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Audited preliminary summarised consolidated results and cash dividend declaration for the year ended September 2016
REUNERT LIMITED
Incorporated in the Republic of South Africa
Reg. No 1913/004355/06
Ordinary share Code: RLO ISIN code: ZAE000057428
("Reunert", "the group" or "the company")
AUDITED PRELIMINARY SUMMARISED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION FOR THE YEAR ENDED SEPTEMBER 2016
Group profile
Reunert manages a diversified portfolio of businesses in the fields of electrical engineering, information communication technologies (ICT), and applied
electronics. The group was established in 1888, by Theodore Reunert and Otto Lenz, and has contributed to the South African economy in numerous ways over
the past 128 years. Reunert was listed on the JSE in 1948 and is included in the industrial goods and services (electronic and electrical equipment)
sector of the JSE. The group operates mainly in South Africa with minor operations in Australia, Lesotho, Sweden, the USA, Zambia and Zimbabwe. Group
headquarters are located in Woodmead, Johannesburg, South Africa.
Commentary
Overview
Reunert delivered another pleasing result in 2016 primarily evidenced by an increase of 12,7% in operating profit from continuing operations to R1 315
million (2015: R1 167 million). The improvement follows on from the 14,7% increase achieved in 2015, reflecting two years of double digit earnings growth
from our core operations. NHEPS, after removing merger and acquisition and empowerment IFRS 2 - Share-based Payment transaction costs, increased by 16,5%
to 662 cents per share (2015: 29%).
The growth in revenue, operating profit and in the earnings metrics are presented in the table below.
Measure Units 2016 2015 %
Revenue R million 8 511 8 300 3
Operating profit (before interest, dividends and empowerment transactions) R million 1 315 1 167 13
Continuing operations
Basic earnings per share cents 577 579 -
Headline earnings per share cents 570 576 (1)
Normalised headline earnings per share cents 662 568 17
All operations
Basic earnings per share cents 577 604 (4)
Headline earnings per share cents 570 588 (3)
Normalised headline earnings per share cents 662 580 14
Financial performance
Group revenue
Overall group revenue from continuing operations increased by 2,5% to R8,5 billion (2015: R8,3 billion). This was underpinned by significant growth of
39,2% in the Applied Electronics segment. The Electrical Engineering segment remained static at R4,1 billion. Revenue in the ICT segment was 2,9% down as
the economic conditions resulted in weaker unit sales offset by an increase in average selling prices, in part due to a weaker Rand and a strategy of
moving the sales mix towards more expensive units.
Group operating profit
The 2,5% increase in group revenue was leveraged to a 12,7% increase in operating profit through improved margins. This can be ascribed to the positive
impact from Applied Electronics arising from large export orders and a good performance in the Electrical Engineering segment. Gains were tempered by the
impact of the difficult trading conditions in the ICT segment.
Cash
Our cash resources and money market deposits ended the year at R2,4 billion. This balance, together with a largely ungeared finance book of R2,1 billion in
our in-house finance company, and the capacity to leverage the rest of our balance sheet, provides us with significant resources to invest in achieving our
strategy.
Segmental performance
Electrical Engineering
The Electrical Engineering segment delivered a strong performance on the back of a good result in 2015.
The energy cable business' operating profit is in line with that of the prior year despite a 7,8% decline in revenue due to changes in product mix and
the delay in the award of key infrastructure projects. The telecommunications cable business enjoyed an excellent year on the back of the roll-out of the
national fibre to the home programme.
The low voltage business benefited from the closure of its underperforming solutions unit at the end of 2015. The business offset muted local volumes
through an excellent export performance. Its Australian operations continued to be impacted by the global downturn in commodities, whereas its North
American business performed strongly. The circuit breaker business launched several new products, which bodes well for the future.
ICT
The main components of this segment made solid progress despite adverse economic conditions. The number of office automation units sold was down on the
prior year, although an improvement in product mix yielded an increase in the average selling price. The office automation business continued to drive
efficiencies throughout its supply chain and together with the enhanced product mix enabled the business to nominally retain its financial performance.
Our voice business, ECN, continued to increase its market share by securing a continuous stream of new customers resulting in the sale of 1,1 billion voice
minutes. Future revenue should reflect the impact of this positive growth now that the last interconnect rate reduction became effective in October 2016
and the regulated floor has been reached.
