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| I N T E R I M R E S U L T S - 2 0 0 2 |
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TO SHAREHOLDERS FOR THE SIX MONTHS ENDED 31 MARCH 2002
- Headline earnings per share +30%
- Dividend per share 30 cents
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| GROUP INCOME STATEMENT |
|
|
Six months ended
31 March |
|
Year ended
30 Sept |
|
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|
|
|
|
Notes
|
2002
R million
(Unaudited) |
2001
R million
(Unaudited)(8) |
%
change |
2001
R million
(Audited)(8) |
|
| Revenue |
|
2 469.4 |
2 112.2 |
17 |
4 229.8 |
|
| Earnings before interest, tax, depreciation |
|
|
|
|
|
| and amortisation (EBITDA) |
|
242,9 |
200,4 |
21 |
425.3 |
| Depreciation |
|
23,8 |
16,7 |
43 |
43.8 |
| Amortisation of goodwill |
|
14,0 |
- |
|
2.3 |
|
Operating profit
|
1 |
205,1 |
183,7 |
12 |
379,2 |
| Net interest and dividend income |
2 |
15,5 |
33,5 |
(54) |
59,1 |
|
| Profit before taxation |
|
220,6 |
217,2 |
2 |
438,3 |
| Taxation |
|
79,2 |
73,8 |
|
145,6 |
|
| Profit after taxation |
|
141,4 |
143,4 |
|
292,7 |
| Share of associate companies’ profits |
|
48,3 |
28,6 |
69 |
81,8 |
|
| Profit after tax including associate companies |
|
189,7 |
172,0 |
|
374,5 |
| Earnings attributable to outside shareholders in |
|
|
|
|
|
| subsidiaries |
|
14,5 |
19,3 |
|
42,3 |
|
| Earnings attributable to ordinary shareholders |
|
|
|
|
|
| in Reunert Limited |
|
175,2 |
152,7 |
15 |
332,2 |
|
| Basic earnings per share (cents) |
3 |
93,7 |
77,8 |
20 |
173,3 |
| Diluted earnings per share (cents) |
3 |
92,0 |
76,8 |
20 |
170,9 |
| Headline earnings per share (cents) |
4 |
101,2 |
77,7 |
30 |
174,8 |
| Diluted headline earnings per share (cents) |
4 |
99,2 |
76,7 |
29 |
172,4 |
| Dividend per ordinary share (cents) |
|
30,0 |
24,0 |
25 |
91,0 |
| Taxation rate excluding abnormal items (%) |
|
33,8 |
34,0 |
|
33,0 |
| EBITDA as a % of turnover |
|
9,8 |
9,5 |
|
10,1 |
|
Note 1
Operating profit
Operating profit is stated after charging: |
|
|
|
|
|
| - Cost of sales |
|
1 795,6 |
1 509,5 |
|
3 036,6 |
| - Other income |
|
(16,4) |
(13,4) |
|
(9,6) |
| - Other expenses excluding depreciation |
|
447,4 |
408,1 |
|
777,5 |
|
Note 2
Net interest and dividend income |
|
|
|
|
|
| Interest received |
|
43,9 |
36,8 |
|
64,5 |
| – from RC&C Finance Company |
|
32,5 |
24,2 |
|
32,1 |
| - External |
|
11,4 |
12,6 |
|
32,4 |
| Interest paid |
|
(31,5) |
(7,1) |
|
(13,1) |
| Dividend income other than from associates |
|
3,1 |
3,8 |
|
7,7 |
|
| Total |
|
15,5 |
33,5 |
|
59,1 |
|
| Dividend income from associates included in
share of associate companies profits |
|
16,4 |
22,8 |
|
70,9 |
|
| Note 3 |
|
|
|
|
|
BASIC EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE
The earnings used to determine both basic earnings per share and diluted earnings per share being the earnings attributable to ordinary shareholders in Reunert (Rm) |
|
175,2 |
152,7 |
|
332,2 |
| The weighted average number of shares in issue used to determine basic earnings per share and headline earnings per share (millions of shares) |
|
186,9 |
196,3 |
|
191,7 |
| Adjusted by the dilutive effect of unexercised share options available to executives employed in the group (millions of shares) |
|
3,6 |
2,6 |
|
2,7 |
|
| Weighted average number of shares used to determine diluted earnings per share and diluted headline earnings per share (note 4) (millions of shares) |
|
190,5 |
198,9 |
|
194,4 |
|
Note 4
HEADLINE EARNINGS PER SHARE AND DILUTED
