Slide 1: Interim Results Presentation
Interim Results Presentation 8 May 2003
Slide 2: Group structure
Group structure REUNERT Electronics Electrical Engineering and Cables Office Systems Consumer products Telecommunications Reutech Electrical Engineering Cables Nashua Nashua Mobile Sietel RDI CBI ATC 100% 100% 40% 100% 100% 64%* Finance Co RC&C Holdings Acuo Technologies Fuchs Electronics African Ca
Slide 3: Salient Features
Salient Features six months ended 31 March 2003 • Revenue R3 047,5m +23% • EBITDA R380,5m +57% • EBITDA % of turnover 12,5% (9,8%) • Operating profit R333,3m +63% • HEPS 115,4 cents +14% • Interim dividend per share 32 cents +7%
Slide 4: Salient Features
Salient Features • Operating margins improved • Significant decline in income from associates (Sietel) • Strong contribution from defence • Impact of volatile exchange rate – 43% of turnover is $-based (excl Sietel) – 47% of turnover is $-based (incl Sietel) • Continued ATC loss
Slide 5: Salient Features: Impact of AC133
Salient Features • Impact of AC133 (financial instruments) – Operating profit reduce by R7,4m – Tax charge reduce by R2,7m – Earnings to outside shareholders reduce by R1,4m – Earnings to ordinary shareholders reduce by R3,3m
Slide 6: Salient Features: Acquisitions
Salient Features • Acquisitions – Bought Marconi’s 51% share in ATC R43,3m • Discount to NAV of R11m • Effective shareholding 89,5% • Kgorong to purchase 25,1% • Subject to certain conditions • Effective Reunert shareholding will then be 64,4% – IQ Works • Acquired 50% outstanding shareholding from
Slide 7: Growth Drivers
Growth Drivers • Improved turnover • Defence contribution • Continued operational improvements – CBI, Nashua Mobile and African Cables
Slide 8: Income Statement
INCOME STATEMENT Six months ended 31 March 2003 2002 % (Unaudited) Rm Rm Change Revenue 3 047.5 2 469.4 23 EBITDA 380.5 242.9 57 Depreciation and goodwill 47.2 37.8 25 Operating profit 333.3 205.1 63 Net interest and dividend income 21.2 15.5 37 Profit before taxation 354.5 220.6 61 Taxation 124.8 7
Slide 9: Balance Sheet
BALANCE SHEET '31 March 2003 2002 Unaudited Rm Rm Non-current assets 1 775.4 1 650.3 Property, plant and equipment 223.3 152.2 Goodwill 331.2 386.0 Investments 80.2 237.9 RC&C Finco accounts receivable 1 114.8 832.9 Deferred taxation assets 25.9 41.3 Current assets 1 811.0 1 378.5 Inventory and cont
Slide 10: Cash Flow
CASH FLOW Six months ended 31 March 2003 2002 FY02 Rm Rm Rm (Unaudited) (Audited) EBITDA 380.5 242.9 559.7 Increase in net working capital ( 123.0) ( 2.7) ( 366.0) Increase in RC&C FinCo accounts receivable ( 160.9) ( 87.8) ( 208.8) Other working capital changes (net) 37.9 85.1 ( 157.2) Cash generat
Slide 11: Dividend and Dividend Cover
Dividend and Dividend Cover 1.95 120 1.92 100 1.8 80 2.4 88 Cents 60 1.9 2.5 67 56 40 40 30 20 25 24 30 32 13 18 20 11 0 1997 1998 1999* 2000 2001 2002 2003 Interim Final * Excludes Special dividend of 250 cents
Slide 12: Segmental analysis
Segmental analysis Revenue Operating Profit 8% 22% 9% 12% 9% 18% 9 % 20% 41% 18% 33% 1% Office systems Consumer products & services Telecommunications Reutech Electrical engineering Cables
Slide 13: Operational review
Operational review REUNERT
Slide 14: Office Systems
Office Systems • Affected by strengthening rand • Higher turnover and profit • Introduced Samsung low-end multi functional printers
Slide 15: Office Systems: Nashua Finance/RC&C Finance Company
Office Systems Nashua Finance/RC&C Finance Company • Growth in finance book – From R0,8bn to R1,1bn over past year – Discounted rental agreements repayable over variable periods up to 5 years
Slide 16: Office Systems: IQ Works acquisition
Office Systems • Finalised acquisition of 50% stake held by The IQ Business Group • Incorporate with Nashua branding • Product house for Nashua and Nashua Mobile • Strong drive into financial sector
