REUNERT LIMITED - Unaudited interim financial statements and cash dividend declaration

Release Date: 30/05/2017 07:05
Code(s): RLO
 
Wrap Text
Unaudited interim financial statements and cash dividend declaration

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")

UNAUDITED INTERIM FINANCIAL STATEMENTS AND CASH DIVIDEND DECLARATION

COMMENTARY
Overview
Reunert has continued to execute its strategy and has pleasure in presenting results, that reflect further real growth
for the six months ended 31 March 2017. Revenue increased by 10% from R4 022 million to R4 421 million and operating
profits increased by 9% from R564 million to R616 million. These results were achieved in challenging operational
circumstances in which the political and economic environment contributed to reduced economic growth and increased Rand
volatility. In addition, the Applied Electronics segment experienced a lull in orders from a major export market while
follow-up contracts were negotiated and concluded. The growth in revenue and operating profit as well as changes in the
earnings metrics are presented in the table below.

Measure                                                                          Unit        6 months to    6 months to    %
                                                                                           31 March 2017  31 March 2016
Revenue                                                                     R million              4 421          4 022   10
Operating profit (before interest, dividends and empowerment transactions)  R million                616            564    9
Operating margin                                                                    %               13,9           14,0   (1)
Basic earnings per share                                                        Cents                276            272    1
Headline earnings per share                                                     Cents                275            271    1
Normalised headline earnings per share                                          Cents                292            282    4

Group re-organisation
During the reporting period, the group changed its corporate structure and created three new statutory entities which
were established to hold all businesses in the respective segment. This necessitated the previous divisions of Reunert
being corporatised and transferred to the appropriate segment holding company. The costs of the holding company, which
were historically recovered from Reunert's own divisions, are now recovered through increased management fees from the
segments. This restructure has no impact on the consolidated group accounts.

The Segmental Analysis in the interim financial statements reflects the impact of this new structure. Similar levels of
management fees were not charged in the comparative period. The Segment Performance set out below reflects the
like-for-like comparatives on the assumption that this restructure had not been implemented for this period.

Financial Performance
Group revenue
Group revenue increased by 10% from R4 022 million to R4 421 million. This growth was driven by a 31% increase in
revenue in the Electrical Engineering segment, from R1 824 million to R2 381 million. Revenue in the Information,
Communication and Technology (ICT) segment declined by 5%, from R1 698 million to R1 602 million, and the revenue in
the Applied Electronics segment was flat at R693 million.

Group operating profit
The 10% increase in revenue translated into a 9% increase in operating profit, mainly due to organic growth in our
traditional operations and the positive impact of acquisitions, which more than offset the negative impact of a
stronger Rand and a decline in orders from a large export market.

Electrical Engineering's operating profit increased by 20%, ICT improved its operating profit by 11% and Applied
Electronics' operating profit reduced by 50%.

Interest received
Over the past 18 months, the group has undertaken acquisitions (R751 million), increased plant capacity (R203 million),
re-financed our in-house finance company (R200 million), deployed working capital to support the group's growth (R451
million) and bought back shares (R140 million). These investments, all of which are aligned with our strategy, have
resulted in the group's net interest received reducing from R70 million in the six months to 31 March 2016 to R44
million in the six months to 31 March 2017.

Segment Performance
Electrical Engineering
This segment continued its strong performance, which was primarily driven by integration benefits from the acquisition
of Zamefa; enhanced market share resulting in good production volumes in the circuit breaker and power cable factories;
and strong local demand for optic fibre due to the acceleration of rollouts of fibre-to-the-home and fibre-to-the-
business.

This resulted in revenue increasing by 31% and operating profit by 20%.

ICT
Due to a firmer Rand exchange rate and the continued movement to fewer but higher capacity machines in the market,
revenue in the Nashua Office Automation business ended the period lower although margins improved. The ongoing
efficiency programme and the improved margins resulted in an increased operating profit for the period under review.
The strong currency also negatively impacted the Rand equivalent income of Prodoc, despite the company achieving real
growth in Swedish Krone.

