Mustek Limited (MST) Earnings Call Transcript & Summary

Good morning, everybody, and thank you very much for joining us on this results presentation for the year ended 30 June 2026. My name is Hein Engelbrecht, I'm the Group CEO of Mustek. And with me is Shabana Aboo Baker Ebrahim, she's the Group Financial Director. And we'll be taking you through the numbers. I think what we'll do is I'll start off by just maybe giving you a background of where we are, where we come from and how do we see ourselves and how do we see ourselves going forward. Maybe some highlights from the results and maybe some comments on that. And then Shabana will carry on and drill down in a lot more detail about the financial performance of the business. I think also then just to say that the long format of the announcement is available on the Mustek website, so is the financial statements on www.mustek.co.za. So if you want to go and look at that, you're more than welcome. So let's start the presentation on who we are and where we're coming from. We were established in 1987 and listed in the JSE in 1997. Originally, it was very much component distribution, which later involved into assembly operation and assembly focus as well, with Mecer, our own brand in those days, which does exceptionally well for us. But I think as time went past, we've involved and we've become more of a technology investment house than anything else where we invest in, integrate and elevate the business that we hold. And our vision is to become more of that. Not to say that we're going to disregard the distribution side of the business, but I think we're heavily weighted towards that. And I think there is an opportunity for us to diversify and looking at alternative investments that we can get involved in. There are a lot of opportunities that actually does present itself in the current environment, and we feel that we are well equipped and well positioned to maybe look at some of those opportunities and obviously then bring that into the group and hopefully give you long-term and sustainable value for our stakeholders. If you look at the Mustek Group currently, and we're breaking it up in 4 different segments, what we're looking at is obviously the distribution side of the business, and that's where the bulk of the revenue still comes from, consisting mainly of Mustek and Rectron. And we'll go into a bit more detail when we get to the actual numbers what contributions do come from the different ones because if you look at some of the revenues, the growth in the revenue was muted, but we did indicate a couple of years ago that we do believe that we can be more profitable by even being smaller and not necessarily chasing revenue for the sake of chasing the revenue. Then on the training side, although they didn't have a great year, I think there's a lot of opportunities there still. If you look at the skills gap that's available and the shortage of skills that's in the current environment, we think that, that's quite a key component of the group going forward. Then on the manufacturing and assembly side, yes, we've mentioned Mustek and obviously, the Mecer brands we do assemble, which is still doing quite well for us or very well for us to be precise. CPS, which is manufacturing cases and racks had a fairly good year. And then the one that did exceptionally well this year is YOA Cable, which is our fiber cable manufacturing concern that we've got in Durban and Dubai Airport, where we're a 25.1% shareholder and the balance is held by a company called YOFC, which is one of the biggest cable manufacturers -- fiber cable manufacturers in the world. So we've seen some exceptional growth from them as the demand for fiber increases. A lot of people think it might be saturated, but what we've experienced now is not only additional rollouts that's happening, but I mean also a refresh of the old infrastructure that's in the ground. And they're obviously benefiting quite handsomely for that. With saying that, the prices of cable has shot through the roof. There's big demand worldwide. That obviously gives opportunities then to make additional margin, although we were tied in certain contracts where we still had supply at a certain value of this calendar year. That will change as we start doing negotiations with them. Part of the reason for the big demand, and it's not only in SA, but worldwide, what we've seen is, number one, China Telecoms have now issued a huge tender, tender, obviously, in China and allocated quite a substantial portion of the business to the big players of which YOFC is one. So that's created a lot of demand which obviously is outperforming the supply side of things. And then obviously, not obviously, but I mean, it's quite interesting for me is the war in the Middle East. I didn't know, but a lot of those drones are being directed by fiber cable. And I mean some of those drone areas where they keep them looks like a lot of spaghetti with all the fiber that's there. Obviously, it's not the long distance ones, but it's short distance ones, and they control it with fiber, and that also created a lot of demand from there. Then on the services side, and you know what you're looking at there, the investment we've made fairly recently in business AI, although it's still in early stages, we've seen some positive movement in that environment. I think what we've realized there that the sales cycle that we initially thought would be shorter is a bit longer. There's still a lot of uncertainty in the market on what the benefits of AI might be in the environment, what the risks are going to be in the environment. And the people need a lot of help, and then we've got the skills there to obviously help them. The platform that they've got is still available for the people to come and procure, but it seems like it's a lot longer sales cycle than what we initially thought. Then Khauleza, which is a desktop maintenance service and support organization also had a very, very good year. They've got some new contracts. I mean they've been doing quite a bit of business in Western and Western Cape in a joint venture with some other companies, but also locally up here a fairly