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Despite turbulent markets and growing
economic uncertainty, Reunert has increased revenue and
operating profit for the eighth year
in a row. Revenue increased by 14% to R10,92 billion.
On a like-for-like basis, operating profit increased
by 9%. The reported number
of R1,57 billion, an increase of 19%, includes R139 million
commission earned on our investment in NSN. Previously,
Reunert’s share of NSN’s net income was disclosed as
income from associates.
Normalised headline earnings improved by 11% to R1,12
billion. Strong cash generation led to net cash resources
at the end of the year,
excluding RCCF borrowing, amounting to R782 million. |
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| CBI-ELECTRIC |
The electrical group had a good year.
Revenue increased by 19% to R3,95 billion, while operating
profit grew from
R554 million to R675 million, an increase of 22%. Both
energy cables and the low-voltage businesses experienced
buoyant market
conditions.
The low voltage business in particular
benefited from strong exports and operating profit improved
by 45%. The acquisition of the
Moeller business strengthened our position in the motor
control market.
The energy cable business had a record
breaking performance, improving revenue by 43%. In select
cases where capacity was stretched,
cables were sourced from other manufacturers. We believe
our cautious approach to increasing capacity will, in
the light of recent
economic developments, prove to be appropriate. Towards
the latter part of the year demand softened noticeably
while the international
copper price collapsed in line with most other commodities.
However, the weakening of the rand has kept the rand
copper price more
stable.
Telecomunication cables, our joint venture
company with Aberdare, had a subdued year mainly due
to Telkom buying less copper
cable than previously. Revenue was down 19%, leading
to a decline in operating profit of 18%. Sales of fibre
cable picked up and this
trend is expected to continue. Capital is being invested
to increase capacity for instrumentation cable, which
is experiencing strong
domestic and foreign demand. Exports of instrumentation
and optic fibre cable are expected to continue growing,
offsetting the decline
in demand from Telkom.
At this stage, it is difficult to gauge what impact global
economic conditions will have on infrastructure development
in South Africa,
although, early signs indicate that revenue in CBI-electric
may decline. |
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| NASHUA |
The Nashua group
of companies, being more directly exposed to the consumer,
had a tough year. Bad debts have become an issue
emphasizing the need to concentrate on quality rather
than the quantity of deals.
Office automation, which once again includes RCCF,
experienced good revenue growth of 12%. However, operating profit
declined by
12%, partly as a result of a more competitive environment
as well as a significant increase in bad debts.
The relationship between the rand/euro versus the rand/yen
negatively affected product pricing, rendering us non-competitive
in many
instances. Recent exchange rate developments may improve
that situation going forward.
On the financing side, rates have been adjusted upward
to reflect the increased risk associated with lending.
Following the subprime crisis and the curtailment of
securitisation, the joint venture in Quince Capital with
PSG was reversed on 31 May
2008. Limited funds of R700 million were raised by securitising
a portion of the book and Reunert used its balance sheet
to provide the
additional funding to finance the balance of the book.
This is a temporary measure and action is under way to
obtain external funding
in due course.
Nashua Mobile had a strong year in business
volume with revenue up by 15%, while operating profit
increased by 8%. The increase in
churn is a major concern, especially since it is mostly
debt related. Average revenue per user is still at an
industry high increasing from
R443 to R472 per user per month. Going forward the focus
is on retaining quality customers.
Nashua Electronics, distributing mainly Panasonic
products, had a tough year. The range of consumer electronic products
is not price
competitive in the South African market, especially when
compounded by a tightening in consumer spending. Firm
management ensured
a breakeven position which is a commendable performance
in that industry. However, the business model needs to
be improved. |
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| REUTECH |
Reutech met expectations
contributing R137 million to operating profits. Precision
products, with its range of Fuchs fuzes, in
particular did well and secured orders stretching well
into the 2010 financial year. The communications business
with its VHF/UHF radios
continues to benefit from long standing local and international
relationships. Exports are brisk and will continue to
grow.
The Department of Communication is in the process of
converting the country’s analogue television broadcasting
to the digital format.
