| Wed 29 Aug 2001, 0:00 | | Rectron Holdings Limited - Audited Financial Resul |
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Share code: RCT
ISIN Code : ZAE000016622
Rectron holdings limited
Incorporated in the Republic of South Africa
Registration number 1998/015355/06
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2001
- ORGANIC REVENUE GROWTH UP 12%
- OPERATING PROFIT UP 24%
- NET CASH GENERATED FROM OPERATIONS R27 MILLION
COMMENTS
Review of trading results
The directors have pleasure in presenting the annual results of Rectron which
cover the 12-month period ended 30 June 2001.
The Group's turnover increased by 12% to R626 million, up from R561 million
while profit before tax was flat impacted by tough trading conditions in the
international operations.
The Group's headline earning per share is marginally down by 1,62 cents from
17,91 cents to 16,29 cents.
Overall, the Group showed a significant positive cash flow at year-end, assiste
by a significant reduction in gearing to zero % and the resulting lower interes
costs, which benefit will be felt in the coming financial year.
The Group's South African business, which is the major segment, delivered the
most impressive results. Profit from operations was up 36% to R39 million,
revenue increased by 15% to R512 million, while net operating margins were
marginally down to 4,8% from 5,1% for the previous year.
Headline earnings per share grew by 8% to 20,38 cents.
Results from the international operations showed mixed fortunes. The Australian
operation showed after-tax profits of R364 193. The UK operation showed a loss
of R1,3 million while the Holland operation showed a loss of R4,7 million, whic
led to divestment.
On 30 June this year, in response to the weakening rand and negative offshore
market influences, Rectron diluted its share- holding in both its Australian an
UK operations to 50%. The net result of this is that Rectron (South Africa)
carries no cross-surety or financial warranties for the Group's offshore
operations and has reduced its exposure to further weak performances.
The effective rate of taxation increased to 37% from 18% for the corresponding
period in 2000. This is due to the unbundling of a procurement structure
previously in place and international operating losses.
Rectron has continued to grow in terms of both revenue and operating profits
despite a significantly more hostile global trading climate in 2000/2001.
Business activities - local operations Rectron SA has cemented its dominant
position in the IT components market in the region and has continued to
organically grow the business. To enhance
this leading position in South Africa as well as to maximize the Group's
financial performance, management has decided to repatriate most of its
resources to the South African operation.
The South African operation and core competency continue to be further
strengthened both locally and internationally by the relationships with
strategic vendors such as Intel, AMD, VIA, Microsoft, Fujitsu, Canon, Matrox,
Gigabyte, Handspring, Viewsonic, CTX, AOpen, Symantec and TwinMOS.
During the period under review Rectron SA expanded its infrastructure and
enlarged its office, workshop and warehousing space by approximately 30% in
anticipation of future growth. This R3 million upgrade included the building of
a new service centre and enhanced technical and administrative
facilities.
Rectron has also added new training facilities, including an auditorium,
which will be used to further enhance product knowledge of our 6 000 nationwide
dealers.
Rectron SA continues to enhance its product offering, increasing market share
while improving operating efficiencies and effective overhead control, thus
improving operating margins. Additional sales resources have been engaged to
realize this potential.
Rectron secured a number of high profile distributorships during the year, whic
included the appointment by Handspring as an exclusive distributor of its
products in South Africa. Rectron also secured distribution rights for Intel
products. This appointment, achieved after lengthy negotiations with Intel
Corporation, is bound to have a positive effect on Rectron's position in the
South African IT industry. Rectron also secured distribution agreements with
Canon (South Africa) for the full range of their products.
Symantec, one of the largest software companies, also appointed Rectron as a
distributor for the full range of their products, which includes OEM and retail
offerings for PC and Internet security products for enterprise.
Business activities - international operations
The Australian subsidiary has proven to be a successful operation by delivering
after tax profits of R364 193. This is the second consecutive year that the
Australian operation has reported profits. These results were achieved in
difficult trading conditions which were reflected by a 27% devaluation of the
Australian dollar in the wake of the Olympic Games. For the last two years the
Australian operation has only traded in Melbourne.
Rectron plans to be national in Australia by the end of 2003 with branches in
Melbourne, Sydney, Brisbane, and Perth.
The UK operation reported a loss of R1,3 million, which arose mainly from re-
structuring costs, being retrenchments and streamlining of the product range.
