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Reunert Limited - Unaudited Results For The Six Months Ended 31 March 2004
Release Date: 18/05/2004 07:00:03 Code(s): RLO
Reunert Limited - Unaudited results for the six months ended 31 March 2004
Reunert Limited
(Registration number 1913/004355/06)
ISIN: ZAE000005914
Share Code: RLO
("Reunert")
Unaudited results
for the six months ended 31 March 2004
Highlights
- Headline earnings per share up 20%
- Dividend up 25%
Group Income Statement by
Six months ended 31 March
Year
ended
30 Sept
2004 2003 2003
R million R million % R million
Notes (Unaudited) (Unaudited) change (Audited)
Revenue 3 011,9 3 047,5 (1) 6 103,9
Earnings before 390,4 380,5 3 712,3
interest, tax,
depreciation and
amortisation
(EBITDA)
Depreciation 25,7 22,1 16 58,4
Operating profit 364,7 358,4 2 653,9
before
amortisation of
goodwill
Amortisation of 25,2 25,1 - 46,2
goodwill
Operating profit 1 339,5 333,3 2 607,7
Net interest and 2 28,5 21,2 34 45,2
dividend income
Profit before 368,0 354,5 4 652,9
abnormal item
Abnormal item 3 20,3 - -
Profit before 388,3 354,5 10 652,9
taxation
Taxation 141,5 124,8 13 224,4
Profit after 246,8 229,7 7 428,5
taxation
Share of 33,1 (21,3) (82,6)
associate
companies"
profits/(losses)
Profit after tax 279,9 208,4 34 345,9
including
associate
companies
Earnings 23,9 16,4 46 50,5
attributable to
outside
shareholders in
subsidiaries
Earnings 256,0 192,0 33 295.4
attributable to
ordinary
shareholders in
Reunert Limited
Basic earnings 4 135,0 102,1 32 156,9
per share (cents)
Diluted basic 4 133,2 100,6 32 154,7
earnings per
share (cents)
Headline earnings 5 138,7 115,4 20 183,5
per share (cents)
Diluted headline 5 136,9 113,6 21 181,0
earnings per
share (cents)
Dividend per 40,0 32,0 25 120,0
ordinary share
proposed/declared
for the period
(cents)
Taxation rate 35,6 33,0 32,1
excluding
amortisation and
abnormal items
(%)
EBITDA as a % of 13,0 12,5 11,7
turnover
Note 1
Operating profit is stated after:
- Cost of sales 2 119,1 2 172,2 4 185,7
- Other income (28,1) (20,1) (14,6)
- Other expenses 530,5 514,9 1 220,5
excluding
depreciation and
amortisation
- Net (5,2) 7,4 44,5
(profit)/loss for
the period due to
the effect of
AC133 (included
in the three
categories above)
Note 2
Net interest and dividend income
Interest 25,8 37,2 95,1
received
- from RC&C 9,8 20,8 51,8
Finance Company
- external 16,0 16,4 43,3
Interest paid (8,7) (16,0) (50,1)
Dividend income 11,4 - 0,2
other than from
associates
Total 28,5 21,2 45,2
Note 3
Abnormal item
Profit on the 20,3 - -
sale of
properties
Taxation (1,4) - -
Total 18,9 - -
Note 4
Number of shares
used to
calculate
earnings per
share
Weighted average 189,6 188,0 188,3
number of shares
in issue used to
determine basic
earnings per
share and
headline
earnings per
share (millions
of shares)
Adjusted by the 2,5 2,9 2,6
dilutive effect
of unexercised
share options
granted to
certain group
employees
(millions of
shares)
Weighted average 192,1 190,9 190,9
number of shares
used to
determine
diluted earnings
per share and
diluted headline
earnings per
share (millions
of shares)
Note 5
Headline earnings
Headline
earnings are
determined by
eliminating the
effect of the
following items
in attributable
earnings:
Earnings 256,0 192,0 295,4
attributable to
ordinary
shareholders
Goodwill 25,2 25,1 50,3
Profit on the (18,9) - -
sale of
properties (note
3)
Other (net) 0,7 (0,2) (0,1)
Headline 263,0 216,9 345,6
earnings
Note 6
Goodwill
Carrying value 306,9 360,0 360,0
at the beginning
of the year
Add: 31,6 3,5 6,4
Acquisitions of
businesses,assoc
iates and
subsidiaries
Less: Adjustment (0,5) (7,2) (9,2)
to the purchase
price ofa
business
acquired in the
prior period
Less: (25,2) (25,1) (46,2)
Amortisation for
the period
Attributable to - - (4,1)
losses in
associate
Carrying value 312,8 331,2 306,9
at the end of
the period
Goodwill is
written off over
periods varying
between one and
ten years.
