Slide 1: Reunert 2018 Results Presentation
REUNERT 2018 RESULTS PRESENTATION For the period ending 30 September 2018
Slide 2: Agenda
AGENDA 01 Salient features 02 Strategy execution 03 Financial performance 04 Segmental performance 05 Business outlook and prospects REUNERT GROUP
Slide 3: Salient Features
SALIENT FEATURES Electrical Strong profit growth Engineering Continued positive in ICT and impacted by low returns for Applied Electronics infrastructure shareholders segments spend and Zambia liquidity crisis ► ICT segment delivered double-digit ► Macro-economic challenges had a ► Share buyback pro
Slide 4: External Environment
EXTERNAL ENVIRONMENT RATE OF EXCHANGE ZAMBIA LIQUIDITY CUSTOMER CONSTRAINTS ► 2% stronger weighted average for FY2018 ► Zambia’s liquidity challenges negatively ► Fiscal constraints within state entities, including ► 7% stronger ZAR:US$ 1H2018 impacted payment capacity of Zesco and ZRA Eskom and Den
Slide 5: Financial Performance
FINANCIAL PERFORMANCE 3% 4% 4% Operating profit HEPS Total dividend 20% per share ROCE R1 542m 703 cents 493 cents 2017: 20% 2017: R1 497m 2017: 679 cents 2017: 474 cents (1%) NHEPS 687 cents 2017: 697 cents REUNERT GROUP 5
Slide 6: Geographic Expansion
GEOGRAPHIC EXPANSION Export revenues continue to grow 2016 2017 2018 ► 30% of revenue is now derived from outside South Africa Total revenue R million 8 511 9 773 10 492 ► Electrical Engineering 29% (2017: 28%) Non-ZAR revenue as a % 24 28 30 ► Applied Electronics 56% (2017: 49%) % of total revenue
Slide 7: Diversification
DIVERSIFICATION ICT ► ICT segment continued its progress in transitioning towards a modern ICT, annuity based, services business ̶ Increased new services revenue by 7% to R251 million ► Contribution from Communication cluster grew to 24% (2017: 22%) of ICT segment revenue ► Acquired SkyWire effectiv
Slide 8: Empowerment
EMPOWERMENT Continued progress made on our transformation strategy ► Extended Reunert black empowerment ownership transaction with Bargenel by four years ► 18,5 million treasury shares are held in this structure ► No IFRS2 charge as option value was incorporated in the initial valuation in 2007 ► Co
Slide 9: Organic and Acquisitive Growth
ORGANIC AND ACQUISITIVE GROWTH Revenue contribution (Rm) Operating profit contribution (Rm) 10 492 1 542 19 367 1 497 9 773 352 1 718 176 150 (131) 1 366 8 511 1 315 299 44 1 523 8 212 8 407 8 774 1 347 1 271 2016 2017 Acquisition Organic 2018 2016 2017 Acquisition Organic 2018 growth growth growth
Slide 10: Financial Performance
FINANCIAL PERFORMANCE Nick Thomson REUNERT GROUP
Slide 11: Financial Overview
FINANCIAL OVERVIEW Year ended 30 September 2018 2017 2016 Revenue R million 10 492 7% 9 773 15% 8 511 Operating profit R million 1 542 3% 1 497 14% 1 315 Basic earnings per share Cents 717 5% 680 18% 577 Headline earnings per share Cents 703 4% 679 19% 570 Normalised headline earnings per share Cent
Slide 12: Group Income Statement
GROUP INCOME STATEMENT 2018 2017 Change Rm Rm % Revenue 10 492 9 773 7 ► Capex in line with depreciation R162 million vs R157 million (2017: R143 million vs R138 million) EBITDA 1 699 1 635 4 ► Net interest earned is lower due to the following major cash outflows: Depreciation and amortisation (157)
Slide 13: Condensed Financial Position
CONDENSED FINANCIAL POSITION 2018 2017 MAJOR MOVEMENT IN BALANCE 2018 Rm Rm SHEET DUE TO ACQUISITIONS Rm Property, plant and equipment, investment properties & intangible 1 297 1 095 PPE and intangible assets 235 assets Goodwill 1 053 921 Goodwill 146 Other long term assets 2 355 2 001 Inventory 2 N
Slide 14: Cash Flow
CASH FLOW MOVEMENT IN CASH FLOW (Rm) (498) (781) 20 (445) 1 455 1 620 (115) (56) 13 (106) 572 641 (565) ( 115 ) Opening Dividends Total cash FX effect Closing (85) balance paid utilised on cash balance Cash generated Working Net interest Tax paid Capex Free Capex Investing Financing Total cash from
Slide 15: Calculation of HEPS and NHEPS
CALCULATION OF HEPS AND NHEPS 2018 2017 Change Number Ordinary shares of no par value Rm Rm % of shares Profit for the year 1 152 1 142 1 Millions Non-controlling interests 6 (30) Attributable profit 1 158 1 112 4 Headline earnings adjustment Shares in issue 184,6 Net gain on disposal of assets (23)
Slide 16: Core Segmental Operating Profit Analysis
CORE SEGMENTAL OPERATING PROFIT ANALYSIS Earnings adjustments impacting operating profit (7%) 2018 1 556 Segment profit 1 539 Profit on sale of assets (28) Re-measurement gain (77) Acquisition costs 9 1 443 12 Core segment profit 1 443 256 76 2017 Segment profit 1 548 79 Profit on sale of assets (1)
Slide 17: Segmental Performance
SEGMENTAL PERFORMANCE Alan Dickson
Slide 18: Electrical Engineering
ELECTRICAL ENGINEERING Cables CORE OPERATING PROFIT (Rm) ► Lower volume for power cables from state entities and (37%) municipalities was offset by more sales to general market ► Liquidity constraints in Zambia continued 696 610 ► Reduced demand from Telkom demand for copper 520 telecom and fibre op
Slide 19: ICT
ICT Office automation CORE OPERATING PROFIT (Rm) ► Improved product mix supported solid product revenue 13% ► Continued cost efficiency and stronger ZAR:€ in H1 delivered improved margins 715 ► New services revenue increased by 7% to R251 million 635 549 Communications 533 ► Growth in number of voic
Slide 20: Applied Electronics
APPLIED ELECTRONICS Strong execution of the segment’s order books CORE OPERATING PROFIT (Rm) ► Fuchs delivered record volume and benefitted from weaker Rand and higher +28% margin product mix in H2 352 ► Reutech Communications had strong production output for export and Radiate 305 276 sales ► Terra
Slide 21: Prospects
PROSPECTS wr, REUNERT
Slide 22: Prospects
PROSPECTS The group remains well positioned for ► An expected improvement in the South African economy ̶ Increased infrastructure investment bodes well for a recovery in Electrical Engineering ̶ Scale and timing of the infrastructure investments inject some uncertainty to the extent of the short-ter