Reunert lifted revenue by 7% in the 2018 financial year to R10.49-billion, buoyed by improvements in the JSE-listed group’s ICT and applied electronics segments. It hiked its full-year dividend.

In the year ended 30 September 2018, Reunert lifted operating profit by 3% to R1.54-billion, despite a sharp decline in the electrical engineering segment’s profitability (the result of recessionary pressures, which dragged down operating profit there by 37%). Headline earnings per share rose by 4% to R7.03.

Revenue in the ICT segment grew by 4% to R3.44-billion, while operating profit soared by 25% to R792-million. This included a fair-value gain of R77-million as a result of the remeasurement of the contingent purchase consideration for telecommunications provider SkyWire. Excluding the fair value remeasurement, the operating profit increased by 13% to R715-million.

“SkyWire should underpin continued growth in the cluster despite further regulated interconnect rate decreases and increased pressure on voice minute volumes being expected in the 2019 financial year,” Reunert said.

“The R146-million in goodwill arising from the SkyWire acquisition is attributable to the expected high growth in this business and the ability to harvest significant synergies through the ICT segment’s distribution network,” it added.

“As the ICT segment in the Reunert group is seeking to diversify its product offerings, and its existing services depend on reliable high-speed data connections, SkyWire data-access products provide a natural extension of the segment’s service offering. Synergies will also be obtained from the vertical integration with the group’s other businesses in the ICT segment.”

Office automation

The office automation cluster continued to produce strong product sales. Revenue from products and services grew by 7% and generated 13% of total revenue. The franchise channel performed well, and the adoption rate of the “new total workspace” products and services continued to increase.

The communications cluster performed well, too, as ECN’s increased voice traffic translated into improved operating profit, the group said.

“The ICT segment is anticipated to continue to deliver a good performance as its strategy execution continues and the SkyWire acquisition bolsters the growth of the segment.”

Reunert’s finance book increased in line with the improved sales of office automation equipment. The loan book closed at R2.81-billion (2017: R2.43-billion), with bad debt remaining at low levels.