Reunert Year-end Results 12 months ended 30 September 2009 1 - PowerPoint PPT Presentation

Reunert Year-end Results 12 months ended 30 September 2009 1

Salient features  Strong balance sheet  Businesses resized  Product offering rationalised  Bolt-on acquisitions 2

Salient features  Revenue R10,3 billion ( 6 %  )  Operating profit R1,1 billion ( 28 %  )  EBITDA as % of revenue from 15,2% to 12%  Cash position R1,6 billion at 30 Sep 09  Interest and dividend income up 79% to R108 million  Normalised HEPS 499,9 cents per share (21%  )  Final cash dividend 188 cents per share  Total cash dividend 253 cents per share (21%  ) 3

Group Structure CBI-electric Nashua Reutech Investments Energy cables Office automation Communications NSN (40%) Telecom cables Electronic fuses Mobile services Low voltage Telecommunications Radar systems Business systems Medium voltage Solutions Finance 4

Income statement % R Millions 2009 2008 Change TURNOVER 10 271 10 921 (6) EBITDA 1 237 1 661 (26) Depreciation (96) (87) 11 Operating Profit 1 141 1 574 (28) Interest & Dividends 108 60 79 Profit before abnormal items 1 249 1 634 (24) Abnormal items 299 - Profit before taxation 1 548 1 634 (5) Taxation (374) (487) (23) Profit after taxation 1 174 1 148 2 Associates - 16 (100) Minorities (9) (7) 26.76 Headline earnings adjustments 3 3 - Headline earnings 1 168 1 160 1 Headline EPS (cents) 652 652 0 Normalised Headline EPS (cents) 500 630 (21) EBITDA % (Before NSN commission) 12 15 (21) Tax rate %* 27 30 (9) 5

Summarised balance sheet R Millions 2009 2008 EMPLOYMENT OF CAPITAL Fixed Assets 588 591 Goodwill & Investments 1 314 1 281 R C & C Finance debtors 994 1 275 Current Assets 3 072 3 620 Stock 696 980 Accounts receivable 1 666 1 935 RC&C Accounts receivable 710 682 Other Debit Balances 23 Gross Assets 5 968 6 767 Net Current Liabilities (1 770) (1 881) Net operating Assets 4 198 4 886 CAPITAL EMPLOYED Shareholders' Funds (4 061) (3 696) Deferred tax liabilities (111) (176) Long-term borrowings (14) (14) Net Cash 1 603 782 Net R C & C Finance Borrowings (1 615) (1 782) (4 198) (4 886) 6

Summarised cash flow statement 2009 2008 Rm Rm (excl movements relating to Finco receivables and borrowings) EBITDA 1 237 1 661 Dividend and interest income 108 147 1 345 1 808 Decrease in inventory 293 (49) Decrease in accounts receivable 284 (193) Decrease in accounts payable (63) (54) Taxation paid (478) (411) Dividend paid (550) (569) Capital expenditure (87) (117) Net cash flow 744 415 Other 1 (6) Increase in net cash and cash equivalents 745 409 7

% contribution to group Revenue Operating profit R10,2 billion (FY08: R10,9 billion) R1,1 billion (FY08: R1,6 billion) 9% 2008 2008 6% 46% 36% 45% 58% CBI-electric 2009 2009 Nashua Reutech 9% 20% 29% 36% 62% 44% 8

Seven-year performance Revenue Operating Profit 12 1573 1600 11 10 10 1400 1273 1319 10 8 1200 1140 8 7 1000 917 R billion 6 R million 6 6 800 701 608 600 4 400 2 200 0 0 2003 2004 2005 2006 2007 2008 2009 2003 2004 2005 2006 2007 2008 2009 9

Cash generation Cash on hand (excl finco) 1 800 1 603 1 600 1 400 1 200 R million 969 1 000 795 784 800 531 600 485 451 400 200 0 2003 2004 2005 2006 2007 2008 2009 10

Normalised HEPS Normalised headline earnings 2009 2008 per share Headline earnings 1 163.1 1 159.8 700 630 Less 570 600 NSN fair value (299.2) 0.0 500 495 Taxation effect 500 37.4 0.0 BEE share of headline 380 400 earnings adjustments 0.3 (0.4) cents 278 901.6 1 159.4 300 Net economic interest due to 184 BEE partners (10.0) (38.5) 200 Normalised headline earnings 891.6 1 120.9 100 0 2003 2004 2005 2006 2007 2008 2009 11