Note 7
Investments
At cost plus
equity accounted
earnings
excluding
goodwill
- Listed 15,5 - -
- Unlisted 54,9 80,2 20,8
At market 30,5 - -
valuation -
Listed
At directors" 541,9 520,0 520,0
valuation -
Unlisted
Note 8
RC&C Finance
Company accounts
receivable
Collectable 54,3 399,8 434,2
within one year
Collectable 181,9 715,0 785,8
after one year
236,2 1 114,8 1 220,0
Accounts receivable mainly consists of discounted deals that comprise the
present value of discounted rental agreements which are repayable over varying
periods up to a maximum of five years from the balance sheet date.
Note 9
Group cash
resources/borrow
ings
Total RC&C 44,5 1 014,6 1 088,0
Finance Company
borrowings at
end of period
per that
company"s
balance sheet
Less: Funded out - (158,7) (187,3)
of other Reunert
cash resources
(see below)
RC&C Finance 44,5 855,9 900,7
Company
borrowings at
end of the
period
RC&C Finance Company has total long-term banking facilities of R900 million. The
banks which have granted these facilities are contractually bound to provide
these on a long-term basis but they may give notice to run down these
facilities. Once notice has been given these facilities reduce to zero in line
with the reduction in the underlying rental debtors over a maximum of five
years.
Total Reunert 688,8 338,7 668,7
net cash
resources at end
of period
Less: Utilised - (158,7) (187,3)
to fund RC&C
Finance Company
(see above)
688,8 180,0 481,4
Note 10
Accounting policies
The group"s accounting policies are in accordance with South African Statements
of Generally Accepted Accounting Practice and are consistent with those of the
prior year. This report has been prepared in accordance with AC127 on interim
financial reporting.
Note 11
Major acquisition
In October 2003 the group acquired the shares in CS Holdings Limited held by
Getronics and Gensec. This amounted to 31,7% of the issued share capital of CS
Holdings. The price paid was R42,9 million including goodwill of R31,6 million.
Group Balance Sheet
at 31 March
at 30
Sept
2004 2003 2003
R million R million R million
Notes (Unaudited) (Unaudited) (Audited)
Non-current
assets
Property, plant 201,4 223,3 213,7
and equipment
Goodwill 6 312,8 331,2 306,9
Investments 7 70,4 80,2 20,8
RC&C Finance 8 236,2 1 114,8 1 220,0
Company accounts
receivable
Deferred taxation 32,6 25,9 33,1
assets
853,4 1 775,4 1 794,5
Current assets
Inventory and 442,6 640,2 531,8
contracts in
progress
Accounts 790,8 832,1 826,7
receivable and
derivative assets
Cash and cash 9 688,8 180,0 481,4
equivalents (net)
1 922,2 1 652,3 1 839,9
Total assets 2 775,6 3 427,7 3 634,4
Shareholders"
funds
Ordinary 1 490,2 1 345,1 1 390,4
Reunert Limited (234,6) (234,6) (234,6)
shares held by a
subsidiary
Preference 0,7 0,7 0,7
1 256,3 1 111,2 1 156,5
Outside 120,5 103,8 121,2
shareholders in
subsidiaries
1 376,8 1 215,0 1 277,7
Non-current
liabilities
Deferred taxation 60,3 46,3 63,8
liabilities
Current
liabilities
RC&C Finance 9 44,5 855,9 900,7
Company short-
term borrowings
Accounts payable, 1 294,0 1 310,5 1 392,2
derivative
liabilities,
provisions and
taxation
1 338,5 2 166,4 2 292,9
Total equity and 2 775,6 3 427,7 3 634,4
liabilities
Segmental analysis
Six months ended 31 March
Year
ended
30 Sept
2004 2003 2003
R million R million % R million
(Unaudited) % (Unaudited) % change (Audited)
Revenue
Electrical 667,1 19 692,6 18 (4) 1 367,7
Engineering
Electronics
Office 501,8 14 445,3 12 13 952,9
systems
Consumer 1 664,2 46 1 572,4 41 6 3 192,5
products and
services
Information 563,5 16 771,0 20 (27) 1 413,7
and
communication
technologies
Reutech 178,7 5 362,4 9 (51) 615,7
Total 2 908,2 81 3 151,1 82 (8) 6 174,8
Electronics
Total 3 575,3 100 3 843,7 100 (7) 7 542,5
operations
Less: (563,4) (796,2) (1 438,6)
Reunert"s
attributable
portion of
associate
companies"
revenue
Revenue as 3 011,9 3 047,5 (1) 6 103,9
