| Wed 18 Nov 2009, 7:05 | | RLO - Reunert Limited - Audited results for the year ended 30 September 2009 and |
|
RLO
RLO
RLO - Reunert Limited - Audited results for the year ended 30 September 2009 and
cash dividend declaration
REUNERT LIMITED
Incorporated in the Republic of South Africa
Registration number 1913/004355/06
Share Code: RLO
ISIN Code: ZAE000057428
("Reunert", "the group" and "the Company")
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2009 AND CASH DIVIDEND
DECLARATION
Condensed group income statement
For the year ended 30 September
2009 2008
R million R million %
Notes (Audited) (Audited) change
Revenue 1 10 270,8 10 921,1 (6)
Earnings before interest, 1 200,3 1 488,7 (19)
tax, depreciation,
amortisation, other income
and dividends
Other income 1 36,5 172,0
Earnings before interest, 1 1 236,8 1 660,7 (26)
tax, depreciation and
amortisation (EBITDA)
Depreciation and 96,4 86,6 11
amortisation
Operating profit 1 140,4 1 574,1 (28)
Net interest and dividend 2 108,2 60,3 79
income
Abnormal items 3 299,2 -
Profit before taxation 1 547,8 1 634,4 (5)
Taxation 374,3 486,8 (23)
Profit after taxation 1 173,5 1 147,6
Share of associate - 16,1
companies` profits
Profit for the year 1 173,5 1 163,7 1
Profit for the year
attributable to:
Minority interests 9,0 7,1 27
Equity holders of Reunert 1 164,5 1 156,6 1
Limited
1 173,5 1 163,7
Basic earnings per share 4 & 5 652,4 650,1 -
(cents)
Diluted earnings per share 4 & 5 646,9 646,9 -
(cents)
Headline earnings per 4 & 5 651,6 651,9 -
share (cents)
Diluted headline earnings 4 & 5 646,2 648,7 -
per share (cents)
Normalised headline 4 & 5 499,5 630,1 (21)
earnings per share (cents)
Normalised diluted 4 & 5 495,3 626,9 (21)
headline earnings per
share (cents)
Cash dividend per ordinary
share declared in respect
of the year (cents) 253,0 319,0 (21)
Taxation rate 24,2 29,8 19
EBITDA as a % of revenue 12,0 15,2 (21)
Condensed group statement of changes in equity
For the year ended 30 September
2009 2008
R million R million
(Audited) (Audited)
Share capital and premium
Balance at the beginning of the year 106,9 90,8
Issue of shares 9,1 16,1
Balance at the end of the year 116,0 106,9
Share-based payment reserve
Balance at the beginning of the year 664,3 649,9
Share-based payment expense and 15,3 14,4
deferred tax there on
Balance at the end of the year 679,6 664,3
Fair value adjustment reserve*
Balance at the beginning of the year 621,1 -
Arising on fair valuation of (321,9) 660,3
financial instruments
Deferred taxation on fair value 39,2 (39,2)
loss/(gain)
Balance at the end of the year 338,4 621,1
Equity transaction with BEE partner
Balance at the beginning of the year (35,3) -
Purchase of a portion of BEE - (35,3)
partner`s interest in a subsidiary
not previously recognised as a
minority
Balance at the end of the year (35,3) (35,3)
Treasury shares (276,1) (276,1)
Non-distributable reserves
Balance at the beginning of the year 4,1 7,3
Foreign currency translation reserve (0,9) 0,7
Reunert`s share of previously equity- - (3,9)
accounted associate`s actuarially
valued surplus of medical aid
provision**
Transfer from retained earnings 8,7 -
Balance at the end of the year 11,9 4,1
Retained earnings
Balance at the beginning of the year 2 590,4 1 997,1
Profit for the year 1 164,5 1 156,6
Reunert`s share of previously equity- - 3,9
accounted associate`s actuarially
valued surplus of medical aid
provision transferred from non-
distributable reserves**
Transferred to non-distributable
reserves (8,7) -
Cash dividends declared and paid (546,3) (567,2)
Balance at the end of the year 3 199,9 2 590,4
Equity attributable to equity holders 4 034,4 3 675,4
of Reunert Limited
Minority interest
Balance at the beginning of the year 20,7 14,4
Profit for the year 9,0 7,1
Dividends declared and paid (4,0) (1,8)
Minority interest introduced 1,0 1,0
Balance at the end of the year 26,7 20,7
Total equity at the end of the year 4 061,1 3 696,1
*This reserve relates to fair value adjustments on financial assets classified
as "available-for-sale" financial assets in terms of IAS 39.
