Slide 1: Presentation to Investors for the Year Ended 30 September 2017
PRESENTATION TO INVESTORS FOR THE YEAR ENDED 30 SEPTEMBER 2017 1
Slide 2: Agenda
AGENDA 01 Overview 02 Salient features 03 Strategic progress 04 Financial results 05 Segmental review 06 Prospects 2
Slide 3: Salient Features
SALIENT FEATURES Good operational Strategy Continued focus performance execution on improving delivering real yielding positive returns to organic growth results shareholders ► Revenue up 15% to R9 773 million ► Geographic diversification ► R203 million returned via shares ► Operating profit up 14%
Slide 4: Financial Overview
FINANCIAL OVERVIEW TWELVE MONTHS ENDED 30 SEPTEMBER 2017 2016 2015 Revenue R million 9 773 15% 8 511 3% 8 300 Operating profit R million 1 497 14% 1 315 13% 1 167 Net interest income and dividends R million 65 -53% 137 0% 135 Profit for the year R million 1 142 19% 963 1% 959 Total dividend per shar
Slide 5: Strategy Execution | Material Matters
STRATEGY EXECUTION │MATERIAL MATTERS Concentration risk 2014: 84% revenue generated in South Africa (R1,2 billion non-ZAR) Growing competition Slow Late life cycle products top-line growth Margin pressures 5
Slide 6: Diversification | Geographic
DIVERSIFICATION │GEOGRAPHIC NON-ZAR REVENUE GROWTH (Rm) ► 33% CAGR in non-ZAR revenue to R2,8 billion (2014: R1,2 billion) ► Electrical Engineering 3 000 ─ 28% of revenue now from non-ZAR ─ CBI-electric: Low Voltage focus resulting in significant improvement 2 500 in hard currency operating profit i
Slide 7: Diversification | ICT Segment Strategy
DIVERSIFICATION │ICT SEGMENT STRATEGY OFFICE AUTOMATION CLUSTER OA CLUSTER COMMS CLUSTER FINANCE ► Material progress in migrating to a service focused segment ► 28 000 Nashua and 12 000 ECN customers present a key competitive ► Nashua ► ECN ► Quince advantage ► Prodoc ► Nashua Capital ─ Only a 25% o
Slide 8: Acquisitions
ACQUISITIONS ► Acquisitions remain a key driver of Reunert’s growth strategy ─ R749 million investment over past 24 months ► Acquisitive growth contribution this year ─ R1,1 billion revenue ─ R104 million operating profit ► Several other opportunities at various stages of engagement 100% 74,4% 100%
Slide 9: Strategy Execution
STRATEGY EXECUTION ► Reduced concentration risk by improving geographic diversification and improved product and service offerings ► Both acquisitive and organic growth contributed to double digit revenue and operating profit growth ► Accessed new markets with high growth potential ─ Renewable energ
Slide 10: Financial Results
FINANCIAL RESULTS NICK THOMSON 10
Slide 11: Condensed Profit / Loss Statement
CONDENSED PROFIT / LOSS STATEMENT ► Revenue up 15% ─ R1,1 billion from acquisitions 2017 2016 % change ─ Improved volumes in last quarter Revenue Rm 9 773 8 511 15 ↑ ► Operating profit up 14% ─ Acquisitions: R104 million Operating profit Rm 1 497 1 315 14 ↑ ─ Continued focus on efficiency and Net in
Slide 12: Financial Results | Revenue Analysis
FINANCIAL RESULTS │REVENUE ANALYSIS MOVEMENT IN REVENUE (Rm) 215 (7) (51) (1,5%) +14,2% +33,1% 1 105 YoY YoY YoY 9 773 8 511 +30,2% YoY 2016 Electrical Engineering ICT Applied Electronics Other 2017 18% 17% 43% 2016 2017 49% Electrical Engineering 34% 39% ICT Applied Electronics 12
Slide 13: Financial Results | Operating Profit Analysis
FINANCIAL RESULTS │OPERATING PROFIT ANALYSIS MOVEMENT IN OPERATING PROFIT (Rm) 52 +13,4% 83 (29) YoY (9,5%) +46,9% YoY YoY 1 497 +15,2% 76 YoY 1 315 2016 Electrical Engineering ICT Applied Electronics Other 2017 (8%) (4%) Electrical Engineering 18% 23% ICT 43% 44% Applied Electronics 2016 2017 Other
Slide 14: Condensed Financial Position
CONDENSED FINANCIAL POSITION 2017 2016 MAJOR MOVEMENT IN BALANCE SHEET Rm Rm DUE TO ACQUISITIONS Rm Property, plant and equipment, investment properties & intangible assets 1 095 1 019 PPE and intangible assets 82 Goodwill 921 737 Goodwill 171 Other long term assets 2 001 1 758 Inventory 4 Non-curre
Slide 15: Financial Results | Working Capital
FINANCIAL RESULTS │WORKING CAPITAL ► Acquisitions had a limited impact on working capital WORKING CAPITAL 3 952 ► Inventory 3 854 3 543 990 1 295 Inventories ─ Pre-stocking in Electrical Engineering for 2018 orders 1 439 2 439 ─ Commodity prices up 30% 2 718 2 981 Accounts and other receivables ► Ac
Slide 16: Financial Results | Cash Flow
