Slide 1: Reunert Interim Results for the Six Months Ended 31 March 2017
REUNERT INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2017 1
Slide 2: Agenda
AGENDA 01 Overview 02 Salient features and strategic progress 03 Financial results 04 Segmental review 05 Prospects 2
Slide 3: Salient Features
SALIENT FEATURES Real growth Strategy Improved achieved in is yielding returns to revenue positive results shareholders and profit ► Additional acquisitions resulting in more: ► Revenue up 10% to ► Continued cash distribution − Geographic diversification R4 421 million − Share buyback programme − Ea
Slide 4: Financial Overview
FINANCIAL OVERVIEW SIX MONTHS ENDED 31 MARCH H12017 H12016 H12015 Revenue R million 4 421 10% 4 022 2% 3 935 Operating profit R million 616 9% 564 12% 503 Net interest income and dividends R million 44 -37% 70 23% 57 4% 5% Profit for the period R million 469 453 476 Interim dividend per share Cents
Slide 5: Progress Made on Strategy Execution
PROGRESS MADE ON STRATEGY EXECUTION Concentration risk 84% of revenue* Growing competition Slow Late life cycle products top-line growth Margin pressures * Based on FY2014 reported revenue 5
Slide 6: Investing into Growth over the Past 18 Months
INVESTING INTO GROWTH OVER THE PAST 18 MONTHS Acquisitions 100% 74,4% 100% 51% 74,9% R751 million Dec 2015 Aug 2016 Oct 2016 Mar 2017 R million ► Acquisitions remain a key driver in the execution of our strategy Cash dispersed 393 Borrowings 306 Minority interests 47 Small investment 5 Total acquisi
Slide 7: Performance of Acquisitions
PERFORMANCE OF ACQUISITIONS ► Omnigo surpasses investment hurdles with excellent execution and has secured more long-term, hard currency export orders ► Nanoteq is performing in line with its business case ► Zamefa is ahead of its investment case, with working capital a key focus area ► Two most rec
Slide 8: Cash Returns to Shareholders
CASH RETURNS TO SHAREHOLDERS ► Dividend ─ Interim dividend of 120 cents per ordinary share up 6,2% from 113 cents per share (~R197 million) ► Share buyback programme continues: ─ Continued confidence in Reunert’s future ─ Creation of shareholder value through the programme ─ General shareholder auth
Slide 9: Financial Results
FINANCIAL RESULTS NICK THOMSON 9
Slide 10: Summarised Profit/Loss Statement
SUMMARISED PROFIT/LOSS STATEMENT ► Revenue up 10% H12017 H12016 % change ─ Good operational performance in Electrical Engineering Revenue Rm 4 421 4 022 10 ↑ ─ Impact of acquisitions Operating profit Rm 616 564 9 ↑ ► Operating profit up 9% ─ Acquisitions Net interest income Rm 44 70 (37) ↓ ─ No orde
Slide 11: Summarised Financial Position
SUMMARISED FINANCIAL POSITION H12017 H12016 MAJOR MOVEMENT IN BALANCE SHEET Rm Rm DUE TO ACQUISITIONS Rm Property, plant and equipment, investment properties and intangible assets 1 066 766 PPE and intangible assets 72 Goodwill 925 671 Goodwill 172 Other long term assets 1 879 1 898 Inventory 5 Non-
Slide 12: Segmental Movements
SEGMENTAL MOVEMENTS MOVEMENT IN GROUP REVENUE (Rm)* % REVENUE CONTRIBUTION 504 99 3 3 15% 17% 4 421 34% 1H17 40% 1H16 4 022 43% 51% Electrical Engineering ICT 2016 Electrical Engineering ICT Applied Electronics Other 2017 Applied Electronics Other MOVEMENT IN OPERATING PROFIT (Rm)* 82 12 68 26 616 ►
Slide 13: Cash Flow
CASH FLOW MOVEMENT IN CASH FLOW (Rm) 540 55 44 206 1 982 692 9 20 29 302 1 433 455 133 (9) Opening Dividends Total cash Closing balance paid utilised balance Cash Working Net Tax Capex Free cash Capex Net investing Financing Total cash generated capital interest paid replacement flow expansion activ
Slide 14: Capital Expenditure
CAPITAL EXPENDITURE ► Capital expenditure R49 million CAPITAL EXPENDITURE (Rm) ─ Replacement capital R20 million +68% -34% ─ Expansion capital R29 million ► All capital expenditure was funded from internal resources 15 17 8 11 10 25 35 29 10 7 1 2 1H15 1H16 1H17 Electrical Engineering Applied Electr
Slide 15: Reconciliation of Segment Operating Profit to Results per Commentary
RECONCILIATION OF SEGMENT OPERATING PROFIT TO RESULTS PER COMMENTARY Electrical ICT Applied Other Total Engineering Electronics Rm Rm Rm Rm Rm Operating profit as reported 309 263 54 14 640 Additional management fees 18 15 7 (40) 0 Comparative total 327 278 61 (26) 640 1H16 results 272 250 122 (68)
Slide 16: Segmental Results
SEGMENTAL RESULTS ALAN DICKSON
Slide 17: Segmental Review: Electrical Engineering
SEGMENTAL REVIEW │ELECTRICAL ENGINEERING ► Strong revenue growth boosted by higher cable demand and the REVENUE (Rm) contribution from Zamefa ─ Zamefa lower margin contribution due to product mix -7% +31% ─ Started realising integration benefits in the area of raw material purchases 2 381 1 965 1 82
Slide 18: Segmental Review: ICT Office Automation
SEGMENTAL REVIEW │ ICT OFFICE AUTOMATION ► The strengthening of the ZAR and continued efficiency drive in all REVENUE (Rm) business units, improved margins during H12017 -1% -5% ► Diversification into additional products and services made up of Voice, PBX and Smart Solutions have progressed well 1 6
Slide 19: Segmental Review: ICT Voice
SEGMENTAL REVIEW │ ICT VOICE ► ECN voice minutes grew by 12% to 600 million minutes VOICE MINUTES GROWTH ► Positive minute and customer growth offset drop in 125 Millions interconnect rates 100 ► Virtual PBX and data solutions showing good promise 75 50 25 0 H12014 2014 H12015 2015 H12016 2016 H1201
Slide 20: Segmental Review: Applied Electronics
SEGMENTAL REVIEW │ APPLIED ELECTRONICS ► Performance in line with expectations due to the absence of major orders REVENUE (Rm) from export markets when compared to H12016 +64% 0% ► New long-term orders secured and will be in full production in H22017 ─ Fuse business 696 693 ─ Radar business 424 ► Om
Slide 21: Prospects
PROSPECTS ALAN DICKSON 21
Slide 22: Prospects
PROSPECTS ► The group expects to deliver real growth for FY2017 ─ Strong long-term export orders secured will result in an improved second half in Applied Electronics’ operating profit ─ Acquisitions’ contribution is expected to continue ─ Real growth is expected in the Electrical Engineering and IC