2011 Reunert results for the year ended 30 September 2011 2011 - - PowerPoint PPT Presentation

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2011 Reunert results for the year ended 30 September 2011 2011 - - PowerPoint PPT Presentation

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2011 Reunert results for the year ended 30 September 2011 2011 OVERVIEW Dave Rawlinson, Chief Executive Agenda 1. Welcome to attendees and phone in participants 2. Operational Performance Dave Rawlinson, Chief Executive 3. Financial

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SLIDE 1

for the year ended 30 September 2011

2011

Reunert results

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SLIDE 2

Dave Rawlinson, Chief Executive

2011

OVERVIEW

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SLIDE 3 3

Agenda

  • 1. Welcome to attendees and phone in participants
  • 2. Operational Performance – Dave Rawlinson, Chief Executive
  • 3. Financial Results – Manuela Krog, Financial Director
  • 4. Energy Infrastructure – Alan Dickson, Managing Director, CBi-electric: african cables
  • 5. Telecommunications – Andy Openshaw, Managing Director, ECN Telecommunications
  • 6. Executive Team Focus – Dave Rawlinson, Chief Executive
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SLIDE 4 4

10.9 10.9

2 4 6 8 10 12 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rbn 1 595 1 391

500 1 000 1 500 2 000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Rm

Salient features

Revenue 2% up

  • 2011: R10.92bn
  • 2010: R10.67bn

Operating profit 10% up

  • 2011: R1.39bn
  • 2010: R1.26bn
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SLIDE 5 5

630.1 590.0

100 200 300 400 500 600 700 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Cents 1.8x

100 200 300 400 500 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Cents

Interim Final Special Dividend cover

Salient features

Normalised HEPS 14% up

  • 2011: 590.0c
  • 2010: 515.7c

Final dividend 15% up

  • 2011: 253 cents per share
  • 2010: 220 cents per share
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SLIDE 6 6

40% shareholding in NSN sold in January 2011 for R794m Nashua franchises R134m ECN R172m ITmatic R14m Share buyback R1 128m Sales

Corporate action

Total R1 448m

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SLIDE 7 7

Cash on hand

400 800 1 200 1 600 2 000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rm Cash on hand (excluding Quince)

  • 2 000
  • 1 500
  • 1 000
  • 500
500 1 000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rm

Net cash on hand reduced by Quince borrowings Quince net borrowings
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SLIDE 8 8

Operating profit

Rm Profit Contrib.

Operating profit 2010 1 262 CBI-electric 71

▲

Nashua 141

▲

Reutech (12)

▼

NSN (36)

▼

Other (35) Operating profit 2011 1 391

▲

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SLIDE 9

2011

OPERATIONAL PERFORMANCE

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SLIDE 10 10

Highlights

  • Quince profitability back to normal levels
  • Turnaround from PanSolutions
  • The integration of ECN
  • LCR conversion to VoIP a priority
  • Four franchises purchased

› Contribution going forward will be meaningful

Operations – Nashua

200 400 600 800 1 000 2007 2008 2009 2010 2011

Rm

Operating profit

5 000 5 500 6 000 6 500 7 000 2007 2008 2009 2010 2011

Rm

Revenue

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SLIDE 11 11

Operations – Nashua Mobile

6 months ended 12 months ended

Sep 11 March 11 Sep 10 Sep 11 Sep 10 % ∆

Contract connections for the period 67 124 54 336 58 701 121 460 150 519 (19.3) 3G/HSDPA connections for the period 26 666 26 025 24 326 52 691 36 863 42.9 Total connections 93 790 80 361 83 027 174 151 187 382 (7.1) Closing base 846 521 824 396 819 035 846 521 819 035 3.4 Average revenue per user R411 R426 R452 R416 R463 (10.2) Churn % 15.0 13.8 10.9 14.4 11.8 21.8 Net bad debts % revenue 1.16 1.03 1.00 1.10 0.95 15.7 Number of retail outlets 150 150 149 150 149 0.7

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SLIDE 12 12

Operations – Nashua Office Automation

393
  • 10

20 30 40 50 60 70 80 90

  • 50

100 150 200 250 300 350 400 450 200210 200310 200410 200510 200610 200710 200810 200910 201010 201110

Clicks (m) Clicks (m)

Total document volumes Total MFP Printer Fax 12 per. Mov. Avg. (Total)