Our Voice Over Internet Protocol (VoIP) business continued to perform strongly as it increased both the number of
customers and minutes carried. This volume increase offset the impact of the statutory reduction in in-bound
interconnect rates. The benefit of lower out-bound interconnect rates and operational efficiencies resulted in an
improved operating profit in this business.

Our in-house finance company increased its finance book. The quality of the book remained high despite the challenging
economic conditions.

Overall, the segment's revenues decreased by 5%, and operating profits improved by 11%.

Applied Electronics
Revenue was flat in the Applied Electronics segment. There was good growth in both revenue and profit in the Tactical
Communications and Radar businesses. This improvement was offset by the reduction in revenue and profit due to a lull
in orders from a major export market and the impact of a stronger Rand. New export contracts have subsequently been
received and the associated businesses will return to full production in the second half of the financial year.
As a result, revenue was flat and operating profit reduced by 50%.

Acquisitions
Over the last 18 months, the group has concluded five acquisitions totalling R751 million (inclusive of debt
and minority interests assumed); R494 million was invested in the 2016 financial year and the remaining R257 million in
the reporting period. These acquisitions, with the exception of Zamefa, are all early life-cycle and innovative
businesses which are expected to achieve higher revenue growth than in the traditional Reunert businesses. Their
contribution to the group's operating profit should also develop positively as these businesses mature. The Board is
pleased with the level of integration already achieved and with the progress made in the development of these
business's operating models.

Our cash and money market deposits ended the period at R1,8 billion. This, together with our largely unleveraged
finance book of R2,2 billion in our in-house finance company and our unutilised borrowing capacity, ensures we continue
to have adequate financial resources to invest in our strategy.

Share BuyBacks
Under the general authority granted by shareholders, the group continued to purchase shares in the open market. During
the period under review, the group purchased 1,7 million shares at a cost of R112 million, bringing the total cash
returned to shareholders since the commencement of the programme to R140 million (2,1 million shares).

Prospects
The group will benefit from an improvement in export orders, received during this period, which will reflect in the
second half's profit as these export orders translate into sales. This, together with the enhanced output in our
tactical communication business, should lead to an improved second half operating profit in the Applied Electronic
segment.

This, in combination with the expected continued solid performance of the Electrical Engineering and ICT segments,
underpins our expectations that real growth for the year will be achieved, provided the economic and political
environment does not deteriorate materially and that no major disruption occurs during the tri-annual wage negotiations
in the metals industry.

The financial information on which the prospects are based has neither been reviewed nor reported on by the group's
external auditors.

Cash Dividend
Notice is hereby given that a gross interim cash dividend No 182 of 120,0 cents per ordinary share (2016: 113,0 cents
per share) has been declared by the directors for the six months ended 31 March 2017.
The dividend has been declared from retained earnings.

A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt from, or who do not
qualify for, a reduced rate of withholding tax.

Accordingly for those shareholders subject to withholding tax, the net dividend amounts to 96,0 cents per share.

The issued share capital at the declaration date is 184 279 096 ordinary shares.

In compliance with the requirements of Strate, the following dates are applicable:

Last date to trade (cum dividend)            Tuesday, 20 June 2017
First date of trading (ex dividend)        Wednesday, 21 June 2017
Record date                                   Friday, 23 June 2017
Payment date                                  Monday, 26 June 2017

Shareholders may not dematerialise or rematerialise their share certificates between Wednesday, 21 June 2017 and
Friday, 23 June 2017, both days inclusive.