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 3.Headline earnings are determined by eliminating the effect of capital items in attributable earnings as
follows: |
|
|
|
|
|
| Earnings attributable to ordinary shareholders |
|
175,2 |
152,7 |
|
332,2 |
| Amortisation of goodwill |
|
14,0 |
|
|
2,3 |
| Other (net) |
|
(0,1) |
(0,1) |
|
0,7 |
|
| Headline earnings |
|
189,1 |
152,6 |
|
335,2 |
|
Note 5
GOODWILL |
|
|
|
|
|
| Carrying value at the beginning of the period |
|
10,9 |
|
|
|
| Add: Acquisitions of businesses/investments |
|
389,1 |
|
|
13,2 |
| Less: Amortisation for the period |
|
(14,0) |
|
|
(2,3) |
|
| Carrying value at the end of the period |
|
386,0 |
|
|
|
|
| Goodwill is written off over periods varying between one and ten years. |
|
|
|
|
|
|
Note 6
INVESTMENTS |
|
|
|
|
|
| At cost excluding goodwill |
|
237,9 |
179,4 |
|
188,4 |
| At directors’ valuation |
|
653,0 |
179,4 |
|
188,4 |
|
Note 7
FINANCE COMPANY ACCOUNTS RECEIVABLE |
|
|
|
|
|
| Collectable within one year |
|
278,0 |
312,8 |
|
278,0 |
| Collectable after one year |
|
554,9 |
435,4 |
|
467,1 |
|
|
|
832,9 |
748,2 |
|
745,1 |
|
| Note 8 |
|
|
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Accounting policies
Reunert has adopted the South African Statements of Generally Accepted Accounting Practice (SA GAAP) which became effective during the current financial year. This has resulted in changes to accounting policies, requiring the restatement of the comparative figures for 2001.
The main change involves the depreciation of properties. Previously, all properties which the group regarded as investment properties were not depreciated. Now, in terms of AC 123, the group is depreciating all properties.
In accordance with AC 107, distributions to shareholders are now accounted for in the period the distribution takes place. This change does not require the restatement of information previously reported.
The group's accounting policies are in accordance with SA GAAP and, except for the above changes, are consistent with those of the prior period.
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| Note 9 |
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Major acquisitions
In December 2001 the group acquired Marconi's 21,5% shareholding in Siemens Telecommunications (Pty) Ltd ("Sietel"). During January 2002, Siemens exercised an option to purchase 9% of Marconi's 21,5% from Reunert. The net effect of this transaction was that Reunert
purchased an extra 12,5% of Sietel at a cost of R161,3 million, including goodwill of R137,7 million. In December 2001 Reunert purchased the remaining 42% of Nashua Nedtel Communications (Pty) Ltd ("NNC") not previously held by it for R261,6 million, including
goodwill of R220,7 million. The name of NNC was subsequently changed to Nashua Mobile (Pty) Ltd.
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| GROUP BALANCE SHEET |
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|
31 March 2002 |
31 March 2001 |
30 Sept 2001 |
|
NOTES |
R million
(Unaudited)
|
R million
(Unaudited)(8) |
R million
(Audited)(8) |
|
| NON-CURRENT ASSETS |
|
|
|
|
| Property, plant and equipment |
|
152,2 |
155,6 |
161,8 |
| Goodwill |
5 |
386,0 |
- |
10,9 |
| Investments |
6 |
237,9 |
179,4 |
188,4 |
| RC&C Finance Company accounts receivable |
7 |
832,9 |
748,2 |
745,1 |
| Deferred taxation assets |
|
41,3 |
22,6 |
42,0 |
|
|
|
1 650,3 |
1 105,8 |
1 148,2 |
|
| CURRENT ASSETS |
|
|
|
|
| Inventory and contracts in progress |
|
509,6 |
432,2 |
496,5 |
| Accounts receivable |
|
673,2 |
570,5 |
595,9 |