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SLIDE 13 13

Highlights

  • Australia contribution up by R20m
  • Copper price helps revenue but minor margin

contribution

  • Value added services

› Power Installation › ITmatic

  • Telecom Cables improved in 2nd half

Operations – CBi-electric

200 400 600 800 2007 2008 2009 2010 2011

Rm

Operating profit

1 000 2 000 3 000 4 000 5 000 2007 2008 2009 2010 2011

Rm

Revenue

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SLIDE 14 14

Operations – CBi-electric

4% 8% 10% 15% 20% 43%

0% 10% 20% 30% 40% 50% Retail and other Exports Mining Commercial and industrial Distributors Government and parastatals

Revenue per market sector

20 40 60 80 100 Mar 09 Sep 09 Mar 10 Sep 10 Mar 11 Sep 11

%

Factory capacity

Low voltage Energy cables Telecom cables
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SLIDE 15 15
  • Lower contribution from defence
  • Fuchs order received for delivery in

2012 and 2013

Highlights

  • Significant contribution from mining surveillance

radars

  • Order books bolstered

Operations – Reutech

200 400 2007 2008 2009 2010 2011

Rm

Operating profit

1 000 2007 2008 2009 2010 2011

Rm

Revenue

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SLIDE 16 16

Operations – research and development

Reunert self-funded developments

  • Mining surveillance radar
  • Set-top box
  • Remote mine winch

2011 Total R&D Rm Self-funded 2011 2010 2009

CBi-electric 2.9 3.5 3.4 2.8 Reutech 11.5 48.2 64.4 55.1

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SLIDE 17 17

Operations – exports

  • Improved performance of Australian subsidiary
  • Supply of circuit breakers for 4G telecoms

upgrades in USA and Europe

  • Defence exports down

Rm 2011 2010 2009

Africa 102 27 129 Rest of the world 607 565 802 Total exports 708 592 931

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SLIDE 18

Manuela Krog, Financial Director

2011

FINANCIAL RESULTS

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SLIDE 19 19

Key highlights – income statement

Rm 2011 2010 % ∆

Revenue 10 923 10 675 2 EBITDA 1 513 1 376 10 Operating profit 1 391 1 263 10 Abnormal items 346 (34) Profit after taxation 1 353 911 48 Headline earnings 989 903 9 Headline earnings per share (cents) 598 506 18 Normalised headline EPS (cents) 590 516 14 EBITDA % 14 13 8 Average no. of shares (million) 165 179 (7)

For the year ended 30 September
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SLIDE 20 20

Key income statement ratios

2011 2010

Gross profit % 29.7% 29.2% Operating profit % 12.7% 11.8% Effective tax rate before abnormal item % 29.7% 28.5% Effective tax rate % 23.9% 29.2% HEPS (cents) 598.3 505.5 Normalised HEPS (cents) 590.0 515.7 Dividend per share (cents) 330.0 287.0 Dividend yield % 5.6% 4.6% Year-end market price per share (cents) 5 885 6 201

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Condensed balance sheet

Rm 2011 2010

Fixed, intangible, other assets & goodwill 1 435 1 212 Accounts receivable 966 846 Non-current assets 2 401 2 058 Inventory and contracts in progress 885 863 Accounts receivable and other receivables 2 177 2 360 Investment 794 Cash and cash equivalents 643 1 878 Current assets 3 705 5 895 Total assets 6 106 7 953 Total equity including minority interests (3 936) (4 471) Deferred tax liabilities (99) (122) Long-term borrowings (1) (711) Non-current liabilities (100) (833) Non-interest-bearing liabilities (1 985) (1 957) Bank overdrafts and other short-term borrowings (85) (692) Current liabilities (2 070) (2 649) Total equity and liabilities (6 106) (7 953)

As at 30 September
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SLIDE 22 22

Key balance sheet ratios

2011 2010

Market capitalisation (Net of treasury shares – Rm) 9 512 10 988 Price earnings ratio 10 12 Normalised return on ordinary shareholders' funds (%) 23.5 21.8 Return on net operating assets (%) 68.9 34.1 Current ratio 1.8 2.2 Total liabilities to total shareholders' funds (%) 52.6 75.1

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SLIDE 23 23

Cash flow

1 186 1 561 41 (439) (499) (99) (214) 791 59 (1 128) (700) 4 565

  • 1 000

2 000 3 000

Opening balance EBITDA & working capital Net interest and dividends Taxation paid Dividends paid Capex Acquisitions NSN proceeds Shares issued Shares repurchased Securitisation repaid Other movements Closing Balance

