Reunert increases NHEPS by 12%
Tuesday, 24 May 2016
Reunert is pleased to announce an improvement in its trading results for the past six months when compared to the comparative period. This was achieved despite the well-publicised adverse macro-economic conditions in the country and delays in the commencement of various national infrastructure projects. The improvement in the financial result is due to moderate growth in operations, a positive impact from exports, cost management and improved efficiencies.
Revenue from continuing operations increased by 2% from R3,9 billion to R4,0 billion, whilst operating profit increased by 12% from R503 million to R564 million.
Normalised headline earnings per share for the group, from continuing operations, increased by 12% from 239 cents to 268 cents. Basic earnings per share, on the same basis, increased by 11% from 246 cents to 272 cents and headline earnings per share increased by 12% from 242 cents to 271 cents.
Normalised headline earnings per share for the group, from all operations, increased by 3% from 261 cents to 268 cents. Basic earnings per share, on the same basis, decreased by 5% from 287 cents to 272 cents, whilst headline earnings per share increased by 2% from 265 cents to 271 cents. This will be the last interim period that discontinued operations from Nashua Mobile will be reported.
A gross interim cash dividend of 113,0 cents per ordinary share (2015: 105,0 cents per share) has been declared.
REVIEW OF OPERATIONS
Revenue in this segment, which includes the group's share from the telecoms joint venture, decreased by 7% from R2,0 billion to R1,8 billion but, for the reasons outlined below, operating profit increased by 6% to R272 million.
In the cable operations the product mix reflected an increased demand for aluminium vs. copper based products, leading to lower revenue. Revenue was also adversely impacted by the delay in the award of key projects that are now expected to materialise in the second half of the year. Operating margins improved through continued manufacturing efficiencies.
The local market continued to tighten for circuit breakers in the low voltage business, the impact of which was more than offset by increased revenue from exports. Furthermore, although revenue was negatively impacted by the restructure of the Solutions division at the end of 2015, this division was loss making and its restructure increased the operating profit of the business unit.
Segmental revenue from continuing operations decreased by 1% to R1,7 billion. Operating profit increased by 2% to R250 million driven by both efficiency gains and cost control across the segment.
The rapid devaluation of the Rand placed pressure on the office automation business, whose market continues to be characterised by strong competition resulting in ongoing margin pressure.
The voice component of this segment continued to grow its base while margins remain intact.
Quince, the in house finance company's first half operating results were positive, mainly due to the higher loan book of R2,1 billion, a 4% increase on the prior period. Despite the continued challenging economic conditions, there was no increase in credit losses.
Revenue increased significantly by 64% from R424 million to R696 million and operating profit increased to R122 million. The solid performance by Applied Electronics is mainly attributable to large scale export sales assisted by the weaker exchange rate. The communications and radar businesses delivered in line with expectations.
Traditional sales and annuity income from maintenance contracts were in line with expectation although market conditions continue to tighten in line with the prevailing economic realities.
The economic conditions in South Africa are not expected to improve significantly in the near future. However, the continued execution of large, base load orders in the Applied Electronics segment and improved order intake in the Electrical Engineering businesses, position Reunert to deliver real growth in continuing operations for the full 2016 financial year. The earnings base in the second half of 2015 benefited from increased export orders in Applied Electronics, which carried forward into the first half of 2016. This, combined with the prevailing economic weakness, will result in lower comparative growth in the second half of 2016.
The board is pleased to announce that subsequent to the period end, within the Electrical Engineering segment, the group entered into a new B-BBEE transaction. Details are set out in note 13 – events after reporting date – in the interim financial report. The group also intends to conclude a similar transaction in the Applied Electronics segment prior to the end of the financial year.
The financial information on which the prospects are based has neither been reviewed nor reported on by the group's external auditors.
There were no changes in the directorate during the period under review.
Notice is hereby given that a gross interim cash dividend No 180 of 113,0 cents per ordinary share (2015: 105,0 cents per share) has been declared by the directors for the six months ended 31 March 2016.
The dividend has been declared from income reserves.
A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt from, or who do not qualify for a reduced rate of withholding tax. The net dividend payable to shareholders subject to withholding tax at a rate of 15% thus amounts to 96,05 cents per share.
The issued share capital at the declaration date is 183 893 996 ordinary shares. Reunert's income tax reference number is 9100/101/71/7P.
In compliance with the requirements of Strate, the following dates are applicable:
Last date to trade (cum dividend) Thursday, 09 June 2016
First date of trading (ex-dividend) Friday, 10 June 2016
Record date Friday, 17 June 2016
Payment date Monday, 20 June 2016
Shareholders may not dematerialise or rematerialise their share certificates between Friday, 10 June 2016 and Friday, 17 June 2016, both days inclusive.