| Cash and cash equivalents (net) |
|
197,5 |
522,7 |
584,5 |
|
|
|
1 380,3 |
1 525,4 |
1 676,9 |
|
| Total assets |
|
3 030,6 |
2 631,2 |
2 825,1 |
|
| SHAREHOLDERS’ FUNDS |
|
|
|
|
| Ordinary |
|
1 146,9 |
912,6 |
971,7 |
| Reunert Limited shares bought by a subsidiary |
|
(234,6) |
(226,2) |
(234,6) |
| Preference |
|
0,7 |
0,7 |
0,7 |
|
|
|
913,0 |
687,1 |
737,8 |
| Outside shareholders in subsidiaries |
|
94,8 |
112,1 |
120,7 |
|
|
|
1 007,8 |
799,2 |
858,5 |
|
| NON-CURRENT LIABILITIES |
|
|
|
|
| Deferred taxation liabilities |
|
49,0 |
33,1 |
48,6 |
| Long-term borrowings |
|
1,8 |
2,7 |
2,7 |
|
|
|
50,8 |
35,8 |
51,3 |
|
| CURRENT LIABILITIES |
|
|
|
|
| RC&C Finance Company short-term borrowings |
|
734,6 |
636,6 |
618,8 |
| Accounts payable, provisions and taxation |
|
1 237,4 |
1 112,7 |
1 171,3 |
| Shareholders for normal dividend |
8 |
|
46,9 |
125,2 |
|
|
|
1 972,0 |
1 796,2 |
1 915,3 |
|
| Total equity and liabilities |
|
3 030,6 |
2 631,2 |
2 825,1 |
|
| R million (unless otherwise stated) |
|
|
|
|
| Net asset value per share (cents) including intangible assets |
|
489 |
367 |
395 |
| Net asset value per share (cents) excluding intangible assets |
|
282 |
367 |
389 |
| Current ratio including short-term portion of RC&C Finance Company accounts receivable (:1) |
|
1,3 |
1,4 |
1,3 |
| Net number of ordinary shares in issue (million) |
|
186,9 |
187,4 |
186,9 |
| Number of ordinary shares in issue (million) |
|
204,1 |
204,0 |
204,1 |
| Less: held by subsidiary |
|
(17,2) |
(16,6) |
(17,2) |
| Capital expenditure |
|
13,2 |
18,6 |
52,8 |
| – expansion |
|
9,0 |
4,7 |
32,4 |
| replacement |
|
4,2 |
13,9 |
20,4 |
| Capital commitments |
|
14,6 |
15,6 |
20,7 |
| – contracted |
|
7,7 |
5,7 |
3,3 |
| – authorised not yet contracted |
|
6,9 |
9,9 |
17,4 |
| Commitments in respect of leases |
|
53,8 |
69,8 |
64,4 |
| – operating |
|
53,7 |
69,8 |
64,4 |
| – finance |
|
0,1 |
|
|
| Contingent liabilities |
|
3,7 |
0,3 |
0,3 |
|
|
|
|
|
|
|
|
|
| GROUP CASH FLOW INFORMATION |
|
|
31 March 2002
R million
(Unaudited)(8) |
31 March 2001
R million
(Unaudited)(8) |
30 Sept 2001
R million
(Audited)(8) |
|
| EBITDA |
|
242,9 |
200,4 |
425,3 |
| (Increase)/reduction in net working capital |
|
(2,7) |
7,7 |
(55,4) |
| (Increase)/reduction in RC&C Finance Company accounts receivable |
|
(87,8) |
3,4 |
6,5 |
| Other working capital changes (net) |
|
85,1 |
4,3 |
(61,9) |
|
| Cash generated from operations |
|
240,2 |
208,1 |
369,9 |
| Net interest and dividends received (including associates) |
|
31,9 |
56,3 |
130,0 |
| Taxation paid |
|
(165,4) |
(105,0) |
(133,0) |
| Dividends paid |
|
(143,7) |
(120,2) |
(169,0) |
|
| Net cash (outflow)/inflow from operating activities |
|
(37,0) |
39,2 |
197,9 |
| Net asset additions |
|
(12,9) |
(16,7) |
(48,6) |
| Other (net) |
|
3,9 |
2,1 |
5,0 |
|
| Net cash (outflow)/inflow from operations |
|
(46,0) |
24,6 |
154,3 |
| Reunert Limited shares purchased by subsidiary |
|
|
(209,5) |
(217,9) |
| Other acquisitions |
|
(456,8) |
(1,8) |
(43,5) |
|
| NET DECREASE IN CASH AND CASH EQUIVALENTS |
|
(502,8) |
(186,7) |
(107,1) |
| NET (BORROWINGS)/CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD |
|
(34,3) |
72,8 |
72,8 |
|
| NET CASH RESOURCES OF THE GROUP EXCLUDING THE RC&C FINANCE COMPANY BORROWINGS |
|
|
|
|
| – Deposit on call with RC&C Finance Company |
|
110,6 |
220,7 |
294,8 |
| – Other cash reserves |
|
86,9 |
302,0 |
289,7 |
|
|
|
197,5 |
522,7 |
584,5 |
| RC&C Finance Company borrowings |
|
(734,6) |
(636,6) |
(618,8) |
|
| NET BORROWINGS AT END OF THE PERIOD |
|
