2012 Reunert results for the year ended 30 September 2012 2012 - - PowerPoint PPT Presentation

for the year ended 30 September 2012

2012

Reunert results

Dave Rawlinson, Chief Executive

2012

OVERVIEW

Agenda

Welcome to attendees Operational performance – Dave Rawlinson, Chief Executive Financial results – Manuela Krog, Financial Director CBi-electric – Alan Dickson, Managing Director, CBi-electric Nashua Andy Openshaw, Managing Director, Nashua Communications Mark Taylor, Managing Director, Nashua Mobile (CT) Executive team focus – Dave Rawlinson, Chief Executive 1 2 3 4 5

JHB CT

6

1.6 1.5 0.0 0.5 1.0 1.5 2.0 01 02 03 04 05 06 07 08 09 10 11 12 Rbn

Revenue 7% up

• 2012: R11.7bn
• 2011: R10.9bn

Operating profit 10% up

• 2012: R1.5bn
• 2011: R1.4bn

Salient features

10.9 11.7 2 4 6 8 10 12 14 01 02 03 04 05 06 07 08 09 10 11 12 Rbn

1.7x 0.0 0.5 1.0 1.5 2.0 2.5 100 200 300 400 500 02 03 04 05 06 07 08 09 10 11 12 Cover Cents

Normalised HEPS 9% up

• 2012: 644.4c
• 2011: 590.0c

Final dividend 9% up

• 2012: 275 cents per share
• 2011: 253 cents per share

Salient features

630.1 644.4 100 200 300 400 500 600 700 01 02 03 04 05 06 07 08 09 10 11 12 Cents

582 681 626 765 736 789 1 263 1 391 1 525

1H10 2H10 1H11 2H11 1H12 2H12

CBi-electric Nashua Reutech Half Year Full Year

Operating profit contribution per segment

Cash on hand

0.0 0.5 1.0 1.5 2.0 2.5 02 03 04 05 06 07 08 09 10 11 12 Rbn

Cash on hand (including internal financing deposited with Quince)

(2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 02 03 04 05 06 07 08 09 10 11 12 Rbn

2012

OPERATIONAL PERFORMANCE

African Cables

• Slower than expected rollout of infrastructure spend
• Delays in contract renewals with parastatals

constrained growth

• Signing of several long-term contracts with public

sector enterprises provides a revenue base

• Power Installations division performing well
• Acquisition of Tank Industries provides expanded

product range

Low Voltage

• Experienced good export demand
• Margins supported by a weaker Rand
• Local residential and mining markets static
• Progress with ITmatic and industrial controls

businesses slow

• Activity levels in Australia lower due to slow down in

mining sector

Telecom Cables

• New high bit rate ADSL cable qualified in 2012
• This secured revenue stream from Telkom
• Export market penetration slow

0.6 0% 5% 10% 15% 20% 0.0 0.2 0.4 0.6 0.8 07 08 09 10 11 12 Profit margin Rbn

Operating profit

3.6 0.0 1.0 2.0 3.0 4.0 5.0 07 08 09 10 11 12 Rbn

Revenue

Operations – CBi-electric

Nashua Mobile

• Loss of LCR
• Further reduction in ARPU as a result of bundled

tariffs affected Nashua Mobile

Nashua Office Automation

• Increased unit sales, but margin pressure due to

weakening rand and increased competition

Nashua ECN

• Successful integration – migration of targeted LCR

customers

• Merger with Nashua Communications supports a

converged telecommunications offering

Nashua Communications

• Acquisition of KSS provides Cisco networking

capability

Quince Capital

• Solid performance, increase of 11% in the rental

book

0.8 0% 3% 6% 9% 12% 0.0 0.2 0.4 0.6 0.8 1.0 07 08 09 10 11 12 Profit margin Rbn

Operating profit

7.2 0.0 2.0 4.0 6.0 8.0 07 08 09 10 11 12 Rbn

Revenue

Operations – Nashua

Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12

Nashua Mobile revenue analysis

Operations – Nashua Mobile

Airtime (excl. LCR) Subscriptions (excl. LCR) Airtime (LCR) Subscriptions (LCR)

Overview

• Strong performance from all divisions
• Weakening rand increased margins from export

sales

• All operations have stable order books

Reutech Communications

• Acquisition of Natcom and SAAB Grintek HF

radio business

Reutech Radar Systems

• Continued success of mining surveillance radar

Reutech Solutions

• 5 year contract for maintenance of defence force

communications networks

Fuchs Electronics

• Expedited long awaited export order

0.15 0% 5% 10% 15% 20% 25% 30% 0.0 0.1 0.2 0.3 07 08 09 10 11 12 Profit margin Rbn

