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MUSTEK LIMITED
CORPORATE PROFILE
GROUP PROFILE
Mustek, from its corporate headquarters in Midrand, South Africa, oversees the activities of its business units operating in its chosen markets in Africa and Australia. The Group invests heavily in its core resource - competent people - by pursuing a comprehensive programme of training and people development. The tenets of the Group's philosophy embrace transparency of operation, imaginative application of technology and accountability to all stakeholders.
Mustek's ongoing success is attributable to a clear and forward-looking strategic vision, responsible management, the technical capabilities of a committed owner-workforce, superior products and service levels and a strong asset base.
The Group aims at continuing sustainable headline earnings growth and creating long-term shareholder value by remaining focused on its core businesses - the assembly, marketing and distribution of personal computers and peripherals and the marketing distribution of complementary electronic products.
MISSION STATEMENT
Mustek assembles, markets and distributes ICT (Information Communication Technology) products and services, and distributes complementary electronic products. Mustek provides competitive, value-added services to its customers and creates wealth for shareholders. Mustek meets its objectives through strong relationships in the international ICT market, and by continually nurturing the entrepreneurial spirit of its people and business associates.
CORPORATE VISION
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Brand Leadership in chosen markets.
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Increasing market share while maintaining margins.
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Maintaining the leadership position by introducing technology advances to the marketplace
ahead of other suppliers.
competitively priced products and services are delivered to customers.
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Equity in the workplace through focused empowerment initiatives.
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Growth and value through initiatives targeted at larger, high-value customers.
CORE VALUES
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Safeguard the integrity and quality of our technological standards.
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Implement the highest business ethics and corporate governance, striving for greater trust from all our stakeholders.
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Our people are our greatest asset.
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The development of a harmonious and prosperous South African society.
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Faith and growth in the African continent and its people.
BLACK ECONOMIC EMPOWERMENT (BEE)
Mustek is regularly audited by an external recognised BEE rating company and adheres to the latest Codes of Good Practice as set out by the Government regarding:
Mustek actively seeks new BEE shareholders and/or partners, but is determined that BEE partners should add value to and develop synergies with Mustek. In this scenario Mustek could actively assist, and even invest, in the partnering BEE business, and vice versa.
Mustek is obliged, through the DTI's National Industrial Participation Programme (NIPP), to invest in South African companies, which it will link, where possible, to enhancing its BEE engagements.
Mustek remains a major supporter of BEE and SMME business through its growing network of 6 000+ mostly SMME dealers. Mustek purposely seeks out BEE enterprises for procurement and to become resellers who are able to bid for contracts in the open market. Where necessary, Mustek supports new BEE dealers by furnishing management, marketing, technical training and support.
ISO 9001
ISO is an International Organisation for Standardisation comprising members from 150 national standards institutes from all over the world. ISO standards specify the requirements for state-of-the-art products, services, processes, materials and systems, and for good conformity assessment, managerial and organizational practice. ISO 9000 has become an international reference for quality management requirements in business-to-business dealings. Mustek achieved certification to ISO 9002 in 1997, and converted to ISO 9001 in 2003 to ensure that it remained at the forefront of the industry. All of Mustek's business processes are included in the scope of its quality management system (QMS), these being the import, sales, assembly, testing, distribution and servicing of computer equipment.
ENVIRONMENTAL SUSTAINABILITY
ISO 14001 Certification and Legal Compliance
Mustek maintained its ISO 14001 certification due to its commitment to sound corporate governance and
its ongoing corporate social responsibility (CSR) and environmental sustainability objectives.
Paperless Production Project
Several system upgrades were introduced in 2008 as part of Mustek's drive for continual improvement.
Mustek's production function no longer automatically prints orders, using the system instead for verification
purposes, thereby significantly reducing paper consumption.
Recycling Initiatives
Packaging materials and paper remain the most significant source of waste from Mustek's business
operations. As such, increased emphasis has been placed on the recycling of packaging and paper.
The financial returns generated through this recycling have been used to fund the employment of fulltime waste separators. These new employees were previously unemployed individuals, meaning that Mustek's recycling programme is effectively benefiting the environment and bolstering the company's community upliftment efforts.
The proposal to promote customer returns of Brother Printer Cartridges has been discussed with Mustek's client, the South African government. All used toner cartridges will now be collected for distribution to responsible recyclers, who will turn the plastic into a variety of products.
e-Waste - Cradle to Grave Management
Many computer components include heavy metals such as lead, mercury, nickel and cadmium, as well as
hazardous products like brominated flame retardants and polychlorinated biphenyls.
As a producer of computer products, Mustek recognises the environmental responsibility it has to manage e-Waste throughout the life cycle (cradle to grave) of the components it uses. Given the nature of the business, which relies on third party suppliers for much of the product design and manufacturing, Mustek does not have much direct influence over the environmental friendliness of supplier production processes. However, investigations into these processes have revealed that Mustek's suppliers recognise the need for
energy-efficient products that contain less environmentally-harmful components, and are doing all that they can to include "green" considerations in their product designs.