On behalf of the Board

Trevor Munday        Alan Dickson             Nick Thomson
Chairman             Chief executive officer  Chief financial officer

Sandton, 29 May 2017

summarised consolidated statement  of profit or loss
for the six months ended 31 March 2017

                                                                                                                                        Year ended
                                                                                              Six months ended 31 March               30 September
R million                                                                 Notes                       2017         2016             %         2016
                                                                                                (Unaudited)  (Unaudited)       change     (Audited)
Revenue                                                                                              4 421        4 022            10        8 511
EBITDA                                                                                                 681          622             9        1 433
Depreciation and amortisation                                                                           65           58            12          118
Operating profit before interest, dividends and empowerment transactions      2                        616          564             9        1 315
Net interest income and dividends                                             3                         44           70           (37)         137
Profit before empowerment transactions                                                                 660          634             4        1 452
Empowerment transactions                                                      4                        (20)           -                       (113)
Profit before taxation                                                                                 640          634             1        1 339
Taxation                                                                                               188          190             1          404
Profit after taxation                                                                                  452          444             2          935
Share of joint venture's profit and associate's profit                                                  17            9            89           28
Profit for the period                                                                                  469          453             4          963
Profit attributable to:
Non-controlling interests                                                                               17            3           467            9
Equity holders of Reunert                                                                              452          450             -          954

Cents
Basic earnings per share                                                    5,6                        276          272             1          577
Diluted earnings per share                                                  5,6                        273          269             1          572

                                                                                                               
                                                                                                                    Restated          Year ended
                                                                                               Six months ended 31 March            30 September
Cents                                                                     Notes                       2017         2016             %       2016
                                                                                                (Unaudited)  (Unaudited)       change   (Audited)
Other measures of earnings per share
Headline earnings per share                                                 5,6                        275          271             1        570
Diluted headline earnings per share                                         5,6                        272          268             1        565
Normalised headline earnings per share                                      5,6                        292          282*            4        662
Diluted normalised headline earnings per share                              5,6                        289          279*            4        656
Interim/total cash dividend  per share                                                                 120          113             6        439

* The March 2016 normalised and diluted normalised headline earnings per share have been restated to align with
  the policy adopted in September 2016 of eliminating the effect of merger and acquisition costs from normalised headline
  earnings.
  
  Cents                                                        As reported    Effect of  
                                                                previously  restatement  Restated
  Normalised headline earnings per share - March 2016                  268           14       282
  Diluted normalised headline earnings per share - March 2016          265           14       279

SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 March 2017

                                                                                                                    Year ended
                                                                                       Six months ended 31 March  30 September
R million                                                                            2017                   2016          2016
                                                                               (Unaudited)            (Unaudited)     (Audited)
Profit for the period                                                                 469                    453           963
Other comprehensive income, net of taxation:
Items that may be reclassified subsequently  to profit or loss
(Losses)/ gains arising from translating the financial                                 (3)                    10           (19)
results of foreign subsidiaries
Total comprehensive income                                                            466                    463           944
Total comprehensive income attributable to:
Non-controlling interests                                                              19                      3             3
Share of comprehensive income                                                          17                      3             9
Share of translation gain/(loss)                                                        2                      -            (6)
Equity holders of Reunert                                                             447                    460           941

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 March 2017

                                                                                                                                      Year ended
                                                                                                         Six months ended 31 March  30 September
R million                                                                           Notes                       2017          2016          2016
                                                                                                          (Unaudited)   (Unaudited)     (Audited)
Non-current assets
Property, plant and equipment, investment properties and
intangible assets                                                                                              1 066           766         1 019
Goodwill                                                                                7                        925           671           737
Investments and loans                                                                   8                         49            90            53
Investment in joint ventures and associate                                                                       169           157           152
Rental and finance lease receivables                                                                           1 578         1 537         1 449
Deferred taxation                                                                                                 83           114           104
                                                                                                               3 870         3 335         3 514
Current assets
Inventory                                                                                                      1 430         1 274         1 295
Rental and finance lease receivables                                                                             656           702           695
Accounts receivable and taxation                                                                               2 016         1 782         2 008
Derivative assets                                                                       9                          5             3            15
Money market instruments                                                                                         270             -           670
Cash and cash equivalents                                                                                      1 562         2 355         1 712
                                                                                                               5 939         6 116         6 395
Total assets                                                                                                   9 809         9 451         9 909
Equity attributable to equity holders of Reunert                                                               6 858         6 675         7 011
Non-controlling interests                                                                                         98            43            81
Total equity                                                                                                   6 956         6 718         7 092
Non-current liabilities
Deferred taxation                                                                                                 96           101           102
Long-term borrowings                                                                   10                         42           247            43
                                                                                                                 138           348           145
Current liabilities
Accounts payable, provisions and taxation                                                                      2 112         2 134         2 037
Derivative liabilities                                                                  9                          1             6             6
Bank overdrafts and short-term loans                                                                             399            44           400
Current portion of long-term borrowings                                                10                        203           201           229
                                                                                                               2 715         2 385         2 672
Total equity and liabilities                                                                                   9 809         9 451         9 909

