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Reduced earnings for Mustek

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Mustek has posted a reduced profit for the six months ended 31 December, although revenue was up over the same period last year. 

The company has reported profit of R254,35-million on revenue of R1,55-billion compared to profit of R274,16-million on revenue of R1,505-billion a year previously.
During the period, Mustek acquired 50% of Digital Surveillance Systems for R4-million and disposed of Mecer Digital Do Brazil LTDA for $1.00.
The company says headline earnings per share have been negatively affected by the fair of the investment in Wavetrend Technologies Limited (12,3 cents), losses incurred in Mecer Digital Do Brazil LTDA (2,6 cents), share-based payments expensed (2,5 cents) and a STC charge on dividends paid (3,5 cents). In total, headline earnings per share have been negatively affected by 20,9 cents per share as a result of these charges and expenses.
However, the share-based payments expense should reduce by 47% in the next interim period and the losses in Mecer Brazil will not be repeated as the subsidiary was disposed of. The
investment in Wavetrend Technologies Limited is currently valued at R8,5-million.
The Group's gross margin from continuing operations decreased to 16,4% from 18,2% in the previous corresponding period.
Looking forward, Mustek believes enterprise adoption of Windows Vista will increase as the long-awaited Service Pack 1 has now been released, which should have a positive impact on PC sales.
In addition, the imminent launch of High Definition Television in South Africa is expected to stimulate the creation of High Definition content for consumers, which will lead to large file sizes and so a resurgence in storage demand for notebook computers.
The pervasiveness of digital photography is also expected to drive storage sales.