Quince Capital, our in-house finance company continued to enjoy the benefits of credit loss ratios that remain well below market levels.
Applied Electronics
This segment delivered an outstanding performance driven by major export orders, most of which were completed in 2016. In particular, the Fuchs business
completed the execution of its large export order with delivery being finalised in the latter part of the financial year.
Our tactical communication business had a difficult year as it industrialised its new production processes and expanded production lines, from three to
eight, to accommodate the new multi-year Radiate contract. The impact of full production is expected to be realised from the second quarter of the 2017
financial year.
Our radar business continued to innovate its product line, launching the latest version of its mining surveillance radar and a new handheld radar for
assessing faults in the ceiling of underground stopes. On the defence side of the business, significant effort was made to secure future research funding
and position the business to participate in future large-scale radar orders. However, due to the delay in certain key programmes in the current year,
revenue and profit were below those of the prior year. This unit is, however, well positioned for the future due to marketing efforts undertaken in the
current year.
Omnigo, our high technology printed circuit board manufacturer, was recapitalised after being acquired in December 2015, and this enabled a significantly
improved performance. This business unit exceeded all investment criteria and has secured more long-term orders.
The Solutions logistics business out-performed inflation with a pleasing increase in operating profit due to stringent cost and margin control.
Strategy execution
The progress made in the execution of the group's strategy yielded pleasing results with the conclusion of three complementary acquisitions that should
deliver geographically diversified revenue streams and provide good growth opportunities.
With our cash resources, the confidence we have in Reunert's future and recognising our shareholders' desire for greater clarity regarding cash reserves,
we commenced a share buyback programme in September 2016, under general shareholder authority permitting us to purchase up to nine million shares. By
year-end we had repurchased 443 000 shares at an average price of R62,69 per share and at total consideration of R27,8 million. We continued to
repurchase shares during the closed period, in terms of a firm mandate that was effected prior to the closed period in accordance with the JSE Listings
Requirements.
We will continue to carefully balance our opportunities to invest in new businesses together with the benefit of share buybacks.
The execution of our transformation pillar progressed well. The demographic at all management levels has improved and the business units are well advanced
in their activities in compliance to the new BBBEE Codes or Sector Codes, as applicable.
We took concrete action in ensuring our businesses have the appropriate equity structures to participate in the local markets. We concluded the new BEE
equity ownership transaction in our Electrical Engineering segment. The equity transaction in the Applied Electronics segment is progressing according to
schedule.
These transactions will position the respective segments to continuously participate in the local markets in which they operate.
Prospects
We have made good progress on the execution of the group strategy, underpinned by our ongoing programme of strategic acquisitions, positioning the group
positively for growth. In the short term, although diminished, our concentration in South Africa will continue to expose the group to the local macro-
economic drivers resulting from the country's current and emerging economic and political environment. In 2017, growth in the second half of the year is
likely to be stronger than in the first half as our export businesses return to full capacity on the back of expected new orders.
Directorate
There were no changes in the directorate during the year under review.
Cash dividend
Notice is hereby given that a gross final cash dividend No 181 of 326,0 cents per ordinary share (2015: 302,0 cents per share) has been declared by the
directors for the year ended 30 September 2016.
The dividend has been declared from income reserves.
A dividend withholding tax of 15% will be applicable to all shareholders who are not exempt from, or who do not qualify for, a reduced rate of withholding
tax. The net dividend payable to shareholders is subject to withholding tax at a rate of 15%, and thus amounts to 277,10 cents per share.
The issued share capital at the declaration date is 184 005 796 ordinary shares.
In compliance with the requirements of Strate, the following dates are applicable:
Last date to trade (cum dividend) Tuesday, 10 January 2017
First date of trading (ex dividend) Wednesday, 11 January 2017
Record date Friday, 13 January 2017
Payment date Monday, 16 January 2017
Shareholders may not dematerialise or rematerialise their share certificates between Wednesday, 11 January 2017 and Friday, 13 January 2017, both days
inclusive.
