Wrap Text
Preliminary reviewed summarised consolidated results and cash dividend for the year ended 30 September 2021
REUNERT LIMITED
Incorporated in the Republic of South Africa
Registration number 1913/004355/06
Ordinary share code: RLO
ISIN code: ZAE000057428
("Reunert", "the Group" or "the Company")
Preliminary reviewed condensed consolidated results1
and cash dividend declaration for the year ended 30 September 2021
The contents of this short-form announcement are the responsibility of the Board of directors of the Company (the Board).
Shareholders are advised that this short-form announcement does not contain full or complete details and represents a summary of the information contained
in the full announcement, which is accessible via the JSE link at https://senspdf.jse.co.za/documents/2021/JSE/ISSE/RLO/AFS_2021.pdf. and on Reunert’s website
(http://www.reunert.com) on 23 November 2021.
Shareholders and investors are advised to review the full announcement in making any investment decisions.
The full announcement is also available for inspection at no charge at the registered offices of the Company and its sponsor during normal business hours.
Salient features
2021 2020 %
Rm
Group revenue 9 575 8 046 19
Operating profit 1 050 208(restated) 405
Profit after tax 743 84 785
Headline earnings per share (cents) 478 115 316
Earnings per share (cents) 483 29 1 556
Dividend per share (cents) 207 192 8
Overview
Strong operating and financial performance
Reunert's 2021 attributable profit was a meaningful improvement compared with the prior year. The Group benefited from the restructuring and productivity
improvement actions implemented in 2020, which created the base for this year's performance. The Group's companies generally managed the complex and
volatile market environment extremely well to deliver solid operating performances, specifically in the Information Communication Technology (ICT) and
Electrical Engineering segments, which resulted in an overall financial performance that demonstrates the resilience and responsiveness of our Group.
All the businesses in the ICT segment performed in line with, or slightly better than, the Group's expectations. Interest income at Quince Capital (Pty) Ltd
(Quince) decreased in line with the lower interest rate environment. Improved performances were achieved in all the other business units in the segment,
which delivered a segment operating profit slightly ahead of the prior year.
The Electrical Engineering segment's recovery was led by a strong performance from the circuit breaker business which included excellent export growth and
improved market share in South Africa. This was augmented by the cable businesses which benefited from the prior year's actions and much improved factory
operational efficiency. Consequently, these businesses delivered a positive operating profit against an operating loss in the prior year.
The Applied Electronics segment had a challenging year as exports reduced because of a COVID-19 related inability to travel and secure new orders, as well
as long delays in the receipt of export permits from the appropriate authorities.
Challenges
Despite the positive financial performance, 2021 remained challenging and the Group had four key challenges to contend with. These challenges included:
COVID-19 lockdowns both in South Africa and in the Group's various export markets; the civil unrest in South Africa in July; the delay to secure export
permits from the appropriate authorities; and the global electronic component shortage and general supply chain challenges.
These factors prevented the full recovery of our businesses and continue to impact the Group, although we expect this impact to steadily diminish
and for the Group's performance to continue to improve in the year ahead.
Group results
Reunert's 2021 financial results were bolstered by a strong recovery in the Electrical Engineering segment, a good performance in the ICT segment and
negatively impacted by the four challenges described above which impeded a stronger performance by the Group and resulted in a poor Applied Electronics
segment performance. The Group's revenue increased by 19% to R9 575 million (2020: R8 046 million) while the Group's operating profit grew by 405%
to R1 050 million (2020: R208 million restated) resulting in headline earnings per share (HEPS) of 478 cents (2020: 115 cents) and earnings per share (EPS)
of 483 cents (2020: 29 cents).
COVID-19
Operations and employees
COVID-19 continued to have a detrimental impact on the Group. Our companies ensured safe working environments for employees and that safety protocols were
adhered to. Despite the strong health and safety protocols, infections continued during the year. Unfortunately, 16 employees succumbed to COVID-19. We take
this moment to recognise these employees and reiterate our condolences to their families and fellow employees.
Markets
COVID-19 affected the markets that our businesses service. In South Africa the tourism and hospitality markets continued to be affected by the lockdowns and
the education sector continues to experience volatile demand as places of learning have yet to return to normal schedules.
Importantly, most of the key markets that support our businesses have recovered. Outside of tourism, hospitality and education, the Small and Medium
Enterprise market that the Group services has largely recovered and our Communications cluster is benefiting from strong last mile broadband connectivity
demand.
The key international markets had their own lockdowns and, together with the ban on South Africans traveling internationally, our export activities in the
Applied Electronics segment were impeded. Pleasingly, travel bans to several of our key markets have recently been lifted and an immediate improvement in
results has been achieved.
Supply chain
COVID-19 has severely impacted global supply chains. Electronic components and inbound and outbound logistics have been impacted through lack of
availability, longer lead times, more complex routings and the resulting increased costs. Solutions have been implemented around the Group and, whilst we
expect supply chain challenges for most of 2022, the situation is already much improved.
Segmental review
Electrical Engineering Segment
The segment recovered strongly from a challenging 2020 led by an excellent performance from the circuit breaker business in both local and export markets.
