PROVISIONAL CONDENSED REVIEWED CONSOLIDATED FINANCIAL STATEMENTS and cash dividend declaration for the year ended 30 September 2020



Reunert’s 2020 financial performance, as set out in the provisional condensed reviewed consolidated financial statements, has been negatively impacted by three distinct issues:

These three issues were the drivers of the Group’s lower financial performance when compared to the prior year.

Importantly, the operational and financial performance of the Group, subsequent to re-commencing operations under COVID-19 regulations after the national lockdown levels 5 and 4, have been more positive than originally anticipated. In the fourth quarter of the 2020 financial year, the Group achieved 90% of the core operating profit1 earned in the comparative quarter of the 2019 financial year. Free cash flow (FCF)2 generation, measured as a percentage of earnings before interest, tax, depreciation and amortisation (EBITDA), has also returned to pre-COVID-19 levels. Whilst recognising that there remains much economic uncertainty ahead, management is of the view that the fourth quarter performance represents the strength of Reunert’s underlying businesses in the economic conditions our key markets are likely to face.

Group Results

Reunert’s 2020 financial performance was adversely affected by the three issues described above and the Group’s revenue decreased by 24,9% to R8 046 million (2019: R10 714 million). The Group’s operating profit decreased by 77,4% to R307 million (2019: R1 361 million), with headline earnings per share of 115 cents (2019: 573 cents) and earnings per share of 29 cents (2019: 490 cents).

The Group’s efforts to manage costs and conserve cash were successful and FCF recovered strongly after COVID-19 lockdown levels 5 and 4 were lifted. The full year cash conversion of the Group remained in line with its historical norms and R946 million of FCF (2019: R1 313 million) was achieved, a conversion ratio of 83,5% (2019: 84,8%) of EBITDA before impairments of financial assets.

Key earnings metrics
2020 2019 % change
Revenue Rm 8 046 10 714 (25)
Operating profit Rm 307 1 361 (77)
Profit for the year Rm 7 804 (99)
Earnings per share cents 29 490 (94)
Headline earnings per share cents 115 573 (80)
Total cash dividend per share for the year cents 257 513 (50)

Reconciliation of core operating profit to operating profit per segment

For the year ended 30 September 2020
  2020 219
Rm EE ICT AE Other Total EE ICT AE Other Total
Core operating profit/(loss)
28 604 268 (33) 867 320 770 359 (73) 1 376
Profit on sale of assets 3 1 4 2 2 4
Segment operating profit/(loss) 31 604 269 (33) 871 320 770 361 (71) 1 380
Credit write-off and expected credit losses (26) (541) (19) (586) 3 (22) (3) (22)
Operating loss/(profit) from equity accounted
joint ventures
30 (5) 25 11 (4) 7
Operating profit from equity accounted associate (3) (3) (4) (4)
Operating profit per the statement
of profit or loss
35 60 250 (38) 307 334 744 358 (75) 1 361

Fourth quarter financial performance

Reunert’s businesses have fully embraced the realities of operating under the constraints of COVID-19. All the Group’s businesses have implemented South African Government regulations and guidelines. In accordance with these regulations, the recommended health monitoring, screening procedures and social distancing practices have been implemented. To create a safe working environment all employees have been provided with hand sanitisers and the required Personal Protective Equipment (PPE) to perform their job functions. Up to the year end, Reunert had 126 employees who tested positive for COVID-19, very fortunately, there had also been a full recovery of 96% of the employees so affected and no fatalities.

The Group’s businesses have adapted quickly and increased their resilience as they met their customer and market demands whilst ensuring its employees were managed with empathy in safe and healthy working environments. The Company’s Business Continuity Plans are comprehensive, and Reunert believes them to be adequate in the event of a second wave of COVID-19 infections.

All three of the Group’s segments performed well during the fourth quarter and were profitable. The Group delivered a core operating profit of R463 million (2019: R515 million) for the fourth quarter, which is 90% of the comparable quarter in the prior year. This performance reflects the strength of the Group’s businesses and the resilience and responsiveness they have demonstrated since the lockdown restrictions were lifted.

The Group’s cash flow recovered strongly in the fourth quarter resulting in FCF of R837 million (2019: R798 million) due to strict cash and cost management implemented since the COVID-19 lockdown was declared.

COVID-19 Impact

The COVID-19 pandemic impacted Reunert through:

Abnormal Credit Write-off

An abnormal credit write-off resulted from an external fraud perpetrated against Quince by a non-connected, independent third-party dealer. A comprehensive external forensic investigation has been completed by Bowmans and has resulted in a credit write-off of R298 million, which was reported as part of the interim financial results for the six months ended 31 March 2020.

In the period since the interim reporting, the following actions have been completed:

The in-depth assessment of the Quince loan book has validated the performance thereof and the risk governance and control framework improvements will strengthen Quince’s resilience.