On behalf of the board
Trevor Munday Alan Dickson Nick Thomson
Chairman Chief executive officer Chief financial officer
Sandton
21 November 2016
Summarised consolidated statement of profit or loss
for the year ended 30 September 2016
Audited
R million Notes %
2016 2015 change
Revenue 8 511 8 300 3
EBITDA 1 433 1 284 12
Depreciation and amortisation 118 117 1
Operating profit before interest, dividends
and empowerment transactions 2 1 315 1 167 13
Net interest income and dividends 3 137 135 1
Profit before empowerment transactions 1 452 1 302 12
Empowerment transactions 4 (113) -
Profit before taxation 1 339 1 302 3
Taxation 404 360 (12)
Profit after taxation 935 942 (1)
Share of joint venture's profit 28 17 65
Profit for the year from continuing operations 963 959 -
Profit for the year from discontinued operation - 42
Profit for the year 963 1 001 (4)
Profit attributable to:
Non-controlling interests 9 7 29
Equity holders of Reunert - from continuing operations 954 952 -
Equity holders of Reunert - from discontinued operation - 42
Cents
Basic earnings per share 5, 6 577 604 (4)
Diluted earnings per share 5, 6 572 595 (4)
Basic earnings per share from continuing operations 5, 6 577 579 -
Diluted earnings per share from continuing operations 5, 6 572 570 -
Basic earnings per share from discontinued operation 5, 6 - 26
Diluted earnings per share from discontinued operation 5, 6 - 25
Summarised consolidated statement of profit or loss continued
for the year ended 30 September 2016
Audited
Cents Notes %
2016 2015 change
Other measures of earnings per share
Headline earnings per share 5, 6 570 588 (3)
Diluted headline earnings per share 5, 6 565 579 (2)
Normalised headline earnings per share 5, 6 662 580 14
Diluted normalised headline earnings per share 5, 6 656 572 15
Other measures of earnings per share from continuing operations
Headline earnings per share 5, 6 570 576 (1)
Diluted headline earnings per share 5, 6 565 568 (1)
Normalised headline earnings per share 5, 6 662 568 17
Diluted normalised headline earnings per share 5, 6 656 560 17
Total cash dividend per share for the year 439 407 8
Summarised consolidated statement of comprehensive income
for the year ended 30 September 2016
Audited
R million
2016 2015
Profit for the year 963 1 001
Other comprehensive income, net of taxation:
Items that may be reclassified subsequently to profit or loss
(Losses)/gains arising from translating the
financial results of foreign subsidiaries (19) 3
Total comprehensive income 944 1 004
Total comprehensive income attributable to:
Non-controlling interests 3 7
Share of comprehensive income 9 7
Share of translation loss (6) -
Equity holders of Reunert - from continuing operations 941 955
Equity holders of Reunert - from discontinued operation - 42
Summarised consolidated statement of financial position
at 30 September 2016
Audited
R million Notes
2016 2015
Non-current assets
Property, plant and equipment, investment properties
and intangible assets 1 019 745
Goodwill 7 737 653
Investments and loans 8 53 95
Investment in joint ventures 152 158
Rental and finance lease receivables 1 449 1 463
Deferred taxation 104 92
3 514 3 206
Current assets
Inventory 1 295 990
Rental and finance lease receivables 695 728
Accounts receivable and taxation 2 008 1 689
Derivative assets 9 15 22
Money market instruments 670 -
Cash and cash equivalents 1 712 2 713
Assets of discontinued operation - 51
6 395 6 193
Total assets 9 909 9 399
Equity attributable to equity holders of Reunert 7 011 6 679
Non-controlling interests 81 46
Total equity 7 092 6 725
Non-current liabilities
Deferred taxation 102 98
Long-term borrowings 10 43 239
145 337
Current liabilities
Accounts payable, provisions and taxation 2 037 2 003
Derivative liabilities 9 6 7
Bank overdrafts and short-term loans 400 77
Current portion of long-term borrowings 10 229 201
Current liabilities of discontinued operation - 49
2 672 2 337
Total equity and liabilities 9 909 9 399
Summarised consolidated statement of cash flows
for the year ended 30 September 2016
Audited
R million Note
2016 2015
EBITDA 1 433 1 329
EBITDA from continuing operations 1 433 1 284
EBITDA from discontinued operation - 45
(Increase)/decrease in net working capital (396) 62
Other (net) 50 79
Cash generated from operations 1 087 1 470
Net interest and dividends 137 133
Taxation paid (431) (415)
Dividends paid (including to non-controlling interests) (690) (629)
Net inflow from operating activities 103 559
Net (outflow)/inflow from investing activities (1 205) 1 641
Capital expenditure (222) (146)
Net (outflow)/inflow from disposal of businesses (23) 1 789
Net outflow arising from acquisition of businesses 11 (462) (19)
Movement in total rental and finance lease receivables 14 (2)
Non-current loans repaid/(granted) 43 (5)
Proceeds from investment in insurance cell captive 48 -
Dividends received from joint venture 35 10
Investments net of other capital items* (638) 14
Net (outflow)/inflow from financing activities (222) 21
Shares issued 25 32
Investment in treasury shares (28) -
Net long-term borrowings repaid (181) (3)
Equity transactions with non-controlling interests (40) (21)
Other 2 13
(Decrease)/Increase in net cash resources (1 324) 2 221
Net cash resources at the beginning of the year 2 636 415
Net cash resources at the end of the year 1 312 2 636
Cash and cash equivalents 1 712 2 713
Bank overdrafts (327) -
Short-term borrowings (73) (77)
Net cash resources at the end of the year 1 312 2 636
* This includes R670 million investment in long-dated money market instruments.