**Since Reunert`s investment in NSN is no longer equity-accounted this reserve
has been transferred to retained earnings.
Supplementary information
For the year ended 30 September
2009 2008
R million (unless otherwise stated) (Audited) (Audited)
Net worth per share (cents) 2 258 2 060
Current ratio (including RCCF) (:1) 1,7 1,5
Current ratio (excluding RCCF) (:1) 2,3 2,0
Net number of ordinary shares in issue 178,7 178,4
(million)
Number of ordinary shares in issue 197,2 196,9
(million)
Less: Held by Bargenel Investments Limited (18,5) (18,5)
(million)
Capital expenditure 87,1 117,1
- expansion 34,7 72,8
- replacement 52,4 44,3
Capital commitments in respect of property, 56,5 74,2
plant and equipment
- contracted 17,9 9,0
- authorised not yet contracted 38,6 65,2
Commitments in respect of operating leases 91,2 90,9
Condensed group balance sheet
As at 30 September
2009 2008
R million R million
Notes (Audited) (Audited)
Non-current assets
Property, plant and equipment and 587,9 591,3
intangible assets
Goodwill 6 460,6 415,3
Investments and loans 7 853,9 865,3
RCCF accounts receivable 993,6 1 274,8
Deferred taxation 29,1 32,0
2 925,1 3 178,7
Current assets
Inventory and contracts in progress 696,2 979,7
Accounts receivable and derivative 1 665,7 1 935,3
assets
RCCF accounts receivable 709,7 682,2
Non-current assets held for sale - 23,1
Cash and cash equivalents 1 603,1 794,6
RCCF bank balances and cash 97,6 82,0
4 772,3 4 496,9
Total assets 7 697,4 7 675,6
Equity attributable to equity
holders of Reunert Limited
Ordinary 4 033,7 3 674,7
Preference 0,7 0,7
4 034,4 3 675,4
Minority interest 26,7 20,7
Total equity 4 061,1 3 696,1
Non-current liabilities
Deferred taxation 140,3 208,2
Long-term borrowings 8 11,0 12,8
RCCF long-term borrowings 8 699,9 699,9
851,2 920,9
Current liabilities
Accounts payable, derivative 1 769,7 1 880,6
liabilities, provisions and taxation
RCCF bank borrowings 1 012,3 1 164,4
Bank overdrafts and short-term 3,1 13,6
portion of long-term borrowings
(including finance leases)
2 785,1 3 058,6
Total equity and liabilities 7 697,4 7 675,6
Condensed group cash flow statement
For the year ended 30 September
2009 2008
R million R million
(Audited) (Audited)
EBITDA 1 236,8 1 660,7
Decrease/(increase) in net working 757,4 (327,7)
capital
Decrease/(increase) in net working 513,9 (295,2)
capital (excluding RCCF)
Decrease/(increase) in RCCF accounts 243,5 (32,5)
receivable
Other (net) 42,6 17,9
Cash generated from operations 2 036,8 1 350,9
Net interest and dividend income 108,2 147,2
(including associates)
Taxation paid (477,5) (410,8)
Dividends paid (including to minorities) (550,3) (569,0)
Net cash flows from operating activities 1 117,2 518,3
Net cash flows from investing activities (130,8) (921,3)
Net cash flows from financing activities 2,5 (380,3)
Increase/(decrease) in net cash resources 988,9 (783,3)
Net (borrowings)/cash resources at the (300,5) 482,8
beginning of the year
Net cash/(borrowings) resources at the 688,4 (300,5)
end of the year
Cash and cash equivalents 1 603,1 794,6
Bank overdrafts - (12,7)
Net cash resources excluding RCCF 1 603,1 781,9
(914,7) (1 082,4)
RCCF bank balances and cash 97,6 82,0
RCCF short-term borrowings (1 012,3) (1 164,4)
Net cash/(borrowings) resources including 688,4 (300,5)
RCCF net borrowings at the end of the
year
Condensed segmental analysis
For the year ended 30 September
2009 2008
R million % R million % %
(Audited) (Audited) change
Revenue*
CBI-electric 2 952,2 29 3 951,9 36 (25)
Nashua 6 364,9 62 6 445,2 58 (1)
Reutech 873,7 9 622,3 6 40
Total operations 10 190,8 100 11 019,4 100 (8)
NSN** 80,0 -
Less: Reunert`s - (98,3)
attributable portion
of associate
companies` revenue
Revenue as reported 10 270,8 10 921,1 (6)
*Inter-segment revenue is immaterial and has not been disclosed.
