| Thu 27 Feb 2003, 9:48 | | Mustek Limited - Interim Financial Results For The |
|
MUSTEK LIMITED - INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER
2002
Mustek Limited
Registration number 1987/070161/06
Share code MST
ISIN ZAE000012373 A11B67DCAAC97C32EB8A1CC1D03FF7A8
("Mustek" or "the Group")
Interim financial results for the six months ended 31 December 2002
Dividend declaration
Basic earnings increases by 59%
Headline earnings increases by 74%
Consolidated Income Statement
Unaudited Unaudited Audited
six months six months Year end
31 Dec 31 Dec 30 June
2002 2001 2002
R 000 R 000 R 000
Revenue 1 418 440 1 240 028 2 825 776
Cost of sales (1 189 200) (1 022 745) (2 346 117)
Gross profit 229 240 217 283 479 659
Operating expenses (107 868) (128 244) (257 834)
EBITDA 121 372 89 039 221 825
Depreciation (8 029) (6 719) (15 273)
Goodwill amortisation (1 857) (1 929) (6 793)
Profit from operations 111 486 80 391 199 759
Dividend income 1 788 - -
Net finance costs (13 463) (12 174) (24 649)
- Net finance costs (10 629) (12 174) (24 649)
- Trade finance commission (2 834) - -
Exceptional items (14 329) (12 431) (20 981)
Income from associates 3 944 519 642
Profit before taxation 89 426 56 305 154 771
Taxation (28 868) (19 409) (63 559)
Profit after taxation 60 558 36 896 91 212
Minority interest (10 479) (5 338) (13 849)
Net profit for the period 50 079 31 558 77 363
Weighted average number of
ordinary shares in issue 87 548 263 100 114 533 98 257 129
Headline earnings per
ordinary share (cents) 75,43 38,00 88,88
Basic earnings per ordinary
share (cents) 57,20 31,52 78,74
Fully diluted headline
earnings per ordinary
share (cents) 70,33 36,31 84,00
Fully diluted basic earnings
per ordinary share (cents) 53,34 30,12 74,41
Reconciliation between basic
and headline earnings
Basic earnings (R 000) 50 079 31 558 77 363
Goodwill amortisation 1 857 1 929 6 793
Realisation of foreign
currency translation
reserve 11 193 - -
Loss on sale of investment
companies 2 909 4 396 8 320
Other exceptional items 227 156 3 767
Effect of circular 7/2002
as released by SAICA (227) - (8 908)
Headline earnings 66 038 38 039 87 335
Consolidated Balance Sheet
Unaudited Unaudited Audited
six months six months Year end
31 Dec 31 Dec 30 June
2002 2001 2002
R 000 R 000 R 000
ASSETS
Non-current assets 196 981 232 552 185 678
Property, plant and
equipment 38 183 38 468 39 706
Goodwill 4 495 5 990 3 475
Development costs 7 737 8 120 7 743
Investments in associates 84 930 73 980 71 352
Other investments and loans 50 213 99 574 52 602
Deferred taxation asset 11 423 6 420 10 800
Current assets 1 074 816 1 139 198 1 030 024
Inventories on hand 414 649 410 079 449 100
Inventories in transit 50 455 98 878 44 415
Trade and other receivables 341 403 499 924 307 302
TDR debtor 101 419 - -
Bank balances and cash 166 890 130 317 229 207
TOTAL ASSETS 1 271 797 1 371 750 1 215 702
EQUITY AND LIABILITIES
Capital and reserves 487 233 358 611 363 260
Share capital 841 801 727
Share premium 100 968 74 968 38 190
Accumulated profits 332 636 236 752 282 557
Other reserves 52 788 46 090 41 786
Outside shareholders
interest 96 963 44 252 52 214
Non-current liabilities 165 203 235 603 167 442
Interest bearing long-term
borrowings 164 890 235 290 167 027
Interest free long-term
borrowings 313 313 313
Deferred taxation
liabilities - - 102
Current liabilities 522 398 733 284 632 786
Foreign exchange contract
liabilities 14 412 - 14 864
Trade and other payables 443 756 667 280 522 535
Interest bearing short-term
borrowings 10 866 14 573 12 031
Interest free short-term
borrowings 2 474 - 2 474
Deferred income 12 165 568 11 046
Taxation liabilities 11 210 6 557 31 901
Bank overdrafts 27 515 44 306 37 935
TOTAL EQUITY AND LIABILITIES 1 271 797 1 371 750 1 215 702
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months Year end
31 Dec 31 Dec 30 June
2002 2001 2002
R 000 R 000 R 000
Operating activities
Cash receipts from customers 1 407 561 1 087 439 2 788 784
Cash paid to suppliers and
employees (1 352 018) (1 049 894) (2 581 557)
Net cash from operations 55 543 37 545 207 227
Net interest paid (13 463) (12 174) (24 649)
Dividends received (paid) 1 788 - (3 636)
Income taxation paid (48 936) (37 334) (58 002)
Net cash (used in) from
operating activities (5 068) (11 963) 120 940
Net cash used in investing
activities (4 858) (100 076) (54 739)
Net cash (used in) from
financing activities (52 391) 132 973 54 459
Net (decrease) increase in
cash and cash equivalents (62 317) 20 934 120 660
Cash and cash equivalents at
beginning of the year 229 207 109 383 109 383
Effect of foreign exchange
rate changes - - (836)
Cash and cash equivalents
at end of the period 166 890 130 317 229 207
Consolidated Statement of Changes in Equity
