Reunert Limited · JSE:RLO
Reunert — Investor Day (2023)
33 slides from Reunert's investor day presentation, 2023
Slide 1: Applied Electronics: Defence
APPLIED ELECTRONICS: DEFENCE
Slide 2: Presenters
Trevor Raman Petrus Pelser Harald Bielfeld Mike Tucker Marcus Applied ETION Create Reutech Radar Fuchs Electronics Capuzzimati Electronics Chief Executive Systems Chief Chief Executive Applied Chief Executive Officer Executive Officer Officer Electronics Chief Officer 25 years executive 25 years exe
Slide 3: Agenda
AGENDA APPLIED Segment overview ELECTRONICS: Segment key growth areas DEFENCE ETION Create Fuchs Electronics Reutech Radar Systems
Slide 4: Defence Overview
DEFENCE OVERVIEW Trevor Raman Applied Electronics Chief Executive Officer
Slide 5: General Market Outlook
General Market Outlook > General global geopolitical instability has a positive impact on defence budgets and defence spend > Positive growth forecasts expected on the back of a positive outlook in key customer markets
Slide 6: Applied Electronics Key Markets Outlook
Applied Electronics Key Markets Outlook Europe > The Ukraine crisis has resulted in all NATO countries materially increasing defence budgets as a percentage of GDP (increasing from ~1.1% to at least 2%) South-East Asia and India > China and countries in the South-East Asia region have increased defe
Slide 7: Beneficiation strategies (localisation) – self reliance
The Applied Electronics segment primarily operates within the South African, Middle-Eastern, Indian, South-East Asian and niche European regions > The United States of America and China are largely self-reliant The Markets in which we operate require: > Beneficiation strategies (localisation) – self
Slide 8: Key competitive advantages
Key competitive advantages > Trusted capabilities and operational excellence proven by our products and services > Long-standing relationships with strategic overseas local companies (B2B) and users (B2C) > Open to localisation and co-development in developing markets > Price competitive > Ability t
Slide 9: R&D and Skills
R&D > Technology foresight planning aligned with customer requirements − Combination of privately funded and co-funded development − Directly own or co-own intellectual property > Key technologies to meet localisation being developed overseas > Ongoing R&D between 8-10% of revenue Skills > Core comp
Slide 10: CSI
CSI > Reunert Learning Institute – matric bridging course, addressing the growing demand for educational and workplace skills for previously disadvantaged communities. Hosted at Fuchs Electronics, Alrode Campus > South African National Defence Force children's fund and military veteran entrepreneuri
Slide 11: Strategic priorities
> Internationalisation: − expansion of export revenues − market expansion − operations > Integration and expansion of ETION Create > Achieve synergies between business units in: − market diversification − product − solution offerings > Driving efficiency to improve quality of earnings
Slide 12: Radars & Sensors; Fuzes
RADARS & SENSORS • Cluster overview • Key capabilities > Contribution to annual revenue ~40% Defence > Defence / Non-defence ~50/50 > Land and sea surveillance and target > Tier 2 supplier to Tier 1 original acquisition radars equipment manufacturers (OEMs) > Tactical navigation for land defence > P
Slide 13: Secure Communications; Logistics
SECURE COMMUNICATIONS • Cluster overview • Key capabilities > Contribution to annual revenue ~25% > Land, air and sea tactical secure > 80% Defence defence communications > Tier 2 supplier to Tier 1 OEMs and > Encrypted communications for both MoDs defence and commercial > Private funded development
Slide 14: Defence and ESG
DEFENCE AND ESG
Slide 15: South African export controls (NCACC)
1. All South African exports are controlled by the National Conventional Arms Control Committee (“NCACC”): ˃ Export permits issued after confirming that the export is within international regulations and within South African ethical guidelines ˃ End-user certificates are required for exports ˃ Inspe
Slide 16: NCAC Act export permit provisions
The NCAC Act has very specific provisions that the Council must consider before they approve any export permit: ˃ avoid contributing to internal repression, including the systematic violation or suppression of human rights and fundamental freedoms; ˃ avoid transfers of conventional arms to governmen
Slide 17: Glass Lewis Report
Glass Lewis Report ˃ Glass Lewis is a leading provider of global governance solutions, helping institutional investors and public companies with stewardship needs ˃ Glass Lewis does not rate any of Reunert’s defence products as controversial weapons or categorised for the military or defence industr
