 344) (12 527) - -
Depreciation and amortisation - - - - - -
Profit (loss) from operations - - (13 344) (12 527) - -
Investment revenues - - 835 276 (6 772) (9 282)
Finance costs - - (6 772) (9 611) 6 772 9 171
Other losses - - (2 168) (135) - -
Share of profit of associates - - 1 686 263 - -
Profit (loss) before tax - - (19 763) (21 734) - (111)
Income tax (expense) benefit - - 5 399 6 086 - -
Profit (loss) for the year from continuing operations - - (14 364) (15 648) - (111)
Discontinued operations
(Loss) profit for the year from discontinued operations (627) 6 655 - - - 111
Profit (loss) for the year (627) 6 655 (14 364) (15 648) - -
Attributable to:
Owners of the parent (716) 5 876 (14 364) (15 648) - -
Non-controlling interest 89 779 - - - -
(627) 6 655 (14 364) (15 648) - -
*Earnings before interest, taxation, depreciation and amortisation.
CONDENSED SEGMENT ANALYSIS (CONTINUED)
Total South Africa
2012 2011 2012 2011
R000 R000 R000 R000
Geographical segments (Restated) (Restated)
Continuing operations
Revenue 3 502 543 2 896 924 3 458 745 2 872 272
Profit (loss) before tax 112 333 120 896 110 193 121 303
Income tax expense (32 515) (34 366) (31 833) (34 366)
Profit (loss) for the year from continuing operations 79 818 86 530 78 360 86 937
Discontinued operations
(Loss) profit for the year from discontinued operations (2 019) 9 508 (2 651) 5 358
Profit (loss) for the year 77 799 96 038 75 709 9 2 295
Attributable to:
Owners of the parent 80 181 94 623 77 469 93 713
Non-controlling interest (2 382) 1 415 (1 760) (1 418)
77 799 96 038 75 709 92 295
CONDENSED SEGMENT ANALYSIS (CONTINUED)
Mustek East Africa Rectron Australia Comztek Africa
2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000
Geographical segments (Restated) (Restated)
Continuing operations
Revenue 43 798 24 652 - - - -
Profit (loss) before tax 2 140 (407) - - - -
Income tax expense (682) - - - - -
Profit (loss) for the year from continuing operations 1 458 (407) - - - -
Discontinued operations
(Loss) profit for the year from discontinued operations - - (1 392) 3 416 2 024 734
Profit (loss) for the year 1 458 (407) (1 392) 3 416 2 024 734
Attributable to:
Owners of the parent 1 458 (407) (609) 604 1 863 713
Non-controlling interest - - (783) 2 812 161 21
1 458 (407) (1 392) 3 416 2 024 734
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary Ordinary Non-
share share Retained distributable
capital premium earnings reserve
R000 R000 R000 R000
Balance at 30 June 2010 877 122 484 492 818 4 116
Net profit for the year - - 94 623 -
Other comprehensive income - - - -
Premium on acquisition of additional shareholding in a controlled entity - - - (1 391)
Recognition of share-based payments - 339 - -
Dividends paid - - (13 146) -
Investment in subsidiary - - - -
Disposal of subsidiary - - - -
Realisation of foreign exchange gains on liquidation of foreign subsidiary - - 985 -
Other adjustments - - 901 -
Balance at 30 June 2011 877 122 823 576 181 2 725
Net profit for the year - - 80 181 -
Other comprehensive income - - - -
Realisation of non-distributable reserve on disposal of fixed assets - - - 1 916
Recognition of share-based payments - 53 - -
Dividends paid - - (18 623) -
Buy back of shares (9) (5 619) - -
Balance at 30 June 2012 868 117 257 637 739 4 641
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Foreign
currency Attributable Non-
translation to owners of controlling
reserve the parent interest Total
R000 R000 R000 R000
Balance at 30 June 2010 (3 096) 617 199 24 552 641 751
Net profit for the year - 94 623 1 415 96 038
Other comprehensive income (3 890) (3 890) 6 (3 884)
Premium on acquisition of additional shareholding in a controlled entity - (1 391) - (1 391)
Recognition of share-based payments - 339 - 339
Dividends paid - (13 146) - (13 146)
Investment in subsidiary - - (506) (506)
Disposal of subsidiary - - (6 527) (6 527)
Realisation of foreign exchange gains on liquidation of foreign subsidiary (985) - - -
Other adjustments (901) - - -
Balance at 30 June 2011 (8 872) 693 734 18 940 712 674
Net profit for the year - 80 181 (2 382) 77 799
Other comprehensive income 6 015 6 015 1 868 7 883
Realisation of non-distributable reserve on disposal of fixed assets (1 916) - - -
Recognition of share-based payments - 53 - 53
Dividends paid - (18 623) - (18 623)
Buy back of shares - (5 628) - (5 628)
Balance at 30 June 2012 (4 773) 755 732 18 426 774 158
Commentary
1. Corporate information
Mustek is a limited liability company incorporated and domiciled in South Africa. The main business of
Mustek, its subsidiaries, joint ventures and associates is the assembling, marketing and distribution
of ICT (Information Communication Technology) products and services.