Rm

Rm 2011 2010

Opening balance 1 186 688 Cash flow for year (621) 498 Closing balance 565 1 186

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Segmental analysis - revenue

For the year ended 30 September

Revenue - Rm 2011 % ∑ % ∆ 2010 % ∑

CBI-electric 3 336 30 13 2 961 28 Nashua 6 928 64 1 6 867 65 Reutech 640 6 (19) 791 7 Other 3

  • 11

3

  • Total operations

10 906 100 3 10 622 100 NSN 17 (68) 53 Revenue as reported 10 923 100 2 10 675 100

10 675 375 60 (152) 0.3 (36) 10 923 10 400 10 600 10 800 11 000 11 200 2010 CBI-electric Nashua Reutech Other NSN 2011 Rm

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SLIDE 25 25

Segmental analysis – operating profit

For the year ended 30 September

Operating profit - Rm 2011 % ∑ % ∆ 2010 % ∑

CBI-electric 592 43 14 521 43 Nashua 794 58 21 654 54 Reutech 49 3 (20) 61 5 Other (61) (4) (26) (2) Total operations 1 375 100 14 1 210 100 NSN 17 (68) 53 Operating profit as reported 1 391 100 1 263 100

1 263 71 141 (12) (35) (36) 1 391 1 200 1 300 1 400 1 500 2010 CBI-electric Nashua Reutech Other NSN 2011 Rm

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SLIDE 26 26

Distribution of wealth created

500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2007 2008 2009 2010 2011 Rm Employees Government Providers of capital Retained

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SLIDE 27 27

Capital expenditure

20 40 60 80 100 120 140 160 180 200 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rm Replacement Expansion

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SLIDE 28 28

Investments

Nashua franchises

  • Tygerberg (51%)

R11m

  • Paarl and Western Cape (51%) R7m
  • Durban (100%)

R49m

  • Cape Town (100%)

R67m

ECN

  • R172m

Share buy-backs

  • 2011: R1.1bn

(17.1m shares)

  • 2010: R126m

(2.1m shares)

  • Total 19.2m shares bought back @ average

price of R65.37 per share

ITmatic

  • R1m and R13m goodwill
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Alan Dickson, Managing Director, CBi-electric: african cables

ENERGY INFRASTRUCTURE

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Year Generation

Total MW Renewable Coal Wind Eskom Wind

  • ther

CSP Medupi Kusile 2012 100 350 772 1 672 2013 350 722 1 572 2014 400 100 1 444 2 044 2015 400 100 722 722 2 444 2016 200 1 446 2 546

Market conditions driven by

Eskom’s new build program

(Policy adjusted IRP 2010)

  • Modified for cable demand
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SLIDE 31 31

Year Generation (Rm)

Distribution Total Spend Renewable Coal Wind Eskom Wind

  • ther

CSP Medupi Kusile 2012 40 140 50 500 730 2013 140 50 500 690 2014 Unclear 100 500 600 2015 160 Unclear 50 50 500 760 2016 80 160 100 500 840

Market conditions driven by

Eskom’s new build program

(Policy adjusted IRP 2010)

  • Modified for cable demand
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SLIDE 32 32

Market conditions driven by

Eskom’s new build program

(Policy adjusted IRP 2010)

  • Modified for cable demand

Municipal infrastructure

  • Service delivery
  • Ageing infrastructure &

backlog

  • Estimated R27bn+

Electrical infrastructure requirements significant

  • ver the next 5 years

pic

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SLIDE 33 33

Strategic positioning

Group products fit well into the infrastructure requirements of the country Significant investment into Value Added Services is delivering results

  • ITmatic
  • Power Installations

Group companies meet the legislated criteria required by their customers

  • B-BBEE (Level 2)
  • CIDB (Projects >R100m)
  • ISO 9001, 18001, 14000

Pic?

