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C H A I R M A N ' S   R E P O R T
Results achieved during the past year were excellent. Turnover from continuing operations grew by 20%, with operating profit increasing by 30%. Headline earnings per share on a comparable basis increased by 31% and dividends per share by the same amount. Compared to last year, attributable earnings exceeded those of Reunert before the various disposals and the special dividend of R2,50 a share which was paid in October 1999. This clearly vindicates the decision taken to exit low-margin businesses which are not core to our strategic intent.
Reunert is a high-tech company focusing more and more on providing total solutions to our customers.
The continued lack of spending on the country's infrastructure impacted negatively on the results of our low-voltage engineering operations, and without any real growth in the economy the markets served by our electronics division were at best sluggish. Increased exports and market share gains more than compensated for this and produced the turnover growth reflected above.
The telecommunications sector continues to be bedevilled by regulatory problems. The controversy surrounding the award of the third cellular licence and most recently the refusal to allow MTN and Vodacom access to the 1 800 MHz spectrum does not help the situation. It is vitally important that South Africa maintains a strong regulatory environment to ensure that the desired level of service and growth is achieved. Without this we will hamper economic expansion, education and international investment.
Although group exports benefited handsomely from the weak rand, the long-term negative inflationary aspect is concerning. Ultimately, for sustained economic growth and prosperity, a stable currency, free of the last vestiges of exchange control, is a prerequisite.
We have decided, in line with international practice, to disclose the performance of all subsidiaries as well as associate companies of Reunert. >From this, it is pleasing to note that all companies are trading profitably.
It is true, however, that profitability alone does not always create maximum shareholder value. With this in mind, we have decided to evaluate future performance of management using the principle of economic value added (EVA). Requirements for producing positive economic value added are stringent, and consequently EVA is an excellent reflection of how effectively shareholder capital is being managed.
Social investment
Reunert continues to support education for the benefit of previously disadvantaged scholars. Our flagship project is the Reunert College, which bridges the gap between school and tertiary education. Over a period of one year, students are equipped to write the higher grade examination in mathematics, science, accounting and English. Over the years, more than 370 students have graduated from the college well prepared to further their studies, specifically in the engineering field. Reunert is grateful for this opportunity to contribute to the future of our country.
Con Schabort resigned from the board at the end of May after 16 years of service. My sincere thanks to Con who served as a member of the audit committee and made a valuable contribution to Reunert. Three new appointments to the board were made and I would like to welcome Sean Jagoe, Bobby Makwetla and Charles Valkin. I look forward to their participation in the deliberations of the board.
Future prospects
Reunert is a high-tech company focusing more and more on providing total solutions to our customers. Emphasis will continue to be on organic growth supplemented by suitable acquisitions which meet our criteria of focus and return. The company is well positioned for future growth and I am confident that shareholders will continue to be well rewarded.
I would like to express my appreciation to my fellow directors, the executive management and the dedicated staff of Reunert. Particularly I would like to pay tribute to Boel Pretorius for his leadership and dedication.
Derek Cooper
15 November 2000

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