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2017

                                                                                                                        Year ended
                                                                                           Six months ended 31 March  30 September
R million                                                                            2017                       2016          2016
                                                                               (Unaudited)                (Unaudited)     (Audited)
Share capital                                                                         356                        337           343
Balance at the beginning of the period                                                343                        318           318
Issue of shares                                                                        13                         19            25
Share-based payment reserves                                                          165                         32           136
Balance at the beginning of the period                                                136                         16            16
Share-based payment expense                                                            33                         16           120
Treasury shares used for incentive scheme                                              (4)                         -             -
Equity transactions with empowerment partners and
non-controlling shareholders                                                            -                          -             -
Balance at the beginning of the period                                                  -                          -             -
Net changes in non-controlling interests                                                -                          -           (40)
Transferred to retained earnings                                                        -                          -            40
Empowerment shares*                                                                  (276)                      (276)         (276)
Treasury shares#                                                                     (136)                         -           (28)
Balance at the beginning of the period                                                (28)                         -             -
Shares bought back during the period                                                 (112)                         -           (28)
Shares used for incentive scheme                                                        4                          -             -
Foreign currency translation reserves                                                 (12)                        16            (7)
Balance at the beginning of the period                                                 (7)                         6             6
Other comprehensive income                                                             (5)                        10           (13)
Non distributable reserves                                                              1                          -             1
Balance at the beginning of the period                                                  1                          -             -
Increase in capital reserve                                                             -                          -             1
                                                                                                                       
                                                                                                                        Year ended
                                                                                        Six months ended 31 March     30 September
R million                                                                        31 March                       2016          2016
                                                                                     2017                 (Unaudited)     (Audited)
                                                                               (Unaudited)
Retained earnings                                                                   6 760                      6 566         6 842
Balance at the beginning of the period                                              6 842                      6 615         6 615
Total comprehensive income attributable to equity holders
of Reunert                                                                            452                        450           954
Cash dividends declared and paid                                                     (534)                      (499)         (687)
Transfer to reserves~                                                                   -                          -           (40)

Equity attributable to equity holders of Reunert                                    6 858                      6 675         7 011
Non-controlling interests                                                              98                         43            81
Balance at the beginning of the period                                                 81                         46            46
Post-acquisition amendment to purchase price allocation
of prior year acquisition                                                             (11)                         -             -
Share of total comprehensive income                                                    19                          3             3
Dividends declared and paid                                                            (6)                        (3)           (3)
Net changes in non-controlling interests                                               15                         (3)           35

Total equity at end of the period                                                   6 956                      6 718         7 092

* These are Reunert Limited shares held by Bargenel Investments Proprietary Limited (Bargenel), a company sold
  by Reunert to its 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.
# Reunert shares bought back and held by a subsidiary: 2 107 979 (2016: nil) (September 2016: 443 331).
~ Impact of the final settlement of prior empowerment transactions.

SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 March 2017

                                                                                                            Year ended
                                                                              Six months ended 31 March   30 September
R million                                                Notes                       2017          2016           2016
                                                                               (Unaudited)   (Unaudited)      (Audited)
EBITDA                                                                                681           622          1 433
(Increase)/decrease in net working capital                                            (55)         (235)          (396)
Other net non-cash movements                                                           11            28             50
Cash generated from operations                                                        637           415          1 087
Net interest and dividends                                                             44            70            137
Taxation paid                                                                        (206)         (231)          (431)
Dividends paid (including to non controlling interests)                              (540)         (502)          (690)
Net (outflows)/inflows from operating activities                                      (65)         (248)           103
Net inflow/(outflow) from investing activities                                         49           (90)        (1 205)
Capital expenditure                                                                   (49)          (74)          (222)
Net inflow arising from disposal of businesses                                          -#           27              -
Net outflow arising from acquisition of businesses          11                       (242)          (13)          (462)
Movement in total rental and finance lease receivables                                (77)          (48)            14
Non-current loans repaid                                                                4             6             43
Proceeds from investment in insurance cell captive                                      -             -             48
Dividends received from joint venture                                                   -            10             35
Investments net of other capital items*                                               413             -           (638)
Other                                                                                   -             2            (23)
Net (outflow)/inflow from financing activities                                       (133)           13           (222)
Shares issued                                                                          13            19             25
Investment in treasury shares                                                        (112)            -            (28)
Net long-term borrowings repaid                                                       (34)           (5)          (181)
Equity transactions with non-controlling interests                                      -             -            (40)
Other                                                                                   -            (1)             2

Decrease in net cash resources                                                       (149)         (325)        (1 324)
Net cash resources at the beginning of the period                                   1 312         2 636          2 636
Net cash resources at the end of the period                                         1 163         2 311          1 312
Cash and cash equivalents                                                           1 562         2 355          1 712
Bank overdrafts                                                                      (325)            -           (327)
Short-term borrowings                                                                 (74)          (44)           (73)
Net cash resources at the end of the period                                         1 163         2 311          1 312

* This includes R400 million movement in investments in long-dated money market instruments  (2016: Rnil)
 (September 2016: R670 million).
# Nil due to rounding.

SUMMARISED SEGMENTAL ANALYSIS
at 31 March 2017

                                                                                                                                                               Year ended
                                                                                                              Six months ended 31 March                       30 September
R million                                                                                            2017             %         2016         %       %       2016         %
                                                                                              (Unaudited)      of total  (Unaudited)  of total  change  (Audited)  of total
Revenue*
Electrical Engineering                                                                              2 381            51        1 824        43      31      4 106        46
ICT                                                                                                 1 602            34        1 689        40      (5)     3 332        37
Applied Electronics                                                                                   693            15          696        17       -      1 505        17
Other                                                                                                   8             -           11         -     (27)        21         -
Total segment revenue                                                                               4 684           100        4 220       100      11      8 964       100
Revenue from equity-accounted joint venture - Electrical Engineering                                 (251)                      (198)                        (453)
Revenue from equity-accounted associate - ICT                                                         (12)                         -                            -
Revenue as reported                                                                                 4 421                      4 022                10      8 511
Operating profit#
Electrical Engineering                                                                                309            48          272        47      14        610        45
ICT~                                                                                                  263            41          250        44       5        549        41
Applied Electronics                                                                                    54             9          122        21     (56)       305        23
Other~                                                                                                 14             2          (68)      (12)    121       (111)       (9)
Total segment operating profit                                                                        640           100          576       100      11      1 353       100
Operating profit from equity-accounted joint ventures - Electrical Engineering                        (23)                       (12)                         (38)
Operating profit from equity- accounted associate - ICT                                                (1)                         -                            -
Operating profit as reported                                                                          616                        564                 9      1 315

* Inter-segment revenue is immaterial and has been eliminated from segment revenue.
# Head office recoveries have not been eliminated from operating profit as the chief operating decision-maker
  judges the performance of the segment net of these fees. The increase in head office recoveries from the prior year is
  due primarily to a group re-organisation.
~ Net interest charged on group funding provided to Quince has been eliminated in line with the consolidation
  principles of IFRS. This elimination amounted to R56 million (2016: R41 million) (September 2016: R95 million).