(537,1) |
(113,9) |
(34,3) |
|
| The deposits on call with the 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 STATEMENT OF CHANGES IN EQUITY |
|
|
Six months ended
31 March |
Year ended
30 Sept |
|
|
2002
R million
(Unaudited) |
2001
R million
(Unaudited) |
2001
R million
(Audited) |
|
| Balance at beginning of period as previously reported |
|
737,8 |
810,7 |
810,7 |
| Adjustment to opening accumulated profit due to changes in accounting policies (note 8) |
|
|
(19,9) |
(19,9) |
| Net profit for the period |
|
175,2 |
152,7 |
332,2 |
| Dividends declared |
|
|
(46,9) |
(168,3) |
| Shares issued in terms of the Reunert Share Option Scheme |
|
|
|
0,4 |
| Reunert Limited shares bought by subsidiary |
|
|
(209,5) |
(217,9) |
| Translation reserve movement during the year |
|
|
|
0,6 |
|
| Balance at end of period |
|
913,0 |
687,1 |
737,8 |
|
|
|
|
| GROUP STATEMENT OF CHANGES IN EQUITY |
The consolidated statement of changes in equity at 31 March
2001 is set out below:
|
|
|
|
|
|
|
Six months ended
31 March |
Year ended
30 Sept |
|
|
2001
R million
(Unaudited) |
2000
R million
(Unaudited) |
2000
R million
(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 31 March |
Year
ended
30 Sept |
|
| Revenue |
2002
R million
(Unaudited) |
% |
2001
R million
(Unaudited) |
% |
%
change |
2001
R million
(Audited) |
% |
|
| Electronics |
|
|
|
|
|
|
|
| Office systems |
419,8 |
12 |
324,6 |
13 |
29 |
694,3 |
13 |
| Consumer products and services |
1 386,7 |
41 |
1 153,2 |
44 |
20 |
2 335,3 |
44 |
| Telecommunications |
866,9 |
25 |
401,0 |
15 |
116 |
922,5 |
17 |
| Reutech |
186,4 |
5 |
253,2 |
10 |
(26) |
399,7 |
7 |
|
|
|
|
|
|
|
|
|
| Total Electronics |
2 859,8 |
83 |
2 132,0 |
82 |
34 |
4 351,8 |
81 |
|
| ELECTRICAL ENGINEERING AND CABLES |
|
|
|
|
|
|
|
| Low-voltage electrical |
268,9 |
8 |
183,6 |
7 |
46 |
399,2 |
8 |
| Cables |
295,6 |
9 |
292,9 |
11 |
1 |
607,8 |
11 |
|
| Total Electrical Engineering and Cables |
564,5 |
17 |
476,5 |
18 |
18 |
1 007,0 |
19 |
|
| Total operations |
3 424,3 |
100 |
2 608,5 |
100 |
31 |
5 358,8 |
100 |
| Less: Reunert’s attributable portion of associate companies’ revenue |
(954,9) |
(496,3) |
|
|
|
(1 129,0) |
|
|
| Revenue as reported |
2 469,4 |
2 112,2 |
|
17 |
|
4 229,8 |
|
|
OPERATING PROFIT
BEFORE AMORTISATION |
|
|
|
|
|
|
|
| ELECTRONICS |
|
|
|
|
|
|
|
| Office systems |
70,9 |
23 |
37,2 |
16 |
91 |
104,5 |
20 |
| Consumer products and services |
78,4 |
25 |
55,2 |
23 |
42 |
123,2 |
24 |
| Telecommunications |
100,3 |
33 |
35,1 |
15 |
186 |
102,7 |
20 |
| Reutech |
12,0 |
4 |
44,7 |
19 |
(73) |
40,0 |
8 |
|
| Total Electronics |
261,6 |
85 |
172,2 |
73 |
52 |
370,4 |
72 |
|
| ELECTRICAL ENGINEERING AND CABLES |
|
|
|
|
|
|
|
| Low-voltage electrical |
41,9 |
13 |
30,1 |
13 |
39 |
74,0 |
14 |
| Cables |
6,0 |
2 |
32,5 |
14 |
(82) |
70,4 |
14 |
|
| Total Electrical Engineering and Cables |
47,9 |
15 |
62,6 |
27 |
(23) |
144,4 |
28 |
|
| Total operations |
309,5 |
100 |
234,8 |
100 |
32 |
514,8 |
|
| Less: Reunert’s attributable portion of associate companies’ operating profit |
(90,4) |
|
(51,1) |
|
|
(133,3) |
|
|
| Operating profit before amortisation of goodwill as reported |
219,1 |
|
183,7 |
|
19 |
381,5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMENTARY
REVIEW OF RESULTS |
Reunert has produced strong results for the six months ended 31 March 2002 with headline earnings per share increasing by 30%. Turnover grew 17% while cost controls and improved efficiencies led to an increase in operating profit before depreciation
and amortisation of 21%.
