REU EUNERT F FY1 Y19 RESU ESULTS PRESEN SENTAT ATION For the year ended 30 September 2019
AGEN AGENDA 1 Salient features 2 Strategy update 3 Financial performance 4 Segmental performance 5 Business outlook and prospects
̶ ̶ ̶ ̶ ̶ ̶ SALIEN SALI ENT FEAT EATURES ES The Group’s Core operating Strong cash flow strategy execution profit* remains reflects the Group’s resilient despite ability to sustain continues to cable company the investment yield positive challenges case results ► Core operating profit decreased by 6% ► Strong export and complementary service ► Released R318 million from working capital revenues in Applied Electronics and ICT Impact of R37,6 million of restructuring costs ► Free cash flow of R1 313 million, 96% of respectively included in these results operating profit ► M&A activity bolsters early life cycle ► ICT delivered real growth despite weak business ► Dividend increase of 4% to 513 cents businesses confidence (FY18: 493 cents) Last mile broadband connectivity: ► Applied Electronics delivered another record year OculusIP Renewable energy storage: Blue Nova ► Electrical Engineering experienced a very challenging year Increased stake in Terra Firma Solutions (TFS) Weak infrastructure expenditure in cables business Zambia duty system changes * core operating profit is operating profit adjusted for once-off items Reunert audited results for the year ended 30 September 2019 3
FI FINA NANCI NCIAL PERFO RFORMA RMANCE NCE 4% 4% 105% 105% 12% 12% 6% 6% Total dividend per Core operating profit* Operating profit Free cash flow share R1 313m 1 313m R1 354m 1 354m 513 cents 513 cent R1 361m 1 361m FY18: R641m FY18: R1 542m FY18: R1 434m FY18: 493 cents Year ended 30 September 2019 2019 019 2018 2017 Revenue R million 10 714 10 14 10 492 9 773 2% 2% 7% 7% Operating profit R million 1 36 1 361 1 542 1 497 12% 12% 3% 3% Normalised headline earnings per share Cents 578 78 687 697 16% 16% 1% 1% Total dividend per share Cents 513 13 493 474 4% 4% 4% Reunert audited results for the year ended 30 September 2019 4
STRATEG EGY Y EXECUTION CUTION
̶ ̶ ̶ ̶ ̶ STRAT ST ATEGY EGY EXEC EXECUTION ON Reunert’s key strategic initiatives centre on ► Accelerating growth by building scale businesses in rapidly developing markets: Last mile broadband connectivity Renewable energy ► Leveraging the strength of our ICT segment by: Transforming office automation into a Total Workspace Provider by increasing complementary products and services Expanding our traditional VOIP services into a vertically integrated communications offering for the SME market Creating a fourth cluster to broaden our ICT service offering ► Diversifying Reunert’s revenue streams by increasing penetration into targeted geographies where we have a competitive advantage Reunert audited results for the six months ended 31 March 2019 6
̶ ̶ ̶ ̶ ̶ ̶ ̶ REN ENEW EWABLE ABLE EN ENER ERGY GY ST STRAT ATEGY EGY ► The drivers for the growth of renewable energy market have strengthened IRP2019 promulgated by Cabinet on 18 October 2019 requires 500MW per annum of distributed generation (R5bn per annum market) Eskom’s cost of electricity and security of supply remain key concerns to corporate customers Opportunities in Africa continue to develop Storage is increasingly being recognised as a mainstream solution as costs per kWh continue to reduce ► Reunert has strengthened its participation in the solar renewable energy market Increased equity stake in TFS to 62% from 54% in September 2019 Acquired 51% of Blue Nova solutions on 1 August 2019 Early entry into storage opens the opportunity to access the next wave of renewable energy growth Reunert audited results for the year ended 30 September 2019 7
̶ ̶ ̶ ̶ ̶ ̶ REN ENEW EWABLE ABLE EN ENER ERGY GY ST STRAT ATEGY EGY ► Solar renewable energy strategy is progressing well ► Engineering, procurement and contracting (EPC) build continues B-O-O A O ASS SSET T BUI BUILD strongly 40 TFS is one of the pre-eminent suppliers of distributed energy solutions in South Africa FY20 pipeline supports strong growth 30 EPC projects in Africa have been successfully executed Total MW ► Build-own-operate (B-O-O) gaining significant traction 20 External financing has been secured to facilitate the acceleration of investment into these assets Strong order book of projects for FY20 10 ► Targeting commercial and light industrial storage solutions First 250kW unit integrated into a solar installation before year end 0 Reunert audited results for the year ended 30 September 2019 8