                                                                                                 Year ended
                                                      Six months ended 31 March                30 September
R million                                      2017         %          2016         %         2016         %
                                         (Unaudited) of total    (Unaudited) of total     (Audited) of total
Total assets
Electrical Engineering                        2 758        28         2 091        22        2 699        27
ICT                                           3 777        39         4 058        43        4 084        41
Applied Electronics                           1 853        19         1 330        14        1 477        15
Other~                                        1 421        14         1 972        21        1 649        17
Total assets as reported                      9 809       100         9 451       100        9 909       100

~ Other consists mainly of group treasury cash balances.

NOTES

1. Basis of preparation
This interim financial report was 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 1 October 2016 and the SAICA Financial Reporting Guides, as issued by the
Accounting Practices Committees and Financial Reporting pronouncements as issued by the Financial Reporting Standards
Council. This interim report was prepared using 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, No 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 applied in this interim report were consistently applied with those used in the group
annual financial statements for the year ending 30 September 2016. These accounting policies comply with IFRS.

                                                                                                                      Year ended
                                                                                        Six months ended 31 March   30 September
R million                                                                                      2017          2016           2016
                                                                                         (Unaudited)   (Unaudited)      (Audited)
2. Operating profit
Operating profit includes:
-  Cost of sales                                                                              2 931         2 566          5 402
-  Other expenses excluding depreciation and amortisation                                       828           887          1 731
-  Other income                                                                                  11            22             45
-  Realised gain on foreign exchange and derivative instruments                                  19            30             26
-  Unrealised (loss)/gain on foreign exchange and derivative instruments                        (11)            1            (16)

3. Net interest income and dividends 
Interest income and dividends*                                                                   64            76            164
Interest expense                                                                                (20)           (6)           (27)
Total                                                                                            44            70            137

4. Empowerment transactions
Share based payment charges#                                                                     19             -            113
Donation to an empowerment partner                                                                1             -              -
Taxation thereon                                                                                  -             -              -
Net empowerment transactions after taxation                                                      20             -            113

* Includes dividends of Rnil (2016: Rnil) (September 2016: R8 million).
# This represents IFRS 2 (Share-based Payment) charges as a result of the introduction of empowerment partners
  in the Electrical Engineering and Applied Electronics segments.

                                                                                                                                                                 Year ended
                                                                                                                                   Six months ended 31 March   30 September
R million                                                                                                                                 2017          2016           2016
                                                                                                                                    (Unaudited)   (Unaudited)      (Audited)
5. 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)                                                                                                    164           165            165
Adjusted by the dilutive effect of unexercised share options granted (millions of shares)                                                    2             2              2
Weighted average number of shares used to determine diluted basic, headline and normalised headline earnings per share
(millions of shares)                                                                                                                       166           167            167

6. Headline earnings
6.1. Profit attributable to equity holders of Reunert                                                                                      452           450            954
Headline earnings are determined by eliminating the effect of the following items from attributable earnings:
Net gain on disposal of assets (after a tax charge of Rnil and non-controlling interest (NCI) portion of Rnil) (2016:
tax charge R2 million, NCI Rnil) (September 2016: tax charge R2 million, NCI Rnil)                                                          (2)          (10)           (20)
Impairment of intangible asset (tax and NCI Rnil) (March and September 2016: tax credit R3 million, NCI R2 million)                          -             7              8
Headline earnings                                                                                                                          450           447            942
                                                                                                                                             