**Revenue in the current year includes dividends in lieu of
commission income received attributable to the investment in NSN
(refer to notes 1 and 7). In 2008 this was disclosed as other
income.
Operating profit
CBI-electric 393,3 36 675,3 46 (42)
Nashua 480,8 44 654,3 45 (27)
Reutech 212,0 20 136,9 9 55
Total operations 1 086,1 100 1 466,5 100 (26)
NSN* 54,3 139,0 (61)
Less: Reunert`s - (31,4)
attributable portion
of associate
companies` net
operating profit
Operating profit as 1 140,4 1 574,1 (28)
reported
*Operating profit of NSN represents commission income and dividends in lieu
of commission income (refer to notes 1 and 7). On a comparative basis the
2009 operating profit amounts to
R96,5 million.
Notes
2009 2008
R million R million
(Audited) (Audited)
Note 1
Other income and EBITDA
EBITDA is stated after:
- Cost of sales 7 585,4 7 915,4
- Other expenses excluding depreciation and 1 518,2 1 559,8
amortisation
- Other income 36,5 172,0
Commission income* - 139,0
Other 36,5 33,0
- Realised profit on foreign exchange and 37,9 20,6
derivative instruments
- Unrealised (loss)/profit on foreign (4,8) 22,2
exchange and derivative instruments
*In terms of the agreement governing the commission income (the
agreement) Nokia Siemens Networks SA (Pty) Limited (NSN) may pay a
dividend to Reunert in lieu of the commission owing to Reunert by
the Nokia Siemens Networks Group (NSN group).
With effect from 1 October 2008 all income earned in terms of the
agreement is included in revenue. Reunert received a dividend of
R80 million from NSN in the current year. R25,7 million of this
accrued in the 2008 financial year, while the balance of R54,3
million relates to the current financial year. On a comparative
basis the commission income would have amounted to R96,5 million
in the current year.