Operating profit

0.8 0.0 0.2 0.4 0.6 0.8 1.0 07 08 09 10 11 12 Rbn

Revenue

Operations – Reutech

100 200 300 400 500 600 700 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Rm Replacement Expansion Investment R&D

Investment in future capacity

Tank Industries R16.7m Nashua franchises R3.5m KSS Technologies R19.8m SAAB Grintek R29.7m Natcom R7.1m Sales

Corporate action

Total R76.8m

Manuela Krog, Financial Director

2012

FINANCIAL RESULTS

Group income statement

Rm 2012 2011 % ∆

Revenue 11 662 10 923 7 EBITDA 1 661 1 513 10 EBITDA % 14.2 13.9 Operating profit (before interest and dividends) 1 525 1 391 10 Operating profit % 13.1 12.7 Effective tax rate (before abnormal item in 2011) % 30.9 29.7 Headline earnings per share (cents) 658.3 598.3 10 Normalised headline EPS (cents) 644.4 590.0 9 Dividend yield 5.4 5.6 Price earnings ratio 10.7 10.0 7

• Reutech has the greatest export revenue proportion, with exports comprising 55% of segment revenue
• Export revenue for CBi-electric amounted to 12% of segment revenue

21% 20% 7% 41% 8% 3% Europe Asia North America Africa Australasia South America

Exports

Group balance sheet

Rm 2012 2011

Total non-current assets 2 578 2 401 Current assets 4 010 3 705 Total assets 6 588 6 106 Shareholders’ equity 4 442 3 880 Non-controlling interests 56 55 Non-current liabilities 153 100 Current liabilities 1 937 2 070 Total equity and liabilities 6 588 6 106 Total liabilities to shareholders’ funds % 43.6 52.6 Current ratio (times) 2.1 1.8 Normalised return on ordinary shareholders’ funds % 25.1 23.5

Cash flow (Rm)

565 621 495 (85) (105) (291) 42 Opening balance Cashflow from

• perating

activities inlcuding traditional working capital Increase in asset rental book Increase in handset subsidies Investing activies Financing activities Closing balance Increase in Quince asset rental book Increase in device finance (Nashua Mobile)

31% 62% 7%

2012

CBI-electric Nashua Reutech 30% 64% 6%

2011

Segmental revenues

2012

R11 662m

2011

R10 906m

Segmental analysis – operating profit

Operating profit - Rm 2012 % ∑ % ∆ 2011 % ∑

CBi-electric 593 39

• 592

43 Nashua 839 55 6 794 58 Reutech 151 10 209 49 3 Other (57) (4) 5 (61) (4) Total operations 1 525 100 14 1375 100 NSN

• 17

Operating profit as reported 1 525 1 391

1 391 1 525 1 44 102 3 (17) 2011 CBI-electric Nashua Reutech Other NSN 2012

Operations – research and development

2012 Total R&D Rm Self-funded 2012 2011 2010 2009

CBi-electric 2.2 2.2 3.5 3.4 2.8 Nashua 3.2 3.2 Reutech 25.1 58.8 48.2 64.4 55.1 Total 30.5 64.2 51.7 67.8 57.9

JHB: Andy Openshaw, Managing Director, Nashua Communications CT: Mark Taylor, Managing Director, Nashua Mobile

2012

Nashua

• Successful integration
• Exceeded profit targets
• LCR migration targets exceeded
• Interconnect rates continue to drop

› Efficiency and volume support sustainability and boost margins › Lower interconnect rates benefit new entrants

10 20 30 40 50 60 70 80 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12

Nashua ECN Monthly Minutes, Nov '09 - Oct '12

Mobile Local National Inbound Special International On-Net

ECN post acquisition

New Nashua Communications

Creating a strategic platform for future growth

Focus for 2013

Creating a strategic platform for future growth

CARRIER ¡/ ¡CLOUD ¡ SOLUTIONS ¡ NETWORK ¡ SOLUTIONS ¡ DATA ¡CENTRE ¡ SOLUTIONS ¡ ¡ COLLABORATION ¡ SOLUTIONS ¡ ¡

TRAINING ¡ SERVICE ¡DELIVERY ¡

Customers ¡ ¡

DIRECT ¡ SALES ¡ INDIRECT ¡ SALES ¡ ADMINISTRATION ¡AND ¡SUPPORT ¡

• Cisco Gold Partner certification achieved in November 2012
• Cisco Big Bet backing in the corporate data centre space
• Siemens Openscape platform deployed in the ECN cloud
• ECN Hosted PBX and Mobile Voice applications launch in the new year
• Successful cross selling achieved for combined PBX and voice offerings

through the Nashua OA channel

Key milestones achieved

• To support growth initiatives the business has been restructured into:

