Reunert Limited (JSE:RLO) News - Operational update and trading statement

REUNERT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1913/004355/06)
ISIN: ZAE000057428
Share code: RLO
(“Reunert” or the “Company” or the “Group”)

OPERATIONAL UPDATE AND TRADING STATEMENT

Reunert is in the process of finalising its year-end financial results for the twelve-month period
ended 30 September 2021 (“Results”). The board of directors of Reunert (“Board”) will consider
and is expected to approve the Results on 22 November 2021 for publication on SENS on 23
November 2021.

Accordingly, shareholders of Reunert (“Shareholders”) are provided herein with:

•   an operational update; and
•   the resulting trading statement.

OPERATIONAL UPDATE

Group’s FY21 Performance

Reunert’s 2021 financial performance is expected to reflect a meaningful improvement
compared to the prior period. The Group benefited from the actions implemented in 2020,
covered in the prior year’s trading statement, which created the base for this year’s
performance. The Group’s companies generally managed the complex and volatile market
environment well to deliver a good operating performance, specifically in the Information
Communication Technology (“ICT”) and Electrical Engineering segments, which
demonstrates the resilience and responsiveness of the Group.

All the businesses in the ICT segment have performed in line with the Group’s expectations.
The interest income at Quince Capital (Pty) Ltd decreased in accordance with the lower
interest rate environment, as expected, but improved performances were achieved in all the
other business units. The Electrical Engineering segment’s strong recovery was led by an
excellent Low Voltage performance, augmented by the cable businesses which achieved
much improved factory operational efficiency and delivered profitable performances. The
Applied Electronics segment had a challenging year as export activity dropped as COVID-19
travel restrictions and lockdowns in our key export geographies resulted in a lower-than-
normal order intake, as well as due to the long delays in receiving export permits from the
appropriate authorities.

Challenges Remain

Despite the positive financial performance, 2021 remained a challenging year and the Group
had four key challenges to contend with. These challenges included COVID-19 lockdowns
both in South Africa and internationally in the Group’s various export markets, which
negatively impacted the Group’s operations; the riots in South Africa in July; the delay to
secure export permits from the appropriate authorities; and the global electronic component
shortage and general supply chain challenges.

These factors prevented the full recovery of our businesses and continue to adversely impact
the Group, although we expect this impact to steadily diminish and for the Group’s
performance to continue to improve in the year ahead.

COVID-19

Operations and Employees

COVID-19 continued to have an adverse impact on the Group. Our companies created safe
working environments for employees and ensured that safety protocols were adhered to.
Despite the strong health and safety protocols, infections continued during the year.
Unfortunately, 16 employees succumbed to COVID-19. We take this moment to recognise
these employees and reiterate our condolences to their families and fellow employees.

Markets

COVID-19 impacted the markets that our companies service. In South Africa, the market
verticals of tourism and hospitality continued to be negatively impacted by the lockdowns and
the education sector continues to experience volatile demand as places of learning have yet
to return to normal schedules.

Importantly, most of the key markets that support our businesses have recovered. The Small
and Medium Enterprise (SME) market that the Group services, outside of the above market
verticals, has largely recovered and our Communications cluster is benefiting from strong last
mile broadband connectivity demand.

The key international markets we service had their own lockdowns and together with the ban
on South Africans traveling internationally, our export activities in the Applied Electronics
segment were impeded. Pleasingly, travel restrictions to several of our key markets have
recently been lifted and an immediate improvement in results has been achieved.

Supply Chain

COVID-19 has severely impacted global supply chains. Electronic components and inbound
and outbound logistics have all been impacted through lack of availability, longer lead times,
more complex routings and the resulting increased costs. Solutions have been implemented
around the Group and, whilst we expect supply chain challenges for most of 2022, the
situation is already much improved.

TRADING STATEMENT

In terms of paragraph 3.4(b) of the JSE Limited Listings Requirements, issuers are required to
publish a trading statement as soon as they are satisfied that a reasonable degree of certainty
exists that the financial results for the current reporting period will differ by at least 20% from the
financial results of the prior comparative period.

Noting the operational update outlined above, Shareholders are accordingly advised that the
Company has reasonable certainty that it will report:

o   earnings per share of between 480,1 cents and 485,9 cents (2020: earnings per share of
    29 cents); and
o   headline earnings per share of between 466,5 cents and 489,5 cents (2020: headline
    earnings per share of 115 cents).

The information contained in this announcement does not constitute an earnings forecast. The
financial information on which this announcement is based has not been reviewed nor reported
on by the Group’s external auditors and is the responsibility of the Board.


Johannesburg
16 November 2021

Sponsor
One Capital

Date: 16-11-2021 05:29:00
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