14441-reunert ppt 2015 · 2019-12-20 · financial results | revenue 3 682 3 935 192 126 ( 64) ( 1)...

UNAUDITED INVESTOR PRESENTATIONfor the six months ended 31 March 2015

2014

22

18 May 2015

1H2015 OVERVIEW

Alan Dickson, Chief Executive Officer

2 © Copyright 2014 Reunert Limited 18 May 2015 2 © Copyright 2014 Reunert Limited 18 May 2015

Agenda

Overview – Alan Dickson, Chief Executive Officer

Segment discussion | CBI-electric – Alan Dickson

Prospects – Alan Dickson

Segment discussion | Nashua – Mark Taylor

Segment discussion | Reutech – Peter van der Bijl

Financial results – Lood de Jager, Acting Chief Financial Officer

23UNAUDITED INVESTOR PRESENTATION for the six months ended 31 March 2015

4 © Copyright 2014 Reunert Limited 18 May 2015

The 6 months in review | challenges

1. The general South African operating environment continues to be extremely challenging

• Slow macro-economic growth

• Eskom challenges

o Direct impact on our production capacity (ECN and CBI-electric);

o Direct impact on sales, specifically CBI-electric; and

o Possible wider repercussions over the medium term

• Delays in the award and roll-out of certain infrastructure projects

• Legislative uncertainty

24


The 6 months in review | achievements

Despite the challenges, a positive operational performance and improved efficiencies have resulted in real growth from our continuing operations

• All loss making business units have been restored to profitability (Prodoc, Nashua Communications and Telecoms Cables JV)

• Cost structures have been carefully managed to below prevailing inflation rates

• Management of working capital has continued and has contributed to very strong cash flows from operations

• Improved sales activity has resulted in pleasing revenue growth, specifically:

› Voice offerings by Nashua continue to deliver accelerated performance; and

› CBI-electric has delivered strong production volumes and the associated sales’ growth


The 6 months in review | challenges (continued)

2. A number of industry specific challenges have also impacted this trading period

• CBI-electric low voltage

o Additional costs were incurred by the Solutions’ business in the closure of existing projects as a result of execution challenges. Further, the delays in expected Window 3 REIPP projects have significantly affected their sales pipeline

• Nashua

o Competitive landscape remains challenging for Nashua Office Automation and margins remain under pressure

• Reutech

o An order for a large project was delayed by three months

o Certain contracts and export orders were not repeated



Financial results | salient features

1H15 1H14 % change Continuing operations Revenue Rm 3 935,3 3 681,7 7 Operating profit Rm 502,8 477,2 5 Earnings per share (*) cents 245,7 200,9 22 HEPS (*) cents 242,1 201,3 20 NHEPS (*) cents 238,7 200,0 19 EBITDA % 14,2% 14,4% Operating profit % 12,8% 13,0%

(*) The interest benefit from the Nashua Mobile proceeds has lifted all earnings’ measures by an estimated 9%

Discontinued operations Operating profit Rm 47,5 85,6 45 Additional gain - disposal of subscriber bases Rm 29,8 - EPS impact cents 40,8 36,9 11 NHEPS impact cents 22,7 37,2 39

Interim dividend cents 105 95 11

26


Financial results | revenue

3 682

3 935

192

126 ( 64) ( 1)

2014 CBI-electric Nashua Reutech Other 2015

Rm 1H15 1H14 % CBI-electric 1 965,4 1 774,1 11

Nashua 1 698,5 1 572,1 8

Reutech 423,7 487,7 13

CBI-electric

48% Nashua

42%

Reutech 10%

Rm

18 May 2015

1H2015 FINANCIAL RESULTS

Lood de Jager, Acting Chief Financial Officer



Financial results | operating profit

477 503

35

39 ( 43)

( 6)

2014 CBI-electric Nashua Reutech Other 2015

Rm

Rm 1H15 1H14 %

CBI-electric 257,3 214,6 20

Nashua 243,7 204,4 19

Reutech 35,3 77,9 55

CBI-electric

47% Nashua

45%

Reutech 7%

28


Financial results | cash flow and efficiency indicators

1H15 1H14

Balance sheet Trade receivables (days) 50 48

Inventory turnover (times) 5,8 5,3

Net worth per share (R) 38,32 29,53

Income statement

Gross profit (%) 32,9 33,8

Bad debts as a % revenue 0,3 0,3

Operating costs as a % of revenue 20,7 21,3

Cash flow statement Cash generated by operations vs operating profit (%) 143 96

Rm

607 606

2 031 166

73

(192) (47) (455)