sizable SAPS contract, which is profitable to them. And there's various others as well, but they seem to be on the right track. And I think that the profitability from them going forward can still become quite substantial. And then the other one that had a great performance this year is CyberAntix. I think if you look at what they're doing, although they're basically SOC, security operations as a service. And so they would monitor your network 24/7. And if they do pick up the desks, maybe something untoward is happening or somebody is trying to penetrate or infiltrate your environment, obviously, they will make alarm. And we don't get involved in actually the remedial work. It's more of a preventative just to make sure that everything that's supposed to be working is working and everything that needs to be implemented is implemented. And they started the consulting leg to the business as well, which is also doing quite well for them or very well for them. They call it a journey to green where they would get involved with large organizations and say for you to be ready for cybersecurity to the extent you can be, these are all the different boxes that you need to tick to make sure that from a Board point of view, at least, that you're comfortable that the right areas of concern are being addressed. We've seen a lot of requests there where they're assisting customers then obviously to put the right things in place. And then they would go and check if you said you did something that you actually do it and then try and assist the people out there to protect themselves to the extent possible. I think it's well known, and we've had discussions internally, I think most organizations is more a case of when and not if, and people need to be ready because it can be very disruptive. And unfortunately, we had an incident at Rectron, but we managed to stop that quite quickly. And there wasn't really any real damage that was -- that occurred in the Rectron environment. But yes, it is scary to think that somebody else is in your system and can possibly do things that you're not comfortable with. So that's on a high level what the group consists of. So I think coming back to the earlier comment is to try and give a little bit of diversification in the group and spread the risk and spread the revenue and profitability contributions to more than just the distribution side of business. If we look at some of the salient features, the revenue at ZAR 7.3 billion, which is slightly up from last year at 1%. But I think a couple of things that maybe I should just highlight there is if you look at the PC market in SA compare this, say, last 2, 3 quarters compared to the same time last year, the estimates are that from a unit point of view, the market is down at least 20%. With that, and I think part of the reason why we still managed to do very similar revenues in the year before, the prices of notebooks specifically and PCs have gone up quite a bit over the last years. I think if you look at, say, for some of the entry-level machines, which generally would give you higher volumes in units, those machines are probably, if not more than, at least double the price that what used to be maybe 2, 3 years ago. So the market is under pressure. I think the pricing is giving an effect. The component pricing at some stage, it seemed like if it could stabilize, but it's still moving up. I think the demand, specifically from AI-related initiatives is still putting the supply side under pressure. There are some alternatives that we've seen that's coming to the fore, but the real big players are more focused on the high end and then obviously servicing that market. But we still believe that from a Mustek point of view, we're well positioned that obviously benefit from that in the high-end segment of the market as well. EBITDA, and I think up 12%, and Shabana will go into a bit more detail. I think the number is actually a bit better than what we're reflecting in the financial statements, and we'll explain to you why. Cash from operations came in at ZAR 116 million. Again, I think if you look at the last, say, probably 3 years where we indicated that the main focus of the business, yes, obviously, will be profitability, but cash generation. Over the last couple of years, I know this year, obviously, it's ZAR 116 million this year, but last year it was ZAR 670 million odd in the year before, there was also a substantial improvement in cash from operations. And you'll see the benefits of that obviously coming through on the interest line as well. So there we are and the management, both in Mustek and Rectron and in all operating, I think we've done exceptionally well to get that gearing down and give us a stronger balance sheet and well, more profitability as well. Headlines earnings per share up 181%. NAV per share is ZAR 30 per share. And then in line with what we did in the past, we're looking at about 20%-odd dividend per share. So ZAR 37.5 sounds like a funny number, but I think the people that does not exempt from dividend tax, they will get around ZAR 0.30. So that was the thinking behind it. So I think overall, a fairly good performance by the company. Cost containments that we've implemented have started giving us the desired results. The currency was fairly stable during this financial year. And I think that also -- there's no big ForEx losses, although there were actually ForEx profits. And again, I think like I said to you, Shabana will explain to you that even if the GP percentage looks like it's down on the year before, there are specific reasons for that, which we would obviously highlight as we go through the presentation. So with that then I'll -- yes, just on that, we will, at the end, have questions because I'm sure there might be some. So if you do have, please just use the -- on the Teams meeting on the side there, you can pop your questions in there and then our control room with Dimitri and Simon here will feed it through to us, and we'll try and answer it in this session. If not, we will just make some notes and get back to you guys and then give you the answers if we're not able to actually answer it. On that, over to Shabana.

