Wrap Text
Unaudited interim financial statements and cash dividend declaration for the six months ended 31 March 2022
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")
Unaudited condensed consolidated interim financial statements1
and cash dividend declaration for the six months ended 31 March 2022
Salient features
31 March 31 March
2022 2021 %
Rm
Group revenue 5 114 4 614 11
Operating profit 465 448(restated) 4
Profit after tax 331 310 7
Headline earnings per share (cents) 195 193 1
Earnings per share (cents) 196 194 1
Dividend per share (cents) 75 70 7
OVERVIEW
Reunert is pleased to present its results for the six-month period ended 31 March 2022 (H1 FY: 2022), which reflect an improvement in the financial
performance on the comparative period in an environment of continued underspend by South African state institutions on electrical infrastructure, increased
logistic costs, extended supply chains and global electronic component shortages, and high commodity prices exacerbated by the Russia-Ukraine war, which all
adversely impacted input costs.
The Group's segmental operating profit increased by 1% to R449 million from R445 million achieved in the six-month period ended 31 March 2021 (H1 FY: 2021).
This growth was negatively impacted by the industry-wide, three-week wage strike in the Electrical Engineering segment which reduced output capacity by
around 14% for H1 FY: 2022, leading to the reduction in the segment's operating performance. Positively, the Applied Electronics segment's operating profit
increased as it commenced delivering into new export contracts facilitated by the receipt of the necessary export permits, with the Information
Communication and Technology segment delivering a result in line with expectations and the guidance given in 2021.
At the half year, all segments were beginning to benefit from a combination of improving order books and improving sales environments. The return of our
Applied Electronics' sales force's ability to travel internationally, combined with our customers' increased focus on defence, has led to a significant
improvement in this segment's order book with several of our businesses in this segment having full order books for the balance of the financial year.
Electrical Engineering Segment (EE segment)
The EE segment delivered a pleasing operating profit taking into consideration the negative impact of the three-week industry-wide wage negotiation strike
which resulted in throughput volumes of the South African power cable factory reducing by approximately 10% in H1 FY: 2022 after the implementation of plans
to catch up on the lost production time. Positively, segment operating profit decreased by only 7% to R151 million (H1 FY: 2021: R163 million).
The circuit breaker business continues to benefit from excellent export demand and its increased local market share.
Information Communication and Technology Segment (ICT segment)
The ICT segment delivered an operating profit in line with previous guidance given, with segment operating profit increasing by 4% to R305 million (H1 FY:
2021: R293 million).
The Total Workspace Provider business successfully onboarded a range of new brands to overcome the product portfolio gap resulting from the fire in the
prior year at the sole supplier of electronic chips to the Group's supplier of entry level multi-function printers.
+OneX successfully integrated the acquisitions undertaken in the 2021 financial year and concluded the acquisition of a software development company and
contributed positively to the growth in the segment's operating profit.
The Group's communication businesses, ECN and Skywire, were able to maintain their profitability at the same level as H1 FY: 2021, despite minute demand
declining as a result of the economic environment and the adverse effects of load shedding.
The Group's finance book continued to perform well, with very limited credit losses being experienced on the lease and loan receivables in the period under
review.
Applied Electronics Segment (AE segment)
The AE segment operating profit increased by 77% to R55 million (H1 FY: 2021: R31 million) as export permits were finally released in the second quarter of
FY:2022 allowing the AE segment to deliver into several of the delayed export contracts.
Due to the timing of these sales, there was insufficient time for the receivables resulting from the sales to be converted into cash, which together with an
increased investment into inventory relating to future sales, were key factors in the Group's reduced cash conversion to 53% of profit after tax from 87% of
profit after tax for H1 FY: 2021. This will be remedied in H2 FY: 2022.
The lifting of COVID-19 travel bans, has resulted in a significant increase in the segment's order book. These new contracts will be delivered in H2 FY:
2022 and the 2023 financial year (FY:2023).
Local defence spending, however, remains under pressure and as a result the next tranche of the local tactical communication order is only expected to
result in revenue in FY:2023.
