Technology group Reunert achieved 16% growth in full-year headline earnings per share (HEPS), despite basic earnings plummeting due to the sale of Nashua Mobile.
Revenue for the year ended 30 September was up 7% to R8.3 billion, and the company declared a final cash dividend of R3.02 per share, up almost 10% from a year ago.
Basic earnings per share from all operations, however, fell by 50% to R6.04, largely due to the sale of Nashua Mobile and the non-recurring nature of the 2014 profit on the sale of its subscriber bases. Reunert made R1.4 billion from the Nashua Mobile sale but this was accounted for in the 2014 financial year.
When looking at continuing operations, the company saw HEPS soar 47% to R5.76, while basic earnings per share rose 146% to R5.79.
The technology group says its "strong concentration in the South African market" could pose a challenge in future if SA's constrained macro-economic environment continues. The group operates mainly in South Africa, with minor operations in Australia, Lesotho, Sweden, the US and Zimbabwe.
"The economic growth rates achieved by the South African economy have slowed materially from those forecast for 2015 and are not expected to improve in the medium-term," says Reunert.
The company says future growth prospects are likely to be constrained by the domestic environment; however, this will be offset by recently secured long-term contracts, specifically in applied electronics.
"These revenues, with a strong, hard currency exposure, are expected to bolster operational performance. Reunert's strengthened financial position, and significant capacity to leverage its balance sheet, positions it well to execute its growth strategy."
Continuing operations
The sale of Nashua Mobile was successfully concluded in the first quarter of the financial year, and Reunert says the management team at Office Automation was strengthened by the deployment of key Mobile team members.
Although the Nashua segment saw flat revenue, operating profit, net of the discontinued operation, increased by 17% to R533 million.
"This was achieved through a careful evaluation of the whole supply chain and realising savings in our distribution and general overhead costs."
The segment's voice businesses had a successful year "with ECN breaking through the one billion voice minutes per year mark and entrenching its position as the largest independent voice over Internet Protocol solution provider in the country".
The company says Nashua Communications, which is now managed by subsidiary Reutech, delivered a positive performance underpinned by strong service revenue.
Reutech saw revenue grow by 8% to R1.1 billion and operating profit rise 6% to R181 million. The segment, which relies on large contracts which often take several years to conclude, saw slowdown in the communications and radar business units.
"The timing of new contracts received by this segment did not fully compensate for contracts completed in the 2014 financial year. However, contracts secured during 2015 provide a strong revenue base for the year ahead."
This includes a long-term South African National Defence Force tactical communications contract, as well as products from a new factory that will commence delivery in the next financial year.
The company's CBI-electric segment delivered a substantially improved performance, with revenue growing by 14% to R4.1 billion and operating profit rising 21% to R520 million.
"This strong performance was driven primarily by the energy and telecommunication cables business units, which maintained strong cost control while benefiting from improved factory utilisation. These drivers resulted in improved profit margins, which further underpinned the financial performance of this segment."
The circuit breaker business unit had a challenging year but the cable business units improved their market shares. Product sales performed well but the contribution from the solutions business unit was disappointing.
"Product volumes into South Africa were strong, while export volumes remained in line with the previous year," according to the company.
Reunert manages a diversified portfolio of businesses in the fields of electrical engineering (CBI-electric), information and communication technologies (ICT-Nashua), and applied electronics (Reutech).
The group was established in 1888 by Theodore Reunert and Otto Lenz, and was listed on the Johannesburg Stock Exchange in 1948.
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