Summarised consolidated statement of changes in equity
for the year ended 30 September 2016
Audited
R million
2016 2015
Share capital 343 318
Balance at the beginning of the year 318 294
Issue of shares 25 32
Cancellation of issued shares - (8)
Share-based payment reserve 136 16
Balance at the beginning of the year 16 -
Share-based payment expense 120 16
Equity transactions with empowerment partners and non-controlling shareholders - -
Balance at the beginning of the year - -
Net changes in non-controlling interests (40) (10)
Transferred to retained earnings 40 10
Empowerment shares* (276) (276)
Treasury shares (28) -
Balance at the beginning of the year - -
Shares bought back during the year (28) -
Foreign currency translation reserves (7) 6
Balance at the beginning of the year 6 3
Other comprehensive income (13) 3
Non-distributable reserves 1 -
Balance at the beginning of the year - -
Increase in capital reserve 1 -
Retained earnings 6 842 6 615
Balance at the beginning of the year 6 615 6 561
Total comprehensive income attributable to equity holders of Reunert 954 994
Cash dividends declared and paid (687) (625)
Cancellation of issued shares - (305)
Transfer to reserves** (40) (10)
Equity attributable to equity holders of Reunert 7 011 6 679
Non-controlling interests 81 46
Balance at the beginning of the year 46 63
Share of total comprehensive income 3 7
Dividends declared and paid (3) (4)
Net changes in non-controlling interests 35 (20)
Total equity at end of the year 7 092 6 725
* These are shares held by Bargenel Investments Proprietary Limited (Bargenel), a company sold by Reunert to an accredited empowerment partner in
2007.
Until the amount owing by the empowerment partner is repaid to Reunert, Bargenel is consolidated by the group as the significant risks and rewards of
ownership of the equity have not passed to the empowerment partner.
** Impact of the final settlement of prior empowerment transactions.
Summarised segmental analysis
for the year ended 30 September 2016
Audited
R million % % %
2016 of total 2015 of total change
Revenue1
Electrical Engineering 4 106 46 4 112 45 -
ICT 3 332 37 3 431 37 (3)
ICT - discontinued - - 530 6
Applied Electronics 1 505 17 1 081 12 39
Other 21 - 23 - (9)
Total segment revenue 8 964 100 9 177 100 (2)
Revenue from equity-accounted joint venture - Electrical Engineering (453) (347) -
Revenue from discontinued operation - ICT - (530)
Revenue as reported 8 511 8 300 3
Operating profit
Electrical Engineering 610 45 520 42 17
ICT2 549 41 533 43 3
ICT - discontinued - - 44 4
Applied Electronics 305 23 181 15 69
Other2 (111) (9) (42) (4) (164)
Total segment operating profit 1 353 100 1 236 100 9
Operating profit from equity-accounted joint venture - Electrical Engineering (38) (25)
Operating profit from discontinued operation - ICT - (44) (100)
Operating profit as reported 1 315 1 167 13
1 Inter-segment revenue is immaterial and has not been separately disclosed.
2 Net interest charged on group funding provided to Quince has been eliminated in line with the consolidation principles of IFRS. This elimination
amounted to R95 million (2015: R77 million).