Note 2
Net interest and dividend income
Interest received 128,9 99,3
- From RC & C Finance Company (Pty) Ltd 69,8 20,7
(RCCF)
- External 59,1 78,6
Interest paid (21,1) (43,2)
Dividend income 0,4 4,2
Total 108,2 60,3
Note 3
Abnormal items
Gain on fair valuation of option in terms 299,2 -
of agreement with NSN
Taxation (37,4) -
Net abnormal items after taxation 261,8 -
Note 4
Number of shares used to calculate earnings
per share
Weighted average number of shares in issue 178,5 177,9
used to determine basic earnings, headline
earnings and normalised headline earnings
per share (millions of shares)
Adjusted by the dilutive effect of
unexercised share options granted
(millions of shares) 1,5 0,9
Weighted average number of shares used to 180,0 178,8
determine diluted basic, diluted headline,
and diluted normalised headline earnings
per share (millions of shares)
Note 5
5.1 Headline earnings
Profit attributable to equity holders of 1 164,5 1 156,6
Reunert (IAS 33 basic earnings)
Headline earnings are determined by
eliminating the effect of the following
items from attributable earnings:
Net surplus on dilution in and disposal of (1,3) (1,5)
business
Net loss on disposal of property, plant and 3,9 5,2
equipment and intangible assets
Taxation (3,9) (0,5)
Minority interest (0,1) -
Headline earnings 1 163,1 1 159,8
5.2 Normalised headline earnings
Headline earnings (refer to note 5.1) 1 163,1 1 159,8
Normalised headline earnings are determined
by eliminating the effect of the following
items from attributable headline earnings:
Fair value of option in terms of agreement (299,2) -
with NSN
Taxation effect 37,4 -
BEE share of headline earnings adjustments 0,3 (0,4)
901,6 1 159,4
Net economic interest in profit (10,0) (38,5)
attributable to BEE partners (refer to note
9)
Normalised headline earnings 891,6 1 120,9
Note 6
Goodwill
Carrying value at the beginning of the year 415,3 372,8
Acquisitions of businesses 44,5 137,1
Unamortised goodwill arising in a previous - (94,6)
period on a further acquisition of NSN now
transferred to investment in NSN (refer to
note 7)
Minor acquisitions in existing business and 0,8 -
subsidiaries
Carrying value at the end of the year 460,6 415,3
Note 7
Investments and loans
Loans - at cost 52,1 52,3
Other unlisted investments - at cost 8,3 7,0
Financial instrument - NSN option - at fair 299,2 -
value*
Financial instrument - investment in NSN - 494,3 806,0
at fair value**, made up as follows:
Carrying value of NSN at the beginning of 806,0 119,7
the year
Unamortised goodwill arising on a further
acquisition in a previous period
(refer to note 6) - 94,6
Pre- acquisition dividend received from NSN - (68,6)
Fair value adjustment (299,2) 660,3
Compensation received (12,5) -
Total carrying value 853,9 865,3
Directors` valuation of unlisted
investments
- Other unlisted investments (includes NSN
at R793,5 million)
(2008: R806,0 million) 801,8 813,0
*Reunert holds an option to sell its investment in NSN to the other
shareholders of NSN, similarly, the other shareholders of NSN may call on
Reunert to sell its shares in NSN. During the current year R12,5 million of
compensation, as defined in the agreement with NSN group, was received in
respect of a country, sales to whom ceased qualifying for commission. In terms
of the agreement any compensation received reduces the minimum and maximum
prices of the options. The minimum price of the put option is R793,5 million
(2008: R806 million) and the maximum price of the call option is R947,5 million
(2008: R960 million). The first time a sale may take place in terms of the
agreement is 31 December 2010.
**The fair value of the investment is the present value of the amount specified
in the shareholders` agreement with NSN group, together with discounted cash
flows of estimated future commissions.
Note 8
RCCF and other long-term borrowings
Total long-term borrowings (including finance 711,0 713,6
leases)
Less: Short-term portion (including finance (0,1) (0,9)
leases)
710,9 712,7
Made up of:
RCCF long-term borrowings 699,9 699,9
Other 11,0 12,8
710,9 712,7
Note 9
BEE transactions
Certain BEE transactions involving the disposal of equity interests have
not been recognised as minority interests because the significant risks and
rewards of ownership of the equity have not passed to the BEE partners under
International Financial Reporting Standards (IFRS).
Accordingly, their equity interests in subsidiaries have not been recognised
in the group income statement and balance sheet.
The effect of this has been to not recognise the following:
- Net economic interest in current year profit 10,0 38,5
that is attributable to BEE partners
- Balance sheet interest that is economically 115,0 95,3
attributable to BEE partners
Note 10
Basis of preparation
These condensed group financial statements have been prepared in terms of
IAS 34 - Interim Financial Reporting as well as in compliance with the
Companies Act (Act 61 of 1973) as amended ("Companies Act") and the Listings
Requirements of the JSE Limited.