Thank you, Hein, and good morning, everyone. Thank you very much for joining us in this investor presentation or results presentation for our results FY '26. Just starting off with an overall 5-year financial summary, just to give you an overview of how the group has performed over the past 5 years. Obviously, you look at -- and I'll go into detail in the main line items across our income statement as well as our balance sheet just to give you more color and some color as to what the numbers represent and what occurred over the year. If you just look at this 5-year summary, FY '23 is standing out there on a revenue from a revenue perspective at ZAR 10.1 billion. And I'd just like to -- for those of you who haven't really followed Mustek for a long time, just to remind you that FY '22 was pretty much coming out of COVID, which we benefited significantly from the COVID boom, work from home, et cetera. And then FY '23 was sustainable energy. So if you recall, Mustek and Rectron, both had fantastic offerings from a sustainable energy perspective on solutions, inverters, batteries, solar panels, which contributed significantly to our FY '23 revenue number of a proper close to ZAR 2 billion. And then that dropped off very suddenly, and we've seen the drop off coming through in FY '24 and then FY '25. So that's pretty much where the story is around where the massive change in revenue, the 30% drop, if you want to recall it. But I think from our traditional business, call it the distribution of ICT hardware and equipment, we've remained fairly stable, and I'll go into more of the numbers going forward as well as what does the GP margins mean the once-off adjustments that we've had in the current year and what that sustainable number looks like going forward. So obviously, from a return on equity, good improvement from where we were last year in FY '24. However, we're not still where we would like to be, and we continue moving forward. So moving on to our revenue and just adding some -- in addition to what Hein mentioned. So as Hein introduced our 4 segments that make up the group, distribution still being the most significant contributor to our revenue as well as our bottom line. And that's part of our strategy is to diversify the group from that perspective. But -- so the distribution segment was fairly flat for this year. We've seen a shift in spending across the channel. So our channel is broken up into retailers, your normal resellers, public sector and export sales. So we did see a bit of a drop-off in public sector as well as export sales and then replaced with more of the local spend in retail and resellers. As Hein mentioned, there was actually -- if you look at that ZAR 7.3 billion, the dollar pricing, our revenue is linked to dollar pricing because a lot of our -- most of our inventory and most of our products are imported. And dollar pricing has increased not because of -- the rand pricing obviously is dependent on the exchange rate. But because the exchange rate was lower in this year versus where we were last year, the actual dollar pricing increased because of the shortages in your components, specifically storage and memory. Your normal entry-level notebooks, with the days of 3999 for entry-level notebooks is not there anymore, and we've seen massive increases in that. And that has resulted in a shrinkage in volumes just because of where pricing is sitting at this year. Hein mentioned that we've seen industry trends of around 20% decline in the market, and that's probably where we've also seen a decline in our volumes. Overall, in our service and support, specifically CyberAntix, we've seen good performance, obviously coming on from a very low base, but good improvement in their revenue. And then in our training business, specifically Mecer Inter-Ed, we did see a slowdown in training. Whenever there is any pressure in the market, training is one of those spends that gets cut probably first. Also from -- as I mentioned earlier, when I looked at the financial overview over the 5 years is sustainable energy. So the sustainable energy in this year -- energy revenue was very minimal in this year from obviously the ZAR 2 billion that I mentioned in June 2023. So that also doesn't really make any impact to what our FY '26 numbers are and our revenue then looking very -- based on sustainable revenue and where we can grow from here. But as Hein mentioned, revenue is not our target that we chase. We believe that we can be smaller but bigger from a bottom line perspective and growth is measured from a bottom line