| Mon 19 Nov 2001, 0:00 | | Reunert Limited - Audited Results |
|
Reunert Limited
Audited results for the year ended 30 September 2001
Headline earnings per share +25%
Operating profit +38%
Group income statement
2001 2000 %
Notes R million R million change
Revenue 4 229,8 3 340,1 27
Operating profit 1 381,5 275,5 38
Net interest and
dividend income 2 59,1 58,8 1
Profit before
abnormal items 440,6 334,3 32
Abnormal items - 77,4
Profit before taxation 440,6 411,7
Taxation 145,6 114,0
Profit after taxation 295,0 297,7
Share of associate
companies' profits 2 81,8 73,8 11
Profit after tax including
associate companies 376,8 371,5
Earnings attributable to
outside shareholders
in subsidiaries 42,4 4,3
Earnings attributable
to ordinary shareholders
in Reunert Limited 334,4 367,2
Basic earnings per
share (cents) 4 174,4 180,3
Diluted earnings per
share (cents) 4 172,0 178,6
Headline earnings per
share (cents) 5 176,0 140,7 25
Diluted headline earnings
per share (cents) 5 173,6 139,4 25
Dividends per ordinary
share (cents) 91,0 76,0 20
Taxation rate excluding
abnormal items (%) 33,1 34,1
Operating profit as a %
of turnover 9,0 8,2
Note 1
Operating profit
Operating profit is stated
after charging:
- Cost of sales 3 036,6 2 432,4
- Other income (9,6) (25,0)
- Other expenses 777,5 620,5
- Depreciation 41,5 36,7
- Amortisation of goodwill 2,3 -
Note 2
Net interest and dividend income
Interest received 64,5 77,0
- from RC&C Finance Company 32,1 56,9
- external 32,4 20,1
Interest paid (13,1) (33,4)
Dividend income other than
from associates 7,7 15,2
Total 59,1 58,8
Dividend income from associates
included in share of
associate companies' profits 70,9 47,6
Note 3
Accounting policies
Reunert has adopted South African
Statements of Generally Accepted
Accounting Practice (SA GAAP)
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) Limited which was previously
equity accounted as an associate
company.
Had the new policies been used in
2000 the group's attributable
earnings and retained income would
not have been affected.
The group's accounting policies are
in accordance with SA GAAP and,
except for the above changes, are
consistent with those of the prior
year.
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)
334,4 367,2
The weighted average number of
shares in issue used to determine
basic earnings per share and
headline earnings per share
(millions of shares) 191,7 203,7
Adjusted by the dilutive effect
of unexercised share options
available to executives employed
in the group (millions of
shares) 2,7 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) 194,4 205,6
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 334,4 367,2
Capital profit on disposal
of businesses - (89,0)
Other (net) 3,0 8,3
Headline earnings 337,4 286,5
Note 6
RC&C Finance Company accounts
receivable
Collectable within one year 278,0 302,9
Collectable after one year 467,1 448,7
745,1 751,6
Segmental analysis
Revenue including associate companies
2001 2000 %
R million % R million % change
Electronics
Nashua Office
Automation 554,4 10 487,5 11 14
Nashua Mobile 1 445,8 27 771,0 17 88
Panasonic 853,3 16 840,0 19 2
Telecommunications 922,5 17 977,7 22 (6)
Reutech 399,7 8 422,2 9 (5)
Saco 36,2 1 52,5 1 (31)
Total Electronics 4 211,9 79 3 550,9 79 19
Electrical
Engineering and Cables
ATC 201,6 4 196,9 4 2
CBI 399,2 7 316,2 7 26
African Cables 406,2 8 294,7 7 38
Total Electrical
Engineering and
Cables 1 007,0 19 807,8 18 25
Financial Services 139,9 2 153,9 3 (9)
Total operations 5 358,8 100 4 512,6 100 19
Less: Reunert's
attributable portion
of associate companies'
revenue (1 129,0) 1 172,5)
Revenue as
reported 4 229,8 3 340,1 27
Operating profit including associate companies
2001 2000 %
R million % R million % change
Electronics
Nashua Office
Automation 63,9 12 42,7 11 50
Nashua Mobile 85,6 17 35,2 9 143
Panasonic 29,8 6 23,2 6 28
Telecommunications 102,7 20 88,6 22 16
Reutech 40,3 8 71,8 18 (44)
Saco 7,9 1 13,0 3 (39)
Total Electronics 330,2 64 274,5 69 20
Electrical Engineering
and Cables
ATC 32,5 6 30,1 7 8
CBI 74,1 15 55,3 14 34
African Cables 38,0 7 3,9 1 874
Total Electrical
Engineering
and Cables 144,6 28 89,3 22 62
Financial Services 40,0 8 35,5 9 13