Though the branch has been trading in an unfavorable climate for the past two
quarters, the revenue and gross profit margins for the last 6 months remained a
the same level, which gives management comfort that on market recovery the UK
will post profits in the year to come.
During the period under review, the closure of the Holland operation was
completed with all trading losses being accounted for in the year 2001 results.
Prospects
The global IT industry has been suffering from an all-time low demand for PC an
peripheral equipment. Management believes there will be growth in the South
African IT industry during this coming period, which Rectron will be able to
capitalize on.A streamlined product portfolio, good management of inventory,
increased
emphasis on service provision, tight fiscal control and continued enhancement o
channel loyalty will be the key focus of the business in the year ahead.
Intel Server backbone, Gigabyte white box PC platform, and Handspring Handheld
devices will be the three main areas to grow in line with Rectron's traditional
components business consisting of processors, memory modules, motherboards,
graphics cards, storage devices, optical storage, input and
pointing devices, display peripherals, printers and scanners.
The Group will continue to invest in both software and hardware to enhance the
efficient operation of the business, staff productivity, and customer support
and service.
We are confident that the growth trend shown during this period will be
maintained and that future growth in both revenue and earnings is attainable.
Dividends
No dividends are declared for the year under review.
By order of the Board
Alex Nugent (Secretary)
29 August 2001
Registered office
Rectron House 152 15th Road Randjespark Midrand 1685
Republic of South Africa PO Box 76494 Wendywood 2148
www.rectron.net
Transfer secretaries
Computershare Services Limited
PO Box 61051 Marshalltown 2107
Directorate
MH Lu** (Chairman & CEO)
PM Otham
DC Kan*
MF Hennessy*
MC Nahon*
** Republic of China
* Non-executive
Income statement
TotalSouth Total South
AfricaInternational AfricaInternational
2001 2001 2001 2000 2000 2000
R000 R000 R000 R000 R000 R000
Revenue 625 975 512 482 113 493 561 144 443 802 117 342
Cost of
sales (550 910) (446 165) (104 745) (483 528) (377 061) (106 467)
Gross
Profit 75 065 66 317 8 748 77 616 66 741 10 875
Operating
expenses (39 601) (27 264) (12 337) (48 955) (38 074) (10 881)
Profit/
(loss)
from
opera-
tions 35 464 39 053 (3 589) 28 661 28 667 (6)
Finance
costs (4 889) (3 512) (1 377) (1 760) (525) (1 235)
Non-operating
(losses)
income (814) 0 (814) 2 728 0 2 728
Profit/
(loss)
before
tax 29 761 35 541 (5 780) 29 629 28 142 1 487
Income
Tax
Expense (11 069) (11 069) 0 (5 355) (5 355) 0
Profit/
(loss)
after
tax 18 692 24 472 (5 780) 24 274 22 787 1 487
Minority
interest 38 0 38 (3) 0 (3)
Net profit/
(loss) for
the year 18 730 24 472 (5 742) 24 271 22 787 1 484
Earnings
per share
Basic
earnings/
(loss) per
share
(cents) 15,61 20,39 (4,78) 20,23 18,99 1,24
Headline
earnings/
(loss) per
share
(cents) 16,29 20,38 (4,09) 17,91 18,94 (1,03)
BALANCE SHEET
Assets
Non-current
assets 24 400 23 906 494 10 078 8 463 1 615
Plant and
equipment 11 942 11 942 0 8 444 6 829 1 615
Investments
in
asso-
ciates 11 151 10 657 494 0 0 0
Deferred
tax asset 1 307 1 307 0 1 634 1 634 0
Current
assets 177 059 176 808 251 163 602 129 368 34 234
Invento-
ries 90 190 90 190 0 108 244 88 236 20 008
Trade
And
Other
Recei-
vables 60 487 60 485 2 48 714 35 880 12 834
Bank
Balances
and cash 26 382 26 133 249 6 644 5 252 1 392
Group 0 0 0 0 4 139 3 989
Total
Assets 201 459 200 714 745 173 680 141 970 39 838