and not top line necessarily. Moving over to our gross profit margin. I've also shown a 5-year trend on this year. Overall, we've actually seen an improvement in our -- so it doesn't look like there is an improvement, but included in our GP or in our cost of sales for FY '26 is over 70 million -- over ZAR 80 million in stock write-downs, of which ZAR 70 million of that relates to sustainable energy stock. So you recall that when the sustainable energy boom or when Eskom stopped load shedding, we were sitting with approximately ZAR 660 million worth of sustainable energy stock. And the reason for that was that we had orders already on the water based on what our past sales were and not -- nobody expected load shedding to be suspended so quickly. And we were sitting with loads of sustainable energy stock. We still do have some stock, and we have written down back to what the market is calling on that stock. And so included in our gross profit margin is an impact of ZAR 70 million of write-downs, specifically relating to sustainable energy stock. So if we had to add back that, we would have ended up on a GP margin of 14.2%, call it, on your normal operations. The graph that I've got at the bottom is more of an adjusted GP percentage taking into account FX. So our ForEx gains and losses sits below the GP line from a financial reporting standards perspective because we cannot capitalize -- or we cannot put it through cost of sales because we don't apply hedging in the sense of IFRS 9 hedging. So if you had to add back the FX gain that we have in the current year, you'll see that the GP margin stabilizes quite nicely over time. And this is something that we've always explained that FX does have an impact on our business. And once you add it back, you will see over time that the GP margin then does stabilize. In the current year, we had a ZAR 53 million FX gain that sits below the GP line. And that's pretty much ZAR 37 million of that is realized and the balance remains unrealized. And we had the rand averaging of ZAR 16.90 over the period versus an ZAR 18.16 in the prior year, which drives where that FX gain is coming from. If I look at our EBITDA and just trying to explain how the movement in our EBITDA, what it came from FY '25 to FY '26. So FY '25, we finished off with an EBITDA of ZAR 249 million. And how we get back to the ZAR 278 million, which is approximately about a 11.6% improvement is made up of changes in, first of all, the impact of the GP on the increase on revenue, taking off the stock write-offs. And as I mentioned, not to just confuse you, ZAR 86 million was the total stock write-offs, of which ZAR 70 million was sustainable energy stocks. So just to highlight that and not confuse anyone. And then we had the ForEx movements. So in the prior year, we had ForEx gains of ZAR 10 million versus ZAR 53 million in this year. So we had an additional ZAR 43 million FX gains this year and then cost savings of ZAR 19 million due to the cost-saving initiatives that we implemented over the past 18 months in terms of rightsizing of the business, et cetera. So that basically shows where the improvement in our EBITDA number comes in. Obviously, taking into account if you had to strip out the ZAR 70 million stock write-offs in our EBITDA, we probably ended up a much healthier EBITDA number, which we believe is sustainable to what our business can achieve. Then moving below the EBITDA line in driving another driver for our improved in our performance is our net financing costs. As you would -- as Hein mentioned, over the past 2 or 3 years, working capital management has been our massive focus for the entire group. And by reducing our working capital, reducing our leverage, we have been able to manage and reduce our net financing costs over and above what the improvements or the reductions in the overall financing cost or interest rates have been. So over the period, we had about an 8% improvement in the prime interest rate, which obviously now will reverse with the interest rate increases happening now. But a 33% improvement in net financing costs has been as a result of a reduction in working capital over the past 2 years and lower leverage. Our trade finance -- yes, so our trade finance, which is our interest-bearing debt has reduced from approximately ZAR 1.2 billion at June 2025 versus to approximately ZAR 820 million at June 2026. And that is also -- that is one of the -- or the biggest reason for our reduction in financing costs. And we believe that this reduction is sustainable. Our finance cost is something