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 revenue grew by 11% from R4,6 billion in the comparative period to R5,1 billion for the current reporting period, primarily due to the pass through of high metal prices to customers in terms of pricing formula in the Electrical Engineering segment and the growth in export sales in the Applied Electronics segment as the granting of export permits resumed.

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 uncertainty of wage negotiations is now behind the Group for the next three years and labour relations have fully recovered from the effect of the strike.

The improved segmental operating profit was due to the increase in operating profit generated by the Applied Electronics segment, as it commenced delivering into new export contracts facilitated by the receipt of the necessary export permits, with the ICT 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.

Key earnings metrics

Six months ended
31 March
Measure- ment
2022 20211 % change Year ended
30 September 2021
Revenue Rm 5 114 4 614 11 9 575
Segment operating profit2 Rm 449 445 1 986
Operating profit Rm 465 448 4 1 050
Profit for the period Rm 319 311 3 767
Earnings per share cents 196 194 1 483
Headline earnings per share cents 195 193 1 478
Interim/total cash dividend
per share
cents 75 70 7 277
1 The comparative period information has been restated to include in operating profit all items of income and expenditure
(excluding dividends received, interest income and expense and share of joint ventures’ and associates’ profit/(loss))
which change was first applied in the 30 September 2021 audited results.
2 Per segmental analysis.

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, with segment operating profit decreasing by only 7% to R151 million (H1 FY: 2021: R163 million).

The strike negatively impacted the throughput of the South African manufacturing businesses with the power cable factory unable to recover approximately 10% of the volume when compared to the prior year, while the circuit breaker business largely recovered all volumes lost in the strike by the half year end.

The power cables business’ ongoing lean six sigma initiatives have resulted in improved quality, reduced wastage and better machine utilisation. This resulted in improved operating margins being achieved in the period under review. There is also early evidence of an increase in demand with several large contracts for delivery in the second half of this financial year (H2 FY: 2022) and in the subsequent financial year having been recently received.

The circuit breaker business continues to make good progress in the export market, while local sales were in line with H1 FY: 2021. The business’s input costs came under pressure during the period under review, largely due to increasing logistic and commodity prices, which negatively impacted margins as not all price increases could be passed onto customers. The company’s development of its energy management systems and products have matured to the extent that they will be launched into the market in the H2 FY: 2022.

CBI-Electric Telecom Cables (Pty) Ltd, the Group’s telecommunication cable joint venture, was placed into business rescue in early March. This business has been loss-making for a number of years, despite several restructuring initiatives having been undertaken. In the current year, the expectation was for a recovery based on indicated order off-take from a major customer. In anticipation of these orders, substantial quantities of raw fibre were imported. Unfortunately, the customer delayed its orders leading to the business suffering cash flow difficulties. As a result of the business rescue process, the Group has recognised and measured its investment in this company at fair value through other comprehensive income, raised the necessary expected credit losses on loans provided and raised a guarantee cost.

The Electrical Engineering segment is beginning to benefit from the first signs of recovery in power cable demand and the improved performance in H1 FY: 2022 is expected to continue throughout the year. 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 expectations, 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 sole chip manufacturer to the Group’s supplier for entry level multi-function printers, enabling the business to achieve the same operating result as in H1 FY: 2021 which did not suffer from similar supply constraints. The actions taken to introduce additional products and brands in the Total Workspace Provider business is positively impacting the trajectory of this business.

+OneX successfully integrated the acquisitions undertaken in the 2021 financial year and concluded the acquisition of a software development company, Code Maven. The acquisitions, together with an improved performance of the traditional managed services and the integrated communication business, resulted in an increase in +OneX’s contribution to the segment’s profitability and continue +OneX’s trajectory to building a next generation business of scale in the ICT segment.

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, which enabled a R9 million release from the expected credit loss provision.

Applied Electronics Segment (AE segment)

The AE segment operating profit increased by 77% to R55 million (H1 FY: 2021: R31 million). Export permits were finally released in the second quarter of FY: 2022 and the Group delivered into several of the delayed export contracts, particularly at Fuchs, the Group’s fuze business. These sales resulted in increased segment profitability. Unfortunately, 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 a large investment into working capital to prepare for the execution and future delivery into outstanding export contracts were factors in the Group’s reduced cash conversion to 53% of profit after tax from 87% of profit after tax (H1 FY: 2021). This will be remedied in H2 FY: 2022.

The ability of the AE segment’s sales force to travel, now that the majority of countries’ Covid-19 travel bans have been lifted, has resulted in a significant increase in the segment’s order book. These 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, with considerable effort going into the enhancement of systems, processes and the product range at the battery storage business. The solar photovoltaic business continues to grow from strength to strength and to capitalise on a buoyant renewable market.

Update on the restructuring of the Group’s BEE transaction

Shareholders received a circular in December 2021 incorporating, inter alia, the key terms of the proposed restructure of the Group’s BEE structure, the necessary steps required to effect the transaction and the accounting implications thereof. Shareholders voted overwhelmingly in favour of the new BEE structure at the February 2022 general meeting and good progress has been made in respect of its implementation. More detail on this transaction is included in note 18 in the unaudited condensed consolidated interim financial statements.

The transaction had no impact in H1 FY: 2022 except for the R9,6 million cost of the repurchase of certain of the minorities’ shares in the previous BEE structure and the expensing of R9,4 million in transaction costs (part of the R9,7 million in transaction costs outlined in the circular). Of the R9,6 million cash cost incurred for the repurchase, R6,3 million was charged to the statement of profit or loss and R3,3 million was charged to equity.

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 base for the purchase consideration is R168 million on a cash-free and debt-free basis, subject to certain agreed adjustments. 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.

Changes to the Board of Directors

At the February Annual General Meeting of Shareholders (AGM), the chair of the Board, Mr TS Munday retired, as did the long standing lead independent director, Mr SD Jagoe. From the date of the AGM Mr MJ Husain assumed the responsibility of chairing the Board and Mr JP Hulley was appointed as the lead independent director.

Ms T Eboka and Mr RJ Boëttger were both appointed to the Board with effect from 1 March 2022.

Further to above the following changes were effected from 1 April 2022:

After considering her personal commitments and her long service to the Reunert Board, advocate NDB Orleyn has elected to retire from the Board on 30 June 2022.


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 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 ensure sufficient free cash is generated 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 six months 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.

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, 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 of directors


Mohamed Husain Alan Dickson Nick Thomson
Chair Chief Executive Officer Chief Financial Officer

Sandton, 24 May 2022