FINANCIAL RESULTS │CASH FLOW MOVEMENT IN CASH FLOW (Rm) 70 218 (225) (375) (45) (745) (98) 1 982 1 695 1 455 1 120 (418) (386) 218 Opening Dividends paid Total cash Closing Cash generated Working Net Tax Capex Free Capex Investing Financing Total cash balance generated balance from operations capita
Slide 17: Financial Results | Capital Expenditure
FINANCIAL RESULTS │ CAPITAL EXPENDITURE ► Capital expenditure in 2017 amounted to R143 million CAPITAL EXPENDITURE (Rm) (2016: R222 million) +52% -36% ─ replacement capital R45 million (2016: R48 million) 222 ─ expansion capital R98 million (2016: R174 million) ► All capex was funded from internal r
Slide 18: Segmental Results
SEGMENTAL RESULTS ALAN DICKSON 18
Slide 19: Electrical Engineering | Cables
ELECTRICAL ENGINEERING │CABLES REVENUE (Rm) ► Zamefa successfully integrated into the group +28% ─ Contributed 18% of segment revenue ─ Vertical integration benefits being realised 5 247 ─ Segment margins reduced due to lower margin Zamefa 3 611 4 112 4 106 products 2014 2015 2016 2017 ─ Liquidity i
Slide 20: Electrical Engineering | Circuit Breakers
ELECTRICAL ENGINEERING│CIRCUIT BREAKERS ELECTRICAL ENGINEERING: ► Depressed local conditions weakened local residential % FACTORY CAPACITY UTILISATION 100 and commercial product volumes ► Stronger ZAR impacted export margins and foreign 80 subsidiary ZAR earnings ► Export markets 60 ─ Good performan
Slide 21: ICT | Office Automation Cluster
ICT │OFFICE AUTOMATION CLUSTER ► Improvement in operating profit margins REVENUE (Rm) ► Cross-selling strategy is gaining impetus ► Nashua market share improved to 15,5% from 13,7% in 2016 3 439 3 431 ► Launched three new product lines 3 332 3 307 ─ Access control and surveillance using biometric fi
Slide 22: ICT | Office Automation Cluster
ICT │OFFICE AUTOMATION CLUSTER MORE UNIT SALES TO HIGHER-END MFPs NASHUA 3000 ► Selling more and higher category multi-functional printers (MFP) but hardware margins remain under pressure 2500 ► Downward trend on total document volumes (TDV) (clicks) as result of exiting lower margin accounts 2000 ►
Slide 23: ICT | Communications Cluster
ICT │COMMUNICATIONS CLUSTER ► ECN voice minutes grew by 9% to 1,2 billion minutes for the year VOICE MINUTES GROWTH ► Revenue 3% lower due to the drop in interconnect rates from 16 cents to 13 cents per minute effective 1 October 2016 140 ► Strong customer growth continues 120 ► Customer numbers por
Slide 24: Applied Electronics
APPLIED ELECTRONICS ► Positive movement in revenue growth REVENUE (Rm) +14% ─ Acquisitions contributed 25% of revenue ─ Enhanced stability of revenue base ► Segment operating margin impacted by lack of fuze 1 720 production in first half and the stronger rand 1 505 ► Local defence and SOE budgets’ u
Slide 25: Applied Electronics | Secure Communications Cluster
APPLIED ELECTRONICS│SECURE COMMUNICATIONS CLUSTER ► Reutech Communications ─ Ramp-up of the tactical radio production slower than anticipated, APPLIED ELECTRONICS REVENUE DISTRIBUTION but now at full production ─ Phase 2 of the order not yet secured, but funded ► Omnigo ─ New capacity installed to m
Slide 26: Applied Electronics
APPLIED ELECTRONICS ► Fuchs Electronics APPLIED ELECTRONICS MARKET SECTOR BY REVENUE SPLIT ─ Secured follow-on option order and two significant additional export contracts which will ensure full production in 2018 ► Reutech Solutions 11% 14% ─ Marginal improvement in revenue, offset by inflationary
Slide 27: Applied Electronics
APPLIED ELECTRONICS NEW ACQUISITIONS APPLIED ELECTRONICS RESEARCH AND DEVELOPMENT (Rm) ► Terra Firma Solutions 93 ─ Increased order book via large group multi-site installations ─ Solar PV expansion into build-own-operate solutions via joint ventures 69 68 64 ► Ryonic Robotics 59 ─ Time is still req
Slide 28: Prospects
PROSPECTS ALAN DICKSON
Slide 29: Prospects
PROSPECTS ► The group is well positioned for future growth ─ Good market positions in all Electrical Engineering and ICT businesses ─ Diversified revenue streams will further augment traditional businesses ─ Robust long-term export orders secured should result in a strong performance in Applied Elec
Slide 30: Diversification, Efficiency, Innovation
—@)— Diversification Efficiency a —{9)}— Innovation aa — re — Our customers 8 Our people —4y— Transformation REUNERT REUNERT LIMITED 30