Acquisitions  Siemens Enterprise Communications • Acquired remaining 60% stake from Siemens Limited South Africa • Competition Commission & Tribunal approval 29 Oct 2009 • Annual sales of about R450 million  Blue Lake Investments • Least-cost routing  Nashua Central • Nashua Holdings bought 60% in Nashua Central • Major franchise 12

Nokia Siemens Networks  Commission income on comparable basis • R97 million ( 31%  ) from R139 million  Market share • More competition • Delayed benefits of merger  Reduced spending by networks  Prospects • Unlikely to make significant progress in short term • Further weakness likely 13

Restructuring Nashua Electronics  Panasonic • Exited consumer electronics • Focus on  Telecommunications  Business systems 14

CBI-electric Revenue Operating Profit 4 500 800 3 952 675 4 000 700 3 315 3 500 600 554 2 952 3 000 500 R million R million 2 500 393 400 2 000 300 1 500 200 1 000 100 500 0 0 2007 2008 2009 2007 2008 2009 16

Market conditions  Volume decrease Reduction in residential and commercial activity • Building confidence: Growth in building activity Residential and non-residential contractors 80 60 40 20 0 -20 -40 -60 -80 -100 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 2006 2007 2008 2009 Source: BER 17

Impact of copper price  Significant volatility during the period  R52 million in copper losses 88 000 84 000 80 000 76 000 72 000 68 000 64 000 60 000 R-value per ton 56 000 RCP Current 52 000 48 000 44 000 Average 40 000 36 000 32 000 28 000 24 000 20 000 October 2007 November 2007 January 2008 February 2008 April 2008 May 2008 June 2008 August 2008 September 2008 November 2008 December 2008 February 2009 March 2009 May 2009 June 2009 July 2009 September 2009 October 2009 18

Energy cables  Total market historically R5-6 billion  Offer a complete product range • HV, MV, LV, ACSR & special cables • No house wire  Services • Installation & service of MV & HV cables  Consistent improvement in market share (both sector and product) • LV products – purchase and consolidation of Rosslyn Cables • ACSR market share grow from zero to >20% • Utility and industrial sectors • Current market share in excess of 30% 19

Market conditions  Margin pressure • Over capacity in manufacturing across all product groups • Consistent import activity under favourable trade agreements and a strong rand • Rand-copper price alignment 20

Outstanding order book  Local order book declined by 64% • Impact of copper price • General market decreased by 61% vs rest of sectors around 35% • Reduction in stock holding within general market 800 700 600 R million 500 400 300 200 100 0 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 21

Energy cables  Our response • Reduced working capital • Company resized for market demand to improve efficiencies • Investment in key operational areas – Mains – XLPE – Extrusion control 22

Energy cables prospects  Volumes expected to be nominally the same as the past year except for • Improved transmission business volumes • Increased HV & MV service offering • Exports • Eskom’s power station requirements  Lower cost base and improved efficiencies will improve profitability 23

Low-voltage product range Moulded case circuit Electricity metering Circuit breakers for Product Wiring accessories Miniature circuit Surge protection Earth leakage Motor control Automation equipment equipment protection breakers breakers devices Market Segment      Residential Commercial             Mining Utilities             Industrial Original Equipment    Manufacturer Manufactured Traded 24

Low voltage  Revenue down 15%  Volumes down by 48%  Working capital down 38%  Headcount reduced by 30%  Position in residential market strengthened  Australia contributed positively during the second semester 25

Low voltage  Weak local demand  Increased presence of low-cost products in certain markets  Effect of commodity prices on industrial projects  Leading to pressure on volumes and margins  Low voltage restructured to face challenges  Signs of stability in our more important market segments  Well positioned to return acceptable results 26

Low-voltage revenue contributions Revenue by Export revenue market segment by region North Far East America Export Residential 18% 13% 25% 25% Australia Other Europe 10% 2% 24% Industrial Other Commercial 3% Controls 15% 11% Mining Industrial Africa 12% 10% 32% 27

Low-voltage volume declines Volumes (poles per day) 2009 2008 % Change 2010 Local  11 970 18 782 (36%) Residential & commercial property 487 657 (26%)  Mining 793 1 863 (57%)  Industrial 4 484 6 991 (36%)  Retail Local total (37%) Export 2 226 3 881 (43%) Residential & commercial property 47 44 7%  Mining 5 889 17 476 (66%)  Industrial 77 57 35%  Retail Export total (62%) Grand total 25 973 49 751 (48%) 28