For the six months ended 31 March 2016

PRESENTATION TO INVESTORS

2

AGENDA

• GROUP OVERVIEW AND STRATEGY UPDATE

• Alan Dickson, CEO

• FINANCIAL OVERVIEW

• Nick Thomson, CFO

• SEGMENTAL OVERVIEW

• ICT – Mark Taylor

• Applied Electronics – Peter van der Bijl

• Electrical Engineering – Alan Dickson

• PROSPECTS

• Alan Dickson

3

OVERVIEW

• Reunert has delivered a good half-year operational performance in challenging local

economic and political conditions.

• The performance is characterised by

• The business segments with high South African exposure are experiencing growth commensurate

with that of the local economy.

• An excellent performance on the execution of export contracts in Applied Electronics contributed to

strong export revenues.

• Resulting in strong financial performance from continuing operations

• Revenue up 2% from R3,9 billion to R4,0 billion.

• Operating profit up 12% from R503 million to R564 million.

• HEPS and NHEPS up by 12% to 271 and 268 cents per share respectively.

• 7,6% increase in interim dividend to 113 cents per share declared out of free cash flow.

4

OVERVIEW │CONTINUED

• Good progress has been made on strategy execution

• Operational efficiencies across the group have been realised.

• Bolt-on, complimentary acquisitions have been concluded.

• B-BBEE transactions in the key subsidiaries, in line with the new B-BBEE Codes,

are nearing completion.

GROUP

STRATEGYAlan Dickson

Transformation

Customers People

Effi

cien

cy

Div

ersi

ficat

ion

Inno

vatio

n

6

STRATEGY REVIEW │ DIVERSIFICATION

• Acquisition activity has resulted in the completion and successful integration of

complementary bolt-on acquisitions

• Deals in Electrical Engineering and Applied Electronics segments have been concluded.

• The acquisitions have resulted in

• Leveraging of existing expertise in industries in which we have key competitive advantages.

• Improved revenue streams with geographic diversification.

• Access to operational efficiencies through vertical integration.

• Creation of a solutions offering for traditional component sales.

• Zamefa acquisition is progressing through regulatory approval at the Competition Commission.

7

STRATEGY REVIEW │ EFFICIENCIES AND TRANSFORMATION

• Efficiencies

• Continued focus on operational efficiencies and waste.

• Total cost increases held below inflation.

• Transformation

• Ownership

› Electrical engineering transaction concluded in May

» Notional IFRS2 B-BBEE charge of R92 million in 2H16.

› A further subsidiary deal is expected to be completed before financial year-end.

FINANCIAL

OVERVIEWNick Thomson

99

FINANCIAL RESULTS │REVENUE

ELECTRICAL ENGINEERING

↓ Product mix favoured aluminium cable.

↓ Local circuit breaker market under pressure.

↑ Circuit breaker export gains.

↑ Increased optical fibre cable demand.

ICT

→ OA flat with market pressure volume

off set by price increases from weak currency.

→ VoIP volume growth offset by lower

interconnect rate.

APPLIED ELECTRONICS

↑ Large volume increase through fuze

factory assisted by weaker exchange rate.

→ Service and maintenance components under

pressure in line with local economy.

3 935 4 022

(180)

(9)

272

4

2015 ElectricalEngineering

ICT Applied Electronics Other 2016

MOVEMENT IN GROUP REVENUE (Rm)

41%

42%

17%

1H16

46%

43%11%

1H15

% REVENUE CONTRIBUTION*

Electrical engineering

ICT

Applied electronics

*From continuing operations

1010

46%

44%

22%(12%)

FINANCIAL RESULTS │OPERATING PROFIT

• Operating profit margin improved from

12,8% to 14,0%.

• M&A and B-BBEE transaction costs impacted

operating margin by 0,8%.

ELECTRICAL ENGINEERING

→ Volumes consistent with prior year, but

change in mix of products.

↑ Improved export margins in circuit breakers.

ICT

→ Segment margin intact.

↑ Efficiency gains across the segment.

↓ OA volumes under pressure.

APPLIED ELECTRONICS

↑ Excellent execution of high volume export

orders.

↑ Further margin gains from weaker ZAR.

