| Mon 1 Sep 2003, 17:35 | | Audited financial results for the year ended 30 Ju |
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MUSTEK Limited - Audited financial results for the year ended 30 June 2003
Registration number 1987/070161/06
Share code MST
ISIN ZAE000012373
Audited financial results for the year ended 30 June 2003
Total dividend of 50 cents per share
Headline earnings per share increases by 33%
Bank balances and cash of R434 million
Consolidated Income Statement
2003 2002
R000 R000
Revenue 2 975 517 2 825 776
Cost of sales (2 518 640) (2 346 117)
Gross profit 456 877 479 659
Operating expenses (222 398) (254 849)
EBITDA* 234 479 224 810
Depreciation (16 287) (15 273)
Goodwill amortisation (4 311) (6 793)
Profit from operations 213 881 202 744
Net finance costs (13 134) (27 634)
- Net interest expense (7 667) (24 649)
- Trade finance commission (5 467) (2 985)
Exceptional items (16 168) (20 981)
Income from associates 10 924 642
Profit before tax 195 503 154 771
Income tax expense (86 981) (63 559)
- Prior years (28 567) (4 698)
- Current year (58 414) (58 861)
Profit after tax 108 522 91 212
Minority interest (16 769) (13 849)
Net profit for the year 91 753 77 363
*EBITDA - earnings before interest,
taxation, depreciation and amortisation
Weighted average number of ordinary
shares in issue 94 396 031 98 257 129
Adjusted headline earnings per ordinary
share (cents) 148,92 93,67
Adjusted basic earnings per ordinary
share (cents) 127,46 83,52
Headline earnings per ordinary
share (cents) 118,65 88,88
Basic earnings per ordinary share (cents) 97,20 78,74
Diluted headline earnings per
ordinary share (cents) 112,60 84,00
Diluted basic earnings per
ordinary share (cents) 92,24 74,41
Dividend per ordinary share (cents) 25,00 -
Reconciliation between basic and
headline earnings
Basic earnings 91 753 77 363
Goodwill amortisation 4 311 6 793
Realisation of foreign currency
translation reserve 11 193 -
(Profit) loss on disposal of subsidiaries (380) 8 320
Loss on disposal of associates 5 128 -
Carrying value adjustment of assets
in subsidiary - (5 141)
Carrying value adjustment of investments
and loans - 3 192
Loans written off - 2 685
Provision for surety 227 3 031
112 232 96 243
Effect of circular 7/2002 (227) (8 908)
Headline earnings 112 005 87 335
Income tax expense - prior years 28 567 4 698
Adjusted headline earnings 140 572 92 033
Consolidated Balance Sheet
2003 2002
R000 R000
ASSETS
Non-current assets 148 250 185 678
Property, plant and equipment 40 000 39 706
Goodwill 3 830 3 475
Development costs 7 707 7 743
Investments in associates 61 799 71 352
Other investments and loans 28 063 52 602
Deferred tax asset 6 851 10 800
Current assets 1 253 268 1 030 024
Inventories on hand 370 077 449 100
Inventories in transit 51 269 44 415
Trade and other receivables 398 019 307 302
Bank balances and cash 433 903 229 207
TOTAL ASSETS 1 401 518 1 215 702
EQUITY AND LIABILITIES
Capital and reserves 457 056 363 260
Share capital 779 727
Share premium 58 494 38 190
Accumulated profits 400 781 282 557
Other reserves (2 998) 41 786
Minority interest 65 769 52 214
Non-current liabilities 207 685 167 442
Long-term borrowings 207 685 167 340
Deferred tax liabilities - 102
Current liabilities 671 008 632 786
Foreign exchange contract liabilities 46 729 14 864
Trade and other payables 526 831 522 535
Short-term borrowings 10 343 14 505
Deferred income 14 629 11 046
Tax liabilities 49 889 31 901
Bank overdrafts 22 587 37 935
TOTAL EQUITY AND LIABILITIES 1 401 518 1 215 702
Consolidated Cash Flow Statement
2003 2002
R000 R000
Operating activities
Cash receipts from customers 2 926 693 2 788 784
Cash paid to suppliers and employees (2 662 360) (2 581 557)
Net cash from operations 264 333 207 227
Net interest paid (12 484) (24 649)
Dividends received 1 788 -
Dividends paid (25 198) (3 636)
Income taxes paid (61 889) (58 002)
Net cash from operating activities 166 550 120 940
Net cash used in investing activities (638) (54 739)
