| Mon 14 May 2001, 0:00 | | Reunert Limited - Interim Results |
|
REUNERT LIMITED
Headline earnings per share +24%
Dividend per share 24 cents
Interim report
TO SHAREHOLDERS FOR THE SIX MONTHS ENDED 31 MARCH 2001
Group income statement
The results for the six months ended 31 March 2001 are set out below:
Six months ended Year ended
31 March 30 Sept
2001 2000 2000
R million R million % R million
Notes (Unaudited) (Unaudited) change (Audited)
Revenue 2 112,2 1 579,5 34 3 340,1
Operating profit 1 184,8 125,1 48 275 5
Net interest and
dividend income 2 33,5 32,4 3 58,8
Profit before abnormal
items 218,3 157,5 39 334,3
Abnormal items -
capital profit on
disposal of businesses - 89,2 77,4
Profit before taxation 218,3 246,7 411,7
Taxation 73,8 51,0 114,0
Profit after taxation 144,5 195,7 297,7
Share of associate
companies' profits 2 28,6 22,4 28 73,8
Profit after tax
including associate
companies 173,1 218,1 371,5
Earnings attributable
to outside shareholders
in subsidiaries 19,3 0,3 4,3
Earnings attributable
to ordinary shareholders
in Reunert Limited 153,8 217,8 367,2
Basic earnings per
share (cents) 4 78,4 106,9 (27) 180,3
Diluted earnings
per share (cents) 4 77,4 106,9 (28) 178,6
Headline earnings
per share (cents) 5 78,3 63,0 24 140,7
Diluted headline
earnings per share
(cents) 5 77,3 63,0 23 139,4
Dividend per ordinary
share (cents) 20,0 76,0
Taxation rate excluding
abnormal items (%) 33,8 32,4 34,1
Operating profit as
a % of turnover 8,7 7,9 8,2
Note 1
Operating profit
Operating profit is
stated after charging:
- Cost of sales 1 509,5 1 175,9 2 432,4
- Other income (13,4) (9,2) (25,0)
- Other expenses
excluding depreciation 408,1 270,5 620,4
- Depreciation 15,6 15,6 36,7
Note 2
Net interest and
dividend income
Interest received 36,8 39,2 77,0
- Finance Company 24,2 26,7 56,9
- External 12,6 12,5 20,1
Interest paid (7,1) (21,4) (33,4)
Dividend income other
than from associates 3,8 14,6 15,2
Total 33,5 32,4 58,8
Dividend income from
associates included in
share of associate
companies profits 22,8 5,7 47,6
Note 3
Accounting policy changes
Reunert has adopted South African statements of generally accepted
accounting practice which have become effective during the current financial
year. This has resulted in changes of accounting policies, requiring the
restatement of the comparative figures for 2000. The main change involves
the consolidation of RC&C Finance Company (Pty) Ltd ("Finance Company")
which was previously equity accounted as an associate company.
Had the new policies been used in 2000, the group's retained income would
not have been affected.
The effect of the change in policies has been to increase/(decrease) the
following:
Income statement
Turnover 82,8 156,0
Cost of sales 54,9 96,3
Operating profit 15,0 30,9
Taxation 5,6 11,7
Share of asoociate companies' profits (9,4) (19,2)
Earnings attributable to ordinary
shareholders in Reunert Limited - -
Balance sheet
Fixed assets 0,6 0,6
Investments (22,4) (13,0)
Finance Company accounts receivable 829,0 751,6
Accounts receivable - (19,9)
Deferred taxation liabilities 31,8 26,8
Accounts payable, provisions, taxation and
shareholders for normal dividend 53,5 61,9
Finance Company borrowings - Long-term 25,0 -
- Short-term 696,9 630,6
Note 4
Basic earnings per share and
diluted earnings per share
The earnings used to determine
both basic earnings per share
and diluted earnings per share
are the earnings attributable
to ordinary shareholders in
Reunert Limited (Rm) 153,8 217,8 367,2
The weighted average number of
shares in issue used to
determine basic earnings per
share and headline earnings
per share (millions of shares) 196,3 203,7 203,7
Adjusted by the dilutive effect
of unexercised share options
available to executives employed
in the group (millions of
shares) 2,6 - 1,9
Weighted average number of
shares used to determine
diluted earnings per share
and diluted headline earnings
per share (note 5) (millions
of shares) 198,9 203,7 205,6
Note 5
Headline earnings per share and
diluted headline earnings per
share
Headline earnings per share and
diluted headline earnings per
share have been calculated using
the weighted average number of
shares in issue as detailed in
note 4.
