Reunert Limited · JSE:RLO
Reunert — Corporate Update (July 2008)
22 slides from Reunert's corporate update, Jul 31, 2008
Slide 1: RC&C Finance Company
RC&C FINANCE COMPANY 31 July 2008 Mike Purnell
Slide 2: RC&C Finance
RC&C FINANCE Who is RC&C Finance? Business Model Risk Management Funding Base Analysis Relevant Statistics The Future
Slide 3: Who is RC&C Finance
RC&C FINANCE The in-house asset finance company for the Reunert group Specialise in office equipment for corporate customers Nashua Panasonic Various others suppliers Only Rental agreements are financed We advance funds against a future income stream
Slide 4: Mission Statement
MISSION STATEMENT “Creating wealth for all through innovative finance and service excellence.” VALUES Respect Integrity Personal Development Ownership Passion Communication
Slide 5: Key Success Factors
KEY SUCCESS FACTORS Competitive rates Best turnaround times Service Excellence One on one relationships
Slide 6: Base Analysis
BASE ANALYSIS SPLIT BY CUSTOMER Nashua 76% Panasonic 9% Other 15%
Slide 7: BBBEE Certification
BBBEE CERTIFICATION • Rating: “Non BEE-Limited Contribution” • Re-Rating in November 2008 • Investment in Staff Development • Development of “Black Management” • Investment in Corporate Social Investment via Nashua Franchises
Slide 8: Competition
COMPETITION ABSA Technology Finance (Union) Sasfin Technofin Nefco Fintech Itec Finance Custom capital
Slide 9: Business Model
BUSINESS MODEL Nashua Finance Quince Asset Rentals
Slide 10: Nashua Finance
NASHUA FINANCE Existing Model Bill to franchise Franchise collects rentals as an agent Recourse risk taken by the franchise Best rates available Perform regular franchise reviews For Nashua and some Panasonic
Slide 11: Quince Asset Rentals
QUINCE ASSET RENTALS Bill Direct to end user We collect directly Finance company takes the credit risk Rates competitive with opposition product No franchise review procedure necessary Panasonic, Siemens, Brokers and other OA Dealers
Slide 12: Quince Asset Rentals
QUINCE ASSET RENTALS Started October 2006 AS Direct Billing Division Rebranded Quince in 2007 under JV Aggressive growth in 2007 Bad debts high in current year – Over 3% of book Breakeven division currently
Slide 13: Risk Management
RISK MANAGEMENT New computerised vetting system System scores deals Executive review of overrides Pricing verifications Voice recording confirmations Quality control prior to payout EFT debit orders on each deal Ongoing analysis of bad debts against base Monthly credit committee re
Slide 14: Risk Management
RISK MANAGEMENT New computerised vetting system Web based, real time front end Balanced Scorecard Management/Exception reports daily Customer facility limits Deal status tracking
Slide 15: Statistics - Credit
STATISTICS - CREDIT Credit Vet average 3,165 applications pm Approval ratio Nashua Finance 67% Quince 27% Discount average 2,038 contracts. Turnaround times Average 8h30 Existing users 3h36 New users 11h03
Slide 16: Funding
FUNDING Conduit Securitisation Bank overnight facilities Shareholder overnight facilities Fixed rate deals backed by Swaps Swaps matched to the expected life of the deal
Slide 17: Interest Rates
INTEREST RATES Margins are managed General Cut backs expected in volumes Rand Devaluation – Increased values per deal ?
Slide 18: Base Analysis - Customers
BASE ANALYSIS - CUSTOMERS Approx’ 13,000 end users Largest end user 1.4% of total base Top 50 end users 19% of total base Top 50 Geographically spread throughout SA ( mainly Gauteng and Western Cape)
Slide 19: Base Analysis
BASE ANALYSIS Nashua Quince Total Value (R’000s) 1,416,561 428,175 1,844,735 Average Deal 34 months 28 months 32 months Age
Slide 20: Base Analysis (Cont'd)
BASE ANALYSIS (CONT’D) • Fixed Rentals 67% • Linked to Prime Rentals 33% • Total Contracts 65,000
Slide 21: Statistics - Ratios
STATISTICS - RATIOS 2003 2004 2005 2006 2007 Return on Equity 5% 52% 49% 57% 49% Cost to Revenue 18% 9% 11% 11% 11% Return on Assets 0% 10% 3% 3% 7% Bad Debts 0.9% 0% 0% 0% 0% -QAR (1%)
Slide 22: Thank You
THANK YOU