Reunert has had a good year with headline earnings per
share and ordinary dividends per share increasing by 35%. Cash and cash equivalents
increased to R958 million at the financial year-end. A special dividend of R2.50 per
share, or R510 million, which is in essence a return of capital, was paid in October 1999
leaving the group with sufficient resources to fund both internal and acquisition growth.
The strategic redirection of the group has progressed well and the group is now clearly
focused on electronics and low voltage electrical engineering. Telephone Manufacturers of
South Africa and Reumech's military vehicle business were disposed of for R265 million. A
number of other smaller non-core operations were either closed or disposed of during the
year. As a result of management emphasis being placed on improving margins, operating
profit from continuing operations increased by 32% to R248 million despite turnover growth
of 3%.
Operations
Electronics had a particularly good year despite a lower contribution from Sietel, which
was negatively affected by greatly reduced spending by Telkom. Nashua continues to grow
and produced good results. Reutech's results were pleasing, with strong export orders.
Panasonic's consumer business performed well in a difficult market increasing both market
share and margins. Electrical Engineering and Cables had a difficult year. Telkom orders
were considerably reduced in the second half of the year resulting in a lower off-take of
optical fibre cable. The power cable market suffered from oversupply and a drop in demand
from municipalities, Eskom and the mining industry. Good growth in exports at CBI failed
to compensate for the continued weak demand in the local market. Alstom showed good
turnover growth mainly due to acquisitions, but at reduced margins. Financial Services'
contribution increased mainly as a result of lower interest rates.
Post Balance Sheet
As announced, agreement has been reached whereby Alstom Holdings will purchase Reunert's
50% share of Alstom South Africa with effect from 1 October 1999, subject to approval by
the Competition Commission. This will hopefully be obtained before the calendar year end.
Consequently the effect of the sale of Alstom has not been reflected in the financial
information set out in this statement. The sale price of R225 million will realise a
surplus of R105 million over net asset value.
Pprospects
The changes in the group, coupled with an anticipated stronger economy, will further
enhance prospects. Real growth is forecast in headline earnings per share after adjusting
for the interest earned for 1999 on the capital of R510 million utilised in paying the
once-off special dividend of R2.50 per share on 29 October 1999. This interest is the
equivalent of 29 cents per share in 1999.
Year 2000 Compliance
The group has formal action plans in place to address year 2000 compliance issues. All
critical business procedures were modified and tested by July 1999. Other than the
inherent uncertainties in any year 2000 situation and the involvement of third parties,
management does not anticipate any significant problems arising from the advent of year
2000.
Annual Report
The annual report will be mailed to shareholders on or about 9 December 1999.
Dividends
Notice is hereby given that a final dividend No 147 of 40 cents per share has been
declared by the directors in respect of the results for the year ended 30 September 1999.
The dividend is payable to ordinary shareholders registered in the books of the company at
the close of business on 3 December 1999. Payment will be made in South African currency
on or about 28 January 2000. The transfer and share registers will be closed from 6
December 1999 to 17 December 1999, both days inclusive. On behalf of the board
16 November 1999
Directors
D E Cooper (Chairman), G Pretorius (Chief Executive), B P Connellan, P T W Curtis, B P
Gallagher, G J Oosthuizen, D J Rawlinson, C C Schabort, Dr J C van der Horst, M A E Wilson
Registered Office
Lincoln Wood Office Park, 6 - 10 Woodlands Drive,
Woodmead, Sandton PO Box 784391, Sandton, 2146,
Telephone (011) 804-5888
Transfer Office
Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