Headline earnings are determined
by eliminating the effect of
capital items in attributable
earnings as follows:
Earnings attributable to
ordinary shareholders 153,8 217,8 367,2
Capital profit on disposal of
businesses - (89,2) (89,0)
Other (net) (0,1) (0,2) 8,3
Headline earnings 153,7 128,4 20 286,5
Note 6
Finance Company accounts
receivable
Collectable within one year 312,8 309,5 292,0
Collectable after one year 435,4 519,5 459,6
748,2 829,0 751,6
Supplementary information
31 March 31 March 30 Sept
2001 2000 2000
R million (unless otherwise stated) (Unaudited) (Unaudited) (Audited)
Net asset value per share (cents) 378 430 400
Current ratio (:1) 1,3 1,6 1,4
187,4 204,0 202,5
Number of ordinary shares in issue
(million) 204,0 204,0 204,0
Less: Held by subsidiary (16,6) - (1,5)
Capital expenditure 18,6 22,6 22,5
- Expansion 4,7 18,1 10,3
- Replacement 13,9 4,5 12,2
Capital commitments 15,6 10,8 20,4
- Contracted 5,7 6,0 8,5
- Authorised not yet contracted 9,9 4,8 11,9
Commitments in respect of operating
leases 69,8 48,8 46,5
Contingent liabilities 0,3 10,1 1,4
- Guarantees on behalf of third
parties - 8,2 1,0
- Other 0,3 1,9 0,4
Group balance sheet
The consolidated balance sheet at 31 March 2001 is set out below:
31 March 31 March 30 Sept
2001 2000 2000
R million R million R million
Note (Unaudited) (Unaudited) (Audited)
Non-current assets
Fixed assets 177,8 172,0 175,3
Investments - at cost and
directors' valuation 179,4 156,6 176,4
Finance Company accounts
receivable 6 748,2 829,0 751,6
Deferred taxation assets 22,6 - 22,6
1 128,0 1 157,6 1 125,9
Current assets
Inventory and contracts in
progress 432,2 366,4 417,0
Accounts receivable 570,5 490,3 528,0
Cash and cash equivalents (net) 522,7 612,7 703,4
1 525,4 1 469,4 1 648,4
2 653,4 2 627,0 2 774,3
Shareholders' funds
Ordinary 933,6 876,4 826,7
Reunert Limited shares held by
a subsidiary (226,2) - (16,7)
Preference 0,7 0,7 0,7
708,1 877,1 810,7
Outside shareholders in
subsidiaries 113,3 81,7 99,2
821,4 958,8 909,9
Non-current liabilities
Deferred taxation liabilities 33,1 38,6 31,3
Long-term borrowings 2,7 25,0 4,1
35,8 63,6 35,4
Current liabilities
Finance Company short term
borrowings 636,6 696,9 630,6
Accounts payable, provisions,
taxation and shareholders
for normal dividend 1 159,6 907,7 1 198,4
1 796,2 1 604,6 1 829,0
Total equity and liabilities 2 653,4 2 627,0 2 774,3
Group cash flow information
The abridged cash flow statement for the six months ended 31 March 2001 is
set out below:
Six months ended Year ended
31 March 30 Sept
2001 2000 2000
R million R million R million
(Unaudited) (Unaudited) (Audited)
Operating cash flows before working
capital changes 202,2 141,3 312,9
Reduction in net working capital 7,7 57,3 164,5
Reduction in Finance Company accounts
receivable 3,4 44,1 121,5
Other working capital changes (net) 4,3 13,2 43,0
Cash generated from operations 209,9 198,6 477,4
Net interest and dividends received
(including associates) 56,3 38,1 106,4
Taxation paid (105,0) (67,1) (96,0)
Dividends paid (120,2) (86,6) (127,4)
Net cash inflow from operating
activities 41,0 83,0 360,4
Net fixed asset additions and other
acquisitions (18,5) (4,5) (80,9)
Reunert Limited shares purchased by
subsidiary (209,5) - (16,7)
Other (net) 0,3 5,5 (21,7)
Net cash flow from operations (186,7) 84,0 241,1
Net proceeds on disposal of non-core
operations, other assets
and related working capital - 154,6 154,5