The group`s accounting policies, as set out in the audited annual financial
statements for the year ended 30 September 2009, have been consistently applied,
except as detailed in note 1 in respect of income from the NSN group. These
accounting policies comply with IFRS.
Note 11
Unconsolidated subsidiary
The financial results of Cafca Limited, a subsidiary incorporated in Zimbabwe,
have not been consolidated in the group results as the directors believe there
is a lack of control as defined in IAS 27 - Consolidated and Separate Financial
Statements, and the amounts involved are not material to the group`s results.
Note 12
Major corporate activity
Acquisition of Blue Lake Investments
With effect from 1 October 2008 Nashua Mobile purchased 75% of the business of
Blue Lake Investments (Pty) Ltd (Blue Lake), which is involved in least cost
routing. The company was valued at R28 million. Nashua Mobile has provided
R21,0 million in loan finance and the non-controlling shareholder has provided
R7 million.
Acquisition of Nashua Franchise
With effect from 1 July 2009 Nashua Holdings has acquired a 60% share in
Santogyn (Pty) Ltd (Nashua Central). RCCF provided R43,4 million in loan
finance. Nashua Holdings contributed R3,0 million and the minority shareholders
R2,0 million of equity.
Nashua
Blue Lake Central Total
R million R million R million
Net assets acquired:
Property, plant and equipment - 1,4 1,4
Intangible assets 8,7 3,2 11,9
Goodwill 19,3 25,2 44,5
Inventory - 9,7 9,7
Accounts receivable - 14,3 14,3
Payables and provisions - (5,4) (5,4)
Shareholders` loan (7,0) - (7,0)
Cost of investment 21,0 48,4 69,4
Profit since acquisition 4,9 2,9 7,8
Revenue for the full year ended 25,5 133,1 158,6
30 September 2009 as though the
acquisition date had been 1
October 2008
Profit for the full year ended 4,9 14,7 19,6
30 September 2009 as though the
acquisition date had been 1
October 2008
Note 13
Related party transactions
The group entered into various transactions with related parties which occurred
under terms that are no more favourable than those arranged with independent
third parties.
Note 14
Events after balance sheet date
Reunert has concluded an agreement to acquire Siemens` remaining 60% stake in
Siemens Enterprise Communications (Pty) Ltd. Final approval by the Competition
Authorities was granted on 29 October 2009.
Note 15
Audit opinion
The consolidated financial statements for the year have been audited by
Deloitte & Touche and the accompanying unmodified audit report, as well as
their unmodified audit report on this set of condensed financial information,
is available for inspection at the Company`s registered office.
COMMENTARY
In a year marked by turbulence in global financial markets, revenue
and operating profit declined by 6% to R10,3 billion and 28% to R1,1
billion respectively. However, Reunert managed to improve its already strong
financial position with cash holdings, excluding RC&C Finance, at the end
of the period amounting to R1,6 billion reflecting effective management of
working capital.Headline earnings was unchanged at R1,2 billion while
normalised earnings declined by 21% to R892 million. The noncash,
mark-to-market accounting gain of an option that Reunert holds to sell
its 40% interest in the South African operation of Nokia Siemens Networks
mainly accounted for the difference.Reutech had a very good year. Fuelled by
exports at favourable exchange rates, revenue was up by 40% to R874 million
while operating profit increased by 55% to R212 million.Our radios, radars
and fuses are now supplied to many countries around the globe. The mining
surveillance radar, a safety product that we have developed, is being sold
or leased to most multinational mining companies in increasing numbers.
Although prospects are good there is a risk that orders may not be received
early enough for the full benefit to be realised in the new financial year.
Revenue and operating profit in the Nashua group, comprising Nashua, Nashua
Mobile, Nashua Electronics and RC&C Finance declined 1% to R6,4 billion and
27% to R481 million respectively.Nashua, the office automation business,
increased market share in a tough market. The strengthening rand,
necessitating price decreases, exerted pressure on revenue and margin.Nashua
Mobile, the cellular service provider business, continued to grow its base
of high value customers, although churn increased from 12,8% to 13,6%. Bad
debts as a percentage of revenue improved from 1,3% to 1,2%. During the year,
three new outlets were opened essentially completing our roll-out of
franchised stores.Nashua Electronics exited the consumer electronics business
after more than 40 years. The associated cost was in excess of R60 million.
