Reunert Limited · JSE:RLO
Reunert — FY2005 Earnings Presentation
40 slides from Reunert's earnings presentation, Nov 15, 2005
Slide 1: Reunert Investors Presentation
Reunert Investors Presentation FY2005 15 November 2005
Slide 2: Reunert's financial performance
Reunert’s financial performance Headline Earnings TURNOVER ASSETS x x ROE TURNOVER ASSETS EQUITY 527 6 247 3 088 2004 49% 6 247 3 088 1 070 8.44% 2.02 2.89 704 7 037 4 057 2005 58% 7 037 4 057 1 217 10.00% 1.73 3.33
Slide 3: Salient features
Salient features • Market capitalisation R9,2 billion (14 Nov 05) • HEPS + 46% = 34%+12% share buyback • Revenue + 13% • Operating Profit + 20% • EBITDA 13,7% (FY04: 13%) • Dividend + 39% 52c + 170c = 222 cents per share • Exchange rate 6% stronger R/$ Average 6.26 (FY04: 6.64)
Slide 4: Group Income Statement
Group Income Statement 2005 2004 % For year ended 30 September R million R million change Revenue 7 037 6 247 13 EBITDA 962 812 18 Depreciation 56 58 (3) Operating profit before goodwill amortisation 906 754 20 Net interest and dividend income 50 65 (23) Profit before taxation 956 819 17 Taxation 31
Slide 5: Group balance sheet
Gro up balanc e s he e t 2005 2004 As at 30 S e pte mbe r 2005 R millio n R million No n-c urre nt as s e ts P rope rty, pla nt a nd e quipme nt 192 196 Goodwill 329 325 Inve s tme nts & loa ns 116 110 # Finco a ccounts re ce iva ble 1 028 529 De fe rre d ta xa tion a s s e ts 43 56 1 708 1 216 Curr
Slide 6: Group Cash Flow Information
Group Cash Flow Information 2005 2004 for year ended 30 September 2005 Rm Rm EBITDA 961.8 811.9 Changes in working capital (101.0) 113.0 Cash generated from operations 860.8 924.9 Interest and dividends received 119.4 65.1 Taxation paid (364.9) (313.5) Dividends paid & sharebuyback (307.1) (744.7) A
Slide 7: Segmental analysis
Segmental analysis % contribution and % change Revenue Operating profit 4% 12% ) 0% (-96%) 13% (-33% +7% 25% 31% +36% +1% +49% -8% +29% +11% 12% 31% +13% 47% Electrical Office systems 25% Consumer Telecoms Reutech
Slide 8: Major Capex Spent and Committed
Major Capex Spent and Committed • CBI – R25 million • Nashua Mobile – R11 million • African Cables – R38 million
Slide 9: Foreign sales
Foreign sales •R415 million •5% of total turnover Reutech Other 17% Other 24% 1% UK & Europe Australia 18% 19% CBI Far East 21% 9% Cables 13% North America 5% Australia Africa 25% 48% Contribution by division Contribution by area Exports: R308 million (FY04: R355 million)
Slide 10: R&D expenditure
R&D expenditure • Total R&D spend for 2005 – R73 million – Includes funded research costs 80 70 60 50 CBI 40 Reutech 30 20 10 0 2002 2003 2004 2005
Slide 11: Nashua
Nashua
Slide 12: Office Automation
Office Automation • Products – Multi-function machines – Printers – Scanners, facsimiles – Consumables – Broadband • 63 Offices – 22 Franchisees – South Africa, Namibia, Botswana, Lesotho, Zimbabwe, Swaziland, Mozambique • Household name, – high profile brand, aggressive marketing • 22% volume growt
Slide 13: Office Automation margins
Office Automation margins Assumed Revenue 800,000,000 900,000,000 13% Cost of sales 500,000,000 63% 562,500,000 63% Expenses 200,000,000 25% 200,000,000 22% PBIT 100,000,000 13% 137,500,000 38%
Slide 14: Nashua Finance
Nashua Finance • Finance supplied to customers from – Nashua (87%) – Panasonic, (8%) – Siemens (5%) – New - Nashua Mobile – Approx 10 000 end users • Book – R1 billion • Hedging – Swaps covering 70% of fixed business • Rates – Fixed: 82% – Variable: 18% • Facilities – Nedcor, RMB, ABSA – R900 millio
Slide 15: Nashua Mobile
Nashua Mobile • Service provider agreements – Vodacom • Previously regularly revised • Agreed until April 2011 – MTN • Service provider agreement is evergreen • Currently negotiating service provider incentive agreement – Cell C • Fixed incentive until 2013
Slide 16: Nashua Mobile
Nashua Mobile 2005 2004 Total contract subscribers 416 000 362 000 Total prepaid 19 000 28 000 Total LCR 37 000 32 000 Total average ARPU for year R557 R576 Churn 10,6% 11,8% Bad debt ratio 0.58 0.56 Specialised services as % of total 29,9% 30,8% turnover
Slide 17: Nashua Mobile Initiatives
Nashua Mobile • Initiatives – Distribution channels – Asset backed finance – Other services & products
Slide 18: Reunert Consumer & Commercial
Reunert Consumer & Commercial
Slide 19: RC&C
RC&C • Strong revenue growth • Prices declined by up to 70% between 2003 and 2005 • Improved operating margins • Substantial support from suppliers – Matsushita • Contribution to turnover – Panasonic 60% – Business Systems 12% – TV’s 22% – Futronic 6% • Management of forex exposure • Direct sales