1 910

(29)

EBITDA Improvementin working

capital

Interest,dividends and

other

Taxation paid Capitalexpenditure

Free cashflow

Dividendspaid

Investingactivities

Financingactivities

Increase incash

resources


18 May 2015

Nashua

Mark Taylor


0

20

40

60

80

100

2011 2012 2013 2014 Mar-15

ECN minutes

Inbound Outbound

Nashua | salient features

Continuing operations (Rm) 1H15 1H14 % change

Revenue 1 698,5 1 572,1 8

Operating profit 243,7 204,4 19

Profit margin 14,3% 13,0%

m

2009 2010 2011 2012 2013 2014 0

10

20

30

40

50

60

70

80

90

0

50

100

150

200

250

300

350

400

450

500

Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14

TDV vs MFP and Printer MIF

Total Clicks (left axis)

Multi-functional printers (right axis)

Printers (right axis)

Note: Nashua Communications is included in the Nashua segment for IFRS reporting purposes, although the business is managed by Reutech.

milli

ons

thousands

milli

ons

30


Nashua | commentary

1. The drive for increased market share and improved sales mix will continue

• Increased base size will provide greater annuity revenue

• Improvement in the ratio of colour machine sales will enhance margin

• Increased software sales and support agreements will improve diversification of revenue

2. Better cross-selling of selected products across the segment

• Nashua Voice (powered by ECN) has been launched through Nashua franchises

3. Continued drive to improve cost efficiencies across group companies

• Continue with shared services programme (logistics and warehousing)

• Integrate back-office functions where feasible

4. International expansion into targeted geographies

• New African opportunities (Ghana, Zambia and Mozambique)


Nashua | overview

Office Automation • Good recovery in unit sales volume, however, pressure on margin persists • Annuity revenues held up well, supported by growth in print volumes • Restructuring of ownership in larger franchises (North/Central, Durban, Cape Town,

Tshwane) expected to drive future volumes and revenues • Good traction in targeted African territories • Prodoc had challenging, but profitable first half

Quince • Quince rental book growth of 9% to R2 billion over prior period • Maintain A+ national credit rating • 34% increase in number of deals financed

ECN • Over 1 000 new customer sites • Despite the impact of load-shedding, traffic over the network has increased • Interconnect rate reductions announced in 2014 continue to support margins • PABX business realigned: Unify moved to Reutech, growth in Panasonic sales to SMEs


18 May 2015

Reutech

Peter van der Bijl

32


Reutech | overview

• Half-year performance declined due to:

› Slow start in Fuchs export sales

› Lower margin product sales by Reutech Communications

› Radar Systems completed solar tracker project at Touws River in 1H2014

• Radar and Solutions external R&D funding for new products has improved

• Long-term production order for new generation ground force radios is now being executed

• Co-operation between Unify and Reutech Solutions resulted in the extraction of synergies, which contributed to an improved result

› Business administration costs optimised

› Refocused sales effort towards enterprise market has yielded positive results

• All divisions received good BBBEE ratings and have started increased spend towards compliance with revised codes


Commercial 27%

Defence 43%

SOEs 30%

Market sector

Exports 49%

Local 51%

Revenue distribution

Reutech | salient features

Rm 1H15 1H14 % change

Revenue 423,7 487,7 13

Operating profit 35,3 77,9 55




Reutech | commentary

1. Expansion of direct product sales into the Middle East and Asian markets

• Three long-term supply contracts for Rogue have been successfully concluded

• HF radios targeting new territories

• Mining surveillance radar sales into large new markets is being actively pursued (Central Asia, India and China)

• Further expansion in the Middle East is being investigated for surveillance radars

2. Bring new products into portfolio

• Client funded R&D will yield a new defence radar for SA Navy and a new mining radar for subsurface work

• New generation airborne radio starts flight testing with first client

3. Large European partner sales of Reutech products

• Rogue arrangement with Euro OEM has been concluded

4. Expansion of Unify market in RSA

34


CBI-electric | salient features

Rm 2015 2014 % change

Revenue 1 965,4 1 774,1 11%

Operating profit 257,3 214,6 20%


40 45 50 55 60 65 70 75 80 85

Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15

R’0

00 p

er to

nne

Copper price

Average R71.9k

Average R77.8k

Average R76.3k

020406080

100

Sep

-09

Mar

-10

Sep

-10

Mar

-11

Sep

-11

Mar

-12

Sep

-12

Mar

-13

Sep

-13

Mar

-14

Sep

-14

Mar

-15

% Factory capacity utilisation

Low voltage Energy cables

Copper telecom cables Fibre telecom cables

18 May 2015

CBI-electric

Alan Dickson



CBI-electric | overview

• South African volumes improved across the segment primarily driven by the power cable business

