Wrap Text
Abridged unaudited financial results for the six months ended 31 December 2012
MUSTEK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/070161/06)
Share code: MST
ISIN: ZAE000012373
(Mustek or the Group or the Company)
Abridged unaudited financial results for the six months ended 31 December 2012
- Revenue from continuing operations up 10%
- Headline earnings per ordinary share up 137%
- Net asset value of 712 cents per share
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months Year-end
31 Dec 31 Dec 30 Jun
2012 2011 2012
R000 R000 R000
(Restated)
Continuing operations
Revenue 1 806 727 1 646 714 3 502 543
Cost of sales (1 569 033) (1 400 092) (3 002 190)
Gross profit 237 694 246 622 500 353
Other income 2 037 14 078 17 980
Foreign currency losses (14 964) (64 071) (47 813)
Distribution, administrative and other operating expenses (174 291) (156 449) (333 591)
Profit from operations 50 476 40 180 136 929
Investment revenues 2 280 2 043 4 668
Finance costs (12 954) (10 593) (25 337)
Other losses - - (5 613)
Share of profit of associates 2 674 155 1 686
Profit before tax 42 476 31 785 112 333
Income tax expense (10 738) (7 920) (32 515)
Profit for the period from continuing operations 31 738 23 865 79 818
Discontinued operations
Profit (loss) for the period from discontinued operations 1 773 (1 094) (2 019)
Profit for the period 33 511 22 771 77 799
Other comprehensive income
Exchange profits on translation of foreign operations 1 605 9 707 7 883
Other comprehensive income for the period, net of tax 1 605 9 707 7 883
Total comprehensive income for the period 35 116 32 478 85 682
Profit (loss) attributable to:
Owners of the parent 34 158 23 010 80 181
Non-controlling interest (647) (239) (2 382)
33 511 22 771 77 799
Total comprehensive income attributable to:
Owners of the parent 35 032 30 969 86 196
Non-controlling interest 84 1 509 (514)
35 116 32 478 85 682
Earnings and dividend per share (cents)
Weighted number of ordinary shares in issue 108 436 464 108 849 751 108 831 677
Ordinary shares in issue 108 433 165 108 677 165 108 469 165
Dividend per ordinary share 17,00 17,00 17,00
From continuing and discontinued operations
Headline earnings per ordinary share 31,75 13,40 70,15
Basic earnings per ordinary share 31,50 21,14 73,67
From continuing operations
Headline earnings per ordinary share 29,52 14,18 71,37
Basic earnings per ordinary share 29,27 21,92 74,89
From discontinued operations
Headline earnings per ordinary share 2,23 (0,79) (1,22)
Basic earnings per ordinary share 2,23 (0,79) (1,22)
Reconciliation between basic and headline earnings
Basic earnings attributable to owners of the parent 34 158 23 010 80 181
Group's share of loss (profit) on disposal of property, plant and equipment 274 (8 427) (7 762)
Impairment of distribution right - - 3 445
Non-controlling interest in impairment of distribution right - - (1 688)
Impairment of associate and other loans - - 2 168
Headline earnings from continuing and discontinued operations 34 432 14 583 76 344
Less Group's share of (profit) loss for the period from discontinued operations (2 420) 855 1 325
Headline earnings from continuing operations 32 012 15 438 77 669
Basic earnings attributable to owners of the parent 34 158 23 010 80 181
Less Group's share of (profit) loss for the period from discontinued operations (2 420) 855 1 325
Basic earnings from continuing operations 31 738 23 865 81 506
Net asset value per share (cents) 712,07 645,72 696,73
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
6 months 6 months Year-end
31 Dec 31 Dec 30 Jun
2012 2011 2012
R000 R000 R000
(Restated)
ASSETS
Non-current assets
Property, plant and equipment 119 702 119 884 122 625
Intangible assets 60 656 63 513 60 240
Investments in associates 6 262 10 207 8 737
Other investments and loans 31 770 31 735 31 733
Deferred tax asset 14 333 16 458 15 666
232 723 241 797 239 001
Current assets
Inventories 843 863 692 722 773 619
Trade and other receivables 709 823 707 649 596 447
Foreign currency assets - 7 505 14 389
Tax assets 11 018 8 818 666
Bank balances and cash 95 847 111 081 224 413
1 660 551 1 527 775 1 609 534
Assets classified as held for sale 307 719 274 308 268 664