The radar systems business
in Stellenbosch has developed a set-top-box product and
production has started. We are confident that
we will participate in the migration to digital television
broadcasting with the market conservatively valued at
R7 billion spread over a
four to five year period. The mining surveillance radar
systems gained a strong foothold in most of the major
mining groups – locally
as well as overseas.
Our defence arm is strong, well positioned in focused
areas and engaged in long-term development programs that
will ensure future
revenue streams. The percentage contribution from this
division to Reunert is expected to grow. |
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| INVESTMENTS |
NSN remains the dominant supplier
of telecommunications network infrastructure in southern
Africa. Revenue was flat in line with the
previous year. Market shares remained high and unchanged.
Commission income derived from revenue is included in
operating profit.
Sales are expected to remain high as Vodacom, Telkom
and Neotel upgrade or expand their networks. NSN products
are world class and
in demand, boding well for future revenue streams.
|
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| DIRECTORATE |
We are pleased to welcome Messrs Thabang
Motsohi and Trevor Munday who joined the board as independent
non-executive directors
on 1 June 2008.
|
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| PROSPECTS |
The global financial crisis has placed
a premium on strong cash flows and liquidity. Lower levels
of economic activity are expected in a
deteriorating global and domestic macro-economic environment.
Although South Africa has so far been relatively sheltered
from the
worldwide turmoil, inflation is well above target levels,
and interest rates are at a level last seen in the nineties.
Given this environment, it is difficult to predict with
any certainty what the impact will be in the 2009 financial
year. Dividend cover has
been increased and may well have to be further increased
in the future given the uncertain economic and liquidity
landscape. |
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REVIEWED RESULTS
|
The above results have been reviewed
by the group auditors, Deloitte & Touche, and a copy
of their unmodified review report is available
for inspection at the company’s registered office.
|
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| CASH DIVIDEND |
| Notice is hereby given that a final
cash dividend, number 165, of 241 cents per share (2007:
241 cents per share) has been declared by the directors
for the year ended 30 September 2008. In compliance with
the requirements of Strate, the following dates are applicable: |
Last date to trade (cum dividend)
First date of trading (ex dividend)
Record date
Payment date |
|
Friday, 9 January 2009
Monday, 12 January 2009
Friday, 16 January 2009
Monday, 19 January 2009 |
|
| Shareholders may not dematerialise
or rematerialise their share certificates between Monday,
12 January 2009 and Friday, 16 January
2009, both days inclusive. |
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| On behalf of the board |
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Martin Shaw
Chairman |
|
Gerrit Pretorius
Chief Executive |
|
Sandton
24 November 2008 |
|
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Directors: M
J Shaw (Chairman) *, G Pretorius (Chief Executive), B
P Connellan *, K S Fuller *,
B P Gallagher, S D Jagoe*,
K J Makwetla*,
T J Motsohi*, T S Munday*, G J Oosthuizen, N D Orleyn**,
D J Rawlinson, Dr J C van der Horst *
*Independent non-executive
**Non-executive
Registered office: Lincoln
Wood Office Park, 6 - 10 Woodlands Drive, Woodmead, Sandton.
PO Box
784391, Sandton, 2146. Telephone +27 11 517 9000
Transfer secretaries: Computershare Investor Services
(Pty) Limited, 70 Marshall Street, Johannesburg, 2001.
P O Box 61051, Marshalltown, 2107
Sponsor: Rand Merchant Bank (A division
of FirstRand Bank Limited),
Secretaries’ certification: In terms
of Section 268 G(d) of the Companies Act, 61 of 1973, as amended,
I certify that, to the best of my knowledge and belief, the company
has lodged with the Registrar of Companies for the year ended 30
September 2008 all such returns as are required by a public company
in terms of the Companies Act and that all such returns are true,
correct and up to date.
J A F Simmonds
For Reunert Management Services Limited
Company Secretaries
Enquiries: Carina de Klerk
+27 11 517 9000 or e-mail invest@reunert.co.za. |
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| For more information log on to the
Reunert website www.reunert.com |
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