Slide 1: Audited Results for the Year Ended 30 September 2006
Reunert Presents AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2006
Slide 2: Salient Features
Salient Features • Strong improvement in top line growth • Continued improvement in EBITDA as % of revenue • Return of excess cash – Final dividend per share = 210 cents per share – Total dividend distribution this year = R4.73 • Interim 63 cents per share • Special 200 cents per share • Final divid
Slide 3: Condensed Income Statement
CONDENSED INCOME STATEMENT R Millions R million R million Change 2006 2005 % Revenue 8 236 7 012 17 EBITDA 1 336 967 38 Depreciation ( 63) ( 50) (27) Operating Profit 1 273 917 39 Interest & Dividends 65 50 30 Profit after Taxation 839 645 30 Share of Associates profit 95 79 20 Minority interests (
Slide 4: Condensed Balance Sheet
CONDENSED BALANCE SHEET R million R million As at 30 September 2006 2005 (Reviewed) (Restated) EMPLOYMENT OF CAPITAL Fixed Assets 467 336 Goodwill 327 329 Investments 149 116 RC&C Finance Debtors (gross) 1 404 1 028 Current Assets 2 274 1 566 Stock 809 561 Accounts Receivable 1 111 797 Other Debit B
Slide 5: Condensed Cash Flow Statement
(Reviewed) (Restated) CONDENSED CASH FLOW STATEMENT R million R million For year ended 30 September 2006 2005 EBITDA 1 336 967 Working Capital change -Finco receivables ( 376) ( 500) -Other ( 253) ( 101) Net interest & dividends received 121 119 Taxation Paid ( 347) ( 365) Dividends Paid ( 464) ( 30
Slide 6: Ratios
Ratio’s 2006 2005 2004 2003 2002 Operating margin(%) 15,5 13,1 11,2 10,0 9,3 ROE (%) 56,7 53,5 49,3 31,0 44,1 Dividend cover (Times) 1,8 1,8 1,7 1,5 1,9 Dividends per share (cents) 273,0 222,0 160,0 120,0 118,0 Special dividend per share 200,0 (cents) Dividend cover calculated on Normalised HEPS
Slide 7: Partners are an essential part of our strategy
BEE deal Partners are an essential part of our strategy
Slide 8: The Structure
The Structure The Peotona founding members The Rebatona Cheryl Carolus (8.7%) Educational Trust Dolly Mokgatle (8.4%) Noluthando Orleyn (8.4%) Wendy Lucas-Bull (4.5%) 70% 30% Qualifying Reunert Retona Employees 100% 100% Reunert Staff Share Other Ordinary Bargenel Trust Shareholders 9.5% 0.3% 90.2%
Slide 9: The Objectives
The Objectives • To benefit a broad base of previously disadvantaged people • Full economic and voting rights transferred from Day ONE • BEE partners of standing, able to add value to Reunert – Locked in as Reunert shareholders for at least 11 year period • Transparent, upfront economic cost with li
Slide 10: The Education Trust
The Education Trust • Rebatona Educational Trust – Broad-based BEE trust – Will own effective 6,65% of Reunert shares in issue • Beneficiaries – Black youth & black entrepreneurs • To provide further education & training – English, mathematics, science & accountancy – Groundwork for tertiary educati
Slide 11: The Partners
The Partners Cheryl • In-depth knowledge of government policy Ann • African National Congress’s overall policy coordinator in 1994 Carolus (8.7%) • South African High Commissioner to London • Former CEO of SA Tourism Dolly • Former CEO of Spoornet Doreen Mokgatle • Chairperson of Women Investment Po
Slide 12: The Employees
The Employees • Reunert Share Trust • Approx 6 000 Reunert employees – South African citizen – Not benefiting from other Reunert share incentive schemes • 100 Reunert shares each – Receive full economic benefit from date of issue – Shares subject to 5 year holding period
Slide 13: Cost of the transaction
Cost of the transaction • Disposal value = R66,81 – (volume weighted average price between 1 & 16 August 2006) – Less 10% discount • 18,5 million shares – R1,2 billion less 10% = R1,1 billion • Educational Trust • Employees – +R 46 million – Share price of R77,50 as at 15 Nov 2006 • Economic cost to
Slide 14: Timeline
Timeline • Detailed transaction announcement released – 20 November • Circular to be distributed to shareholders together with 2006 annual report – Mid December • Shareholder approval obtained @ AGM – 6 February 2007
Slide 15: Operational Review
Operational Review Creating space for our businesses to grow
Slide 16: Quince Capital
Quince Capital • New finance company – Quince Capital – Subject to certain suspensive conditions • Reunert & PSG Group – Reunert 49,9% – PSG 39,9% – Michiel le Roux 7,9% – Individuals 2,3% • Reunert will contribute RC&C Finance (Nashua Finance) – R125 million equity – R250 million goodwill • PSG + i
Slide 17: Electrical Engineering
Electrical Engineering 30% 66% REVENUE OPERATING PROFIT 2006: R2,57 billion 2006: R552 million 2005: R1,98 billion 2005: R333 million Your partner in infrastructure development
Slide 18: Energy Cables
Energy Cables • Capital expenditure – R47 million spent in FY06 – Rod casting – R40 million in 2007 • Cafca, Zimbabwe – Capacity will be sold in South Africa – New management – Reserve Bank approvals outstanding • Prospects – Platinum – Gautrain – Utilities & municipalities
Slide 19: Impact of sharp increase in copper price