Cable Businesses

The cable businesses suffered a material underperformance in the 2020 financial year, primarily due to a seven-week labour disruption at African Cables in the first quarter, significant foreign exchange losses at Zamefa in Zambia, and weak infrastructure investment demand across the businesses’ key Southern African markets. During the second half of the financial year, the financial performance of the cable businesses was negatively impacted due to the inability to manufacture during lockdown levels 5 and 4.

Pleasingly, post lockdown all cable businesses recovered well and the efficiencies achieved in the factories have enabled profitable performances despite moderate market volumes.

Disposal of Subsidiaries

In July 2020, the Group disposed of its shareholding in PanSolutions. The legacy consumer electronic business was no longer aligned to the Group’s ICT Segment Strategy and has made an immaterial contribution to the Segment’s financial results for several years.

The Group has received a binding offer to dispose of 18% of its unconsolidated Zimbabwean cable operations. The Group is in the process of concluding the transaction and the action is commensurate with the Group’s objective to reduce its exposure to its African power cable operations in Zambia and Zimbabwe.

Capital Expenditure

During the year under review, the group invested R32 million (2019: R56 million) in the replacement of property, plant and equipment and a further R138 million (2019: R102 million) to expand operations. All expenditure was financed out of internal cash generation and represented 17,3% (2019: 11,5%) of FCF before replacement capital expenditure.

Cash Resources and Cash Liquidity

Considerable effort was put into managing the statement of financial position, and in particular working capital, to mitigate the impact of COVID-19 on the cashflow of the businesses. This resulted in a R21 million release from working capital despite having to restart the working capital cycle after the hard national lockdown. This enabled the Group to generate R946 million (2019: R1 313 million) in FCF despite the significant operational and other challenges as outlined above.

At the financial year end the Group’s net cash resources amounted to R323 million (2019: R616 million) which, together with the significant lines of credit available to it, ensures that the Group is well positioned to take advantage of opportunities and has the financial strength to address further softening in economic conditions that may arise.

Segmental Review

Electrical Engineering (EE)

The cable businesses faced significant challenges during the reporting year as described. This resulted in the segment’s revenue decreasing by 30,9% to R3 767 million (2019: R5 457million) with a core operating profit of R28 million (2019: R320 million).

In Zambia the liquidity position remained constrained. The Government removed input value added tax (VAT) on copper cathode with effect from 1 January 2020, resulting in Government receivables no longer increasing due to VAT refunds on copper cathode purchases.

During most of the financial year, the repayment of the outstanding Zambian Government receivables (primarily VAT refunds) to Zamefa was slow, resulting in the company’s external, hard currency, borrowings remaining at inflated levels. Consequently, Zamefa suffered material foreign exchange losses as the exchange rate weakened from ZMW13,10:1US$ to ZMW20,05:1US$, over the reporting period. These foreign exchange losses reduced the segment’s operating results by R101 million.

During the financial year the shareholder loan was restructured with the result that the risk of significant foreign exchange losses, should the kwacha depreciate further against the dollar, has been reduced. Post the financial half year the receipt of government receivables accelerated and a total of ZMW154 million was received. The total outstanding government debt by year end accordingly decreased to ZMW96 million (2019: ZMW250 million) which provides Zamefa with an opportunity to slowly increase throughput as working capital improves.

The telecoms factory continues to face challenges due to low volumes and continues to focus on operational efficiencies, cost reduction and cash protection.

The circuit breaker business had a solid year. Local volumes continued to be under pressure although the export performance has been excellent and more than replaced the decrease in local volumes. Our subsidiaries in both Australia and the USA performed materially better than the prior year and exports into Europe and China also continued to grow significantly. This business’ telecommunication solutions division, specifically, had a strong year as the pandemic led to a significant investment in this market.

Information Communication Technology (ICT)

The COVID-19 hard lockdown had a material impact on the segment’s performance and the ICT segment’s strong operational performance in the first half of the financial year weakened in line with the reduced activity in the second half of the 2020 financial year. The segment’s core operating profit fell by 21,6% to R604 million (2019: R770 million) while revenue decreased by 22,0% to R2 524 million (2019: R3 236 million).

The Office Automation Cluster secured pleasing hardware sales as the company continued to improve its market share. The Total Workspace Provider strategy accelerated with the addition of Energy Solutions’ and PC-as-a-Service’s revenues for the first time, which augmented existing revenue streams and resulted in an increase of 19% in complementary revenues through the channel over the corresponding period.