TOTAL ASSETS 2 200 993 2 043 880 2 117 199
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 868 870 868
Ordinary share premium 117 048 118 495 117 257
Retained earnings 655 379 582 484 639 655
Non-distributable reserve 809 809 809
Foreign currency translation reserve (1 983) (913) (2 857)
Equity attributable to owners of the parent 772 121 701 745 755 732
Non-controlling interest 18 510 20 449 18 426
Total equity 790 631 722 194 774 158
Non-current liabilities
Long-term borrowings 6 670 240 426 4 712
Deferred tax liabilities 2 320 4 787 2 409
8 990 245 213 7 121
Current liabilities
Short-term borrowings 287 047 1 110 143 160
Trade and other payables 775 298 664 649 930 255
Provisions 7 910 8 375 13 593
Foreign currency liabilities 8 206 3 625 2 585
Deferred income 29 116 25 521 28 078
Tax liabilities 4 446 6 598 3 963
Bank overdrafts 58 995 164 600 20 055
1 171 018 874 478 1 141 689
Liabilities directly associated
with assets classified as
held for sale 230 354 201 995 194 231
Total liabilities 1 410 362 1 321 686 1 343 041
TOTAL EQUITY AND LIABILITIES 2 200 993 2 043 880 2 117 199
Condensed consolidated cash flow statement
Unaudited Unaudited Audited
6 months 6 months Year-end
31 Dec 31 Dec 30 Jun
2012 2011 2012
R000 R000 R000
Operating activities
Cash receipts from customers 2 025 874 1 678 544 3 983 731
Cash paid to suppliers and employees (2 300 666) (1 959 239) (3 863 800)
Net cash (used in) from operations (274 792) (280 695) 119 931
Investment revenues received 2 921 2 916 5 591
Finance costs paid (16 667) (14 844) (34 241)
Dividends received - - 788
Dividends paid (18 434) (18 623) (18 623)
Income taxes paid (19 555) (6 662) (28 844)
Net cash (used in) from operating activities (326 527) (317 908) 44 602
Net cash used in investing activities (2 360) (23 291) (37 188)
Net cash from financing activities 199 119 304 665 65 196
Net (decrease) increase in cash and cash equivalents (129 768) (36 534) 72 610
Cash and cash equivalents at beginning of the period 268 397 195 787 195 787
Cash and cash equivalents at the end of the period 138 629 159 253 268 397
Condensed consolidated statement of changes in equity
Foreign
Ordinary Ordinary Non- currency Attributable Non-
share share Retained distributable translation to owners of controlling
capital premium earnings reserve reserve the parent interest Total
R000 R000 R000 R000 R000 R000 R000 R000
Balance at 30 June 2011 877 122 823 576 181 2 725 (8 872) 693 734 18 940 712 674
Profit for the period - - 23 010 - - 23 010 (239) 22 771
Other comprehensive income - - - - 7 959 7 959 1 748 9 707
Recognition of share-based payments - 26 - - - 26 - 26
Dividends paid - - (18 623) - - (18 623) - (18 623)
Realisation of non-distributable
reserve on disposal of fixed assets - - 1 916 (1 916) - - - -
Buy back of shares (7) (4 354) - - - (4 361) - (4 361)
Balance at 31 December 2011 870 118 495 582 484 809 (913) 701 745 20 449 722 194
Profit for the period - - 57 171 - - 57 171 (2 143) 55 028
Other comprehensive income - - - - (1 944) (1 944) 120 (1 824)
Recognition of share-based payments - 27 - - - 27 - 27
Buy back of shares (2) (1 265) - - - (1 267) - (1 267)
Balance at 30 June 2012 868 117 257 639 655 809 (2 857) 755 732 18 426 774 158
Profit for the period - - 34 158 - - 34 158 (647) 33 511
Other comprehensive income - - - - 874 874 731 1 605
Dividends paid - - (18 434) - - (18 434) - (18 434)
Buy back of shares - (209) - - - (209) - (209)
Balance at 31 December 2012 868 117 048 655 379 809 (1 983) 772 121 18 510 790 631
Condensed segment analysis
Total Mustek Rectron Comztek Group Eliminations
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000 R000 R000 R000 R000 R000 R000
Business segments (Restated) (Restated) (Restated) (Restated) (Restated)
Revenue 1 806 727 1 646 714 1 095 439 1 093 614 827 645 606 447 - - - - (116 357) (53 347)
EBITDA* 59 213 49 895 39 339 37 608 27 457 17 680 - - (7 583) (5 393) - -
Depreciation and amortisation (8 737) (9 715) (5 548) (5 916) (3 189) (3 799) - - - - - -
Profit (loss) from operations 50 476 40 180 33 791 31 692 24 268 13 881 - - (7 583) (5 393) - -
Investment revenues 2 280 2 043 3 224 4 427 1 530 1 185 - - 427 194 (2 901) (3 763)