Impact of sharp increase in copper price Assumption Base 100 Selling Price Cu @ R20,668/ton Cu @ R37,347/ton 2005 Av 2006 Av Cu content 40 72,28 Other material 20 20 Labour &OH 30 30 Profit 10 13.58 Profit % 10% 10% Selling price 100 135.80 This is a best case
Slide 20: Telecom cables
Telecom cables • Significant increase in revenue • Aberdare closed down – Increased Telkom market share – Agreement reached with Aberdare to acquire its telecom businesses’ assets – 50% share in JV between ATC & Aberdare – Subject to Competition Commission approval Cable sales Non- Optic fibre 17% t
Slide 21: Telecom cables: Exports vs Local
Telecom cables Exports vs Local • Future growth optic fibre cable Exports • Export potential 5% – Nigeria Local – Possible plant 95% • Telkom – New generation network • Non-telkom – Gautrain Capacity utilisation – Power stations – Railway system 2006 2005 2004 • Neotel (SNO) & Infracom Copper 78% 39
Slide 22: Low voltage
Low voltage • Expanding manufacturing capacity – Increased demand from Europe – South Africa – Capex: • 2006: R48 million • 2007: R44 million • Lesotho – Two plants in full production – Satisfied with progress • Exports – 21% growth year-on-year – 27% of total sales are outside SA – CBE products 63%
Slide 23: Low voltage: Sales per revenue stream
Low voltage Sales per revenue stream Other 9% CBE 19% Industrial 42% Residential 30% % Split between own and other 2006 2005 2004 Wiring accessories 3% 2% 0% Own manufactured 84% 86% 85% Mitsubishi 13% 12% 15%
Slide 24: Low voltage: Exports vs local sales
Low voltage Split exports vs local sales Export Sales 100% Europe 19% Australia 80% 40% 60% export USA 12% 40% local Other Far East 20% 11% 18% 0% 2006 2005 2004
Slide 25: Electronics
15% 20% REVENUE OPERATING PROFIT 2006: R7 billion 2006: R862 million 2005: R6 billion 2005: R717 million Electronics % contribution Revenue Operating Profit Office Systems 13% R1,2 billion 22% R314 million Consumer Products & Services 43% R4,1 billion 27% R375 million Telecommunications 14% R1,2
Slide 26: Nashua
Nashua • Streamlining existing businesses – Acuo Technologies absorbed in Nashua – Nashua Broadband transferred to Nashua Mobile • Dynatrack – Incorporated into Nashua, now part of Acuo – Software product – Provides customer with printing & copying cost management system – Established product with c
Slide 27: Nashua
Nashua • Increase total document volume – High volume printers & copiers – Multi-functional units grew over 20% – Colour printers – now 2nd largest in industry • Strong performance from Nashua Kopano • Operating margins decreased slightly – Implementation strategic sales division – Won several large
Slide 28: Nashua Mobile
Nashua Mobile • Move towards one stop service provider – Mobile, fixed line, voice over internet protocol & data services • Expanded into retail market – Now 115 retail outlets countrywide Sep 06 Sep 05 % growth Contract connections for year 194 832 94 034 107% 3G/HSDPA connections 11 095 2 095 Tot
Slide 29: Nashua Mobile
Nashua Mobile • Black Dot – Incorporated into Nashua Mobile – An ISP, website host & developer – Complements the strategy on Nashua Broadband – Exploit convergences of telecoms IT & VOIP – + 35 people • Mobile number portability – Implemented 10 November – Will monitor closely
Slide 30: RC&C Holdings
RC&C Holdings • Volatility of currency market • Business Systems – Grown strongly past year – Now contributes 30% of revenue & 70% of operating profit – Improve market share in office systems, telecommunication, presentation systems and closed circuit television • Pansolutions – Wholly owned franchi
Slide 31: RC&C Holdings
RC&C Holdings • Consumer electronics – Price deflation – Chinese manufacturers driving prices down – Operating margins squeezed – However, increase volumes • Futronic & Akai – Refrigeration, air conditioning & cooking appliances – Expect continued growth in these market segments • Soccer World Cup 2
Slide 32: Reutech
Reutech • Improved profitability from R3,7 million to R30 million – Restructuring previous year – Improvement in sales – Fuchs Electronics disappointed – RRS, RDL Technologies & RDI Communications profitable • Disposal process was started – Various offers received
Slide 33: Siemens Telecommunications
Siemens Telecommunications • Strong revenue growth 29% • Operating profit 8% • Telkom – New generation network – Broadband equipment – System care contract • Vodacom – Launched 3G & HDSPA – Planning to launch 3G in Tanzania • Cell C – Supplied HLRi, Operational systems support and next generatio
Slide 34: Siemens-Nokia deal
Siemens-Nokia deal • 50-50 joint venture Siemens Networks & Nokia • Effective 1 January 2007 • Nokia & Siemens telecommunications infrastructure businesses will be merged • Housed under Nokia Siemens Networks • Enterprise business carved out – Stand alone – +R400 million of sales – Challenging envir
Slide 35: Prospects
Prospects Generally the business climate is expected to be favourable and most of the group’s businesses are likely to continue producing real growth in earnings. The consumer business may experience slower demand in a higher interest rate environment. Overall the group should achieve real earnings