reported
Operating
profit before
goodwill
amortisation
Electrical 114,1 27 92,9 26 23 195,2
Engineering
Electronics
Office 85,4 20 76,7 22 11 157,4
systems
Consumer 150,0 36 115,8 33 30 173,7
products and
services
Information 56,4 13 3,8 1 1 384 (64,6)
and
communication
technologies
Reutech 15,8 4 66,0 19 (76) 117,9
Total 307,6 73 262,3 74 17 384,4
Electronics
Total 421,7 100 355,2 100 19 579,6
operations
Reunert"s
attributable
portion of
associate
companies"
net
operating (57,0) 3,2 74,3
(profit)/loss
Operating 364,7 358,4 2 653,9
profit before
amortisation
of goodwill
as reported
Six months ended 31 March
Year ended
2004 2003 30 Sept 2003
R million R million R million
(Unaudited) (Unaudited) (Audited)
EBITDA 390,4 380,5 712,3
Decrease/(increase) in 1 064,9 (123,0) (59,3)
net working capital
Decrease/(increase) in 983,8 (160,9) (269,8)
RC&C Finance Company
accounts receivable
Decrease in other 81,1 37,9 210,5
working capital
Cash generated from 1 455,3 257,5 653,0
operations
Net interest and 28,5 21,2 45,2
dividends received
(including associates)
Taxation paid (198,7) (121,5) (178,7)
Dividends paid (191,9) (178,5) (258,4)
(including outside
shareholders)
Net cash 1 093,2 (21,3) 261,1
inflow/(outflow) from
operating activities
Fixed asset additions 7,0 (19,7) (40,3)
less disposal proceeds
Acquisitions of (47,4) (80,2) (61,3)
subsidiaries, businesses
and other investments
Other (net) 10,8 2,6 (21,5)
Net increase/(decrease) 1 063,6 (118,6) 138,0
in cash and cash
equivalents
Net borrowings at (419,3) (557,3) (557,3)
beginning of the period
Net cash and cash 644,3 (675,9) (419,3)
equivalents/(borrowings)
at end of the period
Cash resources of the
group
Cash and cash 688,8 180,0 481,4
equivalents (net)
Borrowings of the group
RC&C Finance Company (44,5) (855,9) (900,7)
short-term borrowings
Net cash and cash 644,3 (675,9) (419,3)
equivalents/(borrowings)
at end of the period
Group Statement of changes in equity
Six months ended 31 March
Year
ended
30 Sept
2004 2003 2003
R million R million R million
(Unaudited) (Unaudited) (Audited)
Balance at beginning of 1 156,5 1 071,1 1 071,1
year as previously
reported
Adjustment to opening - 6,7 6,7
accumulated profit due
to changes in
accounting policies
Net profit for the 256,0 192,0 295,4
period
Dividends paid (167,3) (166,0) (226,2)
Issue of shares in 11,9 7,4 11,0
terms of the share
option scheme
Other (0,8) - (1,5)
Balance at end of the 1 256,3 1 111,2 1 156,5
period
Supplementary information
Six months ended 31 March
Year ended
30 Sept
2004 2003 2003
R million (unless (Unaudited) (Unaudited) (Audited)
otherwise stated)
Net asset value per 660 589 612
share (cents)
including goodwill
Net asset value per 495 414 450
share (cents)
excluding goodwill
Current ratio
including short-term
portion of RC&C
Finance
Company accounts 1,5 1,7 1,6
receivable (:1)
Net number of 190,3 188,6 188,8
ordinary shares in
issue (million)
Number of ordinary 207,5 205,8 206,0
shares in issue
(million)
Less: Held by (17,2) (17,2) (17,2)
subsidiary (million)
Capital expenditure 20,7 20,0 44,6
- expansion 9,9 12,8 27,1
- replacement 10,8 7,2 17,5
Capital commitments 20,4 15,7 16,6
- contracted 10,3 2,1 16,2
- authorised not yet 10,1 13,6 0,4
contracted
Commitments in 39,4 80,2 81,4
respect of operating
leases
Contingent 3,7 0,2 3,7
liabilities
Comments
Headline earnings per share increased by 20% for the first six months mainly as
a result of the strong turnaround in profitability at Siemens
Telecommunications, ATC and Panasonic. Revenue did not reflect the higher
volumes in most areas of operations due to price decreases related to rand
strength. Efficiency gains led to higher operating margins in several
businesses. Strong cash flows for the period resulted in an increase in net
interest and dividend income in spite of the lower interest rates.