Finance costs (12 954) (10 593) (7 516) (4 750) (5 438) (5 843) - - (2 901) (3 763) 2 901 3 763
Share of profit of associates 2 674 155 - - - - - - 2 674 155 - -
Profit (loss) before tax 42 476 31 785 29 499 31 369 20 360 9 223 - - (7 383) (8 807) - -
Income tax (expense) benefit (10 738) (7 920) (7 861) (9 361) (5 693) (1 025) - - 2 816 2 466 - -
Profit (loss) for the period from
continuing operations 31 738 23 865 21 638 22 008 14 667 8 198 - - (4 567) (6 341) - -
Discontinued operations
Profit (loss) for the period from
discontinued operations 1 773 (1 094) - - (413) (443) 2 186 (651) - - - -
Profit (loss) for the period 33 511 22 771 21 638 22 008 14 254 7 755 2 186 (651) (4 567) (6 341) - -
Attributable to:
Owners of the parent 34 158 23 010 21 638 22 008 14 460 7 977 2 627 (634) (4 567) (6 341) - -
Non-controlling interest (647) (239) - - (206) (222) (441) (17) - - - -
33 511 22 771 21 638 22 008 14 254 7 755 2 186 (651) (4 567) (6 341) - -
*Earnings before interest, taxation, depreciation and amortisation.
Geographical segments Total South Africa Mustek East Africa Rectron Australia Comztek Africa
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months 6 months
31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec
2012 2011 2012 2011 2012 2011 2012 2011 2012 2011
R000 R000 R000 R000 R000 R000 R000 R000 R000 R000
(Restated) (Restated) (Restated) (Restated)
Revenue 1 806 727 1 646 714 1 784 133 1 627 570 22 594 19 144 - - - -
Profit (loss) before tax 42 476 31 785 42 763 32 033 (287) (248) - - - -
Income tax (expense) benefit (10 738) (7 920) (10 958) (7 994) 220 74 - - - -
Profit (loss) for the period from continuing operations 31 738 23 865 31 805 24 039 (67) (174) - - - -
Discontinued operations
Pofit (loss) for the period from discontinued operations 1 773 (1 094) (194) (623) - - (413) (443) 2 380 (28)
Profit (loss) for the period 33 511 22 771 31 611 23 416 (67) (174) (413) (443) 2 380 (28)
Attributable to:
Equity holders of the parent 34 158 23 010 31 955 23 429 (67) (174) (207) (221) 2 477 (24)
Minority interest (647) (239) (344) (13) - - (206) (222) (97) (4)
33 511 22 771 31 611 23 416 (67) (174) (413) (443) 2 380 (28)
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. Statement of compliance
These abridged financial statements for the six months ended 31 December 2012 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.
3. 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 2012.
4. Audit report
Neither the consolidated financial results for the six months ended 31 December 2012, nor this set of summarised
financial information has been audited by the Groups auditors, and thus no audit report was issued.
5. 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.
6. 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.
7. Board of directors
In order to comply with rule 3.84(j) of the Listings Requirements of the JSE Limited, which requires an arms-length
relationship between the company secretary and the board of directors, Neels Coetzee relinquished the role of company
secretary with effect from 1 November 2012 and the board appointed Sirkien van Schalkwyk as the company secretary with
effect from 1 November 2012.
No other changes were made to the board during the period under review. Total remuneration paid to directors for the
six months under review amounted to R4,1 million (31 December 2011: R3,8 million) and share-based payments of R0,8
million (31 December 2011: Rnil) were expensed relating to directors.
8. Discontinued operations
The comparative figures have been restated to show the results of the discontinued operations separately. On 28 August
2012, management reported that it is their intention to dispose of land in KwaZulu-Natal, the Groups share in Comztek
Holdings (Proprietary) Limited (Comztek) and Rectron Australia BV within the next 12 months. The sale of Comztek to
Datatec Limited was announced on 30 November 2012 subject to certain conditions precedent. Shareholders will be informed
as soon as the transaction becomes unconditional. The land in KwaZulu-Natal was disposed for its book value of R11,9
million and is in the process of being transferred.