                                                                                                                                                    Restated
                                                                                                                                                                Year ended
                                                                                                                                   Six months ended 31 March  30 September
R million                                                                                                                                 2017          2016          2016
                                                                                                                                    (Unaudited)   (Unaudited)     (Audited)
6.2 Normalised headline earnings*
Headline earnings                                                                                                                          450           447           942
Normalised headline earnings are determined by eliminating the effect of the following items from attributable headline
earnings:
IFRS 2 charges on BBBEE transactions undertaken in the current year and prior year (tax and NCI Rnil) (September 2016:
Rnil)                                                                                                                                       19             -           113
Donation to empowerment partner (tax and NCI Rnil) (September 2016: Rnil)                                                                    1             -             -
Merger and acquisition costs (tax and NCI Rnil) (September 2016: tax and NCI Rnil)                                                           9            23#           39
Net economic interest in profit attributable to non-controlling interests with outstanding equity- related loan
accounts. These were not recognised as the significant risks and rewards of ownership had not passed to the non-
controlling shareholders.                                                                                                                    -            (5)~           -
Normalised headline earnings                                                                                                               479           465         1 094

* 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 Limited.

  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.
# This amount has been restated as disclosed in the other measures of earnings per share.

                                            As reported    Effect of  Restated
                                             previously  restatement
  Merger and acquisition costs (R million)            -           23        23
  Normalised headline earnings (R million)          442           23       465

~ This adjustment was not required in September 2016 as Reunert bought back the non-controlling interests
  during 2016.
                                                                                                                                              Year ended
                                                                                                                Six months ended 31 March   30 September
R million                                                                                                              2017          2016           2016
                                                                                                                 (Unaudited)   (Unaudited)      (Audited)
7. Goodwill
Carrying value at the beginning of the period                                                                           737           653            653
Acquisition of businesses*                                                                                              172            12             90
Derecognition of a subsidiary due to reduction of investment                                                            (12)            -              -
Adjustment to goodwill on finalisation of acquisition made in the prior year                                             33             -              -
Exchange differences on consolidation of foreign subsidiaries                                                            (5)            6             (6)
Carrying value at the end of the period                                                                                 925           671            737

8. Investments and loans
Loans - at cost                                                                                                          35            75             37
Investment in insurance cell - at fair value                                                                             14            15             16
Carrying value at the end of the period                                                                                  49            90             53

9. Fair value classification and measurement
At the balance sheet date the only financial instruments that the group held at fair value were:
Derivative assets                                                                                                         5             3             15
Derivative liabilities                                                                                                    1             6              6
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 valuations were performed by major financial institutions.

10. Long-term borrowings
Total long-term borrowings (including finance leases)#                                                                  245           448            272
Less: short-term portion (including finance leases)                                                                    (203)         (201)          (229)
                                                                                                                         42           247             43
* At 31 March 2017, the purchase price allocation of the acquisitions made in 2017 and the second half of 2016
  have not been finalised and therefore the amounts reported are provisional and subject to change.
# These borrowings include R200 million (2016: R400 million) (September 2016: R200 million) in respect of the
  Quince rental book, which is repayable in May 2017 (2016: R200 million was repayable in May 2016) (September 2016: R200
  million).


                                                                                                                    Six months
                                                                                                                         ended
                                                                                                                      31 March
R million                                                                                                                 2017
                                                                                                                    (Unaudited)
11. Acquisition of businesses
During the current period the following entities were acquired by the group and will form part of the Applied
Electronics segment:

-  Nanoteq Proprietary Limited: With effect from 1 October 2016, the group acquired 100% of the share capital of
Nanoteq Proprietary Limited. The R69 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.               95

-  Terra Firma Solutions Proprietary Limited: With effect from 1 March 2017,  the group acquired 51% of the share
capital of Terra Firma Solutions Proprietary Limited. The R87 million in goodwill arising from the acquisition is
attributable  to the high growth in this business and the ability for the group to diversify  into new products and
geographical areas. The following options exist:  callable for a further 9% (September 2018) and a put for a further
25% (September 2019/2020), which if exercised, will increase the group's holding  of Terra Firma's share capital to
85%. At the reporting date it is estimated that the fair value of these options is nil.                                    102

