Financial director’s report  
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David Rawlinson - Financial director  


Revenue and operating profit increased for the eighth year in a row. The group experienced more favourable economic conditions in the electrical and defence operations, whereas slower conditions in consumer spending, due to high interest rates, adversely affected the electronics operations.

Normalised headline earnings >

The group has disclosed normalised headline earnings per share for a number of years to provide shareholders and other users of the financial statements with the group’s sustainable earnings. These numbers are comparable with prior years.

The first adjustment is a charge of R38,5 million in 2008 and R73,5 million in 2007 for the BEE minority shareholders’ interest in the group’s cable operations. In terms of IFRS, the BEE minority interest may not be recognised as long as there are amounts owing by the BEE shareholders on the transaction.

The remaining adjustment of Rnil (2008) and R600 million (2007) is the reversal of the charge for the Reunert BEE equity deal finalised in 2007.


Dividends >

In spite of the sustainable earnings, growth and generous dividends paid by the group, the market capitalisation of Reunert over the last three years has not shown growth. Shareholders have been partially compensated by the high dividend paid by the group which has historically been in excess of 50% of earnings.

Cash flows >

Cash flows excluding dividends and share buy-backs
Reunert’s profit growth is underpinned by strong cash flows after lower cash flows in 2007 due to working capital requirements. Cash generations have been restored to historic levels.

The cash flows for RCCF have been excluded from the cash flow figures as finance is raised on the rental debtor’s book. The group’s exposure in the past has been limited, but the global financial crisis has resulted in the funders requiring Reunert to underwrite certain of the borrowings.


  RCCF accounts receivable     1 964,5  
  RCCF long-term borrowings     699,9  
  RCCF short-term borrowings     1 164,4  
  Cash     (82,0) 
  Total RCCF borrowings     1 782,3  
The difference between the rental accounts receivable and the borrowing is the equity in the finance company. In 2007, RCCF was equity accounted and is now consolidated as a whollyowned subsidiary. The shares not held by the group were acquired in May 2008, when the venture with PSG was reversed.
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