Slide 1: Reunert 1H2019 Results Presentation
REUNERT 1H2019 RESULTS PRESENTATION For the six months ended 31 March 2019
Slide 2: Agenda
AGENDA 01 Salient features 02 Strategy update 03 Financial performance 04 Segmental performance 05 Business outlook and prospects REUNERT GROUP 2
Slide 3: Salient Features
SALIENT FEATURES Operating profit Adjusted* Improved increased by 8% to profit after tax cash returns R615 million increased by 4% for shareholders ► Despite continued challenging economic ► Non-recurring items impacted profit ► Free cash flow improved to R619 million conditions, operating profit in
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 8% 4% (8%) 4% Total dividend Operating profit Adjusted* PAT HEPS per share R615m R421m 253 cents 130 cents 1H2018: R567m 1H2018: R406m 1H2018: 275 cents 1H2018: 125 cents *See table on slide 9 Six months ended 31 March 2019 2018 2017 Revenue R million 5 288 9% 4 841 10% 4 241
Slide 5: Strategy Update
02 STRATEGY UPDATE The group’s diversification activities continue to gather momentum REUNERT GROUP
Slide 6: ICT Segment Strategy
ICT SEGMENT STRATEGY ► The key drivers of the ICT segment’s diversification strategy TOTAL NUMBER OF ECN CUSTOMER SITES continue to grow 17 000 ► Vertically integrated communication solutions are 15 000 accelerating 13 000 ̶ Voice: ECN customer base grew by 22% y-o-y increasing 11 000 cross-sell opp
Slide 7: Renewable Energy Strategy
RENEWABLE ENERGY STRATEGY ► Strong revenue growth and positive profit performance continues ̶ Good pipeline of projects ̶ Margins remain tight ► Recent government announcements are expected to strengthen market demand ̶ 500MW of small-scale embedded generation earmarked for licensing ̶ Enabling legi
Slide 8: Financial Performance
03 FINANCIAL PERFORMANCE NICK THOMSON REUNERT GROUP
Slide 9: Group Income Statement
GROUP INCOME STATEMENT 1H2019 1H2018 Change ► Depreciation increased due to first-time Rm Rm % inclusion of SkyWire with depreciation on intangible and network assets amounting Revenue 5 288 4 841 9 to R13 million EBITDA 698 636 10 ► PAT impacted by non-recurring items Depreciation and amortisation
Slide 10: Summarised Financial Position
SUMMARISED FINANCIAL POSITION 1H2019 1H2018 FY2018 ► No material changes to the balance sheet Rm Rm Rm since 30 September 2018 PPE, investment properties and intangible assets 1 270 1 246 1 297 ► Goodwill reduced by R62 million due to the Goodwill 991 1 088 1 053 sale of Prodoc Other long term asset
Slide 11: Cash Flow at 31 March 2019
CASH FLOW AT 31 MARCH 2019 MOVEMENT IN CASH FLOW (Rm) 1 93 1 754 572 (606) (206) 459 (23) 619 426 (36) (72) (52) 459 Opening Dividends Total cash Forex Closing balance paid generated effect on balance cash Cash Working Interest, Taxation Capital Free cash Capital Investing Financing Total cash gener
Slide 12: Cash Flow Movements
CASH FLOW MOVEMENTS 1H2019 FY2018 WORKING CAPITAL MOVEMENT Rm Rm ► Inventory increases primarily in Electrical Engineering segment Inventory and contracts in progress (139) (48) in part due to commodity price increases and in part due to factory loading Accounts receivable and derivative assets 249
Slide 13: Capital Expenditure
CAPITAL EXPENDITURE ► Capital expenditure in 1H2019 amounted to R59 million CAPITAL EXPENDITURE (Rm) (1H2018: R54 million) divided between replacement +9% capital +10% R23 million (1H2018: R22 million) and expansion capital 59 R36 million (1H2018: R32 million) 54 49 ► All capital expenditure was fun
Slide 14: Segmental Performance
04 SEGMENTAL PERFORMANCE ALAN DICKSON REUNERT GROUP
Slide 15: Electrical Engineering
ELECTRICAL ENGINEERING REVENUE (Rm) +14% ► Segment delivers a 3% improvement in operating profit amid tough trading conditions 2 775 2 381 2 431 ̶ Weak infrastructure investment continues in South Africa in both the 1 824 public and private sectors ̶ Margin pressures at African Cables remained ̶ Key
Slide 16: ICT
ICT Office Automation REVENUE (Rm) ► Solid performance despite tough economic conditions +3% ► Hardware volumes declined, primarily due to the increased time taken to award tenders 1 689 1 670 1 722 1 602 ► Cross-selling and additional services showed good growth and together with OA annuity and ser
Slide 17: Applied Electronics
APPLIED ELECTRONICS REVENUE (Rm) +16% Strong execution 999 863 ► Fuchs delivered excellent export volumes 696 693 ► Reutech Communications had good local and export production and improved operational efficiencies ► Most other companies delivered a reasonable result with RC&C 1H2016 1H2017 1H2018 1H
Slide 18: Business Outlook and Prospects
05 BUSINESS OUTLOOK AND PROSPECTS REUNERT GROUP
Slide 19: Prospects
PROSPECTS ► Reunert continues to execute on its diversification strategy, specifically ̶ Investing into our ICT segment; ̶ Participating in the rapidly growing solar renewable energy market and broadening our value offering; and ̶ Increasing our participation in the Southeast Asian markets through o
Slide 20: Other Information
OTHER INFORMATION REUNERT GROUP
Slide 21: Reconciliation of Core Earnings
RECONCILIATION OF CORE EARNINGS 1H2019 1H2018 Change FY2018 Rm Rm % Rm Attributable profit for the period 366 445 (18) 1 158 Headline earnings adjustments Loss on disposal of subsidiary 44 After tax profit on disposal of assets (2) (23) Headline earnings 408 445 (8) 1 135 Normalised headline earning