The profit (loss) for the period from discontinued operations is as follows:
31 Dec 2012 31 Dec 2011
Revenue 373 343 317 126
Cost of sales (327 334) (275 622)
Gross profit 46 009 41 504
Other income 379
Foreign currency profits 2 350 1 206
Distribution, administrative and other operating expenses (40 011) (40 439)
Profit from operations 8 348 2 650
Investment revenue 641 873
Finance cost (3 713) (4 252)
Profit (loss) before tax 5 276 (729)
Income tax expense (3 503) (365)
Profit (loss) for the period 1 773 (1 094)
Plus loss attributable to outside shareholders 647 239
Groups share of profit (loss) for the period from discontinued operations 2 420 (855)
9. Cash flow
Inventory and receivables increased in line with historic trends while revenue growth and the weaker Rand also
contributed to the R274,8 million cash used in operations (31 December 2011: R280,1 million). This was funded by our long-term
borrowing facilities and is expected to reverse in the period through to June 2013, in line with historic trends.
10. Operating results
Revenue from continuing operations improved by 10% to R1,807 billion (31 December 2011: R1,647 billion). The revenue
growth was supported mainly by the addition of the Acer and Lenovo product ranges.
The group expanded its basket of products with the introduction of multiple additions to the product portfolio
offering, including Huawei Enterprise Solutions and the Miniflex range of fibre cables, as well as solar panels.
Despite the significant depreciation in the external value of the Rand during the reporting period, foreign currency
losses reduced significantly through the adoption of an active hedging programme designed to contain severe volatilities
in the exchange rate, adding to profit from operations. The improved contribution from our associates arose from higher
levels of activity. Focus on optimal working capital management continues. Inventory build-up in anticipation of an
improved order book in the next quarter, as well as higher exchange rates, boosted the value of inventory holdings.
Musteks headline earnings from continuing operations increased to 29,52 cents per share (31 December 2011:
14,18 cents per share) and basic earnings per share from continuing operations are 29,27 cents per share
(31 December 2011: 21,92 cents per share).
The transition in the CEO leadership with the appointment of Ms Lindi Shortt at subsidiary Rectron proceeds apace,
with increased revenues of 36% from continuing operations. Rectron has also regained the historical profitability levels
previously earned, and is positioned to deliver on its continued recovery.
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 groups employees belong to this fund. The Group does not provide additional post-retirement
benefits.
12. Industry outlook
There is ongoing industry debate around the future of the desktop. Our view, premised on our ongoing interactions
with our customers and this rapidly changing industry, is that the desktop will continue to transition into different
formats based on evolving market trends and customer requirements. A manifestation of this is the increasing uptake of the
All-in-One format, proving popular in the banking and public sector markets due to its lower Total Cost of Ownership
and security benefits for the large percentage of desk bound employees in these environments.
We are also continuing with our research and development into new product offerings that have both potential markets
and growth into the foreseeable future.
13. Company outlook
The company is focusing on increasing volumes as it remains a driver of performance across our operations.
Considering vertical sector potential in 2013, significant growth opportunities lie in the education, health and
security industries, as well as the solar energy space.
For some time, skeptics have argued that the PC will be replaced with newer devices such as the tablet (mobile
device). Apple dominates this form factor and Mustek was excluded from this growth opportunity. However, statistics indicate
that the other brands are catching up and Apple is steadily losing its tablet dominance. We believe that Mustek will
become a key player in the local tablet market for the other brands. Over the next few years, this is likely to be a positive
revenue driver.
It became even more apparent that the use of tablets will play an increasing role in education in the future. Mustek
undertook considerable research into the merits of these particular devices, but also how these tools can best be used in
the classroom. Whereas tablets are taking the education world by storm outside of South Africa (and Africa), locally
there is still some work to be done to extol the value of tablets and how they can improve teaching and learning. 2013
presents a great platform to maximise this opportunity.
We recently launched a Cloud offering for the channel that includes a micro-billing system to support the transition
from a transactional sale to an annuity model.
We have also experienced another year of strengthening our strategic partner network within the industry. Mustek was
heavily involved with the Microsoft launch of Windows 8. 2013 is the year that players within this industry will be
exploring possibilities within the framework of the devices and applications spaces.
14. 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.
Musteks 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.
15. 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 Neels Coetzee 21 February 2013
Chief Executive Officer Financial Director
(preparer of abridged Group results)
Corporate information: www.mustek.co.za
Company secretary: Sirkien van Schalkwyk
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
www.mustek.co.za
Date: 21/02/2013 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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