Summarised segmental assets
as at 30 September 2016
Audited
R million % %
2016 of total 2015 of total
Total assets
Electrical Engineering 2 699 27 1 900 20
ICT 4 084 41 3 976 43
Applied Electronics 1 477 15 979 10
Other3 1 649 17 2 544 27
Total assets as reported 9 909 100 9 399 100
3 Other consists mainly of group treasury cash balances.
Notes
Basis of preparation
These preliminary summarised consolidated financial statements were prepared in accordance with the framework concepts and the recognition and measurement
criteria of IFRS and its interpretations adopted by the International Accounting Standards Boards (IASB) in issue and effective for the group at
30 September 2016 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and Financial Reporting pronouncements as issued
by the Financial Reporting Standards Council. This summarised consolidated information was prepared using, at a minimum, the information as required by IAS
34 - Interim Financial Reporting, and complies with the Listings Requirements of the JSE Limited and the requirements of the Companies Act, 71 of 2008, of
South Africa. This report was compiled under the supervision of NA Thomson CA(SA) (chief financial officer).
The group's accounting policies, as per the audited financial statements for the year ended 30 September 2016, were consistently applied with those used in
the prior year financial statements. These accounting policies comply with IFRS.
Audited
R million
2016 2015
Operating profit
Operating profit includes:
- Cost of sales 5 402 5 416
- Other expenses excluding depreciation and amortisation 1 731 1 652
- Other income 45 31
- Realised gain/(loss) on foreign exchange and derivative instruments 26 (13)
- Unrealised (loss)/gain on foreign exchange and derivative instruments (16) 34
Net interest income and dividends
Interest income and dividends* 164 150
Interest expense (27) (16)
Other - 1
Total 137 135
Empowerment transactions
Share-based payment charges** 113 -
Taxation thereon - -
Net empowerment transactions after taxation 113 -
* Includes dividends of R8 million (2015: Rnil).
** This represents IFRS 2 (Share-based Payment) charges
as a result of the introduction of empowerment partners in the
Electrical Engineering and
Applied Electronics segment.
Number of shares used to calculate earnings per share
Weighted average number of shares in issue used to determine
basic earnings, headline earnings and normalised headline
earnings per share (millions of
shares) 165 165
Adjusted by the dilutive effect of unexercised share options
granted (millions of shares) 2 2
Weighted average number of shares used to determine diluted
basic, headline and normalised headline earnings per share (millions of shares) 167 167
Headline earnings
Profit attributable to equity holders of Reunert from continuing
operations 954 952
Headline earnings are determined by eliminating the effect of
the following items from attributable earnings:
Net gain on disposal of property, plant and equipment
(after a tax charge of R2 million and non-controlling interest
(NCI) portion of Rnil) (2015: R1
million) (20) (4)
Impairment of intangible asset (after a tax credit of R3 million
and NCI portion of R2 million) (2015: after tax charge and NCI of Rnil) 8 -
Headline earnings from continuing operations 942 948
Headline earnings from discontinued operation - 20
Headline earnings 942 968
Normalised headline earnings#
Headline earnings from continuing operations 942 948
Normalised headline earnings are determined by eliminating
the effect of the following items from attributable headline earnings:
Recurring IFRS 2 charges on BBBEE deals undertaken in the
current year (after tax charge and NCI portion of Rnil) 113 -
Merger and acquisition costs relating to current transactions
(after tax charge and NCI portion of Rnil) 39 -
Net economic interest in profit attributable to non-controlling
interests with outstanding equity-related loan accounts.
These are not recognised as
significant risks and rewards of ownership have not passed to
the non-controlling shareholders. -* (13)
Normalised headline earnings from continuing operations 1 094 935
Headline earnings attributable to equity holders of Reunert from
discontinued operation - 20
Normalised headline earnings 1 094 955
# The pro forma financial information above has been
prepared for illustrative purposes only to provide information
on how the normalised earnings
adjustments might have impacted the financial results of the
group. Because of its nature, the pro forma financial information
may not be a fair reflection
of the group's results of operation, financial position, changes
in equity or cash flows.
The summarised pro forma financial effects have been prepared
in a manner consistent in all respects with IFRS, the accounting
policies adopted by Reunert
Limited as at 30 September 2016, the revised SAICA guide on pro
forma financial information, and the Listings Requirements of
the JSE.
