Reunert Limited · JSE:RLO
Reunert — FY2023 Earnings Presentation
28 slides from Reunert's earnings presentation, November 2023
Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION For the financial year ended 30 September 2023
Slide 2: Contents
CONTENTS Overview and key financial highlights Financial performance Segment review Strategy update Prospects 2
Slide 3: Overview and key financial highlights
01 Overview and key financial highlights 3
Slide 4: Overview – 2023 created value for Reunert's shareholders
OVERVIEW – 2023 CREATED VALUE FOR REUNERT’S SHAREHOLDERS Progress on key strategic initiatives Strong financial performance Increased shareholder returns remains on track Renewable Energy Segment ˃ Revenues exceeded R1bn, up by 24% ROCE R1 462m operating profit ˃ Increased: Improved quality 28%
Slide 5: Financial performance
02 Financial performance 5
Slide 6: Segment revenue
SEGMENT REVENUE Higher segment sales drive revenue growth SEGMENT REVENUE (Rm) 2022 2023 23% 13 792 14% 11 237 18% 7 159 51% 6 266 3 559 3 064 2 599 2 361 Electrical Engineering ICT Applied Electronics Group SEGMENT CONTRIBUTION TO SEGMENT REVENUE 21% Electrical Engineering 26% ICT 2022 56%
Slide 7: Segment operating profit
SEGMENT OPERATING PROFIT Positive operating leverage increases segment profitability and drives ROCE SEGMENT OPERATING PROFIT (Rm) 28% 2022 2023 1 462 ROCE 1 140 27% 2% 163% 644 660 552 436 432 17,4%** 16,1% 2023 2022 164 Electrical Engineering ICT Applied Electronics Group SEGMENT CONTRIBUT
Slide 8: Reconciliation of segment to statutory operating profit before financial impairment
RECONCILIATION OF SEGMENT TO STATUTORY OPERATING PROFIT BEFORE FINANCIAL IMPAIRMENT % Rm 2023 2022 change 1 Fair value remeasurements: R56m (2022: R85m) Segment operating profit 1 462 1 140 28 ˃ Put and call option contract with Lumika for the future sale of 72% of Terra Firma Solutions: 1 Fair va
Slide 9: Consolidated statement of profit or loss
CONSOLIDATED STATEMENT OF PROFIT OR LOSS % Rm 2023 2022 1 Tightening in credit environment due to high inflation, low change growth and high interest rates, compounded by Revenue 13 781 11 129 24 loadshedding, resulting in an increase in the allowance for Operating expenses (12 259) (9 903) expect
Slide 10: Consolidated statement of financial position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Debt well within covenants with low gearing Rm Sep 2023 Sep 2022 Rm 2023 PP&E, investment property, ROU assets & IA 1 961 1 538 Goodwill 1 186 960 Increase in total assets 1 700 Derivative financial asset 6 57 Less: Increase in cash (341) Lease and loan r
Slide 11: Cash flow analysis
1 CASH FLOW ANALYSIS By year-end, investment into working capital reduced as global supply chains eased and commodity and electronic component prices stabilized Group cash generation supports operational and strategic objectives and dividend payments 2 Free cash flow covers dividends 2,3 times (inte
Slide 12: Capital expenditure
CAPITAL EXPENDITURE Capex maintains organic assets and boosts strategic growth assets Rm 355 Rm 355 Rm 2023 2022 Strategic growth initiatives 101 Last mile broadband infrastructure 30 26 BOO solar plants 103 72 232 237 232 R&D and developed IP 13 34 66 57 Cyber security and IT investment 42 30 Core
Slide 13: Enhanced financial capacity
ENHANCED FINANCIAL CAPACITY Adequate capital to meet operational business plans and strategic objectives > The Group has successfully completed its programme to convert a substantial portion of its short-term uncommitted banking facilities into longer-term committed facilities Group Quince > This pr
Slide 14: Segmental review
03 '_ Segmental review 14
Slide 15: Electrical Engineering