Net cash from financing activities 38 784 54 459
Net increase in cash and cash equivalents 204 696 120 660
Cash and cash equivalents at beginning
of the year 229 207 109 383
Effect of foreign exchange rate changes - (836)
Cash and cash equivalents at end of
the year 433 903 229 207
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 year - - 91 753
Shares issued in terms of
option scheme 23 3 839 -
Share buy-back (131) (71 241) -
Dividend paid - - (25 198))
Taiwan Depositary Receipts
(TDR) listing 160 93 468 -
TDR expenses written off - (5 762) -
Realisation of foreign currency
translation reserve - - -
Transfer to accumulated profits - - 51 669
Net foreign currency translation
reserve - - -
Balance at 30 June 2003 779 58 494 400 781
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 year - - 91 753
Shares issued in terms of
option scheme - - 3 862
Share buy-back - - (71 372)
Dividend paid - - (25 198)
Taiwan Depositary Receipts
(TDR) listing - - 93 628
TDR expenses written off - - (5 762)
Realisation of foreign currency
translation reserve - 11 193 11 193
Transfer to accumulated profits (51 669) - -
Net foreign currency translation
reserve - (4 308) (4 308)
Balance at 30 June 2003 - (2 998) 457 056
Commentary
1. Reporting
The consolidated financial results have been prepared in accordance with South
African Statements of Generally Accepted Accounting Practice (GAAP). The results
have been audited by the group"s joint auditors, Deloitte & Touche Chartered
Accountants (SA) and Henry KH Pon & Co Chartered Accountants (SA), and their
unqualified audit report is available for inspection at the company"s registered
office.
The consolidated results show the gross revenues and costs as well as the total
assets and liabilities of the group. The accounting policies used are consistent
with those used in the annual financial statements at 30 June 2002, with the
exception of the adoption of AC133 - Financial Instruments - Recognition and
measurement, which became effective in the current financial year.
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.
The group also presents "adjusted headline earnings" and "adjusted basic
earnings" to assist users of the group"s financial statements to better
interpret the operating performance of the group for the year under review. The
only adjustment includes the abnormal tax charge arising out of the settlement
reached with South African Revenue Services ("SARS") for prior periods.
2. Segment analysis
Business segments
Total Mecer Rectron
R 000 R 000 R 000
Revenue 2 975 517 1 574 971 1 220 063
EBITDA 234 479 164 318 36 132
Depreciation (16 287) (11 491) (4 643)
Goodwill amortisation (4 311) - -
Profit (loss) from operations 213 881 152 827 31 489
Net finance (costs) income (13 134) (9 278) (4 329)
Net interest (expense) income (7 667) (4 083) (4 057)
Trade finance commission (5 467) (5 195) (272)
Exceptional items (16 168) - -
Income from associates 10 924 - -
Profit (loss) before tax 195 503 143 549 27 160
Income tax expense (86 981) (67 240) (6 557)
Profit (loss) after tax 108 522 76 309 20 603
Minority interest (16 769) - (9 169)
Net profit (loss) for the year 91 753 76 309 11 434
2. Segment analysis (continued)
Business segments
Group
Brother investments Eliminations
R 000 R 000 R 000
Revenue 238 374 - (57 891)
EBITDA 34 029 - -
Depreciation (153) - -
Goodwill amortisation - (4 311) -
Profit (loss) from operations 33 876 (4 311) -
Net finance (costs) income 2 372 (1 899) -
Net interest (expense) income 2 372 (1 899) -
Trade finance commission - - -
Exceptional items - (16 168) -
Income from associates - 10 924 -
Profit (loss)before tax 36 248 (11 454) -
Income tax expense (10 916) (2 268) -
Profit (loss) after tax 25 332 (13 722) -
Minority interest (7 600) - -
Net profit (loss)for the year 17 732 (13 722) -
3. Operating results
The group maintained strong sales volumes for the past year. Despite the
substantial strengthening of the rand and the implementation of AC133, operating
margins were maintained.
