Reunert Limited · JSE:RLO
Reunert — H1 2006 Earnings Presentation
22 slides from Reunert's earnings presentation, March 2006
Slide 1: Unaudited results for the six months ended 31 March 2006
Reunert Presents UNAUDITED UNAUDITED RESULTS RESULTS FOR FOR THE THE SIX SIX MONTHS MONTHS ENDED ENDED 31 31 MARCH MARCH 2006 2006
Slide 2: Salient features
Salient features • Strong sales & volume increase • Consumer boom • Modest increase in demand due to infrastructural spending • Headline earnings per share = 232,6 cents • Dividend per share = 63 cents per share • EBITDA as % of revenue = 14,1% Ò 19% Ò 23% Ò 29% Ò 21 % REVENUE OPERATING PROFIT HEADL
Slide 3: Group income statement
Group income statement 2006 2005 % Six months ended 31 March 2006 R million R million change (Restated) Revenue 3,910.9 3,275.5 19 EBITDA 551.0 448.1 23 Depreciation and amortisation 27.0 23.1 17 Operating profit 524.0 425.0 23 Net interest and dividend income 33.2 22.2 50 Profit before abnormal ite
Slide 4: Financial Results
Financial Results These results are based on International Financial Reporting Standards (IFRS). As a consequence of the application of IFRS, in the opinion of the Reunert board, the earnings of the group from an economic perspective have been overstated. As discussed under the normalised earnings s
Slide 5: Effect of BEE accounting
Effect of BEE accounting • Not treated as minorities until all conditions have been met • Once acknowledged as minorities – HEPS growth reduced to 27%
Slide 6: Group balance sheet
Gro u p b a la n c e s h e e t 2006 2005 a t 3 1 Ma rc h 2 0 0 6 R m illio n R m illio n (Re s ta te d) No n -c u rre n t a s s e ts P ro p e rty, p la nt a nd e q uip m e nt & Inta ng ib le a s s e ts 361 333 Go o d will 330 326 Inve s tm e nts a nd lo a ns 107 110 F inc o a cc o unts re ce iva b l
Slide 7: Group cash flow statement
Group cash flow statement 2006 2005 Six months ended 31 March 2006 R million R million (Restated) EBITDA 551 448 Working Capital change -Finco receivables (207) (232) -Other (187) (85) Net interest & dividends received 81 62 Taxation Paid (211) (244) Dividends Paid (338) (218) CASH UTILISED BY OPERA
Slide 8: Segmental analysis: revenue growth
Segmental analysis Revenue growth 2500 12% 2000 1500 31% 26% Rm 1000 35% 500 (6%) 0 Electrical Office Systems Consumer Telecomms* Reutech Engineering products & services *Attributable to RLO HY05 HY06
Slide 9: Segmental analysis: operating profit growth
Segmental analysis Operating Profit growth 250 33% 200 10% 150 16% 64% Rm 100 50 0 Electrical Office Systems Consumer Telecomms* Reutech -50 Engineering products & *Attributable to RLO services HY05 HY06
Slide 10: Acquisitions
Acquisitions • Two small businesses – R6,3 million • 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 • Dynatrac – Incorporated into Nashua – Software product – Pro
Slide 11: Capital Expenditure
Capital Expenditure • Electrical engineering – R114 million approved for FY06 – Expansion: R83 million(73%) – Replacement R31 million (27%) • Electronics – R70 million • New Nashua building in Midrand • Additions to Nashua Mobile
Slide 12: Operational Review
Operational Review REUNERT REUNERT LIMITED
Slide 13: Circuit Breaker Industries
Circuit Breaker Industries • Expanding manufacturing capacity % Sales – Increased demand from Europe – South Africa Category growth – Mechanising certain processes Residential Ò 7% • Lesotho Commercial & – Full production Industrial Ò 7% – Satisfied with progress MSA Switchgear Ò 30% • Exports – 40%
Slide 14: African Cables
African Cables • Sales Ò 17% if Copper price % March ‘05 ‘06 increase stripped out change • Ever increasing copper price is Average exchange rates matter of concern R/$ 6.02 6.34 +5% • Capex approved to ensure sufficient capacity R/€ 7.85 7.58 -3% • Cafca, Zimbabwe – No improvement Average Copper Pr
Slide 15: ATC
ATC • Volumes doubled • Profits improved • Profitability acceptable • Demand expected to increase significantly – Telkom broadband initiative – SNO – Botswana – Nigeria • Sufficient capacity – Needs to be exploited
Slide 16: Nashua
Nashua • Ò 35% growth in revenue • Multi-functional machines Ò 20% volume growth 1st half • Printers Ò 466% • Acquired Dynatrack – Software – Optimising placement of machines in office environment – Differentiating service to customers • Occupied new HO building, Woodmead North % Multi-functional ma
Slide 17: Finance Company
Finance Company • Long-term facilities of R1,2 billion – Up from R900 million • Facilities provided by 3 banks – RMB, ABSA, Nedbank • Long-term basis – 5 year period
Slide 18: Nashua Mobile
Nashua Mobile • High conversion rate from prepaid to contract – More customers can afford contracts – Credit vetting criteria relaxed • Marked improvement in activity in broadband – IBurst, 3G, HSDPA • Acquisition of Black Dot ISP • Move towards one stop service provider – Mobile, fixed line, voice
Slide 19: RC&C
RC&C • Number units HY05 to HY06 – Photographic & brown goods market Ò 9% – White goods Ò 17% Average exchange rates • Digital explosion – 30% growth in digital cameras, % March ‘05 ‘06 camcoders & plasma screens change • Price deflation R/$ 6.02 6.34 +5% – No real price deflation in white goods R/€
Slide 20: Siemens Telecommunications
Siemens Telecommunications • Rejuvenation of Telkom network • Expansion of Vodacom 3G services – HSDPA • Vodacom Tanzania 3G • Well positioned to benefit from Telkom new generation network • 2nd half unlikely to match 1st half growth
Slide 21: Reutech
Reutech • Returned to profitability • RDI & RDL well positioned & profitability expected to increase • RRS & Fuchs Electronics need more orders – Expected to be profitable for FY06 • Profitability in 2nd half overall expected to be better
Slide 22: Prospects
Prospects Most of the group’s operations are expected to benefit from the current buoyant market conditions. Therefore Reunert should continue to deliver headline earnings growth in the second half of the year.