that we manage very closely together with our working capital and will remain a continued focus for the group. Headline earnings per share, 181% up to ZAR 2.05. One of the other reasons for the improvement in our overall results, as Hein mentioned, is our improvement in our share of profit of associates. Specifically, we had a ZAR 25.8 million share of profit of associates in the current year versus ZAR 6.3 million in the current year. The biggest improvements coming from Yangtze Optical Cable as well as Khauleza performing very well. On YOA, the focus or what we've seen happening over the year, they're still doing extremely well and performance has been very positive. And as Hein mentioned, the demand for cable is still very high, and we still have a lot of -- we're still very happy with that investment. But as part of our strategic objectives, which Hein will cover in terms of our capital allocation, it's something that we would look at -- we are going to look at going forward. Dividend per share, 20% of earnings, so ZAR 0.375. We've maintained our 20% payout that we have in the past. And Hein also will talk about capital allocation and how we manage dividends and earnings going forward in terms of capital allocations -- from a capital allocation perspective. So moving on to just the balance sheet and some of the highlights on that. So just a high-level overview of our net asset value and tangible net asset value, our balance sheet looking strong and continuously improving. We haven't seen massive erosion or any erosion in our balance sheet over the years. The 2 biggest line items on our balance sheet from a working -- is working capital from an asset perspective, and that's inventory and trade receivables. Inventory sitting -- inventory on hand at one point finishing off at ZAR 1.7 billion. As we mentioned, you can see from 2023, '24, '25, we have started reducing our inventory. We were very bloated at that point in time, and that was one of our biggest focuses because with the higher working capital, we had high leverage and then finance costs were really high. There, we've reduced our working capital, and we are slightly higher on inventory at year-end, but that's specifically because of some of the stock shortages, some of the opportunities that they are in the pipeline, and we're quite comfortable with the health of our stock. As I mentioned, on the sustainable energy stock, our net exposure at year-end is approximately ZAR 185 million, coming down from where we were in June 2024 with ZAR 660 million. We've done very well, and we continue, there are initiatives across both Mustek and Rectron in ensuring that we clear out that stock as soon as we can. And inventory, our inventory cycles, our buying cycles continue to be a massive focus for both the distribution businesses within the group. Then the next biggest line item is trade receivable days. We've seen an improvement in our trade receivable days at year-end dropping from 66 days down to 57 days. And this is really -- risk management has been a big focus as well in terms of how we manage our debtors, how we select our deals against margin and credit thresholds. And we continue managing our receivable days, our receivable agings to ensure that we don't have any long outstanding debt and that our provision for estimated credit losses are maintained at healthy levels. And then all this then drops down directly into cash generation. So last year, we had a massive cash generation of ZAR 686 million from operations, and that can be seen, as you can see from the big drop in our -- specifically our inventory values over the past year. Still positive cash generation from operations in the current year at ZAR 116 million. Something very important to also note that included in that ZAR 116 million is ZAR 360 million worth of repayments towards our trade financing. As I mentioned earlier, that dropped from ZAR 1.2 billion down to about ZAR 800 million, ZAR 820 million. So that repayments of those trade finance is sitting in cash generated from operations and that ZAR 116 million is the net of those repayments. Our cash conversion cycles have improved to 97 days from 109 days in the prior year. We set ourselves a target for trying to get closer to 90 days, and we're quite confident that we'll be able to do that through our continued focus on our working capital management. And that's me from the numbers perspective, and I'll hand over back to Hein to take us through strategic priorities and some of the opportunities that we see within the group going forward.