The Group's renewable energy businesses continue to make progress particularly the solar photovoltaic business which continues to grow from strength to
strength as it capitalises on the buoyant renewable market.
EVENTS AFTER THE REPORTING DATE
Subsequent to the reporting date, the Group has concluded a sale of shares agreement with Etion Limited (Etion) for the purchase of Etion Create. The
purchase consideration is R168 million on a cash-free and debt-free basis, subject to certain agreed adjustments, provided that such purchase consideration
shall be subject to an absolute maximum of R210 million. The implementation of the transaction is subject to certain conditions precedent. Etion Create will
be integrated into the AE segment and will provide the Group with original design capability for the design integration and support of advanced technology
in the market sectors of: mining and industrial; defence and aerospace; internet of things and sensors; and cyber security.
In addition to this acquisition, the Group acquired all the shares held by SIBU Private Equity (Pty) Ltd in Terra Firma Solutions (Pty) Ltd for a purchase
consideration of R20,9 million.
PROSPECTS
Reunert is positioned to deliver an improved full year financial performance for FY:2022. The EE segment's improved financial performance is expected to
continue with increased volumes and margins, while the ICT segment should grow in line with recent performances as the South African economy recovers and
the contribution from +OneX accelerates. The AE segment is expected to deliver a strong H2 FY: 2022 as export sales materially increase on the back of the
strong order book.
Free cash flow generation in the H2 FY: 2022 should reflect the stabilisation of the levels of buffer stock needed to combat the consequences of erratic
supply chains and the improvement in the levels of receivables. This will result in sufficient free cash generation to continue to support the cash return
to shareholders as well as the Group's growth and strategy execution.
CASH DIVIDEND
While cognisant of the economic uncertainty going forward, the Group's free cash flow generating capacity remains intact. Notice is hereby given that a
gross interim cash dividend No. 192 of 75,0 cents per ordinary share (March 2021: 70,0 cents per ordinary share) has been declared by the directors for the
period ended 31 March 2022. 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 60,0 cents per ordinary share (March 2021: 56,0 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 Proprietary Limited and the Listings Requirements of the JSE Limited, the following dates are applicable:
Last date to trade (cum dividend) Tuesday, 21 June 2022
First date of trading (ex dividend) Wednesday, 22 June 2022
Record date Friday, 24 June 2022
Payment date Monday, 27 June 2022
Shareholders may not dematerialise or rematerialise their shares between, Wednesday, 22 June 2022 and Friday, 24 June 2022, both days inclusive.
On behalf of the Board
Mohamed Husain Alan Dickson Nick Thomson
Chair Chief Executive Officer Chief Financial Officer
Sandton, 24 May 2022
1 Extracted financial information from the unaudited condensed consolidated interim financial statements for the six months ended 31 March 2022,
excluding free cash flow, which has not been disclosed.
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/2022/JSE/ISSE/RLO/Interim_22.pdf and on Reunert's
website (http://www.reunert.com) on 25 May 2022.
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.
Reunert plans to host an Investor Day on 29 June 2022 where the strategic drivers of growth will be discussed, allowing for greater insight into the
evolution of Reunert's modern ICT segment and renewable energy businesses. Invitations to shareholders will be circulated in due course. For further
information, kindly contact karens@reunert.co.za.
Directors
MJ Husain (Chair)*, T Abdool-Samad*, AB Darko*, AE Dickson (Chief Executive Officer), LP Fourie (Chair of the audit committee)*, JP Hulley*, TNM Eboka*
(Appointed 1 March 2022), RJ Boettger* (Appointed 1 March 2022) , S Martin*, DR MT Matshoba-Ramuedzisi*, M Moodley, Adv N D B Orleyn**, NA Thomson (Chief
Financial Officer)
* 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
Investor enquiries
Karen Smith Email karens@reunert.co.za
For more information log on to the Reunert website at reunert.com
Sponsor
One Capital Sponsor Services Proprietary Limited
17 Fricker Road, Illovo, 2196
25 May 2022 (publication date)
Date: 25-05-2022 12:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