Ordinary
share Share Accumulated
capital premium profits
R 000 R 000 R 000
Balance at 30 June 2001 801 74 968 205 194
Net profit for the year - - 77 363
Shares issued in terms of
option scheme 3 472 -
Share buy-back (60) (25 016) -
Cancellation of shares on
disposal of subsidiary (17) (12 234) -
Net foreign currency translation
reserve - - -
Balance at 30 June 2002 727 38 190 282 557
Net profit for the period - - 50 079
Shares issued in terms of option
scheme 10 1 714 -
Share buy-back (56) (26 551) -
Taiwan Depository Receipts (TDR)
listing 160 93 468 -
TDR Expenses written off - (5 853) -
Realisation of foreign currency
translation reserve - - -
Foreign currency translation
reserve - - -
Balance at 31 December 2002 841 100 968 332 636
Consolidated Statement of Changes in Equity (Continued)
Other Translation
reserves reserves Total
R 000 R 000 R 000
Balance at 30 June 2001 51 669 (5 579) 327 053
Net profit for the year - - 77 363
Shares issued in terms of
option scheme - - 475
Share buy-back - - (25 076)
Cancellation of shares on
disposal of subsidiary - - (12 251)
Net foreign currency translation
reserve - (4 304) (4 304)
Balance at 30 June 2002 51 669 (9 883) 363 260
Net profit for the period - - 50 079
Shares issued in terms of
option scheme - - 1 724
Share buy-back - - (26 607)
Taiwan Depository Receipts (TDR)
listing - - 93 628
TDR Expenses written off - - (5 853)
Realisation of foreign currency
translation reserve - 11 193 11 193
Foreign currency translation
reserve - (191) (191)
Balance at 31 December 2002 51 669 1 119 487 233
Commentary
1 Accounting policies
The interim financial statements have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice. The accounting
policies used are consistent with those used in the annual financial statements
for the year ended 30 June 2002, except for the adoption of AC133 - Financial
Instruments - Recognition and measurement. This had the effect of recognising
profit to the value of R8,6 million of which R2,4 million was realised after
period end.
The Group has adopted Circular 7/2002 - Headline earnings, issued by the South
African Institute of Chartered Accountants. The prior year`s headline earnings
have also been adjusted accordingly.
2 Review of trading results
Considering the challenging conditions, Mustek had a very encouraging
performance. The Group strategy followed over the past few years, of focusing on
productivity and efficiency, has been successfully implemented and is now
materially contributing to the Group`s performance.
Group revenue increased by 14% to R1,418 billion.
The Group achieved solid results for the half year with headline earnings of
R66m, reflecting a 74% improvement over the same period in the previous year.
Headline- and attributable- earnings per share of 75,4 cents and 57,2 cents
represent a 99% and 81% increase respectively.
EBITDA improved by 36% in tough and challenging trading conditions.
Exceptional items consist mainly of the realisation of foreign currency
translation reserves on the sale of Quickstep 75 (Pty) Ltd, the holding company
of Mustek Zimbabwe (Private) Ltd and a loss on the sale of 50% of the interest
in Preworx (Pty) Ltd and Secure Electronic Commerce (Pty) Ltd.
All divisions, subsidiaries and associates showed a commendable improvement in
revenues and profitability. Focused management and cost control should result in
further improvement.
3 Segment analysis
Group
Total Mecer investments
Business segments R 000 R 000 R 000
Revenue 1 418 440 760 021 -
EBITDA 121 372 74 240 -
Depreciation (8 029) (5 751) -
Goodwill amortisation (1 857) - (1 378)
Profit from operations 111 486 68 489 (1 378)
Dividend income 1 788 - 1 788
Net finance costs (13 463) (10 516) (830)
Net finance costs (10 629) (7 682) (830)
Trade finance commission (2 834) (2 834) -
Exceptional items (14 329) - (14 329)
Income from associates 3 944 - 3 944
Profit before taxation 89 426 57 973 (10 805)
Taxation (28 868) (15 701) (1 597)
Profit after taxation 60 558 42 272 (12 402)
Minority interest (10 479) - 704
Net profit for the period 50 079 42 272 (11 698)
3 Segment analysis (continued)
Elimi-
Brother Rectron nations
Business segments R 000 R 000 R 000
Revenue 93 322 598 361 (33 264)
EBITDA 16 033 31 099 -
Depreciation (75) (2 203) -
Goodwill amortisation - (479) -
Profit from operations 15 958 28 417 -
Dividend income - - -
Net finance costs 870 (2 987) -
Net finance costs 870 (2 987) -
Trade finance commission - - -
Exceptional items - - -
Income from associates - - -
Profit before taxation 16 828 25 430 -
Taxation (5 048) (6 522) -
Profit after taxation 11 780 18 908 -
Minority interest (3 534) (7 649) -
Net profit for the period 8 246 11 259 -
Note: The Zimbabwe business was disposed, effective 1 July 2002.