The activities in business systems were retained as was the online shop. We
are confident that the restructured business, with estimated annual sales of
R450 million, will be profitable and capable of strong growth.RC&C Finance
had a poor year. Bad debts escalated and resulted in significantly reduced
earnings. Rates have been adjusted to reflect increased risk. Credit vetting
has been tightened, resulting in a steady decline in the book. In the new
year this business should be an improved contributor.Prospects for the
Nashua group are closely tied to the prosperity of the consumer. By
eliminating non-performing activities, the group is well positioned to
benefit from any uptick in the economy.CBI-electric, our electrical
engineering business, had a disappointing year. The low-voltage and
energy-cable businesses, with their direct exposure to infrastructure
development, experienced volume declines of up to 60%. The result was a
slump in revenue to R3,0 billion and operating profit to R393 million.Order
books remain low but appear to have stabilised. Extensive restructuring was
undertaken to size businesses appropriately. We continued our programme of
capital expenditure to improve plant efficiencies.The telecommunications
cable joint venture with Altron had a good year. Both revenue and operating
profit were up mainly due to increased demand for copper telecommunications
cable. Fibre demand was subdued.The medium-voltage business experienced
strong growth, albeit off a low base. Our offering of quality product,
coupled to short lead times and attractive pricing, is steadily gaining
market share.CBI-electric`s fortunes are linked to a recovery in global
commodity prices and a continuation of development of the local infrastructure.
We have sufficient capacity to supply what is needed and the ability to
react quickly to any change in demand.Our investment in Nokia Siemens
Networks in South Africa suffered a decline in revenue and profit. On a
comparable basis, Reunert`s attributable before tax earnings from NSN
decreased by 31% from R139,0 million to R97 million. Lack of demand and
competitive pressures, which are unlikely to abate, were the cause.
Directorate Mr TS Munday was appointed chairman with effect 1 June 2009.
We welcome Ms KW Mzondeki and Mr R van Rooyen who have joined the Reunert
board on 1 November 2009. Mr KS Fuller and Mr MJ Shaw have reached retirement
age and will retire at the forthcoming annual general meeting. Mr SD Jagoe
has indicated that he will resign at the next board meeting to pursue his
own consulting business overseas. We thank all three of them for their
valued contributions and wish them well in the future. Prospects Looking
forward, it is our view that the economy has stabilised, although we do
not expect any meaningful recovery in the short term. Actions taken to
adjust to the lower volumes of the past year should have a positive impact
on earnings.The forecast financial information has not been reviewed or
reported on by Reunert`s auditors.
CASH DIVIDEND
Notice is hereby given that a final cash dividend, number 167, of 188 cents
per share (2008: 241 cents per share) has been declared by the directors for
the year ended 30 September 2009. In compliance with the requirements of
Strate, the following dates are applicable:
Last date to trade (cum dividend) Friday, 15 January 2010
First date of trading (ex dividend) Monday, 18 January 2010
Record date Friday, 22 January 2010
Payment date Monday, 25 January 2010
Shareholders may not dematerialise or rematerialise their share certificates
between Monday, 18 January 2010 and Friday,
22 January 2010, both days inclusive.
On behalf of the board
Trevor Munday Gerrit Pretorius Sandton
Chairman Chief Executive 17 November 2009
Directors: T S Munday (Chairman)*, G Pretorius (Chief Executive), B P
Connellan*, K S Fuller*, B P Gallagher, S D Jagoe*,
K J Makwetla*, T J Motsohi*, K W Mzondeki*, G J Oosthuizen,
N D Orleyn**, D J Rawlinson, M J Shaw*, Dr J C van der Horst* and
R Van Rooyen*
*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, 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 2009 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
For more information log on to the Reunert website www.reunert.com
Date: 18/11/2009 07:05:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