Margin

14%

Margin

13%

49%

49%

7% (5%)

503

564

11 6

87 (43)

2015 ElectricalEngineering

ICT Applied Electronics Other 2016

MOVEMENT IN OPERATING PROFIT (Rm)

OPERATING PROFIT CONTRIBUTION* (%)

Electrical engineering

ICT

Applied electronics

* From continuing operations

1H16 1H15

Other

1111

FINANCIAL RESULTS │GROUP INCOME STATEMENT

1H16 1H15

%

change

Revenue Rm 4 022 3 935 2

EBITDA Rm 622 559 11

Depreciation & amortisation Rm (58) (56) 4

Operating profit Rm 564 503 12

Net interest income Rm 70 57 23

Profit before tax Rm 634 560 13

Tax Rm (190) (157) 21

Share of JV profit Rm 9 6 50

Profit from continuing operations Rm 453 409 11

Profit from discontinued operation Rm - 67 (100)

Profit for the period Rm 453 476 (5)

HEPS from continuing operations Cents 271 242 12

NHEPS from continuing operations Cents 268 239 12

• Revenue from continuing

operations increased by 2%.

• 12% operating profit

improvement due to

• moderate growth

• positive impact from exports

• efficiency & cost management.

• Tax rate 2% higher due to

non-deductable M&A costs.

• Last year that Nashua Mobile

discontinued operations will

need to be reported.

12

FINANCIAL RESULTS │CASH FLOW

* Before working capital movement

650

234 177

(235)

70

(231)

(20)

(54) (16) 13

Cashgenerated

fromoperations*

Workingcapital

Net interest Tax paid Capexreplacement

Free cashflow

Capexexpansion

Investingactivities

Financingactivities

Total cashgenerated

2 636 2 311

(502)

177

Openingbalance

Dividendspaid

Total cashgenerated

Closingbalance

MOVEMENT IN CASH FLOW (Rm)

1313

FINANCIAL RESULTS │EFFICIENCY

INDICATORS AND WORKING CAPITAL

Inventory increases are mainly due to

• Raw material buy-in for 2H16.

• OA purchase opportunity.

• Radiate preparation increased both scale and lead times.

• Effect of weaker exchange rate.

1H16 1H15

Inventory turnover Times 4,5 5,8

Trade receivables Days 65 50

Trade payables Days 125 115

Net worth (NAV) per share R 40,38 38,32

Gross profit margin (%) % 36,2 32,9

Net profit margin % 11,3 10,4

Bad debt as % revenue % 0,1 0,5

Cash generated by operations

vs operating profit% 74 143

WORKING CAPITAL MOVEMENT (Rm) 1H16 1H15

Inventory and contracts in progress (257) 95

Accounts receivable and derivative assets (13) (23)

Trade and other payables, provisions and

derivative liabilities62 (225)

Advance payments (27) 319

(235) 166

14

FINANCIAL RESULTS │BALANCE SHEET SUMMARISED

1H16 1H15 FY15

PPE and intangible assets 766 710 745

Goodwill 671 648 653

Non-current investments and loans 247 248 253

Net assets of discontinued operation - (178) 2

Rental and finance lease receivables 2 239 2 273 2 191

Net working capital 919 674 691

Long and short-term liabilities (448) (415) (440)

Deferred tax 13 (45) (6)

Net cash and cash equivalents of continuing

operations2 311 2 446 2 636

Net assets 6 718 6 361 6 725

Equity 6 718 6 361 6 725

ICT OVERVIEWMark Taylor

1616

ICT │SALIENT FEATURES

• Overall market conditions are tough with

many long-term contract decisions deferred

by customers.

• The rapid devaluation of the ZAR in

December 2015 placed pressure on new

sales and margins in the OA and PBX

business units.

• Focus on improving operational efficiencies

across all business units.

• The voice business unit performed well, with

good growth in customers and voice traffic.

• Good profit growth in Swedish operating unit.

(Rm) 1H16 1H15

%

change

Revenue 1 689 1 698 1%

Operating profit 250 244 2%

Profit margin 15% 14%

17

ICT │OVERVIEW

• Asset finance business

• Total discounting reflected slower OA sales – 11% down on previous year, however the loan book still

increased by 4% to R2,1 billion.

• No material increase in credit losses, despite challenging economic conditions.

• Office automation

• MFP unit sales reflected overall pressure on the market.

• Deteriorating ZAR impacted on costs for hardware, parts

and consumables and price increases were unavoidable.

• Some pressure on total document volume of 2,2 billion,

however colour copies showed a modest growth over 1H15.

• Diversification of channels into voice services progressing

well with good growth in PBX and voice minutes sales.

• Prodoc business has stabilised with strong profit growth

recorded over previous financial year.

• Pansolutions performing according to expectations.

0

30

60

90

0

100

200

300

400

500

13 14 15

Total Clicks Multi-functional printers Printers

Mar 16

TDV vs MFP and printer MIF

Mill

ions

Tho

usan

ds

18

ICT │OVERVIEW

• Enterprise telecommunications

• Sales decreased as a result of low growth and downsizing of many medium and large

enterprises.

• Cost pressures at customers result in service level agreement increases being marginal.

• Increased competition in the Unify product set due to appointment of alternate distributor of

entry-level products.

