Slide 1: Audited results for the year ended 30 September 2003
Audited results For the year-ended 30 September 2003 JSE: RLO
Slide 2: Reunert at a glance
Reunert at a glance Market capitalisation* R3,8bn Revenue R6,1bn EBITDA R712m EBITDA % 11,7% Attributable earnings R295m Net cash R481m Total dividend 120 cents per share *26 November 2003 2
Slide 3: Strategy – Clean up
Strategy – Clean up • Achieve greater focus • Some 18 businesses sold or closed • Eliminate low margin businesses • Increase profit margins 7 700 6 600 5 500 4 400 3 300 2 200 1 100 0 0 97 98 99 00 01 02 03 Revenue (Rbn) Operating profit (Rm) 3
Slide 4: Strategy - Consolidate
Strategy - Consolidate • Take out minorities – Nashua Mobile • Increase shareholding – Siemens Telecommunications • Acquired majority stake – ATC – IQ Works now Nashua Connect • Encourage organic growth – Nashua: Royce Imaging – CBI: Mitsubishi, Tellumat, – Panasonic: major franchisers • Unfinished
Slide 5: Strategy – Grow
Strategy – Grow • Maintain organic momentum • Grow market share – Consolidate sectors – Export • Add products/services – Put distribution systems to work • Careful to sacrifice revenue for excessive margins • Add a new dimension to Reunert – Major acquisitions – Closely aligned to Reunert’s core 5
Slide 6: Financial results
Financial results REUNERT REUNERT LIMITED
Slide 7: Key drivers of 2003 results
Key drivers of 2003 results • Volatile currency & AC133 impact on group results – Consumer goods – RC&C Holdings (Panasonic) – Telecommunications – Siemens Telecommunications • Excellent performance from managed companies – 29% operating profit growth – Revenue up by 21% – Exception RC&C (Panasonic)
Slide 8: Hedging policies
Hedging policies •Panasonic •Rest of Reunert •Siemens Telecommunications – Hedging mechanisms in place to minimise further losses 8
Slide 9: Impact of AC133
Impact of AC133 Operating loss (R44,5m) Effect on operating Rm Tax charge R13,3m profit by segment Attributable earnings (R31,2m) Electrical engineering 0,5 Office systems (29,5) •This accounts for seven of the 20% Consumer products (23,9) drop in HEPS from 2002 ICT (0,1) Reutech 8,5 Total (44,5) 9
Slide 10: Income statement
Income statement Highlights 2003 2002 % R million Revenue 6 103,9 5 062,9 21% Operating profit 607,7 472,1 20% Tax 224,4 177,3 Attributable earnings 295,4 370,6 (20%) Headline earnings 345,6 429,3 HEPS (cents) 183,5 229,5 (20%) Effective tax rate 32,1% 32,2% Final dividend/share (cents) 88,0 88,0 0%
Slide 11: Shareholder wealth
Shareholder wealth Headline earnings per share Dividend per share (cents) and (cents) dividend cover (times) 250 140 3 120 2.5 200 100 2 150 80 1.5 100 60 1 40 50 0.5 20 0 0 0 99 00 01 02 03 99 00 01 02 03 11
Slide 12: Performance
Performance Revenue Operating profit (R billion) (R million) 7 700 6 600 5 500 4 400 3 300 2 200 1 100 0 0 99 00 01 02 03 99 00 01 02 03 12
Slide 13: Segmental analysis
Segmental analysis Revenue including associate companies 2003 2002 8% 5% 18% 17% 19% 27% 12% 13% 42% 39% Electrical engineering Electrical engineering Office systems Office systems Consumer products and services Consumer products and services ICT ICT Reutech Reutech 13
Slide 14: Consolidated revenue
Consolidated revenue % R million 2003 change Electrical engineering 1 367,7 15% Office systems 952,3 9% Consumer products & services 3 192,5 15% ICT 1 413,7 -28% Reutech 615,7 64% Less: Associates (1 438,6) Revenue as reported 6 103,9 14
Slide 15: Consolidated operating profit
Consolidated operating profit R million 2003 % change Electrical engineering 195,2 60% Office systems 157,4 7% Consumer products & services 173,7 (1)% ICT (64,6) (131)% Reutech 117,9 206% Less: Associates 74,3 Operating profit as reported 653,9 15
Slide 16: Segmental analysis
Segmental analysis Operating profit including associate companies Rm 195.2 117.9 -64.6 2003 173.7 157.4 122.4 38.5 2002 209 175.2 147.2 -100 -50 0 50 100 150 200 250 Office systems Consumer products and services ICT Reutech Electrical engineering 16
Slide 17: Cash flow
Cash flow Highlights 2003 2002 203 2002 EBITDA 712,3 559,7 Increase in net working capital (59,3) (366,0) Increase in Finco accounts receivable (269,8) (208,8) Decrease/(increase) in other working capital 210,5 (157,2) Interest & dividends received net of taxation and dividends paid (391,9) (265,1)
Slide 18: Cash resources
Cash resources Highlights 2003 2002 Cash and cash equivalents (net) 481,4 280,7 RC&C Finco borrowings (900,7) (838,0) Net borrowings @ end of year (419,3) (557,3) • Finco long-term banking facilities of R900m • Maximum notice run off period over 5 years 18
Slide 19: Exports and R&D
Exports and R&D Export revenue R&D Investments % R million Rest of CBI group 16% 18% 2003 28 42 2002 27 68 Reutech 0 50 100 66% CBI Reutech •Total exports R519m or 9% of total revenue •Total exports 60% up year-on-year 19
Slide 20: Operational review
Operational review REUNERT REUNERT LIMITED
Slide 21: Current structure
