Good morning, ladies and gentlemen, and welcome to Reunert's half-year results presentation for the six-month period ending thirty-first of March, 2022. I'm Alan Dickson, the Group Chief Executive of Reunert, and together with Nick Thomson, our Chief Financial Officer, we'll be presenting these results today. This is a pre-recorded webcast with a live question and answer session immediately after the webcast. Please submit any questions that you may have, and Nick and I will address them immediately after this webcast. If we start just by taking an overview of Reunert's first half performance, it reflects that the financial results were largely in line with the guidance that we provided at our November 2021 year-end results presentation. That a good performance was achieved across all three of Reunert's segments.
The primary growth engine in the first half was our Applied Electronics segment, where a good renewable energy performance and the commencement of sales into our strong defense export order book drove the much improved financial performance. Our ICT segment delivered steady growth that was largely in line with inflation, and the Electrical Engineering segment recovered extremely well from the three-week industry-wide wage negotiation strike in October 2021. While their financial result is slightly down on the prior comparative period, it was a performance that, if normalized for the lost time associated with the strike, was an improvement over the first half of 2021. I will cover each segment performance in more detail later in the presentation. Given the challenging local environment, it is a performance that positions the group well for a pleasing full year result.
During the course of the first half, there were several key actions that were executed that addressed some of the material challenges that we faced during the prior financial period. These included our continued strong focus on the creation of a safe and healthy workplace for our employees, and thereby reducing the potential negative impact of any COVID waves on the future performance of our businesses. Our health and safety protocols remain fully implemented, and our active promotion of and enablement for employees to receive vaccines has led to the very pleasing position where 74% of our employees have been vaccinated. While the legacy effects of COVID-19 on the country's economic recovery remain and continue to impact our financial performance, we are hopeful that the worst of the pandemic is behind us and that the COVID-19 impact on Reunert is diminishing.
Importantly, the ability of our defense business development teams to travel continued in the first half of this year, and the attractiveness of our offerings to our key markets continues to hold true. The strong order intake that we reported to you in November 2021 has continued into the first half of this year, and the segment now has ZAR 1.8 billion worth of export orders on hand after securing an additional ZAR 1.2 billion worth of new defense export orders during the first half of this financial year. Of equal importance is that the structural challenges that were associated with the export permits have now eased, and we are in receipt of all of the export permits we have applied for, and we are expectant that this will continue into the future.
The global electronic chip shortage is a material challenge, and one that has worsened in the past six months. This challenge is likely to continue for the rest of this financial year, and we are of the view that it will also extend through next financial year. As a result of this, the group has increased its mitigating actions to manage this increasingly difficult challenge. In line with this mitigation, Nashua has been successful in developing, launching, and executing a dual brand strategy to offset the supply problems experienced with their primary OEM being unable to fill their requirements on certain key product lines. In the Applied Electronics segment, where the bulk of the electronic chip risk resides, we have consolidated and synchronized the segment's procurement activities, thereby opening new and multiple sourcing channels.
In addition, where unacceptable uncertainty remains, products have been redesigned to eliminate the risk of a segment not being able to acquire key electronic components. While these actions have largely been successful so far during the course of this year, this global challenge remains, and although it's mitigated in our case, remains a risk for the group. Finally, despite a solid operating profit performance, our cash conversion cycles were lower than traditionally delivered by the group. This is primarily due to the mitigating actions that we have taken to address the worsening supply chain situation which we had originally anticipated would have improved during the first half of the year. In order to do this, we have invested working capital into three key areas.
Firstly, we are holding additional critical stock to offset the risk to our delivery commitments of both the electronic chip shortage and the unreliable logistic channels that we have, both here in South Africa and internationally. Secondly, we've invested into and built up the necessary work in progress so that the large export commitments that we have in the Applied Electronics segment for the second half of the year will be able to be met. Finally, we've invested into metals inside of our power cables plant as a result of the higher metal prices and the increased volume expectations that we have in that plant. Nick will describe the working capital position and its expected unwind in more detail in the financial section.