One area where Mustek can contribute to managing the environmental impact of its products is at the end of
such products' life cycles. Mustek is therefore currently investigating ways in which to provide a convenient
means for customers to recycle their e-Waste responsibly.
Disaster management
During the past year, Mustek has undergone a variety of significant facilities upgrades, in support of which the company's disaster management system and teams have been reviewed and upgraded.
Organisational Performance Monitoring
Mustek is running an ongoing project aimed at improving the levels of management, monitoring and measurement of its operational performance. This project is enabling management to better understand the business in order to streamline processes and improve efficiencies, which also delivers several environmental and community spin-offs.
Energy Efficiency
Like many South African organisations, Mustek has felt the effects of increased energy bills. In response to this, and as part of ongoing efforts to conserve the country's energy resources, a project has been
undertaken to improve the energy-efficiency of the Midrand facility.
SOCIAL RESPONSIBILITY
LABOUR PRACTICES
Labour and management relations
Over a period of 21 years, Mustek has grown into a major listed company with over 700 staff members nationally. Despite this exceptional growth, Mustek has worked hard to retain its personal touch and carefully guard the close working relationships between management and staff. As a result, the company's open door policy and transparent style of management persist, helping to keep workplace conflicts to a minimum.
The company has a comprehensive range of effective HR policies and procedures, all of which are introduced to new employees during their induction and always accessible via the company intranet.
In an industry known for its high staff turnover, Mustek continues to retain many of its employees and present them with long service awards.
Health and safety
Mustek conforms to all legislation and conducts its business within the parameters of a Group Safety, Health,
Environmental and Quality (SHEQ) manual. Emergency and disaster plans have been prepared for all areas and the workforce is thoroughly trained in their application.
Within the Group, the focus on Health and Safety is driven by staff volunteers who are elected by their peers onto various Health and Safety Committees.
Training and education
Mustek competes in an ever-evolving industry in which the right skills and experience are always in short supply. As such, ongoing skills development and training are business imperatives.
While some of this staff training is outsourced to reputable and appropriately registered service providers, Mustek has established an in-house training department.
Being a fully accredited member of the ISETT SETA and reclaiming its full development levies every year, Mustek continues to run "learnerships" through ISETT SETA. This programme educates and trains unemployed members of the South African economy in order to make them employable within the IT industry. Upon completion of the programme, Mustek is able to offer employment opportunities to those "graduates" with the appropriate skills to fill any vacancies that exist in the Group.
Those who are not employed by Mustek are generally able to find work within the industry thanks to the training they have received while on Mustek's learnership programme.
Mustek also continues its popular and successful English literacy programme for staff whose first language is not English.
Mustek has successfully completed the first year of its Leadership Development Programme (LDP) - which saw a number of talented and able previously disadvantaged staff being fast-tracked in their training towards management positions. This programme will continue in the future and promises to provide a meaningful pipeline of talented individuals who will be ready to take up leadership positions in the company in the future.
The company also continues to provide training and study assistance to its staff, resulting in better trained and educated staff, whilst also benefiting the broader South African economy in the process.
Diversity and opportunity
The diversity of the workforce remains a clear priority for the Mustek Group. The make-up of the company's staff complement has, for some time, been closely aligned with South Africa's racial and cultural demographics. All staff members, regardless of their background or function within the company, are regarded as members of the "Mustek family", and there is a zero tolerance approach to any form of discrimination or unfair treatment. When vacancies occur, Mustek first seeks to promote or transfer people within its ranks before advertising to the broader job market.
HUMAN RIGHTS
Freedom of association
Mustek complies with the Labour Relations Act and all associated labour legislation. Employees may associate with, or be members of, any representative organisation or trade union that they choose.
HIV/Aids and the workplace
In 2002, Mustek introduced a comprehensive HIV/Aids strategy founded on the core principle that the human rights and dignity of any employees infected by the virus should, at all times, and under all circumstances, be upheld. The approach also recognises the need to educate all employees regarding HIV/Aids in order to empower them to protect themselves and their loved ones from the disease. In addition, the programme includes the provision of anti-retroviral drugs for HIV positive staff as needed.
Mustek continues to fund this programme in its entirety, and none of the costs are passed on to employees. In addition, the confidentiality of employees seeking assistance via the programme is assured at all times.
CORPORATE SOCIAL INVESTMENT (CSI)
Mustek has a long and proud record of community support and corporate social investment (CSI). In 2008, the Group contributed more than R2,2 million to various CSI projects. Mustek traditionally focuses its CSI efforts on the needs of South Africa's children - particularly in terms of education - but also supports charities that work in sport development and various government programmes.
Computers and education in Africa's schools
The Mustek Group is immensely proud to be in a position to leverage its ICT expertise and country-wide infrastructure to help develop ICT learning facilities in schools across Africa. In South Africa, the Group has been involved for several years with school computerisation programmes which work to further e-learning in schools across the province by installing dedicated computer centres.