Current structure Electrical Engineering Electronics Consumer Information & Electrical Reutech Office Systems products communication Engineering and services Technologies CBI Nashua Nashua Mobile Siemens RDI 100% 100% 100% 40% 100% ATC Nashua Finance RC&C Holdings Acuo Technologies Fuchs Electronics
Slide 22: Electrical engineering
Electrical engineering CBI ATC African Cables 22
Slide 23: CBI
CBI • Excellent year – Sales volumes up • Local • Export – 13% of turnover • USA, Europe, Far East and Africa – High barriers to entry • Manufacturer of repute – International standards and qualifications – Testing facility to UL specifications • Wide product range • Diverse customer base • Sole dis
Slide 24: CBI
CBI Offshore expansions • Sales offices in Germany & USA Export markets Export Sales by Region Rm • Anti-dumping case in USA 120 • Strong growth in volumes 100 • Rand value down 80 Prospects 60 • Increase volumes and revenue 40 20 • Grow market share 0 – Motor control 2001 2002 2003 – Automation sys
Slide 25: ATC
ATC • Acquired 100% of business – 51% Marconi plc & 10% Pirelli Cables and Systems • Restructured and streamlined operations • Sold 25,1% to black owned group Kgorong Holdings • Last few months profitable Prospects • First signs of international market recovering • Aggressive look at export markets
Slide 26: African Cables
African Cables • Increase in margins Revenue – Higher volumes 10% – Favourable mix of products 20% – Reduced scrap – Reduced over consumption 30% – Sharper buying • Cafca 40% • City Power Johannesburg – 3 year contract Mining General Market Utilities Industry Future • Impact of exchange rate • Price
Slide 27: Electronics
Electronics Office Automation Nashua, Finance, Nashua Connect Consumer Products & Services Nashua Mobile, RC&C Holdings, Saco Systems Reutech RDI, Fuchs Electronics, RDL, RRS Information & Communication Technologies Acuo Technologies, Sietel 27
Slide 28: Nashua
Nashua • Strong profit growth • Cost reductions passed on to consumers • Multi-function machines • Strong competition in lower-end of market Prospects • Low market penetration of colour machines • Increased demand for multi-function machines • Systems integration capability 28
Slide 29: Nashua Mobile
Nashua Mobile • Excellent year • Improved systems and processes • Won least cost router court case – Now on appeal • Average revenue per user at all time high = R575 (2002:R552) • Churn rate = 11,6% (2002: 11,9%) • Market share: – Contract base: 313 000 (2002: 264 000) – Prepaid base: 38 000 (2002:
Slide 30: Nashua Mobile
Nashua Mobile Prospects • Vodacom offered to renew incentive contract until March 2005 • ARPU’s expected to grow further • Strong growth in professional services • Not a mature market 30
Slide 31: RC&C Holdings
RC&C Holdings Consumer electronics • Disappointing performance – Long lead times addressed – Overstocked • Restructured operations • Hedging mechanisms reviewed Business systems • Strong growth • Direct presence in Cape Town, Johannesburg & Durban 31
Slide 32: RC&C Holdings
RC&C Holdings Prospects • Much brighter • Stronger rand & lower interest rates benefit consumer • No exchange rate disadvantages • Overstocked position corrected • Expecting an excellent festive season Revenue • Futronic well positioned Consumer electronics Business systems 45% 55% 32
Slide 33: Reutech
Reutech • Excellent profit contribution • Fuchs Electronics – Profits adversely affected by strong rand • Reutech Radar Systems – Delivered 1st optronic radar tracker units to SA Navy on time – Full order book for 2004 • Reunert Defence Logistics – Making strong inroads in commercial sector – Infras
Slide 34: Reutech
Reutech • Reutech Defence Industries – Difficult year due to lack of orders – Rationalized operations and relocated manufacturing capacity to Fuchs • Reutech managing director: Piet Smit Prospects • Need to fill order books • Continued strong rand impacts on global competiveness • Unlikely to repeat
Slide 35: Siemens Telecommunications
Siemens Telecommunications Attributable profit after tax R million 2002 115,8 2003 (76,2) Swing 192,0 • Exchange rate losses • Dollar based contracts with rand based costs • Penalties – Delays in roll-out of sites • Contracts delayed – Nigeria, Mozambique 35
Slide 36: Siemens Telecommunications
Siemens Telecommunications Prospects • Return to profitability – Existing contracts renegotiated – Restructuring – Hedging mechanisms – New contracts: Mozambique • Future growth of mobile networks • Second network operator 36
Slide 37: CS Holdings acquisition
CS Holdings acquisition • Acquired – Gensec’s 15,4% – Getronics 16,3% – Price = R42,8 million • Other shareholders – Worldwide Africa Holdings 25,8% – Management 6% – Institutional & retail • Outsourcing, systems integration, managed services and training • Forecast revenue +R600m 37
Slide 38: A glimpse at next year
A glimpse at next year Prospects • ATC, RC&C (Panasonic) & Sietel to turn profitable • Reutech expected to be down • All others flat ➔Overall positive result ➔Continued growth 38
Slide 39: For more information contact Carina de Klerk
For more information contact Carina de Klerk Tel 011 517 9000 or e-mail carina@reunert.co.za or invest@reunert.co.za