ELECTRICAL ENGINEERING Strong power cable performance underpinned good segment results Drivers Financial performance Outlook and prospects Manufacturing volumes ➢ Power cable market conditions remain stable ˃ Power cables SEGMENT REVENUE (Rm) 14% − Good power cables orders on hand in South Africa
Slide 16: ICT
ICT South African macro-economic headwinds tempered operating profit growth Drivers Financial performance Outlook and prospects Key factors tempered segment operating profit ➢ South African macroeconomic challenges growth REVENUE (Rm) unlikely to materially improve in H1 2024 ˃ Loadshedding impacted
Slide 17: ICT
ICT Segment diversification strategy continued to yield positive results Drivers Financial performance Outlook and prospects Segment’s diversification strategy continued to COMPLEMENTARY REVENUE FROM END CUSTOMERS ➢ Segment supported by Solutions and Systems yield positive results R(m) Integration C
Slide 18: Applied Electronics | Defence
APPLIED ELECTRONICS | DEFENCE Excellent execution resulting in multi-year high profitability Drivers Financial performance Outlook and prospects Excellent operational performance ➢ Record orderbook intake of R2,7bn, positioning the SEGMENT REVENUE (Rm) segment for continued financial performance in
Slide 19: Applied Electronics | Renewable Energy
APPLIED ELECTRONICS| RENEWABLE ENERGY Well positioned in a growing market Drivers Financial performance Outlook and prospects Increased revenue in growing market ➢ Energy generation liberalization is expected to drive REVENUE (Rm) 24% ˃ Revenue increased by 24% to R1,1bn renewable energy investmen
Slide 20: Strategy update
04 \__ Strategy update 20
Slide 21: IQbusiness Acquisition | Strategic Benefits
IQBUSINESS ACQUISITION| STRATEGIC BENEFITS ˃ Reunert’s ICT Segment growth strategy accelerated in Digital Consulting Management Consulting 2023 with the acquisition of IQbusiness, a leading independent technology and consulting firm in South Africa • Agile advisory • Solutions economy • ˃ The acquis
Slide 22: Renewable Energy
RENEWABLE ENERGY Well positioned to continue to deliver into our strategic objectives Solar energy generation ˃ Put option exercised to create joint venture with AP Møller Capital ˃ Increased BOO portfolio − 87 plants in operation and work in progress − Total investment in BOO assets of R352m, funde
Slide 23: Internationalisation
INTERNATIONALISATION GEOGRAPHICAL SPLIT OF INTERNATIONAL REVENUE (Rm) CAGR 20% 4 500 ˃ International revenues increased by 21% in 2023 4 000 − 20% CAGR since Covid-19 pandemic 3 500 − Increased from R1,4bn to R4,0bn since 2015 3 000 ˃ Provides a significant income stream to augment South African r
Slide 24: Prospects
05 L. Prospects 24
Slide 25: Prospects
PROSPECTS Reunert is pleased with the 2023 performance and remains well positioned, both operationally and strategically Reunert will continue to face the challenges associated with the general South African macroeconomic environment which are not expected to materially improve in H1 2024. Despite t
Slide 26: The Investment Case
06 _. The Investment Case A\ 26
Slide 27: Reunert's Investment Case
REUNERT’S INVESTMENT CASE Delivering financial growth underpinned by a strong balance sheet, financial discipline through considered capital allocation , and pursuing organic and acquisitive growth Investment highlight Drivers Deliverables − Strong, defendable market positions 1 High quality assets
Slide 28: Q&A Contact Us
Q&A Key upcoming dates > Integrated Report 20 December 2023 > AGM 22 February 2024 Contact Us > BofA Conference 05 – 06 March 2024 > Interim results 23 May 2024 > RMB Conference 19 September 2024 > Full year results 22 November 2024 karens@reunert.co.za Reunert audited results for the year ended 30