Slide 1: Presentation to Investors – Year ended 30 September 2014
2014 PRESENTATION TO INVESTORS (Unaudited) For the year ended 30 September 2014 19 November 2014
Slide 2: Agenda
Agenda Overview of the year – Alan Dickson, Chief Executive Officer Financial results – Manuela Krog, Chief Financial Officer Segment discussion | Nashua – Mark Taylor Segment discussion | Reutech – Peter van der Bijl Segment discussion | CBI-electric – Alan Dickson The way forward – Alan Dickson ©
Slide 3: Overview
2014 OVERVIEW Alan Dickson, Chief Executive Officer 19 November 2014
Slide 4: The year in review – challenges
The year in review – challenges 2014 financial performance characterised by tough local operational environment • Slow economic growth • Significant industrial action • Delays in the award and roll-out of certain infrastructure projects Increased competition continues to put pressure on margins • Ra
Slide 5: The year in review – positive impacts
The year in review – positive impacts Benefit has been derived from strategic investments made • High-voltage cable line at African Cables • ECN VoIP network continues to reflect pleasing growth • High-frequency radio export sales continue to grow Operational efficiency indicators maintained • Signi
Slide 6: Nashua Mobile disposal transaction
Nashua Mobile disposal transaction • Transaction made unconditional by the Competition Tribunal in late September • The project has been meticulously executed • Staff remained focused and delivered excellent customer service • Anticipated proceeds from the networks are approximately R200m lower than
Slide 7: Segmental contributions | continuing operations
Segmental contributions | continuing operations Revenue 2014 – R7.7bn Operating profit 2014 Reutech CBI- CBI- Reutech R1,0bn electric electric R170m R3,3bn R429m Nashua Nashua R3,4bn R454m Revenue 2013 – R7.3bn Operating profit 2013 Reutech Reutech CBI- R1,0bn CBI- R 207m electric electric R 490m R3
Slide 8: Financial Results
2014 FINANCIAL RESULTS Manuela Krog, Chief Financial Officer 19 November 2014
Slide 9: Salient features
Salient features 2014 2013 % change Revenue from continuing operations Rm 7 773,8 7 246,7 7% ! Revenue from discontinued operation Rm 3 348,1 3 695,2 9% " Operating profit from continuing operations Rm 1 017,0 1 102,5 8% " Operating profit from discontinued operation Rm 183,7 212,1 13% " EPS cents 1
Slide 10: Revenue movement
Revenue movement (20) 4 7 774 386 7 247 157 2013 CBI-electric Nashua Reutech Other 2014 Improved revenue performance due to Offset by • Higher commodity prices (African Cables) • Effect of industrial action • Renewable energy contracts (CBI Solutions) › Significant direct strike action within CBI-el
Slide 11: Operating profit movement
Operating profit movement (61) 18 (37) (6) 1 103 1 017 2013 CBI-electric Nashua Reutech Other 2014 Negative profit impact caused by Offset by • Labour disruption impacted operating profit • Improved volumes on sale of HV cable by an estimated R62m (product mix) in African Cables • Overruns on renewa
Slide 12: Group balance sheet
Group balance sheet 2014 2013 Rm Restated Non-current assets 3 128 3 237 Current assets 3 846 4 136 Current assets – discontinued operation 2 609 Total assets 9 583 7 373 Total equity 6 333 4 878 Non-current liabilities 547 156 Non-current liabilities – discontinued operation 250 Current liabilities
Slide 13: Cash flow and efficiency indicators
Cash flow and efficiency indicators Rm (99) (44) (332) (122) (612) 1 315 718 (367) 434 173 EBITDA Increase in Interest, Taxation Capital Free cash Dividends Investing Financing Increase in working dividends paid expenditure flow paid activities activities cash capital and other resources 2014 2013 B
Slide 14: Capital investment into organic growth
Capital investment into organic growth 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Replacement capex Expansion capex Research & development • Investment in future capacity has been funded from internal cash resources • Expansion capex mainly related to high-voltage cab
Slide 15: Nashua
Nashua Mark Taylor 19 November 2014
Slide 16: Nashua salient features
Nashua salient features Nashua total document volume All operations m 2014 2013 % change (Rm) 500 421 400 Revenue 6 787,2 6 748,4 1 300 200 Operating profit 637,5 647,7 (2) 100 0 2009 2010 2011 2012 2013 2014 Profit margin 9,4% 9,6% ECN minutes Includes Nashua Mobile m 100 80 60 40 20 0 2011 2012 20
Slide 17: Nashua commentary