Comztek (Pty) Ltd`s results have been equity accounted for in the current
period.
4 Corporate activities
Mustek successfully listed 20 000 000 shares as Taiwan Depository Receipts
(TDR`s) on the Taiwan Securities Exchange, raising approximately R100 million.
Mustek acquired 49% of CIS Thuthukani Technology (Pty) Ltd trading as Comp
Import Systems to increase its presence in the Free State Province.
The Group disposed of 50% of its shareholding and loans in Preworx (Pty) Ltd,
Secure Electronic Commerce (Pty) Ltd and Wavetrend (Pty) Ltd for USD 3 million.
Mustek subscribed for 40% of the equity in Gijima Support Services (Pty) Ltd.
The Group provides IT support services to Industry and the Public sector.
Mustek disposed of Mustek Zimbabwe (Private) Ltd.
A large parastatal extended Mustek`s supply contract for another year, proving
that Mustek is capable of meeting stringent requirements from large parastatals
and corporate clients.
Mustek acquired a total of 14 381 750 shares at a average price of R3,60 during
the 2002 calendar year. These shares were cancelled.
The 20 million Depository Receipts listed on the Taiwan Stock Exchange in
January 2003 have been included in share capital and share premium with a
corresponding debtor of R101 million as the transaction was effective in
December 2002 although the cash was only received by Mustek in January 2003.
5 Future prospects
Corporates, government, parastatals and exports represent growth areas for the
Group in future.
Increased growth in PC demand in Southern Africa and Africa continues to be
positive.
Accelerated growth is expected when government initiatives around education
start to roll out, which is expected in the near future. Increased computer
literacy will also result in increased PC demand from the home-user market.
Continuous assessment and identification of cost savings and improved
efficiencies within the organisation have resulted in margins being maintained.
Long term funding and focused working capital management within the Group will
continue to ensure that the Group is able to consolidate and extend its dominant
market position going forward.
Management`s main focus will still be directed at repositioning the Group for
growth through effective marketing and improved customer service. The
streamlining of processes to reduce costs and improve efficiencies will also
continue. The successful execution of this strategy is dependent on the Group`s
people skills which will continue to be a key focus area.
Provided that interest rates do not rise unduly and significantly inhibit
spending, balanced stock levels in the industry are expected for the remainder
of the financial year.
6 Dividend
Notice is hereby given that a dividend of 25 cents per share has been declared.
In accordance with the settlement procedures of STRATE, the last day to trade in
order to participate in the dividend is Thursday 20 March 2003. The shares will
commence trading ex dividend on Monday 24 March 2003 and the record date will be
Friday 28 March 2003. Payment will be made on Monday 31 March 2003.
Share certificates may not be dematerialised or rematerialised between Monday 24
March 2003, and Friday 28 March 2003, 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
shareholders at their risk on payment date. Shareholders who have dematerialised
their shares will have their accounts at their CSDP or broker credited on
Monday, 31 March 2003.
The board took a further decision that a dividend of at least 25 cents will be
declared at year end.
Dates to qualify for this dividend will be announced with the Group`s annual
results and on SENS.
7 Post balance sheet date events
Mustek acquired 4242640 shares from shareholders on 10th February 2003 in terms
of a pro-rata share buy back at 500 cents per share. No additional shares were
bought back in terms of the excess pro-rata offer.
8 Black Economic Empowerment
Policies relating to transfer of skills, employment equity, procurement from
Black Economic Enterprise (`BEE`) suppliers, and other `BEE` initiatives, has
resulted in Mustek being classified as an `BEE` by a large parastatal
organisation. Mustek is continuously looking at other opportunities to enhance
its status as an `BEE`.
9 Contingent liability
As previously reported, Mustek is still in a dispute with South African Revenue
Services relating to the 1991 to 1998 years of tax assessment. The Group has not
received tax assessments for 1999 and 2000.
10 Corporate information
Website: www.mustek.co.za
www.mecer.co.za
Company Secretary
Debbie Tam
Transfer Secretary
Computershare Investor Services Limited
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Registered address
322 15th Road, Randjespark, Midrand, 1685, Republic of South Africa
Postal address
P.O. Box 1638, Parklands 2121
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/000034/07)
On behalf of the board of directors
David C. Kan
Chief Executive Officer
Hein Engelbrecht
Financial Director
27 February 2003
Date: 27/02/2003 07:31:00 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