Net (decrease)/increase in cash and
cash equivalents (186,7) 238,6 395,6
Net cash/(borrowings) equivalents at
beginning of the period 72,8 (322,8) (322,8)
Net (borrowings)/cash equivalents at
end of the period (113,9) (84,2) 72,8
Net cash resources of the group
excluding the Finance Company
borrowings
- Deposit on call with the Finance
Company 220,7 619,9 483,4
- Other 302,0 (7,2) 220,0
522,7 612,7 703,4
Finance Company borrowings (636,6) (696,9) (630,6)
Net (borrowings)/cash equivalents at
end of the period (113,9) (84,2) 72,8
The deposits on call with the Finance Company are repayable on demand. The
Finance Company has long-term banking facilities to replace these funds.
Group statement of changes in equity
The consolidated statement of changes in equity at 31 March 2001 is set out
below:
Six months ended Year ended
31 March 30 Sept
2001 2000 2000
R million R million R million
(Unaudited) (Unaudited) (Audited)
Balance at beginning of period as
previously reported 810,7 674,4 674,4
Net profit for the period 153,8 217,8 367,2
Dividends declared (46,9) (44,9) (158,3)
Goodwill written off - - (83,4)
Translation reserve movement during
period - 2,4 0,1
Shares issued in terms of the Reunert
Share Option Scheme - 27,4 27,4
Reunert Limited shares bought by
subsidiary (209,5) - (16,7)
Balance at end of period 708,1 877,1 810,7
Segmental analysis
Six months ended Year ended
31 Mach 30 Sept
2001 2000 2000
Revenue including R million R million % R million
associate companies (Unaudited) % (Unaudited) % change (Audited) %
Electronics
Nashua Office Automation 253,8 10 222,8 11 14 487,5 11
Panasonic 454,6 17 448,6 22 1 840,0 19
Cellular 674,2 26 309,3 15 118 771,0 17
Telecommunications 401,0 15 384,1 19 4 977,7 22
Reutech 253,2 10 216,1 10 17 422,2 9
Saco 24,4 1 16,2 1 51 52,5 1
Total electronics 2 061,2 79 1 597,1 78 29 3 550,9 79
Electrical engineering
and cables
ATC 95,3 4 87,5 4 9 196,9 4
CBI 183,6 7 150,6 7 22 316,2 7
African Cables 197,6 7 133,1 7 48 294,7 7
Total electrical
engineering
and cables 476,5 18 371,2 18 28 807,8 18
Financial services 70,8 3 82,8 4 (14) 153,9 3
Total operations 2 608,5 100 2 051,1 100 27 4 512,6 100
Less: Reunert's attributable
portion of associate
companies' revenue (496,3) (471,6) (1 172,5)
Revenue as reported 2 112,2 1 579,5 34 3 340,1
Operating profit including
associate companies
Electronics
Nashua Office
Automation 20,5 9 15,1 9 36 42,7 11
Panasonic 14,6 6 13,4 8 9 23,2 6
Cellular 34,9 15 13,6 9 157 35,2 9
Telecommunications 35,1 15 27,5 17 28 88,6 22
Reutech 44,9 19 38,6 24 16 71,8 18
Saco 6,1 2 1,7 1 259 13,0
Total electronics 156,1 66 109,9 68 42 274,5 69
Electrical engineering
and cables
ATC 16,0 7 9,6 6 67 30,1 7
CBI 30,3 13 23,4 14 30 55,3 14
African Cables 16,6 7 0,5 - 3 220 3,9 1
Total electrical engineering
and cables 62, 9 27 33,5 20 88 89,3 22
Financial services 16,9 7 18,8 12 (10) 35,5 9
Total operations 235,9 100 162,2 100 45 399,3 100
Less: Reunert's attributable
portion of associate companies'
operating profit (51,1) (37,1) (123,8)
Operating profit as
reported 184,8 125,1 48 275,5
REVIEW OF RESULTS
Turnover for the six months ended 31 March increased by 34%, with operating
profit growing by 48%. Operating margins increased from 7,9% to 8,7%,
reflecting an improvement in efficiencies. Headline earnings increased by
20% to R154 million. Headline earnings per share of 78 cents represents an
improvement of 24% over the previous period.
