Slide 1: Year-End Results
YEAR-END RESULTS For the 12 months ended 30 September 2016
Slide 2: Agenda
AGENDA 01 Overview 02 Strategy execution 03 Segmental review 04 Financial results 05 Prospects 2
Slide 3: Overview
OVERVIEW • Despite the anaemic local macro-economic environment, % REVENUE BY REGION Reunert has delivered another set of very pleasing results: 4% 20% • Double-digit growth in operating profit and NHEPS; R8 511m 2016 • 8% growth in dividends; and • Good progress on strategy execution. 76% • The res
Slide 4: Financial Overview
FINANCIAL OVERVIEW 2016 2015 2014 Revenue Rm 8 511 3% 8 300 7% 7 774 Operating profit Rm 1 315 13% 1 167 15% 1 017 Continuing operations Cents 1% 47% Headline earnings per share 570 576 391 Normalised headline earnings per share Cents 662 17% 568 29% 439 Total dividend per share Cents 439 8% 407 10%
Slide 5: Overview
OVERVIEW • Concrete progress has been made on the execution of our strategic imperatives, including: • The conclusion of three complementary, bolt-on acquisitions; • Clarity on cash utilisation and increased return of cash to shareholders; and • Positive transformation through two BEE transactions a
Slide 6: Strategy Execution
STRATEGY EXECUTION
Slide 7: Strategy Execution
STRATEGY EXECUTION Concentration risk 84% of revenue* Growing competition Late life-cycle products Slow-top-line growth Margin pressures * Based on FY-2014 reported revenue 7
Slide 8: Strategy Execution │ Acquisitions
STRATEGY EXECUTION │ ACQUISITIONS Progress Results • Completed three complementary • Costs of acquisitions: R180 million excluding: bolt-on acquisitions. • Merger and acquisition costs of R45 million; and • Omnigo – December 2015 • R130 million for Nanoteq effective 1 October 2016. • Meeting all inv
Slide 9: Strategy Execution │ Secure Communications
STRATEGY EXECUTION │ SECURE COMMUNICATIONS • Reutech Communications The acquisitions have created a • Capital investment of R90 million into a new state-of-the-art facility that vertically integrated provider of significantly increases the capacity to supply into the multi-year Radiate next generati
Slide 10: Strategy Execution │ Africa Infrastructure
STRATEGY EXECUTION │ AFRICA INFRASTRUCTURE Forecast GDP growth rates of sub-Saharan African countries Zamefa acquisition 10 9 • Zambian manufacturer of copper rod and power cables. 8 8 8 7 6 6 • Provides existing power cable businesses with the opportunity for market 6 % 5 diversification by increas
Slide 11: Strategy Execution │ Transformation
STRATEGY EXECUTION │ TRANSFORMATION • Two empowerment ownership transactions were executed during the year. • Electrical Engineering › The transaction for African Cables and Telecom Cables was successfully completed and implemented, with a non-cash IFRS2 Share-based Payment charge of R93 million. •
Slide 12: Cash Utilisation │ Shareholder Returns
CASH UTILISATION │ SHAREHOLDER RETURNS Dividend Cash returned to shareholders • Final dividend of 326 cents per ordinary share. • Total dividends paid: • Total dividend for the year up 8% to 439 cents per share (2015: 407 cps). • 2016: R690 million • 2015: R629 million Share-buyback programme commen
Slide 13: Segmental Review
SEGMENTAL REVIEW
Slide 14: Segmental Review │ Electrical Engineering
SEGMENTAL REVIEW │ ELECTRICAL ENGINEERING • Power cable revenue was reduced by a change in the traditional product mix, however this did not impact profitability REVENUE • 12% decrease in copper cable. +14% 0% • 129% increase in aluminium cable. 4 112 4 106 3 611 • Delay in infrastructure projects.