̶ ̶ ̶ ̶ ̶ ICT CT SEGM SEGMEN ENT DIVER VERSI SIFICAT ATION ON END CUSTOMER PURC END CUST PURCHAS ASES O S OF CUSTOMERS W CUST WITH H MORE RE COMPL PLEM EMENT NTARY P RY PRODUCT DUCTS ( S (Rm) THAN O HAN ONE NE PRO PRODUCT The Total Workspace Provider strategy accelerates 25% Complementary revenues strongly: % increase in complementary revenues ► Complementary revenues are : 700 25% 23% 20% Service revenues 600 Annuity in nature and supported by long-term contracts 20% 17% 15% Capital light 500 Supportive of improved segment margins 15% 400 22% ► Value offering increased by launch of PCs and associated 10% 18% 300 services in Q4 FY19 10% 15% ► Complementary revenues to end-customers has reached critical 200 5% mass 5% 100 Increased 23% y/y to R616 million (FY18: 501 million) 501 616 429 0% ► Significant further cross-sale opportunities exist as only 22% of - 0% 2017 2018 2019 2017 2018 2019 our customer base have more than one Nashua service (FY18: 18%) 9
̶ ̶ ̶ ̶ ̶ ̶ ̶ GEOGR GEOGRAPH APHIC EXPAN EXPANSI SION ON ► Applied Electronics local presence in Southern Asia is yielding the 2017 017 2018 018 2019 019 desired benefits Improved access to high quality local supply chain Total revenue R million 9 773 10 492 10 714 Achieved local beneficiation requirements enabling market access for Non-ZAR revenue as a new contracts and % 28 30 30 % of total revenue +1% Increased brand presence has opened new market opportunities for other Applied Electronics products 3 164 3 141 Exports were under pressure due to various once-off events affecting customers of Nanoteq and Omnigo 2 769 ► Applied Electronics order book for FY20 is more than 60% of budgeted revenue ► Zambian liquidity crisis continues to hamper African expansion 2 076 ► Increasing percentage of R&D funding targeted at our international markets Radars (Esprit, SSP) Circuit breakers (5G, solar energy and rail) 1 422 Secure communications (new Airborne platform) Americas Europe Australia Middle East & Asia Africa 2015 2016 2017 2018 2019
03 FINANCIA NCIAL PERFORM FORMANCE NCE NICK THOMSON
% change CONSOLIDATED STATEMENT OF PROFIT & LOSS Core operating profit reconciliation FY 19 FY 18 on PY Operating profit 1 361 1 542 (12) Equity Accounted JV's & Associates (3) (3) Segment operating profit 1 358 1 539 (12) % change FY 19 FY 18 Rm Skywire contingent consideration gain (77) on PY Profit on sale of PPE (4) (28) Core operating profit 1 354 1 434 (6) Revenue 10 714 10 492 2 % change Core earnings reconciliation FY 19 FY 18 EBITDA on PY 1 526 1 699 (10) EE 323 440 (27) Depreciation & amortisation (165) (157) 5 Operating profit ICT 748 715 5 1 361 1 542 (12) Net interest (expense)/income AE 356 352 1 (15) 11 (236) Profit before capital & other items Other (73) (73) - 1 346 1 553 (13) Core operating profit 1 354 1 434 (6) Disposals & impairments (151) - Empowerment transactions (3) (42) (93) Disposal & impairment FY 19 Profit before Tax 1 192 1 511 (21) Prodoc 44 Tax (387) (358) 8 Impairments 107 Profit after Tax 805 1 153 (30) Goodwill 67 Share of JV’s & Assoc. loss (1) (1) PPE 40 Profit for the Year 804 1 152 (30) Total 151
CONSOLIDATED STATEMENT OF FINANCIAL POSITION No material changes to the • Rm FY19 FY18 balance sheet since 30 2015 September 2018. PPE, investment property & intangible assets 1 292 1 297 Goodwill 999 1 053 Investments and loans 60 56 Goodwill reduced due to: • Investments in joint ventures and associate 154 158 Finance leases and loans receivable 2 082 1 990 Deferred taxation 143 151 Non-current assets 4 730 4 705 Sale of Prodoc (63) Impairments (67) Inventory 1 376 1 461 Acquisition of Blue Nova 53 Finance leases and loans receivable 893 821 Acquisition of OculusIP 23 Trade and other receivables and taxation 2 356 2 694 Net movement (54) Derivative assets 10 7 Cash and cash equivalents 939 765 Current assets 5 574 5 748 Total assets 10 304 10 453 Working Capital improved by • R318m Shareholders' Funds 7 431 7 526 Deferred taxation 138 156 Balance sheet ungeared with net • Put option liability - 120 cash and cash equivalents of Share-based payment liability 14 23 Long-term loans 57 82 R616m Non-current liabilities 209 381 Put option liability 120 - Current portion of long term loans 3 18 Share-based payment liability 18 - Derivative liabilities 16 65 Trade and other payables, provisions and taxation 2 184 2 270 Bank overdrafts and short term facilities 323 193 Current liabilities 2 664 2 546 Total equity and liabilities 10 304 10 453
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