Slide 17: Consumer Products and Services
Consumer Products and Services • Merger bedded down – Improved credit control, fraud and risk management, customer focus • Increased profit margin • 6% growth in contract base • Churn down to 10,7% (March’02 - 11,2%) • Arpu’s - R584 • Internet billing system well received • Least cost router court c
Slide 18: Consumer Products and Services: RC&C Holdings
Consumer Products and Services • RC&C Holdings • Negative impact – Re-valuation of rand (33%) – Stock – Profit margins squeezed • Acquired 3rd franchise – now directly represented in major business centres • Futronic and Nintendo – investment period
Slide 19: Telecommunications: Siemens Telecommunications
Telecommunications Siemens Telecommunications • Dollar-based order book • Costs fixed in rand • Hedging mechanisms now in place • 2nd half improved contribution expected
Slide 20: Telecommunications: Impact of the stronger rand
Telecommunications Illustration of the impact of the stronger rand 2002 Contract value US$100m R1 200m Exchange rate 12 Gross Margin 20% 20% Gross Profit US$20m R240m Cost US$80m R960m 2003 US$100m R900m Exchange rate 9 Cost R960m Debtors 2002 $100m R1 200m 2003 R1 000m Loss (R200m) Numbers bear no
Slide 21: Telecommunications
Telecommunications • Nashua Mobile pre-pay top-up server implemented – 2nd phase developments • Partner with RRS to develop software for SANDF • Software development and integration market still depressed
Slide 22: Reutech
Reutech – 2003 excellent year – Reasonable prospects – Depend on exports – Difficult to predict timing of orders – Confident that orders will be secured • RDI’s software definable radio • Fuzes
Slide 23: Reutech: RRS
Reutech • RRS – 1st tracking radar delivered • Profit taking 2nd half and FY04 – Order base secured for next three years – Ground based air defence system • over R100m software development contract
Slide 24: Low-voltage electrical engineering: Domestic market
Low-voltage electrical engineering • Domestic market – Residential business above expectations – Eskom national contract • More orders than quota received – Mining and industrial business promising • Expansions at platinum mines
Slide 25: Low-voltage electrical engineering: International
Low-voltage electrical engineering • International – Enquiries picking up – Motorola order received – Hewlett Packard USA – International slump hamper export targets – Dumping case • Possible USA acquisition
Slide 26: Cables
Cables • Sold 25,1% of ATC to Kgorong Investment Holdings • No recovery in international telecoms market • Telkom placing virtually no orders • SNO • Downgrade breakeven forecast to significant loss for FY03
Slide 27: Cables
Cables • Strong turnover driven by implementation of projects • Focus on service excellence • Strengthening of rand increases threat of imports
Slide 28: Going forward
Going forward • Acquisitions – Local & International • Turnover growth • Growth prospects
Slide 29: Black economic empowerment
Black economic empowerment • Comprehensive approach taken • Beneficially black owned shares – Between 17,8% and 20,5% » Business Map
Slide 30: Shareholding
Shareholding Pension funds 33.47 Insurance companies 18.03 Below threshold 0.43 Other funds 1.43 Investment trust 1.86 Unit trusts 14.21 Unclassified 1.9 Other managed funds 8.9 Corporate holdings 9.82 Private investors 9.95 7,2% offshore shareholders These analyses represent 100% of the register; "
Slide 31: Basic Statistics
Basic Statistics • Shares in issue 205,8 million • Shares in treasury 17,2 million • Ave # of shares HEPS 188,0 million • Market price last 12 months – Highest 2210 – Lowest 1600
Slide 32: Thank you
Thank you REUNERT