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E T T E R T O T H E
S H A R E H O L D E R S |
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Dear
Shareholder |
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It
is pleasing to report that Reunert has had a good
year increasing headline earnings per share by 25%
to 176 cents per share and the dividend payout by
20% to 91 cents. Reunert's strategy of focusing on
its core businesses, with the objective of
maximising returns to shareholders, has proved
successful.
Growth in Circuit Breaker Industries (CBI) and
Nashua was particularly strong. Acquisitions
enabled CBI to considerably broaden its product
range. In the field of low-voltage electrical
engineering, this company is now the undisputed
leader in South Africa. Exports remain a high
priority and, although good progress was achieved
during the year, further improvements will be
planned in the years ahead.
The acquisition of all the franchisee interests in
Nashua Cellular and the subsequent merger with
NedTel Cellular has proved to be highly
successful. |
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Derek
Cooper - chairman |
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The
expanded business has gained the necessary
critical mass to become the biggest independent
corporate contract service provider in South
Africa's cellular telephony industry. In order to
exploit the strong Nashua brand, Nashua NedTel
Communications has been renamed Nashua Mobile and
is well positioned to benefit from the recent
introduction of Cell C, the third cellular
telephony network operator. |
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Nashua
itself continues to focus on the office automation
business systems market and this has resulted in
strong gains in both margin and market share. The
ability to leverage off strong brands and a common
customer base positions these two independent, but
synergistic, businesses, for continuing strong
growth. |
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Our
telecommunications interests have enjoyed a
particularly good year. Siemens Telecommunications
(Sietel) was awarded the contract for the supply
to Cell C of its entire infrastructure.
Penetration into the markets of a number of
African countries continues, further entrenching
the dominance of Sietel throughout the continent. |
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"Reunert's
strategy of focusing on its core businesses, with
the objective of maximising returns to
shareholders has proved successful." |
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Eskom
Enterprises recently announced that Siemens would
be its technology partner in the rollout of its
national fibre optic communication backbone for
South Africa's second fixed-line
telecommunications network. |
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With
its stated objective of becoming less dependent on
defence, the group has continued transforming
itself into a leading South African electronics
and low-voltage electrical engineering enterprise.
Defence technology and services currently
contribute only 8% of profit before interest and
taxation, and this trend is expected to continue
in future. |
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Training
and development of all staff remains a high
priority. The Reunert College continues to provide
a bridging year between school and university for
historically disadvantaged students, with its
curriculum focusing on mathematics, science,
English and accounting. Since 1993, this bridging
initiative has enabled almost 500 students to
undertake tertiary education courses that may
otherwise not have been available to them. This
strong commitment to developing South Africa's
human capital is vital to the future socioeconomic
development of both the group and the country. |
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Reunert
is fully committed to the empowerment of
historically disadvantaged groups in order for
them to participate successfully in South Africa's
mainstream economy. To this end a further 20% of
Reunert Defence Logistics was sold to Kgorong
Investment Holdings. Kgorong now owns 30% of the
equity in this successful company. |
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We
remain committed to upholding the principles of
good corporate governance. The non-executive
directors are each uniquely qualified to
contribute to Reunert's growth and governance. Mr
Martin Shaw recently joined the board and I
welcome him. The board now has more non-executive
directors than executive directors. Apart from the
audit and remuneration committees, which consist
entirely of non-executive directors, greater
emphasis is being placed on risk management within
the group. |
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Should
the world economy fail to recover quickly from its
current deep recession, South Africa is likely to
be negatively affected. Signs of recession are
already apparent and this could inhibit growth in
the local economy. |
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I
am, however, confident that Reunert, with its
strong cash resources, is well positioned to take
advantage of any growth opportunities that may
present themselves. Growth in earnings is expected
to continue, although at a lower level than was
achieved in the last two financial years. |
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Our
continued success is in no small way dependent on
our dedicated staff and management team. I have
little doubt that they will, under the outstanding
leadership of Gerrit Pretorius, continue to meet
the demands of our shareholders as well as they
did during 2001. On your behalf I thank them. |
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I
also thank my fellow directors for their support
and contribution to the success of the group
during the year under review. I remain confident
about the future of both Reunert and South Africa
and look forward to another year of continuing
growth and business optimisation. |
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Yours
sincerely |
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Derek
Cooper
Chairman
Sandton
19
November 2001 |
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PS:
I am delighted to inform you that it has just come
to my attention that Reunert has acquired all the
shares held by Nedcor in Nashua Mobile in a deal
which valued the company at R630 million. |
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Reunert
now owns 95% of this company with the remainder
held by Metropolitan Life. The transaction is
earnings enhancing. |