The Communications Cluster delivered a positive performance despite the interruptions from the COVID-19 lockdown. New fixed line voice deals continued to grow strongly with record new sales concluded in the 2020 financial year. ECN successfully implemented the new best-in-class operational system and the benefits of the operational efficiencies were realised in the 2020 financial year. ECN’s diversified revenue streams of the cloud-based Virtual PBX (VBX) and last mile broadband connectivity sales both continued to accelerate and augment the company’s core fixed-line voice income. Skywire expanded its operational network and entered 19 new regions during the financial year. It continues to operate in line with its investment case and growth is expected to accelerate in the 2021 financial year.

The Finance Cluster’s gross lease and loan book at the financial year end was R2 783 million (2019: R3 016 million). The book initially grew on the back of the improved hardware and complementary product sales in the Office Automation channel but was impacted by the credit write-off of R298 million. No further increase in ECL beyond what was recognised in the interim results for the six months to 31 March 2020, was considered necessary at year end.

Applied Electronics Segment (AE)

Although the AE segment rebounded strongly after the COVID-19 lockdown, revenue for the year decreased by 16,8% to R1 951 million (2019: R2 346 million) while core operating profit for the year decreased by 25,3 % to R268 million (2019: R359 million).

Reutech Communications and Reutech Radar Systems both delivered an excellent year-on-year improvement in their financial performance as they continue to deliver against their strong export order books. Reutech Communications delivered another record year as operational efficiencies and good export volumes continue to support the local demand.

Fuchs’ performance reduced, as expected, due to the large export order that did not repeat in the year under review. Despite this the company delivered a profit as sales into new geographies lifted its performance.

Both Nanoteq and Omnigo delivered strongly into their export orders which resulted in them each contributing a positive financial performance. Good export orders have been received for the ensuing financial year and their strong performance is therefore expected to continue.

Terra Firma was materially impacted by the COVID-19 pandemic as a lack of site access delayed project recommencement well into June 2020. The market fundamentals and associated demand for distributed generation are exciting and the company is expected to continue to grow strongly.


With effect from 1 November 2020, Mr M Husain was appointed as an independent non-executive director. Mr M Husain will serve on the Investment Committee, Nomination and Governance Committee and Remuneration Committee. Mr Husain is also appointed as the chair-elect of the Board and will assume this role by no later than the annual general meeting of Reunert to be held in February 2022, as agreed between the Nomination & Governance Committee, the current chair (Mr TS Munday) and Mr Husain. Mr Husain will be provided with the opportunity to familiarise himself with the Board and the Reunert group of companies during the months ahead, before he succeeds to the role of chair.

With effect from 31 December 2020, Ms Karen Louw, who is primarily responsible for the company secretarial function of the Company, through its registered company secretary, being Reunert Management Services Proprietary Limited, has tendered her resignation.


We owe our performance to the dedication and drive of the teams at each of our business units. These attributes were particularly evident this year where our employees faced multiple challenges and we thank them for their efforts and commitment. To all our customers, we value your continued support and commit to continue to create value in the years ahead. To our suppliers and other stakeholders, we value your continued support. To the Board, thank you for your wise counsel and support in a year where we faced new and unique challenges whilst ensuring our governance standards remained high.


Reunert has recovered well from the business interruption of COVID-19. The fourth quarter financial and operational performance compares favourably against performance in the comparable period of last year and reflects the strength of the underlying businesses. The statement of financial position remains strong and cash flow generation supports the execution of the Group’s strategic and operational objectives.

Whilst recognising that there remains much economic uncertainty ahead, the Group’s businesses have robust business models and are likely to recover to prior-COVID-19 financial performances as the economy recovers and the government’s infrastructure expenditure improves. In addition, the Group is serving markets that are anticipated to offer good structural growth and opportunities, including:

Cash dividend

Whilst cognisant of the economic uncertainty going forward, the Group’s FCF generating capacity remains intact. The actions taken by the Company to increase its resilience enable Reunert to declare a final dividend, albeit at a reduced level. Therefore, notice is hereby given that a gross final cash dividend No. 189 of 192,0 cents per ordinary share (September 2019: 383,0 cents per ordinary share) has been declared by the directors for the year ended 30 September 2020.

The dividend has been declared from retained earnings, bringing the total dividends declared for the year to 257,0 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 153,6 cents per ordinary share (September 2019: 306,4 cents per ordinary share).

The issued share capital at the declaration date is 184 969 196 ordinary shares.

In compliance with the requirements of Strate Proprietary Limited and the Listing Requirements of the JSE Limited, the following dates are applicable:

Last date to trade (cum dividend)
Tuesday, 19 January 2021
First date of trading (ex dividend) Wednesday, 20 January 2021
Record date Friday, 22 January 2021
Payment date Monday, 25 January 2021

Shareholders may not dematerialise or rematerialise their shares between Wednesday, 20 January 2021 and Friday, 22 January 2021, both days inclusive.

On behalf of the Board

Trevor Munday
Alan Dickson
Nick Thomson
Chair Chief Executive Officer Chief Financial Officer


Sandton, 23 November 2020