Slide 20: Brands & products
Brands & products • Panasonic • Futronic – Consumer – TV’s, DVD, Hi Fi, • Brown Goods & Photographic Microwaves/mini ovens • Television • Akai • FMCG – Consumer • Small appliances – Air conditioners – Business • Nintendo • Office automation & systems – Gaming Consoles • Air-conditioning Systems – Ga
Slide 21: Electrical Engineering
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Slide 22: CBI
CBI • Local market – Strong growth – Residential boom – Platinum mining expansion – Infrastructure developments • Opened factory in Lesotho • Export market – Strong rand – Overall decline of 8% in export sales – Africa sales under performed – Good growth in Far East • Australia – Buoyant mining indu
Slide 23: CBI
CBI • Residential products – Turnover grew more than 21% • Wiring accessories – Launched in March ’05 – Project costs repaid within 3 months • Commercial, Industrial & Mining products – Modest 5% sales growth • Mitsubishi – Motor control gear – Factory Automation Sales growth of 22% • Meters – Eskom
Slide 24: ATC
ATC • ATC volumes doubled – Aberdare closed down – Supplier to Telkom • Prospects are better – Optic fibre • African demand • Deregulation of telecommunications market • Second Network Operator – Copper cable • Demand for ADSL cable • Eskom power stations • Gautrain (signalling cable) • Rehabilitati
Slide 25: African Cables
African Cables • Full range of power cables – Bells, Mains, splits, ABC, Paper, MV & HV XLPE – Cable installation • Exceptional year • Full order book • Customer base as a % of total turnover – Utilities 42% – Mining 8% – General Market 40% – Industry 8% – Export 2% • Increased demand for electricit
Slide 26: African Cables
African Cables • Capacity constraints – Production capacity of 37 000 cable tons p.a. – Upgrade this year to 43 000 cable tons • R7 million capex FY 2005 • Additional R31 million capex committed • Likely to continue • Cafca
Slide 27: Associates
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Slide 28: Sietel African References
SIETEL AFRICAN REFERENCES Burkina Faso Zambia Celtel Celtel Gambia Tanzania Africell Vodacom Sierra Leone Malawi Lintel Celtel Telecom Congo Mauritius Celtel Mauritius Telecom Namibia Madagascar MTC Madacom Telekom Zimbabwe Mozambique NetOne Vodacom Econet TDM TelOne Botswana RSA Lesotho Swaziland B
Slide 29: Siemens Telecommunications
Siemens Telecommunications • Full spectrum supplier of telecommunications networks • 1000 employees • Reunert holds 40% • Equity accounted • Vodacom – Ongoing business in 4 countries: SA, Mozambique, Tanzania, Lesotho – Sole supplier for Core 2G/3G – 3G in its infancy • Cell C – Sole supplier for GS
Slide 30: Africa Fixed Line & Mobile Subscriber Growth
Africa Fixed Line & Mobile Subscriber Growth 2004 – 2009 Subscriber Growth - Africa 180 13% p.a. 160 140 Subscribers (Millions) 120 100 80 60 40 20 0 2004 2005 2006 2007 2008 2009
Slide 31: Reutech
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Slide 32: Reutech
Reutech • Extremely difficult year • SA government policy • RDI, RRS, RDL stabilised – Expect next year to be better • Concerned over Fuchs – International market under pressure – However potential for upswing
Slide 33: Black economic empowerment
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Slide 34: BEE to date
BEE to date • Reutech – 10% RRS – Kgorong – 30% RDL - Kgorong • ATC & African Cables – 25,1% - Powerhouse Utilities • Nashua Kopano – Nashua Ltd merged direct operation with former black owned franchise Nashua Kopano in Jan 2005 • Nashua Direct: 74% of capital • Kopano 26% – Responsible for 17% of N
Slide 35: BEE at Reunert level
BEE at Reunert level • Equity Code published • Under construction
Slide 36: Incentive scheme
Incentive scheme • Since 2001 on economic value added incentive – Base 20% compound growth – 75% on reaching operational targets – 25% linked to Reunert HEPS growth – Unchanged for 5 years • From 2006 – 50% EVA – 25% reaching sales targets – 25% linked to Reunert HEPS growth
Slide 37: Prospects
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Slide 38: Assumptions for 2006
Assumptions for 2006 • Low interest rates remain • Rand remains strong • Economy likely to grow by + 6% per year • Expenditure on infrastructure to continue
Slide 39: Prospects
Prospects • Aim at growing headline earnings per share at a rate higher than inflation in a sustainable way • More modest growth expected
Slide 40: For more information contact
For more information contact Carina de Klerk [email protected] Tel +27 11 517 9000 Mobile +27 83 631 5743 Website www.reunert.com