Mustek has reported significantly stronger volume growth or 10%, but the strong rand has restricted revenue growth to just 2,8% during the financial year ended 30 June 2011.08. Despite this, the group managed to increase its gross profit margin from 14,2% to 14,7%.
Headline earnings per share attributable to ordinary shareholders increased by 54,5% to 89,39 cents (2010: 57,84 cents).
Distribution, administrative and other operating expenses (excluding foreign exchange profits and losses) were well controlled and increased by only 1,7%.
The Mustek segment contributed R75,8-million (2010: R38,6-million) to the group’s net profit despite tough trading conditions with technology becoming more commoditised and consumers spending less.
Mustek believes the imminent release of Windows 8 will prompt large scale operating system upgrades leading to a surge in activity. This will, in turn, lead to an increase in investment on hardware like PCs, RAM and storage.
Mustek also believes the era of the netbook is over and the tablet computer is taking over in the ultra-portable device space. This will be enhanced by the increased availability of wireless connectivity.
It also acknowledges that the cloud computing era has reached South Africa, with the SMB market starting to embrace the cloud. Mustek is exploring ways to unlock cloud functionality for its channel and expects to have some announcements in the next two quarters.
The company is focusing on increasing volumes as it remains a driver of performance across its operations. It is also placing increased focus on working capital management in
order to reduce finance costs further.
With the addition of Acer and Lenovo to Toshiba and Mecer over the past six months, Mustek has become one of the preferred distributors for the local reseller community to do business with, being able to offer a wider choice as well as build to order.,
Cash generated from operating activities of R50,5-million (2010: R159,4-million) was mainly used to reduce bank overdrafts and pay down short-term debt and long-term debt. This resulted in a reduction in net finance costs of 43,7%. Cash generated from the continued drive to improve working capital management will be used to reduce short-term borrowings further.
During the year, Mustek acquired a further 25% of Digital Surveillance Systems for R1,9-million and acquired a 40% stake in Continuous Power Systems on 14 December 2010 for a nominal amount after advancing a loan of R1,3-million.
On 1 January 2011, the group disposed of its 60% stake in Corex IT Distribution Dynamics for a total cash consideration of R9,8-million.