Total operations 514,8 100 399,3 100 29
Less: Reunert's attributable portion
of associate companies'
operating profit 133,3) (123,8)
Operating profit
as reported 381,5 275,5 38
Group cash flow information
The abridged cash flow statement for the year ended 30 September 2001 is set
out below:
2001 2000
R million R million
Operating cash flows before working
capital changes 425,0 312,9
(Increase)/reduction in net working capital (55,4) 164,5
Reduction in RC&C Finance Company
accounts receivable 6,5 121,5
Other working capital changes (net) (61,9) 43,0
Cash generated from operations 369,6 477,4
Net interest and dividends received
(including associates) 130,0 106,4
Taxation paid (133,0) (96,0)
Dividends paid (169,0) (127,4)
Net cash inflow from operating activities 197,6 360,4
Net asset additions (48,6) (19,9)
Other (net) 5,3 (21,5)
Net cash flows from operations 154,3 319,0
Reunert Limited shares purchased by
subsidiary (217,9) (16,7)
Other acquisitions (43,5) (61,2)
Net proceeds on disposal of non-core
operations, other assets and related
working capital - 154,5
Net (decrease)/increase in cash and
cash equivalents (107,1) 395,6
Net cash and cash equivalents at beginning
of the year 72,8 (322,8)
Net (borrowings)/cash equivalents at end
of the year (34,3) 72,8
Net cash resources of the group excluding RC&C
Finance Company borrowings
- Deposit on call with RC&C Finance Company 294,8 483,4
- Other cash reserves 289,7 220,0
584,5 703,4
RC&C Finance Company borrowings (618,8) (630,6)
Net (borrowings)/cash equivalents at end
of the year (34,3) 72,8
The deposits on call with RC&C Finance
Company are repayable on demand, RC&C
Finance Company has long-term banking
facilities which can be utilised to
replace these funds.
Group balance sheet
The consolidated balance sheet at 30 September 2001 is set out below:
2001 2000
Notes R million R million
Non-current assets
Fixed assets 185,2 175,3
Goodwill 10,9 -
Investments - at cost and
directors' valuation 188,4 176,4
RC&C Finance Company accounts
Receivable 6 745,1 751,6
Deferred taxation assets 42,0 22,6
1 171,6 1 125,9
Current assets
Inventory and contracts in progress 496,5 417,0
Accounts receivable 595,9 528,0
Cash and cash equivalents (net) 584,5 703,4
1 676,9 1 648,4
Total assets 2 848,5 2 774,3
Shareholders' funds
Ordinary 993,8 826,7
Reunert Limited shares bought by
a subsidiary (234,6) (16,7)
Preference 0,7 0,7
759,9 810,7
Outside shareholders in subsidiaries 122,0 99,2
881,9 909,9
Non-current liabilities
Deferred taxation liabilities 48,6 31,3
Long-term borrowings 2,7 4,1
51,3 35,4
Current liabilities
RC&C Finance Company short-term
borrowings 618,8 630,6
Accounts payable, provisions, taxation
and shareholders for normal dividend 1 296,5 1 198,4
1 915,3 1 829,0
Total equity and liabilities 2 848,5 2 774,3
Supplementary information
R million (unless otherwise stated)
Net asset value per share (cents) 406 400
Current ratio including short-term portion
of RC&C Finance
Company accounts receivable (:1) 1,3 1,2
186,9 202,5
Number of ordinary shares in issue
(million) 204,1 204,0
Less: held by subsidiary (17,2) (1,5)
Capital expenditure 52,8 22,3
- expansion 32,4 10,3
- replacement 20,4 12,0
Capital commitments 20,7 20,4
- contracted 3,3 8,5
- authorised not yet contracted 17,4 11,9
Commitments in respect of operating leases 82,5 46,5
Contingent liabilities 0,3 1,4
Guarantees on behalf of third parties - 1,0
Other 0,3 0,4
Group Statement of changes in equity
The consolidated statement of changes in equity at 30 September 2001
is set out below:
2001 2000
R million R million
Balance at beginning of year 810,7 674,4
Net profit for the year 334,4 367,2
Dividends declared (168,3) (158,3)
Goodwill written off* - (83,4)
Shares issued in terms of the Reunert
Share Option Scheme 0,4 27,4
Reunert Limited shares bought by
subsidiary (217,9) (16,7)
Translation reserve movement during
the year 0,6 0,1
Balance at end of the year 759,9 810,7
* With effect from 1 October 2000 the policy relating to goodwill was
changed to conform to AC 131 on Business Combinations. Goodwill is now
capitalised and amortised. The cost of amortisation is included in the net
profit for 2001.