• Voice business

• Voice minutes usage continued growing by

14% to 550 million minutes

• The further reduction in interconnect rates in

October 2015 resulted in flat revenue growth,

but strong operating profit growth.

• Virtual PBX product launched in order to

transition PBX business into the cloud. 0

20

40

60

80

100

13 14 15 1H16

Mill

ions

ECN number of minutes per call type

Inbound Outbound

APPLIED

ELECTRONICS

OVERVIEWPeter van der Bijl

2020

APPLIED ELECTRONICS │SALIENT FEATURES

• Excellent performance underpinned by

successful delivery of large scale export

fuze order boosted by a weak ZAR.

• Good progress has been made with the

upgrade of production lines for the Radiate

tactical radio production order

• Full production to commence in 2H16 in fully

equipped facility.

(Rm) 1H16 1H15

%

change

Revenue 696 424 64%

Operating profit 122 35 248%

Profit margin 18% 8%

2121

APPLIED ELECTRONICS │OVERVIEW

• Ongoing pressure in mining surveillance radar market due

to slump in commodity prices

• Increased competition resulted in further pricing pressure

and less market share.

• Traditional project businesses were in line with

expectations

• Expect market conditions to tighten as private and public

sector adjust budgets in line with prevailing economy.

• Rogue platform exports proceeding well.

19%

66%

15%

Commercial Defence SOEs

27%

43%

30%

1H15

1H16

MARKET SECTOR

2222

APPLIED ELECTRONICS │OVERVIEW

• Expansion of direct product sales into the African,

Middle East and Asian markets

• Security radars supplied in DRC and in Kruger National Park.

• Rogue, radar, radio and fuze systems to Middle East position are

improving.

• Long-term radio contracts orders won in Asia.

• Innovation

• Client-funded R&D will yield a new generation technology radar for

the SA Navy.

• First export sales achieved on the new generation airborne radio.

• Acquisitions

• Vertical integration acquisition for electronic manufacturing has been

successfully integrated and export revenue expanded.

• Communications security acquisitions are progressing.

REVENUE DISTRIBUTION

Exports Local

49%

51%

51%

49%

1H15

1H16

ELECTRICAL

ENGINEERING

OVERVIEWAlan Dickson

2424

ELECTRICAL ENGINEERING │ SALIENT FEATURES

• Market conditions remain challenging with lower

GDFI rates experienced.

• Revenue reduction due to

• Product mix at power cables business.

• Restructure at Low Voltage reducing revenues in

project business.

• Profits have increased resulting in a

positive 1H

• Realised benefits at Low Voltage after the

restructure.

• Export volumes have increased with associated

margin enhancement due to weaker ZAR.

• Good operational efficiencies achieved.10

30

50

70

90

Sep 2012 Sep 2013 Sep 2014 Sep 2015 March2016

ZA

R th

ousa

nd p

er to

nne

COPPER VS ALUMINIUM PRICE

(Rm, includes

portion of JV) 1H16 1H15 % change

Revenue 1 824 1 965 7%

Operating profit 272 257 6%

Profit margin 15% 13%

Cu

Al

2525

ELECTRICAL ENGINEERING │OVERVIEW

The segment has enjoyed a solid performance.

• Maintained volumes despite tough local challenges by

• Growing market share in our key markets.

• Fibre-to-the-Home roll-out.

• Good export growth with recently released product range.

• Good execution of the strategic targets, specifically

around the diversification pillar

• Export volumes into our targeted geographies at Low

Voltage.

• Conclusion of the sale purchase agreement for African

cable assets.

• Completed our B-BBEE ratings under the new Codes

resulting in the retention of market leadership position.

• Market disruption expected as new entrants emerge in

the cable manufacturing businesses.

0

20

40

60

80

100

1H14 1H15 1H16

Low voltage Energy cables

Copper telecom cables Fibre telecom cables

% FACTORY CAPACITY UTILISATION

PROSPECTSAlan Dickson

27

PROSPECTS

• The overwhelming consensus is that the South African economy is not expected to show any material

improvement in the near future.

• Reunert expects to deliver a positive financial performance for full year from continuing operations

• Improved order intake in key businesses.

• Augmented by execution of secured long-term contracts and the conclusion of the current export fuze order in

the Applied Electronics segment.

• Due to the good growth in 2H15, the comparative growth in 2H16 will not be at the same level as 1H16.

• The non-cash impact of the B-BBEE transactions will mute earnings per share.

• Execution of Reunert’s strategy

• Continued focus on niche acquisitions that improve our competitive position, service offering and export sales.

• Dividends

• Reunert’s cash resources are sufficient to support both the execution of the Reunert strategy and the

distribution of sustainable dividends.

www.reunert.co.za

QUESTIONS & ANSWERS