2. Basis of preparation
The abridged financial information for the year ended 30 June 2012 has been prepared in accordance with
the framework concepts and measurement and recognition requirements of International Financial Reporting
Standards ("IFRS"), the AC 500 standards as issued by the Accounting Practices Board, the information as
required by IAS 34: Interim Financial Reporting, the Listings Requirements of the JSE Limited and the
requirements of the Companies Act of South Africa. The audited financial statements and this set of
abridged financial information, which are based on reasonable judgements and estimates, have been prepared
using accounting policies that comply with IFRS. These are consistent with those applied in the financial
statements for the year ended 30 June 2011.
3. Auditor's opinion
The independent auditors, Deloitte & Touche, have issued their opinion on the Group's financial statements
and this set of abridged financial information for the year ended 30 June 2012. The audit was conducted in
accordance with International Standards on Auditing. They have issued an unmodified audit opinion for the
Group's financial statements and this set of abridged financial information. This set of abridged financial
information has been derived from the Group financial statements and are consistent in all material respects,
with the group financial statements. Their unmodified audit report as well as their unmodified audit report
for this set of abridged financial information is available for inspection at the company's registered office.
Any reference to future financial performance included in this announcement, has not been reviewed or reported
on by the company's auditors.
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 year under review. Total remuneration paid to directors for the
year under review amounted to R7,5 million (2011: R8,4 million) and share-based payments of R1,7 million
(2011: R0,4 million) were expensed relating to directors.
7. Cash flow
Cash generated from operating activities of R44,6 million (2011: R50,5 million) was lower due to the revenue
growth and the resultant increase in working capital requirements. Cash generated from the drive to improve
working capital management will be used to reduce short-term borrowings.
8. Corporate activities
Mustek Lesotho (Proprietary) Limited was incorporated in Lesotho on 8 July 2011 and the Group acquired a 99%
stake in the company for a nominal amount.
9. Discontinued operations
The comparative figures have been restated to show the results of the discontinued operations separately.
Management is of the intention to dispose of land in KwaZulu-Natal and the Group's share in Comztek Holdings
(Proprietary) Limited and Rectron Australia BV within the next 12 months. The aforementioned asset and companies
were treated as discontinued operations and their assets and liabilities classified as available for sale as
management is committed to a plan to sell the companies and an active programme to locate buyers and complete the
plan have been initiated.
The (loss) profit for the year from discontinued operations is as follows:
2012 2011
Revenue 640 479 609 449
Cost of sales (559 916) (526 349)
Gross profit 80 563 83 100
Other income 1 023 8 660
Distribution, administrative and other operating expenses (77 442) (72 199)
Profit from operations 4 144 19 561
Investment revenues 1 711 1 028
Finance costs (8 905) (8 823)
(Loss) profit before tax (3 050) 11 766
Income tax benefit (expense) 1 031 (2 258)
(Loss) profit for the year (2 019) 9 508
Less loss (profit) attributable to outside shareholders 694 (3 590)
Group's share of (loss) profit for the year from discontinued operations (1 325) 5 918
10. Operating results
Revenue from continuing operations increased by 20,9% to R3,503 billion (2011: R2,897 billion) and the gross profit
percentage from continuing operations decreased to 14,3% (2011: 14,9%). The addition of Acer and Lenovo to our
product range over the past 12 months assisted the revenue growth but negatively impacted margins as these products
are typically sold at lower margins. Included in profit from operations from continuing operations is R47,8 million
relating to realised and unrealised foreign exchange losses (2011: R12,0 million foreign exchange profits).
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. Inventory is accounted for at the exchange rate
at the time when risks and rewards transfer to the company and 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 from continuing operations is 71,37 cents per share (2011: 82,60 cents per share)
and basic earnings from continuing operations is 74,89 cents per share (2011: 79,59 cents per share).