Review of operations
Electronics
Nashua and Nashua Mobile enjoyed continued growth and contributed strongly to
the group"s results. A large portion of RC & C Finance Company"s accounts
receivable book was sold at a profit in December 2003 resulting in a significant
reduction in that company"s rental debtors and borrowings.
Panasonic"s consumer electronics sales volumes grew strongly but declined in
value due to the strong rand. Better management of assets and currency risk
enabled this business to achieve improved levels of profitability.
As expected Reutech"s sales and profitability dropped significantly mainly due
to the cyclical decline in the orders. The strong rand also affected margins
negatively in the export dependent businesses.
Information and Communication Technologies
Siemens Telecommunications has made a welcome return to profitability. Turnover
declined largely due to rand strength. This business continues to enjoy a strong
position in the South African telecommunications industry.
Electrical Engineering
Circuit Breaker Industries and African Cables performed satisfactorily despite
the strong rand. ATC improved considerably during the period under review. It
achieved cash positive results at a time when demand for its products was
subdued.
CS Holdings Limited
No impairment has been raised on the investment in CS Holdings Limited as the
amount cannot be determined at this time. The matter should crystalise by year-
end and any impairment will be taken to account at that time.
Prospects
Siemens Telecommunications, Panasonic and ATC all traded at a loss during the
second half of the 2003 financial year. They have all made strong recoveries and
are expected to contribute positively. With the exception of Reutech, all the
other businesses are experiencing satisfactory trading conditions. The rate of
increase in Headline earnings per share in the second half is likely to be
higher than that achieved in the first half.
Dividend
Notice is hereby given that an interim dividend No 156 of 40 cents per share
(2003: 32 cents per share) has been declared by the directors for the half year
ended 31 March 2004. In compliance with the requirements of Strate, the
following dates are applicable:
Last date to trade (cum dividend) Friday, 18 June 2004
First date of trading (ex dividend) Monday, 21 June 2004
Record date Friday, 25 June 2004
Payment date Monday, 28 June 2004
Share certificates may not be dematerialised or rematerialised between Monday,
21 June 2004 and Friday, 25 June 2004, both dates inclusive.
On behalf of the board
Derek Cooper Gerrit Pretorius
Chairman Chief Executive
Sandton, 17 May 2004
Secretaries" certification
The company has lodged with the Registrar all such returns for the six months
ended 31 March 2004 as are required by a public company in terms of the
Companies Act.
RG Drakes
For Reunert Management Services Limited
Company Secretaries
Share transfer secretaries
Computershare Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Sponsor
Rand Merchant Bank
A division of FirstRand Limited, Corporate Finance
Die verslag is ook in Afrikaans beskikbaar.
Enquiries: Carina de Klerk +27 11 517 9000 or e-mail invest@reunert.co.za. For
background information on Reunert and a presentation on these results visit our
website at www.reunert.com
Reunert Limited
Incorporated in the Republic of South Africa (Reg No 1913/004355/06) Share
code: RLO ISIN code: ZAE000005914
Directors: DE Cooper (Chairman)*, G Pretorius (Chief Executive), BP Connellan*,
BP Gallagher, SD Jagoe*, KJ Makwetla*, GJ Oosthuizen, DJ Rawlinson, MJ Shaw*, Dr
JC 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
www.reunert.com
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