Unaudited Interim Financial Report and Cash Dividend Declaration for the 6 months ended 31 March 2016



Revenue increased by 9%, from R4 841 million to R5 288 million, and operating profit increased by 8% from R567 million to R615 million. This was achieved despite a weak economic environment in South Africa and continued subdued demand specifically in the electrical engineering segment. Profit after tax (PAT) declined by 16%, from R448 million to R377 million. The decline in PAT was impacted by two non-recurring items:

i) During the prior period, the group successfully defended an action brought by the South African Revenue Service which allowed the group to release a R42 million tax provision resulting in an abnormally low tax charge for that period of 21%; and
ii) In March 2019, the group disposed of its controlling shareholding in Prodoc Svenska AB (Prodoc),
the group’s Swedish office automation business. The rationale for this disposal was the consistent low earnings from this business and the weakened strategic alignment of the business with the broader ICT segment strategy. This disposal realised a loss of R44 million.

Adjusting PAT* for the above non-recurring items, resulted in an increase of 4% in the adjusted PAT (refer to table below), which is a more appropriate reflection of the core performance of the group.

6 Months to 31 March 2019 6 Months to 31 March 2018 % Change
PAT as reported 377 448 (16)
Less: impact of release of tax provision (42) 9
Add: loss on disposal of Prodoc 44 10

Adjusted PAT*

421 406 4



Financial performance group results and
key earnings metrics
Units 6 Months to 31 March 2019 6 Months to 31 March 2018 % Change
Revenue R million 5 288 4 841 9
Operating profit R million 615 567 8
Operating margin % 12 12
Profit for the period R million 377 448 (16)
Basic earnings per share Cents 227 275 (17)
Headline earnings per share Cents 253 275 (8)
Normalised headline earnings per share Cents 253 276 (8)
* This pro forma financial information has been prepared for illustrative purposes only in order to provide information on how the earnings adjustments highlighted have impacted on the financial results of the group. Because of its nature, this pro forma financial information may not be a fair reflection of the group’s results of operations and is not intended to comply with the requirements of IFRS. The directors are responsible for compiling the pro forma financial information on the basis of the applicable criteria specified in the JSE Listings Requirements.


Electrical Engineering

Although depressed demand from key state institutions continued in the period under review, segment revenue increased by 14% from R2 431 million to R2 775 million with segment operating income improving by 3% from R219 million to R225 million.

CBi-Electric African Cables continues to contend with low demand from Eskom and some municipalities.
To counter this, this business continues to actively pursue other segments of the cable market, although any such sales are generally at lower margins due to the type and length of cables produced.

The adverse liquidity environment in Zambia continued and limited progress was made in collecting overdue state debt by Zamefa, our Zambian power cable manufacturer. The business was managed to preserve cash by limiting manufacturing output to cash received. Positively, the draft legislation for the new general sales tax has been published and is expected to be promulgated this year which will result in the repeal of Value Added Tax (VAT). This should allow Zamefa to return to normal operating levels in 2020 as it should no longer be burdened by the slow settlement of VAT refunds arising on manufacturing inputs.

Subsequent to 31 March 2019, the rapid depreciation of the Zambian Kwacha against the United States Dollar (the currency in which the majority of Zamefa’s liabilities are denominated), resulted in the technical insolvency of Zamefa. To remedy this, the group has subordinated its loan account of US$20 million in favour of Zamefa’s other creditors.

Orders for copper and fibre optic telecommunication cables partially recovered from the levels experienced in 2018, which together with reduction in the base cost at CBi-electricTelecom, a joint venture company, saw this business returning to profitability in the current reporting period.

Our circuit breaker business continued to make good progress in increasing export volumes to both Australia and the USA, thereby increasing factory throughput. The improved export performance resulted in the company improving their year-on-year performance, notwithstanding weak local market conditions

Information Communication Technologies

This segment increased revenue by 3% from R1 670 million to R1 722 million and operating profit by 11% from R317 million to R351 million.