Equity
and
liabi-
lities
Capital
And
reserves 80 289 84 893 (4 604) 61 870 60 422 1 448
Share
capital 1 200 1 200 0 1 200 1 200 0
Share
premium 22 776 22 776 0 22 776 22 776 0
Accumu-
lated
profits
(losses) 56 313 60 917 (4 604) 37 894 36 446 1 448
Minority
Interest 0 0 0 39 0 39
Long-term
Borrowings
418 418 589 519 70
Current
Liabi-
lities 120 752 116 423 4 329 111 182 77 040 34 142
Trade
and other
payables 89 068 84 739 4 329 91 829 75 015 16 814
Short-
Term
Borrowings 20 142 20 142 0 280 216 64
Tax
Liabi-
Lities 6 269 6 269 0 1 809 1 809 0
Bank
Over-
drafts 5 273 5 273 0 17 264 0 17 264
Group 0 (1 020) 1 020 0 3 989 4 139
TOTAL
EQUITY AND
LIABILITIES
201 459 200 714 745 173 680 141 970 39 838
STATEMENT of changes in equity
Non-
Share distri- Share Accumu-
capital butable premium lated Total
reserves profits
R000 R000 R000 R000 R000
Balance at 30 June 1999 1 200 0 22 776 13 659 37 635
Net profit for the year 0 0 0 24 271 24 271
Foreign currency
translation reserve 0 (36) 0 0 (36)
Reclassification of
foreign currency
translation reserve 0 36 0 (36) 0
Balance at 30 June 2000 1 200 0 22 776 37 894 61 870
Net profit for the year 0 0 0 18 730 18 730
Foreign currency translation
reserve 0 (311) 0 0 (311)
Reclassification of
foreign currency
translation reserve 0 311 0 (311) 0
Balance at 30 June 2001 1 200 0 22 776 56 313 80 289
CASH FLOW STATEMENT
Total South Africa Total South
International Africa International
2001 2001 2001 2000 2000 2000
R000 R000 R000 R000 R000 R000
Operating activities
Cash receipts from
customers 594 427 486 506 107 921 538 851 434 342 104
509
Cash paid to suppliers
and employees (567 608) (461 961) (105 647) (557 504) (437 303)(120
201)
Net cash generated by/
(used in) operations 26 819 24 545 2 274 (18 653) (2 961) (15
692)
Interest paid (4 889) (3 512) (1 377) (1 760) (525) (1
235)
Income taxes paid (6 282) (6 282) 0 (6 431) (6 431) 0
Net cash generated
by/(used in)
operating activities 15 648 14 751 897 (26 844) (9 917) (16
927)
Investing activities
Dividends received
from investment 0 0 0 9 744 9 744 0
Repurchase of interest
in subsidiary (3 112) (3 112) 0 0 0 0
Interest received 683 600 83 185 159 26
Purchases of plant and
equipment (8 399) (6 122) (2 277) (8 384) (6 382) (2
002)
Proceeds on disposal
of plant and
equipment 831 323 508 486 352 134
(Acquisition)/disposal
of investment (4 836) (4 836) 0 162 162 0
Proceeds on disposal
of interest in
subsidiaries 0 0 0 2 732 0 2 732
Loans advanced/
(received) 0 (5 821) 5 821
Disposal of
subsidiaries (553) 0 (553) 0 0 0
Net cash (used in)
/generated from
investing activities (15 386) (18 968) 3 582 4 925 4 035 890
Financing activities
Proceeds from issue
of shares 0 0 0 31 0 31
(Decrease)/increase in
bank overdrafts (215) 5 273 (5 488) 17 264 0 17 26
Net increase/(decrease)
in borrowings 19 691 19 825 (134) 399 265 134
Net cash generated
from/(used in)
financing activities 19 476 25 098 (5 622) 17 694 265 17 42
Net increase/(decrease)
in cash and
cash equivalents 19 738 20 881 (1 143) (4 225) (5 617) 1 392
Cash and cash
equivalents at
beginning of year 6 644 5 252 1 392 10 869 10 869 0
Cash and cash
equivalents at end
of year 26 382 26 133 249 6 644 5 252 1 392
YOUR COMPUTER COMPONENTS SOLUTION PROVIDER
Johannesburg Cape Town Durban Melbourne Manchester Johannesburg Cape
Town Durban Melbourne Manchester Johannesburg Cape Town Durban
Melbourne Manchester Johannesburg Cape Town Durban Melbourne
Manchester Johannesburg Cape Town Durban Melbourne Manchester
www.rectron.net
GIGABYTE TECHNOLOGY
VIEWSONIC
FUJITSU
AOPEN
MATROX
INTEL
MICROSOFT DIRECT OEM
SYMANTEC
HANDSPRING
AMD
TWINMOS TECHNOLOGIES