Nashua commentary Office Automation • Pressure on unit sales volumes and margin due to competitive market and currency devaluation • Annuity revenues held up well • Large installed base supported growth in print volumes • Purchased 60% of Prodoc Svenska AB in January 2014 Quince • Quince grew book b
Slide 18: Nashua focus areas
Nashua focus areas 1. Drive market share growth and resultant annuity revenues • Single brand to be offered through the franchise network • Maintain benefits of entrepreneurial flair through shareholder restructuring in key franchises to allow for a minimum 20% ownership by management • Extension of
Slide 19: Reutech
Reutech Peter van der Bijl 19 November 2014
Slide 20: Reutech salient features
Reutech salient features Market sector (Rm) 2014 2013 % change Commercial 27% Revenue 1 000,0 1 019,9 (2) SOEs 30% Operating profit 169,7 207,0 (18) Defence 43% Profit margin 16,9% 20,3% % Revenue exports Local Exports 51% 49% © Copyright 2014 Reunert Limited 19 November 2014 20
Slide 21: Reutech commentary
Reutech commentary • Preserved revenue despite lack of Fuchs export sales, due to market penetration in HF radio sales and commercial product offerings • Delivery of coastal surveillance radars › First sales in South Africa › Planned further expansion in the Middle East • Radar and Solutions busines
Slide 22: Reutech focus areas
Reutech focus areas 1. Expand direct product sales into the Middle East and Asian markets • Long-term supply contracts for remote turret systems (Rogue) • HF radios (SAAB acquisition) move into new territories • Mining surveillance radar sales into large new markets – explore new geographies 2. Brin
Slide 23: CBI-electric
CBI-electric Alan Dickson 19 November 2014
Slide 24: CBI-electric salient features
CBI-electric % Factory capacity utilisation (Rm) 2014 2013 % change 100 Revenue 3 610,9 3 505,7 3 50 Operating profit 427,6 505,5 (15) 0 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Low voltage Energy cables Profit margin 11,8% 14,4% Copper telecom cables Fibre telecom cables Copper price 85 80 R’000 p
Slide 25: CBI-electric commentary
CBI-electric commentary • SA labour unrest dominated financial performance – on average 6 weeks of disruption • Local market performance continued › Awarded primary SOE agreements › Strong market shares in renewable energy and distribution • International operations yielded lower volumes › Telecommu
Slide 26: Focus areas
Focus areas 1. Margin control • Production efficiency improvements • Improved Solutions’ performance within Low Voltage 2. Continued growth in value added segment • Installation and maintenance of power cable circuits • Accessory business 3. Indicators point to a softening in local demand • Increase
Slide 27: The way forward
The way forward Alan Dickson 19 November 2014
Slide 28: The way forward
The way forward 1. Elimination of once-off costs in 2014 › Direct labour unrest o Three-year wage agreements were signed in July 2014 › Impairments o Projected future cash flows for remaining goodwill provides sufficient headroom › In principle settlement agreement reached with the Competition Commi
Slide 29: The way forward – Nashua
The way forward 2. Improved segmental results Nashua segment | continued › Nashua Office Automation o Prodoc has returned to profits due to appropriate cost cutting and improved sales » Significant deals since year-end of SEK41m o Improved business model efficiency in South Africa » Shared service i
Slide 30: The way forward – Reutech
The way forward 2. Improved segmental results Reutech › Increased US dollar based revenue streams o USD27m order received from the Middle East o HF radio sales to the Far East continue to accelerate › SANDF radio communications capital project commences mid-2015 © Copyright 2014 Reunert Limited 19 N
Slide 31: The way forward – CBI-electric
The way forward 2. Improved segmental results CBI-electric › Project based business will accelerate o Orders on hand for the power installations’ division amount to R197m o CBI Solutions has completed the low margin renewables business › South African SOE long-term frame agreements have been secured
Slide 32: The way forward – allocation of capital
The way forward 3. Allocation of capital Capital is available › Net cash proceeds from the Nashua Mobile transaction are expected to amount to approximately R2bn › Facilities in place to further leverage the Quince balance sheet › Low current leveraging of the Reunert balance sheet Process › A detai
Slide 33: Results Presentation – Year ended September 2014
2014 RESULTS PRESENTATION For the year ended 30 September 2014 19 November 2014