Slide 15: Segmental Review │ ICT
SEGMENTAL REVIEW │ ICT • Economic conditions created a challenging operating environment for the OA sector: • Nashua successfully sold into higher performance segments with associated REVENUE improved revenues; 0% -3% • Total Document Volume (TDV) continued to be under pressure, however the number o
Slide 16: Segmental Review │ Applied Electronics
SEGMENTAL REVIEW │ APPLIED ELECTRONICS • Very strong performance driven by the successful execution of major export orders assisted by favourable exchange rates: REVENUE • Fuchs Electronics completed its fuze order; +8% +39% • Omnigo executed existing and secured additional long-term export orders;
Slide 17: Financial Results
FINANCIAL RESULTS NICK THOMSON
Slide 18: Financial Results │ Segmental Movements
FINANCIAL RESULTS │ SEGMENTAL MOVEMENTS MOVEMENT IN GROUP REVENUE (Rm) % REVENUE CONTRIBUTION * 2 8 511 17% 12% 8 300 40% 424 37% 112 99 FY16 FY15 46% 48% 2015 Electrical Engineering ICT Applied Electronics Other 2016 Electrical engineering Applied electronics ICT Other MOVEMENT IN OPERATING PROFIT
Slide 19: Financial Results │ Group Income Statement Extract
FINANCIAL RESULTS │ EXTRACT FROM GROUP INCOME STATEMENT FY16 FY15 % change • Revenue from continuing operations increased by 3% reflecting the change in Revenue Rm 8 511 8 300 3 product and segment mix. • 13% operating profit improvement due to: Operating profit Rm 1 315 1 167 13 • Moderate local gr
Slide 20: Financial Results │ Balance Sheet Summarised
FINANCIAL RESULTS │ BALANCE SHEET SUMMARISED 2016 2015 Major movement in balance sheet Rm Rm due to acquisitions Rm Property, plant and equipment and intangible assets 1 019 745 PPE and intangible assets 201 Goodwill 737 653 Goodwill 90 Other long term assets 1 758 1 808 Inventory 151 Non-current as
Slide 21: Efficiency Indicators and Working Capital
FINANCIAL RESULTS │ EFFICIENCY INDICATORS AND WORKING CAPITAL 2016 2015 WORKING CAPITAL MOVEMENT (Rm) 2016 2015 Inventory turnover (1) Times 7,0 5,5 Inventory and contracts in progress (154) 24 Inventory turnover (2) Times 5,0 5,5 Accounts receivable and derivative assets 201 (84) Trade receivables
Slide 22: Financial Results │ Capital Expenditure
FINANCIAL RESULTS │ CAPITAL EXPENDITURE • Capital expenditure in 2016 amounted to R222 million CAPITAL EXPENDITURE (Rm) (2015: R146 million) 52% • replacement capital R48 million (2015: R42 million) 222 • expansion capital R174 million (2015: R104 million). 35 20% • All capex was funded from interna
Slide 23: Financial Results │ Cash Flow
FINANCIAL RESULTS │ CASH FLOW MOVEMENT IN CASH FLOW (Rm) 2 636 690 1 483 396 36 137 431 1 982 48 745 174 313 222 36 Opening Dividends Total cash Closing Cash Working Net Tax Capex Free Capex Net investing Financing Total cash balance paid generated balance generated capital interest paid replacement
Slide 24: Prospects
PROSPECTS
Slide 25: Reunert's Strategic Focus Areas
REUNERT’S STRATEGIC FOCUS AREAS ELECTRICAL ENGINEERING ICT APPLIED ELECTRONICS Key focus areas Drivers for growth Key focus areas Drivers for growth Key focus areas Drivers for growth • Sub-Saharan Africa • Demand for • Acquire • Cloud and other • Innovative product • Global commodity infrastructure
Slide 26: Prospects
PROSPECTS • We have made good progress on the execution of the group strategy. • Our programme of strategic acquisitions will remain a key focus area and underpins our ability to sustain our growth projections. • In the short term, although diminished, our South African concentration will continue t
Slide 27: Questions & Answers
QUESTIONS & ANSWERS www.reunert.co.za