Slide 1: Reunert FY19 Results Presentation
REUNERT FY19 RESULTS PRESENTATION For the year ended 30 September 2019
Slide 2: Agenda
AGENDA 1 Salient features 2 Strategy update 3 Financial performance 4 Segmental performance 5 Business outlook and prospects
Slide 3: Salient Features
SALIENT FEATURES Core operating Strong cash flow The Group’s profit* remains reflects the Group’s strategy execution resilient despite ability to sustain continues to cable company the investment yield positive challenges case results ► Core operating profit decreased by 6% ► Strong export and compl
Slide 4: Financial Performance
FINANCIAL PERFORMANCE 12% 6% 105% 4% Operating profit Core operating profit* Free cash flow Total dividend per share R1 361m R1 354m R1 313m 513 cents FY18: R1 542m FY18: R1 434m FY18: R641m FY18: 493 cents Year ended 30 September 2019 2019 2018 2017 Revenue R million 10 714 10 492 9 773 2% 7% Opera
Slide 5: Strategy Execution
: rowed — STRATEGY EXECUTION REUNERT
Slide 6: Strategy Execution
STRATEGY EXECUTION Reunert’s key strategic initiatives centre on ► Accelerating growth by building scale businesses in rapidly developing markets: ̶ Last mile broadband connectivity ̶ Renewable energy ► Leveraging the strength of our ICT segment by: ̶ Transforming office automation into a Total Work
Slide 7: Renewable Energy Strategy
RENEWABLE ENERGY STRATEGY ► The drivers for the growth of renewable energy market have strengthened ̶ IRP2019 promulgated by Cabinet on 18 October 2019 requires 500MW per annum of distributed generation (R5bn per annum market) ̶ Eskom’s cost of electricity and security of supply remain key concerns
Slide 8: Renewable Energy Strategy
RENEWABLE ENERGY STRATEGY ► Solar renewable energy strategy is progressing well ► Engineering, procurement and contracting (EPC) build continues B-O-O ASSET BUILD strongly 40 ̶ TFS is one of the pre-eminent suppliers of distributed energy solutions in South Africa ̶ FY20 pipeline supports strong gro
Slide 9: ICT Segment Diversification
ICT SEGMENT DIVERSIFICATION END CUSTOMER PURCHASES OF CUSTOMERS WITH MORE COMPLEMENTARY PRODUCTS (Rm) THAN ONE PRODUCT The Total Workspace Provider strategy accelerates Complementary revenues 25% strongly: % increase in complementary revenues ► Complementary revenues are : 700 23% 25% 20% ̶ Service
Slide 10: Geographic Expansion
GEOGRAPHIC EXPANSION ► Applied Electronics local presence in Southern Asia is yielding the desired benefits 2017 2018 2019 ̶ Improved access to high quality local supply chain Total revenue R million 9 773 10 492 10 714 ̶ Achieved local beneficiation requirements enabling market access for new contr
Slide 11: Financial Performance
03 FINANCIAL PERFORMANCE NICK THOMSON
Slide 12: Consolidated Statement of Profit & Loss
% change CONSOLIDATED STATEMENT OF PROFIT & LOSS Core operating profit reconciliation FY 19 FY 18 on PY Operating profit 1 361 1 542 (12) Equity Accounted JV's & Associates (3) (3) Segment operating profit 1 358 1 539 (12) % change Rm FY 19 FY 18 Skywire contingent consideration gain (77) on PY Prof
Slide 13: Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF FINANCIAL POSITION Rm FY19 FY18 • No material changes to the 2015 balance sheet since 30 PPE, investment property & intangible assets Goodwill 1 292 999 1 297 1 053 September 2018. Investments and loans 60 56 Investments in joint ventures and associate 154 158 • Goodwill re
Slide 14: Cash Flows for Year Ended 30 September 2019
CASH FLOWS FOR YEAR ENDED 30 SEPTEMBER 2019 MOVEMENT IN CASH FLOW (Rm) 2 (6) 318 (403) (56) 1 313 (102) 616 572 (260) 859 (92) (817) 1 460 859 Opening Dividends Paid Total Cash FX Closing Cash generated Working capital Interest, dividends Taxation paid Capital Free cash flow Capital Investing activi
Slide 15: Capital Expenditure
CAPITAL EXPENDITURE • Capital expenditure in 2019 amounted to R158 million (2018: R162 million) divided between replacement capital R56 million (2018: R56 million) and expansion capital R102 million +13,3% -2,5% (2018: R106 million). 162 158 • All capital expenditure was funded from internal 143 31
Slide 16: Segmental Performance
04 SEGMENTAL PERFORMANCE ALAN DICKSON
Slide 17: Electrical Engineering
ELECTRICAL ENGINEERING REVENUE (Rm) Cable companies +6% 6 000 ► Trading conditions in South Africa materially weakened in H2FY19 5 000 5 247 ̶ Structural impediments to SOE’s and municipalities’ weak financial state 5 139 5 457 4 000 remained 4 106 3 000 ̶ Business confidence continues to be subdued
Slide 18: ICT
ICT Office Automation -6% REVENUE (Rm) 3 500 ► Challenging market conditions reflected in hardware sales 3 450 3 400 3 443 ► Cross-selling of complementary services showed good growth and 3 350 3 300 offset the hardware volumes 3 250 3 332 3 307 3 200 ► Improved efficiencies in business processes an
Slide 19: Applied Electronics
APPLIED ELECTRONICS REVENUE (Rm) +7% Strong execution 2 347 2 198 ► Record local sales in energy and secure communications 1 720 companies 1 505 ► Further implemented our geographical diversification strategy by opening new offices in Australia 2016 2017 2018 2019 ► Further expanded exports into Eur
Slide 20: Business Outlook and Prospects
05 BUSINESS OUTLOOK AND PROSPECTS
Slide 21: Prospects
PROSPECTS ► Reunert’s ICT and Applied Electronics segments are performing well: ̶ Strategy execution is translating into good financial performance ̶ This is expected to continue into FY20 ► There remains uncertainty on the timing and quantum of the recovery in the Electrical Engineering segment ̶ I
Slide 22: Appendix
APPENDIX
Slide 23: Calculation of Earnings Per Share
CALCULATION OF EARNINGS PER SHARE % change on Rm FY 19 FY 18 PY Reconciliation of year on year EPS Profit for the year 804 1 152 (30) EPS in 2018 717 Non-controlling interests (14) 6 Once off's in 2018 (62) Once off's in 2019 (84) Attributable profit 790 1 158 (32) Im pact of current year trading (8