JSE-listed electronics company Reunert has added to its Nashua portfolio by buying Nashua franchises and ECN Telecommunications, paying a total of R305.5 million, which was funded out of cash reserves.
Reunert yesterday reported its full-year results and said revenue was mostly flat, gaining 2% to R10.9 billion in the 12 months to September. However, after-tax profit surged 48%, to R1.35 billion.
The company, which recently appointed Dave Rawlinson as CEO, after Nick Wentzel stepped down, says it completed several buyouts during the year, all of which were funded from its cash resources. Reunert ended the year with R643 million in cash.
Among the purchases were 51% stakes in the Nashua Tygerberg and Nashua Paarl franchises for R10.6 million and R7.1 million, respectively. In May, the company bought Nashua Durban for R48.9 million, of which R47.8 million was due six months after purchase.
The following month, Reunert bought Nashua Cape Town for R67 million, and an amount of R41.1 million is due after six months.
During the year, the company also acquired ECN Telecommunications, initially for an undisclosed amount. However, in Reunert's results, it disclosed that it spent R171.9 million on the deal.
Reunert has said ECN will aid it in its bid to offer fully converged solutions through Nashua.
As expected
Reunert says Nashua performed to expectation in a quiet market, but the acquisitions aided revenue growth and allowed it to gain a percentage point on the unit's margin.
The purchases, “together with substantial increases in the contributions from Quince and Nashua Electronics”, led to operating profit growth of 21%, to R794.2 million, it says.
“The acquisition of ECN from 1 June 2011 has been very beneficial to the group. It has achieved good market penetration and is currently billing over 50 million minutes a month,” says the listed company.
Nashua Mobile had a “satisfactory” year despite the reduction in interconnect rates.
Reunert adds that the conversion of Nashua Mobile's least-cost routing business to the ECN's voice over IP network is meeting customer expectations, although migration will take another year-and-a-half to wrap up.
Quince's profitability returned to normal levels with the reduction in bad debts, and is now focused on financing its office automation and telecommunications equipment customers, Reunert says. “We are confident that bad debts will be negligible in the year ahead.”
Nashua Electronics saw sales decline after the company exited the consumer market, but the addition of the Kyocera Mita range to its product offering led to a return to profitability, it says.
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