The actions taken in 2020 to rationalise the cable companies' cost base in line with the expected market volumes, and reduce our exposure to forex movements
in Zambia, yielded the desired outcomes and in 2021 the companies improved their operational efficiencies. This led to a 47% increase in segment revenue to
R5 551 million (2020: R3 767 million) with a corresponding increase in segment operating profit to R373 million (2020: R28 million restated).
ICT Segment
The segment improved on the performance of the past year with all companies achieving solid operating performances. Nashua Office Automation leveraged its
strong market position and customer relationships to significantly recover in its traditional print business as well as continue its strong growth in new
complementary products and services. The Communications cluster continued to grow strongly as growth in the broadband connectivity accelerated and the
general economic activity improved. The Finance cluster performed well in a tight credit and collection environment. During the year +OneX completed two
acquisitions in cloud hosting and digital media, which expanded its service offering alongside the existing managed services and unified communications
capabilities. Our businesses have some exposure to markets that continue to be negatively impacted by COVID-19 which, impeded a stronger segment
performance. The good performance resulted in revenue remaining nominally flat at R2 490 million (2020: R2 524 million). Segment operating profit increased
slightly to R608 million (2020: R604 million). The segment's operating profit was impacted due to the lower interest yield in Quince because of the low
interest rate environment.
Applied Electronics Segment
The segment had a challenging year. Our export activity fell significantly and resulted in revenue reducing by 5% to R1 854 million
(2020: R1 951 million) and segment operating profit decreased by 63% to R100 million (2020: R269 million restated). The segment continued to be impacted by
the COVID-19 lockdowns in South Africa and in key export markets, making the execution of existing orders and obtaining new orders extremely difficult. This
was exacerbated by the COVID-19 induced extended supply chain issues and the worldwide shortage of electronic components as well as the delays in receiving
export permits from the relevant authorities. Subsequent to the financial year end several large orders were received as travel restrictions were lifted.
Prospects
Reunert expects the South African macro-economic conditions to continue to steadily improve during 2022. Accordingly, the Electrical Engineering and ICT
segments should experience moderately improved market demand on the back of accelerating renewable energy infrastructure investment and the improvement in
the South African economy. The strength of the underlying businesses in these two segments position them well to continue to grow in such economic
environments. Due to the recent relaxation in international travel restrictions, the Applied Electronics segment has secured new export orders and this
should support an improved segment performance.
The Group's first half is likely to face some pressure from:
- the impact of the union strike action in October on the Electrical Engineering segment;
- the time taken to acquire the production requirements for new export orders in the Applied Electronics segment before revenue is earned.
These impacts are both temporary and unlikely to affect the expected full year performance of the Group.
While recognising that challenges and uncertainty due to COVID-19 and global supply chain remain, our key growth markets of renewable energy, exports and
our Solutions and Systems Integration clusters all continue to represent a strong underpin to our growth aspirations.
Cash dividend
Notice is hereby given that a gross final cash dividend No 191 of 207,0 cents per ordinary share (September 2020: 192,0 cents per ordinary share) has been
declared by the directors for the year ended 30 September 2021.
The dividend has been declared from retained earnings, bringing the total dividends declared for the year to 277,0 cents per ordinary share.
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 165,60000 cents per ordinary share (September 2020: 153,60000 cents per
ordinary share).
The issued share capital at the declaration date is 184 969 196 ordinary shares.
Income tax reference number: 9100/101/71/7P
In compliance with the requirements of Strate (Pty) Ltd and the Listings Requirements of the JSE Limited, the following dates are applicable:
Last date to trade (cum dividend) Tuesday, 18 January 2022
First date of trading (ex dividend) Wednesday, 19 January 2022
Record date Friday, 21 January 2022
Payment date Monday, 24 January 2022
Shareholders may not dematerialise or rematerialise their shares between Wednesday, 19 January 2022 and Friday, 21 January 2022, both days inclusive.
On behalf of the Board
Trevor Munday Alan Dickson Nick Thomson
Chairman Chief Executive Officer Chief Financial Officer
Sandton, 22 November 2021
1 All extracted information from the preliminary reviewed condensed consolidated financial statements for the year ended 30 September 2021. This
announcement itself is not audited or reviewed. The review conclusion on the underlying preliminary reviewed condensed consolidated financial statements was
unmodified. The unmodified auditor's review report is available for inspection at the registered offices of the Company.
Directors
TS Munday (Chair)*, T Abdool-Samad*, AB Darko*, AE Dickson (Chief Executive Officer), LP Fourie*, JP Hulley*, SD Jagoe*, S Martin*, MT Matshoba-
Ramuedzisi*, MJ Husain* (appointed: 1 November 2020), M Moodley, Adv NDB Orleyn**, NA Thomson (Chief Financial Officer)
* Independent non-executive; ** Non-executive
Registered office
Nashua Building
Woodmead North Office Park
54 Maxwell Drive
Woodmead, Sandton, 2191
PO Box 784391
Sandton, 2146
Telephone +27 11 517 9000
Investor enquiries
Karen Smith E-mail invest@reunert.co.za.
For more information log on to the Reunert website at
reunert.com
Sponsor
One Capital Sponsor Services (Pty) Ltd
17 Fricker Road, Illovo, 2196
Date: 23-11-2021 12:00:00
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