Thank you. Thank you very much. Yes, from an executive point of view, some of the things we're going to be focusing on and continue to focus on is capital release. And what we mean by that is we went through quite an extensive exercise with all the individual organizations within the group trying to get a situation where our return on equity in those individual operations make sense. And if there's excess capital, then obviously, from a holding point of view, we are extracting that. And then obviously, that will give us opportunities going forward from a diversification point of view, either there's opportunities that actually present themselves to maybe get involved in there. Or if there's nothing, then I think the decision probably it will definitely be a Board decision, but maybe in the next 2 years 2, 3 years, say, we haven't really identified something that we want to deploy the capital in and then maybe then return it to shareholders through either a special dividend or whatever the case may be. So we've gone through that exercise. And I think part of the reason was historically, we've been criticized quite a bit about our return on equity. And you can see there it's improved, but it's still not where it should be. We'd like to get it probably maybe not double that, but yes, probably over time, doubling that. But yes, that's the exercise that we've gone through, and we're driving it quite hard and everybody bought in and understand where we're coming from. And then that should enable us then to obviously see if we can diversify the group even further over and above what we currently do have. And then just from a marketing point of view, I think just maybe a bit more of identifying the group and what the group is all about. I think everybody is still very much got the idea it's only Mustek and Mecer and Rectron. But I think there's a lot more to it, and we'd like to give that -- those individual organizations a lot more exposure within the group identity as well. And if you look at some of the opportunities, and I'm going to just go back to some of the industry outlook that we've got in our long format, just to maybe give you some idea and I've put down there where we do believe there's opportunities, and I'll just maybe cover on why we think so. Because if you look at currently, the defining supply side story for the year is obviously memory. AI data center demand has pulled manufacturing capacity away from the commodity DRAM. And for the group, I mean, this changes the future, the nature of memory in every product line, moving away from volume-driven turnover to a question of allocation and timing. And we've also seen that a second tier of supply is emerging as new Chinese manufacturers gain share and certifications that obviously bring certification and confirmation of product quality becomes a bit of an issue, but we're quite comfortable that the products we are bringing in and meet the necessary standards. I think the clear growth opportunity lies in AI. Most organizations will adopt it through licenses and hardware ready and the refreshes that they are ready to have. And this is precisely where the group's AI services are positioned to add value across the enterprise and the mid-market customers. So we're pretty excited about the opportunities that AI will bring to us. And then I think cybersecurity demand remains firmly nondiscretionary. I don't think people have a choice anymore. Attack volumes continue to rise against the backdrop of stretch internal security teams, reinforcement and that reinforces the case for security as a durable recurring revenue stream rather than just a project-based one. And then I think underlying all of this is the local skill shortage, which shapes how much this opportunity the group can convert into delivery rather than simply identity or identify. If you put all of this together, it's a harder market to operate in and more valuable one to serve well. Component supply, hardware demand, AI adoption and data center development all comes with constraints and constraints then obviously reward judgment more than scale. Because at Mustek Limited group, we cover supply chain management, AI enablement, cybersecurity, skills development and certifications. We've got the ability to advise across various areas of the market and participate in that. So all in all, I think we're quite positive about the future, keeping in mind that there's a lot of external influences which we don't necessarily have control over. But yes, we're trying to manage to the best of our abilities, but we do believe that there's a lot of opportunities still that we would like to pursue. So I think that's my story. If somebody wants to reach out to us, I mean, obviously, our contact details is available. Are there any questions, Dimitri or I can just maybe anticipate some of the questions that there might be.