The associates performed well, with improvements in revenue and profitability,
contributing R10,9 million profit before taxation.
The group settled its long-outstanding tax dispute with SARS by agreeing to make
a payment in full and final settlement of all disputes relating to the 1991 to
2000 years of assessment. This resulted in an additional once-off charge of
R28,2 million to the income statement. This once-off taxation charge against
current year"s income affected headline earnings per share by 30 cents per
share.
4. Impact of AC133
The implementation of AC133 - Financial Instruments - Recognition and
measurement, had the following effect: Gross profit was reduced by R32,7 million
due to the valuation of embedded derivatives in creditors, which happened mainly
as a result of the strengthening rand and the corresponding credit went to
operating expenses. In addition, mark to market valuations of financial
instruments led to a R46,7 million loss on open forward exchange contracts, a
R12,9 million profit on an interest rate swap and a R2,4 million profit on hedge
assets.
5. Cash flow
The increased net operating profit and focused working capital management
resulted in bank balances and cash increasing to R434 million (2002: R229
million) at year-end.
6. Corporate activities
During the financial year, Mustek successfully listed 20000000 shares as Taiwan
Depositary Receipts on the Taiwan Securities Exchange, raising approximately
R100million.
Mustek acquired a total of 16344115 shares at an average price of 437 cents per
share during the year, including 4242640 shares acquired from shareholders on 10
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. All
these shares were cancelled.
To improve its presence and expand its sales in the Free State Province, Mustek
acquired 49% of CIS Thuthukani Technology (Pty) Ltd (trading as Comp Import
Systems).
Mustek also subscribed for 40% of the equity in Gijima Support Services (Pty)
Ltd. The group provides IT support services to industry and the public sector.
In its further rationalisation and focus of the group, Mustek disposed of 50% of
its shareholding and loans in Preworx (Pty) Ltd, Secure Electronic Commerce
(Pty) Ltd and Wavetrend (Pty) Ltd. Mustek also disposed of its entire interests
in Beijing Computer Corporation and Mustek Zimbabwe (Private) Ltd (with an
option to acquire 40% at par value in future).
7. Post-balance sheet events
To expand its business globally, Mustek subscribed for 51% in Mecer East Africa,
an operation located in Kenya. An investment will be made in Brazil, thereby
promoting the group"s geographical footprint in Latin America, once approval is
received from the South African Reserve Bank.
8. Black economic empowerment
Mustek"s long-standing policies relating to skills transfer, employment equity,
procurement from Black Empowering Enterprise (`BEE") suppliers and other `BEE"
initiatives has resulted in Mustek being classified as a `BEE".
9. King report on corporate governance
The group"s compliance with the King II report is fully detailed in its annual
report which will be mailed to shareholders shortly.
10. Growth opportunities
Increased growth in PC demand in Southern Africa and Africa continues to be
positive.
Mustek continues to explore opportunities, investments and partnerships in other
regions, particularly in the rest of Africa and other emerging markets as part
of its globalisation strategy.
The group also anticipates accelerated growth when the government"s planned
education initiatives are rolled out. Further impetus to growth will come from
increased PC demand from the home-user market as computer literacy rises.
11. Declaration of final dividend
Notice is hereby given that a final dividend of 25 cents per share for the year
ended 30 June 2003 has been declared, payable to shareholders recorded in the
books of the company at the close of business on the record date appearing
below. The salient dates applicable to the final dividend are as follows:
Last day to trade cum final dividend Friday, 26 September 2003
First day to trade ex final dividend Monday, 29 September 2003
Record date Friday, 3 October 2003
Payment date Monday, 6 October 2003
No share certificates may be dematerialised or rematerialised between Monday, 29
September 2003 and Friday, 3 October 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 Central Securities Depository
Participant or brokers credited on the payment date.
12. Corporate information
Website: www.mustek.co.za or www.mecer.co.za
Company secretary
Debbie Tam
Transfer secretary:
Computershare Limited, 70 Marshall Street, Johannesburg, 2001
Registered office:
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 no. 1996/000034/07)
On behalf of the board of directors
David C. Kan Hein Engelbrecht
Chief Executive Officer Financial Director
1 September 2003
Date: 01/09/2003 05:10:11 PM
Produced by the JSE SENS Department