The Nashua Office Automation cluster continued to progress its strategy of evolving to a ‘total workspace provider’ with new services forming an increasingly important part of its revenue and profit mix. These revenues relieved some of the pressure on the lower sales of hardware units because of the prevailing economic conditions. Margins were maintained through a combination of increased service revenue and cost control resulting in a solid performance for this business.

Our voice over internet business, Electronic Communications Network, gained a record number of new customers, which largely offset the decline in usage per customer due to the economic environment and alternative technology offerings. To improve the operating efficiency of the business, we are migrating to a best-in-class industry standard software platform to manage the network.

SkyWire’s integration into the ICT segment is complete. Connection rates are not yet at the required rate. However, the cash generation of the business remains in line with the investment case.

Applied Electronics

Revenue in this segment increased by 16% from R863 million to R999 million with operating profit increasing by 39% from R61 million to R85 million.

The increase in both revenue and operating profit was mainly as a result of increased exports and the recovery in our mining radar business.

The Communications business’ revenue and operating profit increased substantially over the prior period. The business continued to achieve higher throughput and improved its operational efficiencies by optimising its production lines. The second tranche of the contract for the renewal of the South African National Defence Force’s tactical communication system is currently being executed and the business was successful in securing and delivering export orders for its new range of digital tactical radios.

The fuze factory’s exports increased in the period under review, although the mix of fuzes sold had a lower margin than in the prior year.

Our solar energy business continued to accelerate growth as the volume of contracts secured increased. Margins have come under some pressure as market competition increases.

The rest of the business units in the Applied Electronics segment did not materially contribute to the profit, primarily due to timing of their export contracts.


The group continued to generate positive operating cash flow and ended the period with R426 million in net liquid resources (30 September 2018: R572 million) after payment of the final dividend of 2018 amounting to R606 million.


The group adopted IFRS:15 Revenue from Contracts with Customers and IFRS: 9 Financial Instruments with effect from 1 October 2018. The new standards did not materially impact the results for the period under review and the transitional adjustments are set out in Note 15: changes in accounting policy.


There were no changes to the Board during the period under review.


The results from the national election and the anticipated improvements that are likely to ensue, should be positive for business confidence, foreign direct and local investment and improved management of state owned entities and municipalities. All of these factors are positive for the Reunert investment case and should result in improved economic activity as the changes are implemented.

The exact timing of this improvement in electrical infrastructure and investment remains uncertain and accordingly, the profitability of the Electrical Engineering segment in the second half of the financial year is expected to remain at current levels.

The ICT segment is expected to continue positively for the balance of the financial year with stronger business confidence, post national elections, hopefully creating an improved environment for asset investment by its customers.

The Applied Electronics segment commences the second half of the financial year with strong export orders and our solar energy business should continue its growth, which should result in a strong segment performance in the second half of the financial year.

Despite the above, the group is unlikely to match the performance of the second half of the prior financial year. However with our strong balance sheet and operational focus, we remain well positioned to benefit from any improvement in local economic conditions.

* Any forecast financial information is the responsibility of the directors and has not been reviewed or reported on by the group’s auditors.


Notice is hereby given that a gross interim cash dividend No 186 of 130,0 cents per ordinary share (2018: 125,0 cents per share) has been declared by the directors for the six months ended 31 March 2019.

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 104,0 cents per share (2018: 100,0 cents per share).

The issued share capital at the declaration date is 184 659 796 ordinary shares.

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, 18 June 2019
First date of trading (ex dividend) Wednesday, 19 June 2019
Record date Friday, 21 June 2019
Payment date Monday, 24 June 2019

Shareholders may not dematerialise or rematerialise their shares between Wednesday, 19 June 2019 and Friday, 21 June 2019, both days inclusive.

On behalf of the board


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

Sandton, 24 May 2019