Anonymous asks, please, can you talk to the quality of inventory on hand, such as aging, bad products still held, solar packs, et cetera. Has there been large charges in the current year? Sorry, ZAR 76 million increase on bad inventory allowance, ZAR 35 million inventories written off. And no dilutive cash flow shows inventory adjustments of ZAR 127 million.

All right. Yes. So I think I did cover that in my presentation. We're quite comfortable with the aging and the quality of our inventory. As I mentioned, that we do have about ZAR 185 million of net exposure to sustainable energy stock, of which we took massive write-downs in the current year. And we've got approximately ZAR 120 million of provisions against our inventory number. That's not specifically on sustainable energy, but across our inventory book, which we're quite comfortable that, that provision is sufficient.

Are currency gains to be viewed together with the gross margin deterioration when asserting the overall margin performance for the year?

That's our view, yes. From an accounting point of view, obviously, the treatment is different. But I think from a business point of view, we continuously adjusting prices based on what happens with the rand-dollar exchange rate. So -- so from a business point of view, we regard that as part of the GP. And I think if you go back historically like what Shabana has done, it gives you a fair picture of consistent GP over time, not all this up and down, up and down because generally, if you've got higher GPs, normally, we have ForEx losses and then the opposite is also true. But we tend -- we look at it combined in gross profit.

So from anonymous, what is the impact of the Rectron cyberattack on '27 profits in terms of lost sales and gross margin over that period that you can't recover?

Those were minimal.

Very immaterial. They were offline for pretty much a week and which was July, and they had met their -- or very close to meeting their July budget and probably exceeding from a GP perspective.

Yes.

Also from anonymous. Do you expect a PC upgrade cycle due to AI as older PCs may not have sufficient memory to run these AI applications?

Yes. I think we've seen that already happening worldwide. And I think that's part of the reason why stock is becoming a bit of an issue to get in hand. You've got fairly long lead times, although it's improved slightly, but I mean, the big multinationals, we're still looking at 3 months plus before we actually receive the stock where historically it was, say, 6 to 8 weeks. So yes, definitely, we've seen the demand increase worldwide, and we're seeing it locally as well. So we do expect that there will be a refresh as people get themselves ready for the effect that AI might have in their businesses. It's not only PCs. I think if you look at the infrastructure, back-end infrastructure as well, your server, all your storage and all those type of things, I think that's something that people need to seriously look at.

How much working capital do you realistically think you can release?

Well, we -- like I said, on our cash conversion cycle, we finished off at 97 days. We're aiming for 90 days, and I think that's an achievable target. I'm not going to put a rand value to it.

So from anonymous, now that Novus owned 57.6%, what specifically changes operationally or financially for Mustek, if anything.

Absolutely nothing. I think with this whole offer is still not concluded. It's pretty much hands off. We're carrying on as we used to in the past. I mean we've got an independent Board, obviously, majority nonexecutive directors. We've got the executives, business as usual. I mean, we do our own things. We do our what you call budgets, our own strategic plan. So at this stage, a big shareholder, obviously, but not getting involved operationally or even with the management side at all.

Congratulations on good results. Question one, could you expand on the rationale for remaining listed given the very limited free float with Novus now having control of Mustek, what has changed? Or do you expect to change once the mandatory offer process has been finalized?

I think it's going to be difficult to speculate. I think the discussions that we've had with Novus is that they would prefer us to stay listed at this stage. I mean that might change depending on whether the offer gets accepted and not into what extent it gets accepted. But I think from our point of view and this executive point of view is we're focusing on the business, whichever the decision then gets taken later, whether we remain listed or we get delisted, and that's obviously a shareholder decision that needs to be made. And although we're also shareholders, we will abide by the decisions taken then. But to preempt what's going to happen, I think it's not for us to say.

From an operational and capital allocation perspective, should we expect anything to change as the results of Novus becoming the majority shareholder? For example, could this lead to a greater appetite for acquisitions or disposals or a different approach to working capital, debt repayment or returning excess capital to shareholders.

I think once we get to a level where either we listed and are not listed or they have already got control, it's obviously a discussion that we will have with them. No indication of which specific way we're going to go. Currently, as is and like we've explained just now, we're focusing on the business. We've got our strategy, which we want to execute on. And we're going to carry on in that sense until at such time, maybe they do get involved on the Board level and/or not, and they feel that we should be doing something different. I mean, obviously, there will be the discussion that we'll have at that point in time. And then if something needs to change or is going to change, we'll communicate that to the market.