REVIEW OF RESULTS
Reunert has produced strong results for the financial year ending 30
September 2001. Turnover grew by 27%, while improved margins and cost
control led to an increase in operating profit of 38%.
Headline earnings per share increased by 25% to 176 cents per share and the
dividend by 20% to 91 cents per share. Since the commencement of the share
buyback in July 2000, the group has repurchased a total of 17,2 million
shares at a cost of R235 million. The average price paid was R13,67,
inclusive of all costs.
REVIEW OF OPERATIONS
Electronics
Nashua office automation had a good year with strong growth in earnings. The
Nashua name continues to be recognised as one of the premier brands in the
country based on its products and service delivery.
The successful merger of Nashua Cellular and NedTel Cellular into Nashua
Mobile led to 15% growth in market share in an increasingly competitive
industry. It has established itself as the leading independent contract
service provider to corporate South Africa. The large increase in revenue
and operating profit reflected in the segmental analysis is due to the
merger that took place in July 2000.
Panasonic continues to improve with a 28% increase in profit on a 2%
increase in turnover. This was partially due to improved asset management
and tighter government control on the unlawful importation of goods by third
parties.
RC&C Finance Company has been consolidated for the first full year. This has
resulted in an apparent increase in the group's gearing; however, all
borrowings are more than adequately covered by amounts payable to the
finance company. The company has direct long-term banking facilities in
place to cover its borrowings.
The remainder of the electronics group experienced a drop in turnover, but
profits remained at the same level as the previous year. The selection of
Siemens Telecommunications to supply the Cell C infrastructure and the Eskom
Enterprises fibre optic network for the second fixed-line operator confirms
its position as the leading telecommunications network supplier in Southern
Africa.
Reutech had a difficult year with turnover declining by 5% and operating
profits by 44% due to a drop in customer orders. We are, however, confident
that order books will be restored to acceptable levels, although this might
only happen in the 2003 financial year.
Electrical engineering and cables
Circuit Breaker Industries' (CBI) turnover increased by 26%, with export
growth of 48%. Several acquisitions broadened the company's product offering
providing a strong base for future growth.
The telecommunications cable market was difficult with the downturn in
international spend impacting on fibre optic sales. The slump is expected to
be temporary and ATC, which is expanding its capacity to one-million fibre
kilometres, will be well positioned to take advantage of the upturn
anticipated for 2003.
African Cables had a good year with revenue improving by 38%. Due to
increased efficiencies, its operating margin increased almost tenfold from
R3,9 million to R38 million. The scope for further improvements is limited.
PROSPECTS
Focused investment in market and product development will continue in key
areas such as the Nashua operations and CBI. Reunert will increasingly
concentrate on the lucrative export markets as it already enjoys high local
market shares in most of its businesses.
Real growth is expected to continue in the 2002 financial year, albeit at a
lower level than that achieved in the year under review.
DIVIDEND
Notice is hereby given that a final dividend No 151 of 67 cents per share
(2000: 56 cents per share) has been declared for the year ended 30 September
2001.
In compliance with the requirements of Strate, the following dates are
applicable:
Last date to trade (cum dividend) Friday, 18 January 2002
Last date to register transfers of certificated
securities (cum dividend) Friday, 18 January 2002
First date of trading (ex dividend) Monday, 21 January 2002
Record date Friday, 25 January 2002
Payment date Monday, 28 January 2002
On the payment date, dividends due to holders of certificated securities
will either be electronically transferred to shareholders' bank accounts or,
in the absence of suitable mandates, dividend cheques will be posted to such
shareholders.
Share certificates may not be dematerialised or rematerialised between
Monday, 14 January 2002, and Friday, 25 January 2002, both dates inclusive.
On behalf of the board
Derek Cooper Gerrit Pretorius
Chairman Chief Executive
Sandton
19 November 2001
Sponsor
Rand Merchant Bank
Share transfer secretaries
Mercantile Registrars Limited, 8th Floor, First National House,
11 Diagonal Street, Johannesburg, 2001
Company secretary
Reunert Management Services (Pty) Limited
Reunert Limited
Incorporated in the Republic of South Africa (Reg No 1913/004355/06)
Share code: RLO ISIN code: ZAE000005914
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, M J Shaw*, C L Valkin*, Dr J C
van der Horst* *Non-executive
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
