EXECUTIVE DEPUTY CHAIRMAN'S REVIEW
Despite challenging trading conditions, the Rebhold group enjoyed another highly satisfactory financial year, underscoring its status as one of South Africa's leading listed industrial companies.
Turnover increased by 129% to R 3,4 billion, producing net income before taxation of R 579,3 million. Headline net income attributable to shareholders of R 191,5 million was up 101% on the previous year's R 95,5 million. Headline earnings per share increased by 70% to 110,2 cents for the year, which translates to an annual compound growth rate in headline earnings per share since 1995 of 94%. Liquid funds at the year end stood at R 647 million.
During the year the company's listing on the Johannesburg Stock Exchange was moved from the Beverages, Hotels and Leisure sector to the Service sector of the Industrial board. This is in line with the group's structure which now comprises three focused business units operating in the areas of wholesale, services and food and beverages. It also heralds the next stage of Rebhold's strategy of entrenching itself as a leading player in the services sector.
In addition to its changed status on the JSE board, Rebhold acquitted itself well in the prestigious Financial Mail Top Companies survey, improving its position from 63 to 29 ( based on market capitalisation). The group was also for the first time included in the Indi 25 index during the year.
The major transaction for 1999 was the acquisition from Tiger Oats of the cash and carry operations, Browns and Weirs, and their merging with Jumbo Cash & Carry. This has established Rebhold as a national leader in the competitive wholesale cash and carry sector. Jumbo is the exclusive vehicle through which Rebhold and Tiger Oats will hold their wholesale cash and carry interests in southern Africa.
The joint venture between Rebhold and Tiger Oats has allowed Rebhold to accelerate its growth in the sector, with the Browns and Weirs network of 40 stores providing a ready base through which the Jumbo brand and product range can be expanded, at a far greater pace than would otherwise have been possible.
Rebhold's acquisition strategy is based on identifying companies which dominate their niche markets, have dynamic entrepreneurial management, strong cash flows and provide new opportunities for growth.
In line with this strategy, Rebhold identified the security industry as a segment of the services sector which will experience good growth and which has a high tolerance to fluctuating economic cycles. To this end, the Coin Security group was acquired after the year end, which acquisition has been implemented operationally.
Security offers Rebhold a steady stream of contract-based annuity income, significant opportunities for organic growth, and a strong base for future acquisitions in this sector. The services division will become the second largest in the Rebhold group, after the wholesale division.
The current regard in which the group is held is attributable not only to the group's successful acquisition strategy, but also to rigorous operational structures and controls which ensure that businesses acquired by the group benefit from the natural opportunities for synergies and organic growth which exist between Rebhold operations. Positive perceptions regarding the group will also be assisted by the strong prospects which exist for the group to expand its presence in the areas of outsourcing and facilities management.
Prospects
The group's balance sheet is stronger than
ever with liquid funds at year end of
R 647 million. Rebhold intends to enhance returns by pursuing acquisitions within
the group's existing areas of focus which complement existing operations. These
acquisitions are likely to take the form of businesses that can readily be incorporated
into divisional management structures, as well as those acquisitions which are
strategic in nature.
The directors are confident that in the absence of unforeseen circumstances the group will in the ensuing year achieve earnings growth in real terms off the base which has now been established.
Acknowledgements
My thanks go to the Chairman, Mackie Brodie,
to the members of the board for their support and valuable advice, and to our
shareholders for their continued loyalty. I also record our appreciation for
the valuable contribution made by our strategic black empowerment partner, the
Mineworkers Investment Company.
My thanks also go to our executives and employees, who by their hard work and dedication have helped us attain our present heights.
Stephen Levenberg
Executive Deputy Chairman