Mustek's profit significantly increased by the end of the year ending in June 2026; however, the technology distributor, whose shares are listed on the JSE, recorded lower gross profit from product sales compared to the previous year, and cash generated from operations fell by more than 80%.
According to the annual financial reports approved by the board of directors on Wednesday, earnings per share, which is the main JSE profitability indicator and excludes one-off and capital items such as impairments and asset sales, grew by 181% to reach 204.6 cents. Revenue increased by only 1% to R7.26 billion, while profit attributable to shareholders rose from R38.8 million to R107.6 million. The board of directors announced a final dividend of 37.5 cents per share, which is higher than the previous 13.75 cents.
Sources of Financial Improvement
The question arose as to where this improvement came from. Gross profit decreased by 3.4% to R924.9 million, and gross margin shrank from 13.3% to 12.7%. However, three items in the income statement had a significant positive impact:
- Financial expenses were reduced by a third, falling from R154.1 million to R101.8 million;
- Profit from foreign exchange operations increased from R10 million to R52.6 million;
- Mustek's share in the profits of affiliated companies quadrupled, reaching R25.7 million.
These three elements collectively improved the figures by R114.4 million compared to last year—more than the R95.4 million increase in taxable profit. Excluding foreign exchange income, operating profit declined by 6%, amounting to R159.8 million. Mustek openly acknowledged this, attributing the profit growth mainly to 'a significant reduction in financial expenses and more favorable currency conditions,' which was supported by cost control and better contributions from affiliated companies.
The reduction in interest payments resulted from balance sheet cleanup last year, when Mustek reduced inventory by R607 million and used these funds to repay R594 million of its overdraft. This process is now reversing. Cash generated from operations plummeted to R115.8 million from R687.4 million. Inventory consumed R176.4 million in cash, and Mustek repaid R265.5 million in trade and other payables, partially offset by customer receipts of R146.1 million. After deducting interest, taxes, and dividends, operations yielded only R7.7 million, compared to R529.7 million the previous year. Cash reserves decreased to R206.2 million from R225.7 million.
The new dividend will cost approximately R20 million, exceeding the R15.6 million generated by Mustek's operations after deducting interest and taxes. Nevertheless, the group refinanced its working capital lines: in July, it entered into a syndicated trade finance agreement worth R1.1 billion led by Absa with RMB as co-lender, replacing previous trade credit lines. The company decided not to renew its overdraft.
Some stock is becoming obsolete. Mustek's provision for obsolete inventory increased by 52% to R119.3 million, and the value of inventory written down to expected selling price almost doubled, reaching R86.9 million from R46.8 million. Auditor BDO noted the impairment provision as a key audit matter, emphasizing that the group's products are constantly being replaced by new models. BDO accepted management's explanations regarding the write-downs, which they reviewed.
Distribution, which accounts for 98% of the group's revenue, was heavily dependent on dealer sales. Equipment sales through this channel grew by 7.5% to R4.9 billion, masking a decline in other segments. Equipment sales to the public sector dropped by 5.2% to R1.39 billion, retail sales fell by 6.8% to R392.7 million, and exports contracted by 43% to R233 million. Total equipment sales revenue grew by less than 1%, reaching R6.92 billion.
Mustek's small businesses showed declining results. Revenue for the Mecer Inter-Ed training division fell by 20% to R72.2 million, and profit in the training segment decreased from R17.6 million to R1.5 million. Income from managed cybersecurity from Cyberantix, in which Mustek holds 70%, grew by 75% to R54 million, but profit in the services and support segment fell from R2.9 million to R1.9 million. This segment also includes Business AI, a startup in which Mustek invested 51% of its shares in August 2025, which incurred an operating loss in its first year of operation.
The most significant contribution came from the affiliated business Yangtze Optics Africa, which deals in fiber optics, in which Mustek holds 25.1%. This business's revenue grew by 27% to R476 million, and its taxable profit nearly quadrupled, reaching R100.5 million from R26.6 million.
Staff Reduction
The number of employees decreased by 9%, totaling 1009 people from 1112, with almost all reductions occurring in distribution, although personnel costs remained unchanged at R508.9 million. The salaries of three executive directors increased by 13% to R19.1 million after receiving bonuses of R3.9 million, whereas in the 2025 fiscal year they received no bonuses. CEO Hein Engelbrecht earned R8.3 million.
Novus Holdings, which owned 50.4% of Mustek at year-end, informed the company on September 25 that its stake increased to 57.63%. Its mandatory offer to minority shareholders, which Novus agreed to raise to R15.41 per share from R13 after the Mergers & Acquisitions Regulatory Panel ruled that Numus Capital was a concert party of Novus, still cannot be implemented. The settlement reached in May has not yet received approval from the Special Committee on Mergers, and Novus has not received clearance from the panel.
