Michael Coulson interviews Gerrit Pretorius
Friday, 28 November 2003
Gerrit Pretorius: CE, Reunert
Broadcast Date: 2003-11-27
Programme: PSG Appleton Market Update
Presenter: Michael Coulson
Producer: Thembisa Gebeda
Guests: Gerrit Pretorius
Michael Coulson: And a very good evening from Michael Coulson, consulting editor of the Financial Mail. Well, again quite a lot of things happening today and we'll discuss as many of them as we can. We're starting with Reunert which has just published its preliminary results for the year to September and they make, I think it's fair to say, mixed reading because although revenue is up 21% and operating profit up 29%, headline earnings per share are down 20% and the reason is that although the core business, as you can tell, had a pretty good year, there were major problems at the Siemens telecoms associate which in fact I think operated at a loss. It's good evening now to Reunert CE Gerrit Pretorius. Hello Gerrit. Gerrit? Gerrit, can you hear me? Well, people are nodding at me but I'm afraid I can't hear Gerrit and neither can my sound engineer, Brandon van Schalkwyk, so I hope we're not having another.
Gerrit Pretorius: Can you hear me Michael?
MC: Ah, now I can hear you, yes. Hello Gerrit.
GP: Okay, hi Michael.
MC: Did you hear me all along?
GP: Ja, I don't know what went wrong.
MC: No, I don't know. Anyway there we are, all sorted out. As I say, a good year for the core business but your associate had a pretty shocking time.
GP: Ja, it was a bit disappointing but we explained that at the time we issued the profit warning. You may actually recall that happened, I guess round about May this year. It related in the main to the damage done by the sharp increase in the value of the rand as well as some minor contractual difficulties that we experienced. However, that is now behind us, we've fully accounted for it, we've taken the knock and we're looking forward to a good year in that investment.
MC: Okay. Headline earnings per share as I say, down 20% and that's taking them at diluted level, down from 225 to 181 but you have actually raised the dividend only by a nominal 2c to 120c, but that does I think come across as an indicator of how confident you are.
GP: Ja, we are extremely confident for the year ahead of us. If you look at the cash resources that we have at our disposal, R481 million, you can actually question why we haven't increased the dividend by more and it's best to explain that by referring to the cover. Our concern was that we may actually reduce cover to an unacceptable level, which is something we don't want to do because we fully expect to grow quite strongly in the coming year and if we were then to increase the dividend at a similar rate, the cover may be affected negatively.
MC: So as far as you're concerned it's just a blip and it's going to be a return to the pretty good earnings trend that Reunert has shown for some years, in financial 2004?
GP: It was a spike.
MC: Let's hope so. Thank you Reunert CE, Gerrit Pretorius.