Listed electronics company Reunert has increased its dividend payout as a new tax regime comes into effect.
The company yesterday reported its interim results for the six months to March and said revenue gained 10%, to R5.7 billion. Normalised headline earnings per share moved to 298c, from 261c.
Reunert has increased its interim dividend to 95c a share from 77c to take into account the change in tax law, which moves the tax burden from companies to shareholders from the end of March.
Until the end of March, companies were required to pay a secondary tax on shareholder payouts in the form of dividends. However, this burden has now been shifted to the stock owner.
IP gaining
Reunert says it saw increased revenue in all of its business segments, with Reutech and CBi-electric being particularly strong. Operating profit grew 18%, to R736 million, as it improved margins through productivity and processes.
However, the company's basic earnings per share dropped 35%, to 303.8c, because of the abnormal R346 million profit it made last year on selling its stake in Nokia Siemens Networks. Headline earnings per share gained 16%, to 304c.
In November 2010, Reunert said it would sell its 40% stake in the local unit of Nokia Siemens Networks as it was a passive shareholder.
Reunert, which is embroiled in a court battle with former employee and ECN founder John Holdsworth, says the mobile telecoms sector remains challenging. It notes that its voice over IP offering and associated services are showing growth off a low base.
Holdsworth and Reunert are in a restraint of trade wrangle, as Reunert accuses Holdsworth, founder of ECN, which Reunert bought last year, of poaching its staff and intellectual property to start mobile company AppChat.
Reunert has been shifting its least-cost routing (LCR) business to ECN's VOIP platform and now has more than 60 million minutes a month on the network. It says Nashua Mobile's results were satisfactory, but was affected by a decrease in a loss of LCR turnover, lower interconnect rates and a “market that is approaching saturation”.
Bulking up
Reunert's telecommunications arm, Nashua, grew revenue 7%, to R3.6 billion, and improved operating profit 20%, to R403 million. Its office automation operation increased revenue 25% and operating profit gained 31%, mostly because of contributions from the franchises Reunert bought towards the end of 2011.
Last year, Reunert bought 51% stakes in the Nashua Tygerberg and Nashua Paarl franchises for R10.6 million and R7.1 million, respectively. In May 2011, the company bought Nashua Durban for R48.9 million, of which R47.8 million was due six months after purchase.
The listed group says it will continue to buy the “last of the franchises targeted for repurchase”.
Revenue and operating profit from Nashua Communications was “static” for the first half of the year. “The market for customer premises equipment remains subdued but the tender pipeline has started showing signs of improvement,” it says.
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