Mecer e-Learning
Developed by Mustek in association with Inter-Ed in 1996, Mecer e-Learning is a multilingual, multimedia system that enables learners to acquire basic numeracy, literacy and life skills in any of South Africa's 11 official languages. Mecer e-Learning supports true multi-lingualism and promotes learner self-confidence by allowing users to proceed at their own pace through the programme. Learners also get prompt and appropriate support from teachers, who are provided with a suite of tools to monitor their progress, intervene where necessary, and interact with any, or all, learners logged into the network at any given time.
Mecer e-Learning is installed in many GautengOnline computer centres as well as other schools with ICT learning centres across South Africa.
FINANCIAL OVERVIEW JUNE 2008
Mustek Operations, excluding subsidiaries (Comztek and Rectron), achieved an Operations Revenue of R1.48 billion for the financial year June 2008, realising Profit before Tax of R26.3 million, a Y/Y increase of 17%.
BRANCH OPERATIONS
Mustek has branches within all the major centres in South Africa:
Mustek W Cape - Cape Tow
Mustek E Cape - Port Elizabet - East London
Mustek KwaZulu-Natal - Durban
Mustek Free State/N Cape - Bloemfontein - Kimberley
MUSTEK IN AFRICA
Mustek retains a significant footprint in Africa, with anchor operations in Kenya and Nigeria. Mustek's African presence is primarily based on partnership agreements reached with competent local companies.
Nigeria
Mustek has a 12% stake in Zinox Technologies in Nigeria. This company intends to list on the Nigerian Stock Exchange, which is encouraging due to the fast growth of the Nigerian market.
Kenya
Mustek's Kenyan operation, in the form of Mecer East Africa, continues to deliver satisfactory results, despite the turbulent political and economic environment experienced by the country in recent times.
BRAND DIVERSIFICATION
Since 1987, Mustek has assembled, marketed and distributed the Mecer-branded range of PCs, Notebooks, Servers, peripherals and accessories. In re-evaluating its brand strategies in 2008, Mustek realised that it must adopt a horizontal growth strategy by bringing complementary quality international brands into its brand stable. Apart from the obvious potential such partnerships or acquisitions have to making valuable contributions to Mustek's bottom line, these also represent opportunities to maximise the cost-effectiveness of the existing infrastructure via enhanced economies of scale and cost sharing. In addition, projections indicate that future Mecer PC growth will likely be in the region of 3% to 5% per annum, whereas associated brands are likely to show double digit growth.
During 2008, Mustek made a number of acquisitions and entered into several potentially lucrative partnerships to enhance its product offering and effectively extend its target market:
Brother
During June 2008, Mustek successfully completed the process of purchasing and integrating all the assets and resources of Brotek into the operations of Mustek. Apart from making Brother products available through Mustek branches nationwide, the move has already resulted in significant cost savings, enhanced efficiencies, and access by Brother products to a far greater dealer and distribution network.
DSS
Mustek acquired a 50% shareholding of DSS (Digital Surveillance Systems) in June 2007. DSS provides a comprehensive range of digital surveillance and security solutions.
Fujitsu
Mustek acquired the South African distribution rights for the Fujitsu range of document scanners in November 2007. While these distribution rights are not exclusive, they do represent a significant growth opportunity for Mustek, as high-end scanners provide the solution to digitising and electronically archiving paperwork.
NEC
In March 2008, Mustek concluded a deal with NEC to become South Africa's exclusive distributor of the Japanese giant's high-end server and storage products, which have been notably absent from the Mustek offering previously. This partnership effectively means that, in addition to obtaining a huge vote of confidence from one of the world's leading and largest ICT companies, the Group is now able to offer its clients proven solutions in these areas.
Samsung Cameras
In May 2008 Mustek enhanced its retail technology offering by adding Samsung's camera range to its product portfolio. Mustek obtained the exclusive distribution for Samsung cameras, which is the third largest provider of cameras to the South African market.
Tier One
The acquisition of Tier One Electronics in February 2008 has afforded Mustek a valuable basket of retail electronics products to add to its existing offering. Tier One offers a sought-after product range and well established distribution channels. Also, there is no overlap between the Tier One product range and any of the products currently offered, so this acquisition allows Mustek to maximise the effectiveness of its Midrand warehousing and transport facilities without cannibalising existing market share or revenue flows.
Toshiba
Previously the role of distribution of the Toshiba range of notebooks was shared between Mustek (since January 2006), Rectron and a third company outside of the Mustek Group, Mustek was awarded sole South African distributorship in July 2008. Toshiba's outstanding notebook range complements the Mecer range of products.
Going forward, Mustek is committed to investigating further opportunities to enter partnerships that further extend the Group's product offering. The Group will not, however, consider partnerships that dilute the market penetration of any of its existing brands or products.
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