There are no post balance sheet events which require adjustment
to the pro forma financial information.
The directors are responsible for compiling the pro forma financial
information on the basis of the applicable criteria specified
in the JSE Listings
Requirements.
The pro forma financial information should be read in conjunction
with the unmodified Deloitte & Touche independent reporting
accountants' reasonable
assurance report thereon, which is available for inspection
at the company's registered office.
* This adjustment is not required in 2016 as Reunert
bought back the non controlling interests during the year.
Goodwill
Carrying value at the beginning of the year 653 649
Acquisition of businesses1 90 13
Disposals of businesses and subsidiaries - (6)
Exchange differences on consolidation of foreign subsidiaries (6) (3)
Carrying value at the end of the year 737 653
Investments and loans
Loans - at cost 37 81
Investment in insurance cells - at fair value 16 14
Carrying value at the end of the year 53 95
Fair value classification and measurement
At the balance sheet date, the only financial instruments that the
group held at fair value were:
Derivative assets 15 22
Derivative liabilities 6 7
These were classified as Level 2 instruments in the fair value hierarchy
and comprise forward exchange contracts and interest rate swaps. The fair
value of these derivative financial instruments is calculated using a discounted
cash flow model, with the major variables being the discount rate, the spot
exchange rate and prevailing interest rates.
The calculations were performed by major financial institutions.
Long-term borrowings
Total long-term borrowings (including finance leases)2 272 440
Less: short-term portion (including finance leases) (229) (201)
43 239
1 At 30 September 2016, the purchase price allocation of the
acquisitions made in 2016 were not yet finalised and therefore the amounts reported are
provisional and subject to change.
2 These borrowings include R200 million (2015: R400 million)
in respect of the Quince rental book, which is repayable in May 2017 (2015: R200
million).
Acquisition of businesses
During the current year, the following entities were acquired by the group:
- Metal Fabricators of Zambia Plc: With effect from 26 August 2016, 74,39% of
the share capital of Metal Fabricators of Zambia Plc (Zamefa) was purchased
by Reunert International Investments (Mauritius) Limited. The R40 million
goodwill arising from this acquisition consists mostly of synergies expected to
be realised with the group's existing energy cable businesses and through the
facilitation of Zambian copper procurement which is utilised extensively in
cable production. 153 -
- Omnigo Proprietary Limited: With effect from 1 December 2015, 100% of the
share capital of Omnigo Proprietary Limited was purchased by Reutech
Proprietary Limited. In addition to the base purchase price, there is a further
contingent purchase consideration estimated at a net present value of R51
million payable over three years subject to the achievement of pre-defined
threshold targets. The R40 million in goodwill arising from the acquisition is
attributable to the synergies from the vertical integration with the group's
other businesses in the Applied Electronics segment. 22 -
- Polybox Proprietary Limited: With effect from 1 October 2015, 51,12% of
the share capital of Polybox Proprietary Limited was purchased by CBI
Proprietary Limited. The R10 million in goodwill is attributable to the
combination of the Polybox product in conjunction with CBI Low Voltage's circuit
breakers to provide a weather-proof solution to customers. 5 -
Cost of investment 180 -
Net borrowings at time of acquisition 282 -
Net cash flows on acquisition of businesses 462 -
Minority interest 32 -
494 -
Acquisition of businesses continued
Gross assets acquired:
Deferred taxation 19 -
Property, plant and equipment and intangible assets 201 -
Inventory 151 -
Current accounts receivable 443 -
Non-current payables (12) -
Payables and provisions (398) -
Goodwill 90 -
Net assets acquired 494 -
Revenue since acquisition 439 -
Profit after taxation since acquisition 24 -
Revenue for the 12 months ended 30 September 2016, as though the acquisition
dates had been 1 October 2015 1 881 -
Profit after taxation for the 12 months ended 30 September 2016 as though the
acquisition dates had been 1 October 2015 111 -
Unconsolidated subsidiary
The financial results of Cafca Limited (Cafca), a subsidiary incorporated in
Zimbabwe, have not been consolidated into the group results, as the group does
not exercise management control:
- Reunert has not appointed a majority of the directors to the board of
directors of Cafca and therefore does not control the board; and
- The difficult economic circumstances in Zimbabwe have resulted in a major
liquidity crisis, which renders Reunert's access to economic benefits from
Cafca (e.g. dividends) such that it does not have the ability to affect its
variable returns through its powers over Cafca.