All the Group's operations, with the exception of ATC and Reutech, have achieved topline and operating profit growth. The acquisition in November 2001 of additional stakes in Sietel and Nashua Mobile together with last year's share buyback programme
contributed to Reunert's growth in headline earnings per share.
|
|
| REVIEW OF OPERATIONS |
Electronics
The Office Systems businesses capitalised further on the strength of the Nashua brand. The strong demand for Nashua's digital products and systems solutions has continued.
The Consumer Products and Services businesses reported strong growth. The Nashua Mobile customer base has continued to expand in the corporate and commercial market. Average revenue per subscriber continues to grow with the focus on improving
customer service. Panasonic has achieved encouraging sales growth in the period under review. This market, however, remains highly competitive and the Consumer and Commercial division has responded by launching key mass market consumer products under the Futronic brand to
complement the premium Panasonic line-up.
The Telecommunications Division's contribution to Reunert's results has more than doubled in the period under review. This increase has been achieved through organic growth and as a consequence of Reunert increasing its investment in Sietel to 40%.
Sietel's successful expansion into Africa as well as its award of the supply contract for Cell-C and its preferred supplier status for Eskom Enterprises has enhanced its position as the leading telecommunications equipment supplier in southern Africa.
Reutech's turnover declined by 26% and operating profit by 73%. This was caused by the lower order book noted in last year's annual report. The recent receipt of a large export contract has improved the outlook for Reutech and revenue and income
will return to more normal levels during the second half of the financial year. The bulk of the export contract will run into the 2003 financial year and prospects for further increases in the order book remain good.
Electrical engineering and cables
CBI's low voltage electrical business has continued to expand with 46% growth in revenue. Operating profit growth was lower at 39%. The margins on meter products and the newly acquired Mitsubishi product range are at a lower level than achieved by the other operations in CBI.
The domestic and industrial market is likely to continue at the current lower levels but growth will continue to be achieved from the new product offerings and from exports.
African Cables’ order book has remained strong and the company continues to increase market share. Continued improvements in factory output and a reduction in scrap and overconsumption has enabled African Cables to achieve a satisfactory operating
margin in this period.
The demand for ATC's optical fibre was weak, resulting in a loss for the half-year. Major restructuring of the business has taken place to reduce costs in the light of expected weak demand.
|
|
| PROSPECTS |
Continued strong growth in the second half is expected.
|
| DIRECTORATE |
In terms of the Company's mandatory retirement rules, Mr P T W Curtis retired at the annual general meeting on
29 January 2002. The board wishes to thank him for his enthusiasm and commitment over the last nine years
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| DIVIDEND |
Notice is hereby given that an interim dividend No 152 of 30 cents per share (2001: 24 cents per share) has been declared by the directors for the half year ended 31 March 2002. In compliance with the requirements of Strate, the following dates are
applicable:
Last date to trade (cum dividend) Tuesday, 11 June 2002
First date of trading (ex dividend) Wednesday, 12 June 2002
Record date Wednesday, 19 June 2002
Payment date Thursday, 20 June 2002
Share certificates may not be dematerialised or rematerialised between Wednesday, 5 June 2002, and Wednesday,
19 June 2002, both dates inclusive.
On behalf of the board
Derek Cooper Gerrit Pretorius
Chairman Chief Executive Officer
Sandton
8 May 2002
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| DIRECTORS |
D E Cooper (Chairman)*, G Pretorius (Chief Executive), B P Connellan*, 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
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| REUNERT LIMITED |
Incorporated in the Republic of South Africa
Registration number 1913/004355/06
Share code: RLO
ISIN code: ZAE000005914
Registered office
Lincoln Wood Office Park
6 - 10 Woodlands Drive, Woodmead, Sandton
PO Box 784391, Sandton, 2146
Telephone (011) 517-9000
Sponsor
Rand Merchant Bank, Corporate Finance
Share Transfer secrataries
Investor Services Ltd
11 Diagonal Street, Johannesburg, 2001
PO Box 1053, Johannesburg, 2000
visit our website at
www.reunert.com
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| ©
Copyright - Reunert - 2003 |
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