Since the commencement of the share buyback in July 2000, the Group has
repurchased a total of 16,6 million shares at a cost of R226 million. The
average price paid was R13,62, inclusive of all costs. The buyback
contributed 4 of the 24% improvement in earnings per share.
Due to the change in accounting policies referred to in note 3, the Finance
Company has now been consolidated.
REVIEW OF OPERATIONS
ELECTRONICS
The cellular businesses of Nashua and Nedcor were merged in July last year
and integration was substantially completed by February. The benefits
derived from this venture have exceeded original expectations.
Nashua is continuing to enhance its position as the leading supplier of
office automation equipment in South Africa and is enjoying increased market
share.
The environment for Panasonic continues to be difficult due to reduced
consumer demands.
Reutech had a good first half year. Performance is expected to slow down as
a result of the phasing of orders.
Telecommunications was influenced by the delays in the award of the third
cellular licence, as well as the continued deferment of capital expenditure
by Telkom. Exports partially compensated for this.
ELECTRICAL ENGINEERING AND CABLES
Circuit Breaker Industries had a strong first half, both in the domestic and
export markets. Growth in exports is expected to continue.
ATC is benefiting from strong international demand for optical fibre cable.
Capacity is being expanded to take advantage of the favourable international
market conditions. Demand for copper cable remains strong.
The very pleasing performance from African Cables is the result of
management effort, as well as a modest pick-up in demand. Further room for
improvement exists.
PROSPECTS
Growth in headline earnings per share for the year should equate to that
achieved in the first half.
DIVIDEND
Notice is hereby given that an interim dividend (No. 150) of 24c has been
declared by the directors. The dividend is payable to ordinary shareholders
registered in the books of the company on 1 June 2001. Payment will be made
in South African currency on or about 22 June 2001. The transfer and share
registers will be closed from 4 June 2001 to 15 June 2001, both dates
inclusive.
On behalf of the board
D E Cooper G Pretorius
Chairman Chief Executive Officer
11 May 2001
Hierdie verslag is ook in Afrikaans verkrygbaar.
Directors
D E Cooper (Chairman)*, G Pretorius (Chief Executive), B P Connellan*,
P T W Curtis*, B P Gallagher, S D Jagoe*, K J Makwetla*, G J Oosthuizen, D J
Rawlinson, C L Valkin*, Dr J C van der Horst*
*Non-executive
REUNERT LIMITED
Incorporated in the Republic of South Africa
Registration number 1913/004355/06
Registered office
Lincoln Wood Office Park
6 - 10 Woodlands Drive, Woodmead, Sandton
PO Box 784391, Sandton, 2146
Telephone (011) 517-9000
Transfer office
Mercantile Registrars Limited
11 Diagonal Street, Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
visit our website at
www.reunert.com