The amounts involved are not material to the group's results. At 30 September
2016 Cafca's share capital and reserves amounted to USD15 million.
Related party transactions
Counterparty Rm Relationship Sales Purchases Treasury
shares
All related-party transactions, trading accounts and loan balances are on
the same terms and conditions as those with non-related parties.
September 2016
CBI-electric: Telecom Cables Proprietary Limited A joint venture 1 - -
Bargenel Investments Proprietary Limited Owns 18,5m Reunert shares - - 276
September 2015
CBI-electric: Telecom Cables Proprietary Limited A joint venture 2 - -
Bargenel Investments Proprietary Limited Owns 18,5m Reunert shares - - 276
Litigation
There is no material litigation being undertaken against the group. The group has
made adequate provision against any cases where the group considers there
are reasonable prospects for the litigation to succeed. The group has adequate
resources and good grounds to defend any litigation of which it is aware.
Events after reporting date
Effective from 1 October 2016, the group acquired all the issued share capital and shareholder loans in Nanoteq Proprietary Limited, a company specialising
in military grade encryption. The company was purchased for a total cash consideration of R130 million and will form part of the Applied Electronics
segment.
Audit opinion
These summarised consolidated financial statements were derived from the consolidated financial statements and are consistent in all material respects with
the group's consolidated financial statements. The directors take full responsibility for the preparation of the summarised consolidated financial
statements. The auditors, Deloitte & Touche, have issued unmodified audit opinions on the consolidated financial statements and on these summarised
consolidated financial statements for the year ended 30 September 2016, and the audit opinions and consolidated financial statements are available for
inspection at Reunert's registered office. The audit was conducted in accordance with the International Standards on Auditing. The auditor's report does
not necessarily report on all information contained in this announcement. Shareholders are, therefore, advised that in order to obtain a full understanding
of the nature of the auditor's engagement, they should obtain a copy of that report together with the accompanying financial information from Reunert's
registered office. Any reference to future performance included in this announcement has not been reviewed or reported on by the auditors.
Additional information
Audited
R million (unless otherwise stated)
2016 2015
Current ratio (:1) 2,4 2,6
Quick ratio (:1) 1,9 2,2
Dividend Yield (%) 7,2 6,7
Net number of ordinary shares in issue (million) 165 165
Number of ordinary shares in issue (million) 184 184
Less: Empowerment shares (million) (19) (19)
Capital expenditure 222 146
- expansion 174 104
- replacement 48 42
Capital commitments in respect of property, plant and equipment 60 68
- contracted 10 41
- authorised not yet contracted 50 27
Commitments in respect of operating leases 63 75
Contingent liabilities - -
Administration
Directors
T S Munday (Chairman) *,T Abdool-Samad*, A E Dickson (Chief Executive Officer), S D Jagoe*, S Martin*, P Mahanyele*, M Moodley, T J Motsohi*, N D B
Orleyn**, S G Pretorius*, M A R Taylor, NA Thomson (Chief Financial Officer), R Van Rooyen*
* independent non-executive; ** non-executive
Registered office
Nashua Building
Woodmead North Office Park
54 Maxwell Drive
Woodmead, Sandton
PO Box 784391
Sandton, 2146
Telephone +27 11 517 9000
Income taxation reference number 9100/101/71/7P
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg, 2001
PO Box 61051
Marshalltown, 2107
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Registered auditors
Deloitte & Touche
Secretaries' certification
In terms of section 88(2)(e) of the Companies Act, 71 of 2008, I, Karen Louw, duly authorised on behalf of the Company Secretary, Reunert Management
Services Proprietary Limited (Registration number 1980/007949/07), certify that, to the best of my knowledge and belief, the company has lodged with the
Companies and Intellectual Property Commission for the financial year ended 30 September 2016 all such returns and notices as are required in terms of the
aforesaid Act and that all such returns and notices appear to be true, correct and up to date.
Karen Louw
On behalf of Reunert Management Services Proprietary Limited
Group Company Secretaries
Enquiries
Carina de Klerk +27 11 517 9000 or e-mail invest@reunert.co.za.
For more information log on to the Reunert website at http://www.reunert.com.
22 November 2016
http://www.reunert.com
Date: 22/11/2016 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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