› Consumer and Enterprise › Customer Operations to provide support

• Create efficiencies
• Focus on margin growth
• New network agreements will be concluded soon

Nashua Mobile – key focus points for 2013

• Refresh hardware technologies
• Update and redo the retail stores
• Address technology in the stores to have the same POS and Accounting system
• Automated credit collection system
• Revamp the front-end systems
• Grow retail footprint by partnering with stores

› In-store concept › Cost effective › Adding 100 new Nashua Mobile touch points

Nashua Mobile Retail

• Focus on SME and SMME

› Better margins and growth opportunities

• Augment our product suite to help drive more services into this base
• There is pressure for more discounts in the corporate space
• Refresh and revamp the technology

› Self-serve › Account executives can serve customers at their offices in real time

Nashua Mobile Enterprise

Strategy to follow a two-pronged approach for 2013

• Maintain and grow current hardware and service model

› Grow production printing › Improve penetration into strategic accounts › Continuous training, motivation and support via our existing franchise channel

• Transform into a services-led organisation
• Focus more on solutions than pure product

› Managed print service solutions › Managed document service solutions

• Provide document tracking, archiving, indexing or business

process optimisation

Nashua Office Automation

Nashua companies working together

• Customers continue to look for a consolidated product offering

› Our businesses will continue to work and move closer together › Each bringing their expertise, solutions and routes to market › Into a converged product environment

• Cross selling across and between our customer bases is yielding good returns

and adding to our brand strength

• Collaboration on consolidated product offerings to key clients

Working together on the evolution of unified communications and cloud driven services across the product ranges

Alan Dickson, Managing Director, CBi-electric

CBi-electric

Generation build (IRP 2010) 1a

YEAR Coal, Pumped Storage & Eskom Wind (MW) 2013 1 455 2014 1 721 2015 1 444 2016 722 2017 2 168 Total generation build 7 510

Market conditions

Market conditions are predominantly driven by state infrastructure projects

Market conditions

Transmission Assets New assets expected in 2013 - 2017 HVDC 765kV Lines (km) 1 890 400kV Lines (km) 5 668 275kV Lines (km) 52 Total kms of line 7 610

Transmission expansion (TDP) 1b Market conditions are predominantly driven by state infrastructure projects

Window 1 (MW) Window 2 (MW) Remaining by 2016 (MW) Solar PV 632 417 401 Solar CSP 150 50

• Wind

634 562 653 1 416 1 029 1 054

Market conditions

Renewable energy 2 Market conditions are predominantly driven by state infrastructure projects

• R18bn local content in Window 1 and will grow in subsequent Windows
• Window 2 financial closure in March 2013
• An additional 3 200MW between 2017 - 2020

Market conditions

Residential 3

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Buildings reported as completed Constant 2005 prices ZAR (m)

• Stable

Welcome to attendees 1

Market conditions

Commercial 4 Mining 5

• Chance of improved conditions
• Operational mining expected to continue at pre-unrest levels
• Deep level mining capital to be significantly reduced
• Iron ore and coal are primary drivers of capital expenditure

• Mining uncertainty on project roll out
• Rising cost base (electricity and labour)
• Increasing competition and margin pressure
• State infrastructure execution risks

Head winds

• Strong local corporate responsibility

› Level 2 BBBEE › Product designation › Local manufacture investment

• Reduced component exposure by expanding in Value Added Services business

› IT Matic › Power Installations › Tank Acquisition

• Export 12% of CBi-electric group revenue across the world

› Rand hedge

Positioning

• Proven track record on operating efficiencies
• Well positioned within the electrical sector which has strong demand and long

term fixed investment

› Eskom › Renewable Energy › Transnet

Positioning

Dave Rawlinson, Chief Executive

Executive team focus

Team focus 2013 – CBi-electric

Local supplier of choice for R18 billion local spend on renewable energy roll-out

1

Increase export activity in Europe, USA and Africa

2

Participate actively in Eskom and Transnet expansion

3

Team focus 2013 – Nashua

Grow customer base and minutes on voice network

1

Market penetration in converged voice and data network space

2

Roll-out recently developed products for

3

Hosted PBX

Grow mobile customer base

4

Mobile voice Data storage

Accelerate roll-out of office solutions

5

Increase outlets in retail space Automate customer processes Service excellence

Team focus 2013 – Reutech

Integrate Saab Grintek and Natcom acquisition into Reutech Communications

1

Increase MSR market penetration

2

Secure further orders for concentrated photovoltaic tracker solution

3

Obtain and execute set-top box order

4

Secure further export orders for Fuchs

5