• Market conditions are tenuous but CBI-electric’s relative market position is strong with:

› Long-term supply contracts held by the power cable business have offset some of the reduced offtake by Eskom

› REIPP recommencement of Window 3 projects is expected towards year-end

› Eskom transmission line projects are expected to provide increased volumes

• Excellent working capital management has resulted in an improved operating cash flow position

• The labour situation remains challenging with increasing union politicisation but no disruptions are anticipated

36

18 May 2015

Prospects

Alan Dickson


CBI-electric | commentary

1. Progress has been made into improving the revenue streams from international businesses

• New product launch into Australia commencing 2nd half of FY2015

• The new rail and telecoms circuit breaker product sets for international OEMs are nearing completion

2. The value added portfolios have delivered mixed results

• The Solutions’ arm of the Low Voltage business has not gained the required traction

• The Power Installations’ business within African Cables continues to grow in line with our expectations

3. Margins have improved slightly • Increased volumes resulting in improved recoveries of fixed costs

• Decreased cost base in the Telecoms Cables JV has been fully implemented

• Marginal price increases



Prospects

1. Deployment of sale proceeds

• Strategic review is complete

› Appropriate investment to enhance our existing portfolio of businesses is required for meaningful real growth

› Stakeholder value will be increased by investment to: o Drive real growth in earnings

o Reduce the current concentration risk through diversification

› This will be achieved through the application of Reunert’s acquisition philosophy, which supports smaller, bolt-on acquisitions versus a single large one

• Execution of acquisition and expansion plan

› Potential acquisition and expansion opportunities to be aligned to Reunert’s objectives related to diversification (new products and services, improved value offerings, geographic expansion)

› Potential targets are being prioritised based on their alignment to: o Reunert’s strategic objectives; and

o Relative financial returns

38

18 May 2015

2015 – Half year results presentation RESULTS PRESENTATION

For the six months ended 31 March 2015


Prospects | continued

2. Real growth expected

• Next six months

› Reutech expected to record a stronger 2nd half with the execution of new orders

› Projected savings from cost optimisation initiatives within Nashua should result in improved results

› Previously loss-making operations have been sustainably restored to profits

• Longer-term positioning

› The procurement of certain multi-year orders by Reutech has significantly improved its revenue base load, which is expected to provide an improved result from this segment into the medium term

3. Dividends

• The strong operating cash flows generated by our current portfolio of businesses is expected to continue and will support the payment of sustainable dividends to our shareholders

DIRECTORSTS Munday (Chairman) *,T Abdool-Samad*, AE Dickson (Chief Executive), SD Jagoe*, S Martin*, M Moodley, TJ Motsohi*, NDB Orleyn**, SG Pretorius*, MAR Taylor, R Van Rooyen*

* Independent non-executive; ** Non-executive

REGISTERED OFFICELincoln Wood Office Park6 – 10 Woodlands DriveWoodmead, SandtonPO Box 784391Sandton, 2146Telephone +27 11 517 9000

TRANSFER SECRETARIESComputershare Investor Services Proprietary Limited 70 Marshall StreetJohannesburg, 2001P O Box 61051Marshalltown, 2107

SPONSORRand Merchant Bank (A division of FirstRand Bank Limited)

SECRETARIES’ CERTIFICATIONIn terms of section 88(2)(e) of the Companies Act, 71 of 2008, we certify that, to the best of our knowledge and belief, the company has lodged with the Companies and Intellectual Property Commission for the financial period ended 31 March 2015 all such returns and notices as are required of a public company in terms of the aforesaid Act and that all such returns and notices appear to be true, correct and up to date.

Karen Louwfor Reunert Management Services Proprietary LimitedGroup Company Secretaries

ENQUIRIESCarina de Klerk +27 11 517 9000 or e-mail [email protected]. For more information log on to the Reunert website at www.reunert.com.

19 May 2015

www.reunert.co.za

14441-reunert ppt 2015 · 2019-12-20 · financial results | revenue 3 682 3 935 192 126 ( 64) ( 1)...

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