Slide 18: Financial Performance
FINANCIAL PERFORMANCE Marcus Capuzzimati Applied Electronics Segment CFO
Slide 19: Order book per reporting period end
> Record order book backlog, successful diversification strategy > Revenue and operating profitability expected to grow beyond pre-Covid highs ORDER BOOK PER REPORTING PERIOD END Includes circa R600m of ETION Create orderbook 2 952 2 432 1 900 1 362 1 338 1 364 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Jun
Slide 20: Cluster revenue & profit (Rm)
> Operating profit impacted by factory throughput > Significant operating leverage potential > Revenue and operating profitability expected to grow beyond pre-Covid highs CLUSTER REVENUE & PROFIT (Rm) 1 922 1 917 1 611 1 440 1 224 2018 2019 2020 2021 2022
Slide 21: Key Growth Areas | ETION Create
KEY GROWTH AREAS | ETION CREATE Petrus Pelser Chief Executive Officer
Slide 22: ETION Create core business
Our core business > ETION Create is an Original Design Manufacturer (ODM) that develops and manufactures products and solutions for the digital world. As a strategic partner we are deeply embedded in the value stream of our golden clients, by providing them with full turnkey start-to-finish solution
Slide 23: ETION Create products by sector
ETION Create, as an original design manufacturer, is a trusted strategic partner deeply embedded in the value chain of its local and international clients by providing quality, high-end electronic products and services DEFENCE MINING CYBER SECURITY Mining electronics for Tactical Navigation Systems
Slide 24: ETION Create growth drivers
1. Defence growth in existing Middle-Eastern market > Track record of collaboration and localisation with a strategic partner in the rapidly growing Middle-Eastern market > Various Land System acquisition and upgrade programs planned over the next 5 to 10 years > ETION Create’s tactical navigation s
Slide 25: Key Growth Areas | Fuchs Electronics
KEY GROWTH AREAS | FUCHS ELECTRONICS Mike Tucker Chief Executive Officer
Slide 26: Fuchs Electronics overview
> Founded in 1963 to enhance South African defence electronics production > Now focused largely on exports of electronic fuzes into the European, Middle-Eastern, Indian and South-East Asian regions > Fuchs is an internationally respected designer and producer of electronic fuzes, in a very small com
Slide 27: Fuchs trusted supply chain partner
Fuchs Electronics, as an equipment designer and manufacturer, is a trusted supply chain partner to international OEMs and end-customers, providing quality electronic fuzing products > Proven products, suited to international operational conditions − Usable on various international systems − Reliable
Slide 28: Fuchs growth drivers
1. Russia-Ukraine Crisis > Increased European demand for fuzes on the back of increased defence budget allocations > Multi-year orders alleviating typical cyclical nature of the defence industry > Capitalisation of the increased demand and growing orderbook through − Improving time to market through
Slide 29: Key Growth Areas | Reutech Radar Systems
KEY GROWTH AREAS | REUTECH RADAR SYSTEMS Harald Bielfeld Chief Executive Officer
Slide 30: Reutech Radar Systems overview
> Founded in 1987 for South African radar technology capability establishment > 220+ personnel in Stellenbosch Technopark primarily engineering and technical > Commercial and defence markets > Extensive commercial international distribution channels > Significant internationalisation enabling defenc
Slide 31: Radar products: defence and mining
Customisable products including joint development, localisation, and international cooperation DEFENCE MINING Tracking radars Mining slope stability scanning radars Search radars Mining slope stability staring radars Tactical and defence radars Mining ground penetrating radars ancillaries
Slide 32: Bespoke radar solutions
> Reutech Radar Systems develops and delivers bespoke radar solutions for commercial and defence markets > World-class team of experts with 35 years’ experience in radar technology > Established niche product base with competitive pricing and superior performance System integration and System instal
Slide 33: Mining and defence revenue by region
MINING REVENUE • Mining South Africa 15% 14% Rest of Africa > Open-cast worldwide mining safety and productivity solutions Australia > Expanding into underground productivity improvement and safety 12% China globally 23% Europe 8% India 10% North America • Defence 5% 13% South America > Radar produc