Financing costs are higher for the year, arising from the increased working capital needs.
Mustek grew its revenue by 42,5% after adding new products and a renewed focus on its customers ensured growth in all sectors.
Rectron grew its full year revenue by 5,7% after it reported a decline of 6,5% for the six months to December 2011. The transition
in the CEO leadership at Rectron with the appointment of Lindi Shortt has gone smoothly.
Distribution, administrative and other operating expenses were well controlled and increased by 6,2%.
11. 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.
12. Integrated reporting
Mustek is committed to transparent and integrated reporting in the spirit of King III and the Global Reporting Initiative
("GRI"). We are accordingly updating corporate governance practices where necessary and are enhancing our internal
information gathering systems to provide the quality and type of information required for authentically integrated
annual reports.
This exercise has also given impetus to in-house programmes to mitigate our environmental impacts. For example, Mustek has
commenced an ambitious project to reduce our head office and assembly line power consumption to virtually zero by installing
hundreds of rooftop solar panels. This installation will pay for itself in a few short years and will not only significantly
reduce our overall electricity footprint, it will also demonstrate the viability of renewable energy for powering corporate
infrastructure.
13. Industry outlook
We are positive that the PC industry will see growth in the coming years, especially in Africa. Users who own a PC for three
years typically spend 30% on hardware and 70% on internet connectivity. We have no doubt that the connectivity costs will
continue to become more affordable, enabling users to spend more on hardware. We believe that this change in cost of
Internet/Broadband, as well as improvements to infrastructure and computer literacy skills over the next 10 years, will result
in significant growth of personal computing on the African continent.
The channel is forever changing. Looking ahead Mustek will continue to support and invest in desktop computing, notebooks and
ultrabooks, where we are currently seeing many opportunities. The soon to be launched Windows 8 Operating System will create
possibilities for sleek and exciting technology innovations.
14. 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.
With the addition of Acer and Lenovo to Toshiba and Mecer over the past 18 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 the hardware platforms, Mustek can build configurations to exacting customer requirements through the Mecer
brand. The company believes this strategy will serve it extremely well over the coming years.
Our product offerings also cater for international vendors and distributers, which ensures competitiveness in the marketplace. We
look forward to increasing our market share and the average spend per customer, by building on our established and trusted after
sales service and support programme for our valued customers.
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 reduce our debt.
15. 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 commitment to optimal cash utilisation will mean that cash generated by the operations will be used to fund
growth and reduce debt. To this end, the final dividend declared by the board of directors for the financial year ended 30 June 2012
has been maintained at 17 cents (2011: 17 cents) per share.
Notice is hereby given that a final dividend of 17 cents per ordinary share for the year ended 30 June 2012 is declared, payable to
shareholders recorded in the books of the company at the close of business on the record date appearing below. This dividend is
declared out of income reserves. There are 108 469 165 ordinary shares in issue and ranking for dividend at the date of this
declaration. The South African dividend tax rate is 15% and the company has utilised Secondary Tax on Companies credits to the value
of 9,03479 cents per share to partially offset the 15% withholding tax, resulting in a net dividend of 15,80522 cents per share to
shareholders who are not exempt.
The salient dates applicable to the final dividend are as follows:
Last day of trade cum dividend Friday, 28 September 2012
First day to trade ex dividend Monday, 1 October 2012
Record date Friday, 5 October 2012
Payment date Monday, 8 October 2012
No share certificates may be dematerialised or rematerialised between Monday, 1 October 2012 and Friday, 5 October 2012, both days
inclusive.
Where applicable, payment in respect of certificated shareholders will be transferred electronically to shareholders bank accounts
on the payment date. In the absence of specific mandates, payment cheques will be posted to certificated shareholders at their risk
on the payment date. Shareholders who have dematerialised their shares will have their accounts at their Central Securities Depository
Participant or broker credited on the payment date.
Mustek Limited¹s tax reference number is 9550081716.
16. Annual general meeting
The notice of the annual general meeting will be included in the annual report that will be posted to shareholders in due course.
17. Post balance sheet events
There have been no significant events subsequent to year end up until the date of this report that requires adjustment or disclosure.
On behalf of the board of directors
David Kan
Chief Executive Officer
Neels Coetzee
Financial Director
(preparer of abridged Group results)
28 August 2012
Corporate information:
Company secretary: Neels Coetzee.
Transfer secretaries: Computershare Investor Services (Proprietary) Limited.
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 (Proprietary) Limited.
www.mustek.co.za
Date: 28/08/2012 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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