-  Ryonic Robotics Proprietary Limited: With effect from 1 March 2017, the group acquired 74,9% of the share capital of
Ryonic Robotics Proprietary Limited. The R16 million in goodwill arising from the acquisition is attributable to the
high growth in this business, unique product offering and the ability for the group to diversify into new products and
geographical areas.                                                                                                         21
Cost of investments                                                                                                        218
Net borrowings at time of acquisition                                                                                       24
Net cash flows on acquisition of businesses                                                                                242
Non-controlling interest                                                                                                    15
                                                                                                                           257
Gross assets acquired and liabilities taken over:
Deferred taxation                                                                                                           (7)
Property, plant and equipment and intangible assets                                                                         72
Non-current receivables                                                                                                      2
Inventory                                                                                                                    5
Accounts receivable and taxation                                                                                            80
Short-term borrowings                                                                                                       (7)
Accounts payable, provisions and taxation                                                                                  (60)
Goodwill                                                                                                                   172
Net assets acquired                                                                                                        257
Revenue since acquisition                                                                                                   48
Profit after taxation since acquisition                                                                                      8
Revenue for the six months ended 31 March 2017 as though the acquisition dates had been 1 October 2016                     151
Profit after taxation for the six months ended 31 March 2017 as though the acquisition dates had been 1 October 2016        19

2016
Refer to 2016 published results

12. 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 (eg 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 31 March 2017 Cafca's share capital and reserves amounted to USD15 million.

13. Related-party transactions
Counterparty R million                            Relationship                Sales  Purchases  Treasury
                                                                                                 shares
All related-party transactions, trading account
 and loan balances are on the same terms and
 conditions as those with
non-related parties.
March 2017
CBI-electric Telecom Cables Proprietary Limited   A joint venture                3          1         -
Nashua Winelands                                  An associate                   7          5         -
Bargenel Investments  Proprietary Limited         Owns 18,5m Reunert shares      -          -       276
March 2016
CBI-electric Telecom Cables  Proprietary Limited  A joint venture                -          -         -
Bargenel Investments  Proprietary Limited         Owns 18,5m Reunert shares      -          -       276
September 2016
CBI-electric Telecom Cables  Proprietary Limited  A joint venture                1          -         -
Bargenel Investments  Proprietary Limited         Owns 18,5m Reunert shares      -          -       276

14. 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  it is aware of.

15. Events after reporting date
No events have occurred after the reporting date that require additional disclosure or adjustment to the results
presented.

ADDITIONAL INFORMATION
                                                                                                              Year ended
                                                                                Six months ended 31 March   30 September
R million (unless otherwise stated)                                                    2017          2016           2016
                                                                                 (Unaudited)   (Unaudited)      (Audited)
Current ratio (:1)                                                                      2,2           2,6            2,4
Quick ratio (:1)                                                                        1,7           2,0            1,9
Dividend yield (%)                                                                      6,2           6,0            7,2
Net number of ordinary shares in issue (million)                                        163           165            165
Number of ordinary shares in issue (million)                                            184           184            184
Less: empowerment shares (million)                                                      (19)          (19)           (19)
Less: treasury shares (million)                                                          (2)            -              -
Capital expenditure                                                                      49            74            222
- expansion                                                                              29            54            174
- replacement                                                                            20            20             48
Capital commitments in respect of property, plant  and equipment                         83            91             60
- contracted                                                                             46            53             10
- authorised not yet contracted                                                          37            38             50

Commitments in respect of operating leases                                               62            74             63
Contingent liabilities                                                                    -             -              -

ADMINISTRATION
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")

Directors: T S Munday (Chairman) *,T Abdool-Samad*, A E Dickson (Chief Executive Officer), S D Jagoe*, P Mahanyele*,
S Martin*, M Moodley, T J Motsohi*, N D B Orleyn**, S G Pretorius*, M A R Taylor,  N A 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
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
PO Box 61051
Marshalltown, 2107

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)

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 period ended 31 March 2017 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 and correct.

Karen Louw
for 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

30 MAY 2017 (PUBLICATION DATE)

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