Jacques Magliolo
DESPITE growing local and international competition in=20 the electronics market, Johannesburg Stock Exchange- listed Log-Tek produced enviable results for its=20 financial year to end-April 1995.=20
Earnings per share climbed by a spectacular 138 percent=20 to 57,5 cents a share and a dividend of 17 cents (1994:=20 eight cents) was declared. This is a turnaround from=20 1993 when no dividend was paid.
During the past fiscal year, the group pushed its=20 turnover up by 44 percent to R60,9-million and=20 operating profits up by 50 percent to R6,2-million.=20 These figures translate into an attributable profit of=20 R2,7-million, which is an increase of 135 percent.
Log-Tek chief executive officer Harry Spain says: “Our=20 philosophy in terms of organic growth is simple. To=20 expand the group we make full use of the knowledge we=20 have gained in our existing markets to use in the=20 larger commercial customer based markets.”
This was highlighted during this past fiscal year.=20 Despite a substantial increase in the number of public=20 holidays and country-wide labour unrest, Log-Tek=20 managed to improve productivity and efficiency. Its=20 1995 operating margin rose to 10,1 percent from last=20 year’s 9,7 percent.
Log-Tek chairman Tony Behrmann confirms that improving=20 profit margins has been an objective of the group. He=20 says: “The profit attributable to shareholders exceeded=20 the budget due to continued emphasis on client=20 requirements and on productivity and margins.”
The results are impressive, particularly in view of=20 problems incurred in the industry. In the past five=20 years, growth in the local electronics market has been=20 anything but exciting. While the 1980s saw strong=20 growth in home computer sales, a decline in economic=20 activity and substantial cuts in defence spending=20 quickly dampened the electronics sector.
Market experts suggest that to navigate through these=20 difficult times electronics companies have relied=20 heavily on strong management capabilities. For Log-Tek=20 this was never in question as its directors are also=20 majority shareholders. This is best highlighted in the=20 group’s financial profile, which shows strong cash=20 inflow, substantially reduced debt equity and a higher=20 net tangible asset value per share.
Behrmann says that the sale of the group’s head office=20 was completed in April and the net cash inflow was used=20 to reduce interest bearing debt, which now stands at=20 115 percent compared to last year’s crippling 350=20 percent. Yet the sale of this asset has not reduced the=20 value of net tangible assets, which now stands at 115,2=20 cents (1994: 67,6 cents).
Two questions stand out in the minds of investors and=20 market experts alike: will the group continues to=20 impress and will the share price maintain its recent=20 upward momentum? The share has climbed from 1994’s 200=20 cents a share to its present 600 cents, which is an=20 increase of 200 percent. On future prospects for Log- Tek, investors need only look at the ventures and=20 market potential being developed.
The future does look bright. Log-Tek has started=20 developing software for healthcare products and=20 directors say the company will continue to develop new=20 products in this area. In addition, Quickcut Pre Press,=20 which provides users with direct access to extensive=20 libraries of products and other images on a centralised=20 database, is now able to operate without assistance=20 from the company’s head office.