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SLIDE 34 34

Other prospects

Operational efficiencies

  • Margin pressure
  • Cost base increases

Export revenues are consistently improving

  • Africa
  • Australia

the dti is aligning legislation to support local manufacture for SOE’s procurement

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SLIDE 35

Andy Openshaw, Managing Director, ECN Telecommunications

TELECOMMUNICATIONS

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SLIDE 36 36

ECN historical growth

10 20 30 40 50

Oct-08 Apr-09 Oct-09 Apr-10 Oct-10 Apr-11

Minutes (m)

ECN monthly minutes, Oct 2008 - Sept 2011

Inbound Mobile National Local Special International On-Net Oct 08 Apr 09 Oct 09 Apr 10 Oct 10 Apr 11

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SLIDE 37 37

Next generation services LCR migration Nashua Telecoms / ICT ECN provides a VoIP platform onto which the Nashua LCR base can be migrated

Key focus points

LCR migration The drop in interconnect rates has made the offering of mobile LCR non-viable in medium term Rather than have the traffic move back to the incumbent operators these customers will be migrated onto the ECN VoIP network Migration process is underway

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SLIDE 38 38

Next generation services LCR migration Nashua Telecoms / ICT

0% 10% 20% 30% 40% 50% 60% Nashua Mobile LCR – Conversion Target Convert 2012 Convert 2013

LCR base analysis

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nashua Mobile LCR – Convertible Base Large customers to Telkom Convertible customers Small unconvertable customers

LCR migration

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SLIDE 39 39

Next generation services LCR migration Nashua Telecoms / ICT

LCR to VoIP conversion – revenue FY12-FY13

LCR migration

Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Revenue VOIP LCR Total

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SLIDE 40 40

Next generation services LCR migration Nashua Telecoms / ICT

LCR to VoIP conversion – minutes FY12-FY13

LCR migration

Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Minutes VOIP LCR Total

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Next generation services LCR migration Nashua Telecoms / ICT

LCR to VoIP conversion – GP FY12-FY13

LCR migration

Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 GP VOIP LCR Total

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Next generation services LCR migration Nashua Telecoms / ICT

Key focus points

Next generation services The ECN national IP network provides Reunert with platform

  • ff which Next Generation services can be delivered

Current: ECN is a significant player in the voice sector and a minor player in the data sector Next 12 months: Bundling data offerings, together with voice offerings, over the same connection Next 12 to 24 months: Cloud computing is gaining traction and the demand for hosted solutions is growing steadily 24 to 48 month view: Future players will become service providers, delivering IP based content to their customers over their evolved IP platforms

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SLIDE 43 43

Next generation services LCR migration Nashua Telecoms / ICT

Key focus points

ECN + Nashua Communications + Nashua Mobile = Nashua Telecoms / ICT entity in the medium to longer term ECN, Nashua Communications and Nashua Mobile all have immediate and focused individual short-term strategies Each have a medium-term strategy that brings the entities together to form a comprehensive Telecommunications / ICT entity delivering LAN, WAN and Mobile solutions to the Nashua customer base and the broader market Cross selling and cross support is ongoing and growing between the entities The total Nashua customer base is a large and ‘un-mined’ asset to the group Nashua Telecoms / ICT

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SLIDE 44

Dave Rawlinson

EXECUTIVE TEAM FOCUS

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SLIDE 45 45

Executive team focus

Nashua

A thorough review of the Nashua One vision Identified synergies,

  • pportunities and

negatives Divisional layer redeployed Conventional reporting lines and responsibilities clearly defined Franchise and distribution channel aligned and rejuvenated Strategic and technical business partners’ concerns addressed

1 2 3 4 5 6

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SLIDE 46 46

Executive team focus

Maximise utility and municipal spend Increase value-added services

  • Systems design
  • Systems integrator
  • Maintenance outsourcing
  • Add to Power Installations

and ITmatic offerings

Continued focus on improving operational efficiencies Secure more business in Africa Explore further growth opportunities in Australia

1 2 3 4 5

CBi-electric

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SLIDE 47 47

Executive team focus

Reutech

Pursue commercial

  • pportunities
  • Mining surveillance radar
  • Set-top box
  • Mine winch
  • Security surveillance
  • Mobile phone encryption

Radios for ground forces

  • Development in final stages
  • Industrialisation
  • Production

Production and quality efficiencies

1 2 3

200 400 600 800 1 000 1 200 2009 2010 2011 Rm Order book Sales coverage Order intake Sales

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SLIDE 48 48

In summary

Available cash an opportunity Expect current economic conditions to continue It is going to be hard work People, product, productivity and perfection = profit and pride

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SLIDE 49

for the year ended 30 September 2011

Q&A

Reunert results