During the first half, however, we chose to refrain from further share buybacks until we have improved confidence that the global supply challenges are genuinely improving. If we then take a quick snapshot of the group's results, they reflect that the group's revenue has increased by 11% to ZAR 5.1 billion, while the operating profit increased by 4% to ZAR 465 million, and our profit after tax increased by 7% to ZAR 331 million over the prior comparative period. The cash generating capacity of the group remains fully intact, and hence, we are in a position to increase the interim dividend by 7% to ZAR 0.75, up from ZAR 0.70 in the prior period. Both of the key growth areas that underpin our strategy accelerated in the first half of the financial year.
In our renewable energy businesses, the general market fundamentals continue to strengthen, and the demand for all of the product offerings continues to grow. Our storage and solar energy businesses took advantage of this positive market dynamic, and the revenue from these two businesses increased by 80% over the comparative period. We remain of the view that there is more market opportunity as the deregulation of the power generation market in South Africa continues. We expect that the demand for renewable energy will continue to accelerate as we realize the financial close by the preferred bidders for the projects on the REIPPPP Bid Window 5 and the execution of larger scale embedded generation projects take place once the regulatory approvals have been secured.
In addition to the acceleration of the revenue in the renewable energy market, we've also accelerated our solar asset ownership during the period, and that has increased remarkably in the first half of the year. In our circuit breaker business, their expansion of their traditional control of energy continues to evolve and increasingly converges with our renewable energy and storage strategy. The Astute Range of products, which we released around about two years ago, which is an IoT range of products that enables a reduction in energy consumption through the active management and control of electrical loads, continues to find strong adoption in the market, where there are now nearly 30,000 of these IoT devices installed and are being managed through our CBi platform, which enables them to be managed through any mobile device.
However, of perhaps even greater importance is the imminent realization of the energy into what we are calling the Smart Energy Management system, or SEM. We've been alluding to this in the last two presentations, and this investment is particularly important as it contains a first-in-class energy management application for the South African market. The investment is nearing conclusion and the first proof-of-concept systems are operating in our Reunert companies, and the market release of SEM will occur before the end of this financial year. The SEM solution enables the automated monitoring and switching of loads that will result in the optimization of a user's electrical consumption and load profile, thereby yielding material energy cost savings. These elements result in Reunert having a unique renewable energy offering that enables us to participate across multiple legs of the value chain.
Specifically, we now have a leading EPC solar energy generation supplier in Terra Firma Solutions, or TFS. A rapidly growing ownership of renewable assets held both in South Africa and in Africa through TFS and Lūmika, respectively. A high-performance and ultra-reliable, locally manufactured storage solutions at BlueNova, and a sophisticated control of these energy and storage sources through our Astute IoT product range and the SEM system. We feel that the nature of this value offering, our strong market positions within these markets, and the positive impact on our future growth cannot be done full justice in our normal reporting cycles.
We are therefore holding a specific investor day for our renewable energy cluster in late June, where we'll be giving our shareholders and investors the potential to deep dive on these elements and to get greater insight to what they mean in the Reunert investment case, and we look forward to seeing many of you there. In the ICT segment, where the development of +OneX continues well and good progress has been made since its launch. +OneX is a modern systems integrator and managed services organization that enables enterprise customers to excel by becoming their digital transformation partner. +OneX has rapidly increased their capabilities, and they have expanded their service offering to now include managed services, unified communications and collaboration, cloud, digital media and consulting, and most recently, application and software development.
There are future acquisitions in the pipeline which will create an even broader set of service offerings and expand the holistic solutions that they can take to market to drive value for their enterprise customers. The progress +OneX has made is evidenced by the rapid growth in revenue, which should exceed 30% year-on-year. This rapid growth is being driven by their successful market penetration, where 12 new blue chip enterprise customers have been secured and several key OEM partnerships concluded just in the first half of this year. We expect this progress to continue, and +OneX's success in the market validates that there is a clear opportunity for their value offering in the South African ICT market, and that our aspiration of +OneX becoming a real new age ICT competitor is well on track.
As a key South African corporate, Black economic empowerment is of strategic importance to our success in the local market. Reunert's original BEE ownership structure entailed Black shareholding of 10% in Reunert. Of this 10%, 7% was held by the Rebatona Educational Trust, and the remaining 3% was held by the founders of the Peotona Group, which is a Black woman-owned entity. The Rebatona Educational Trust is a broad-based trust that empowers young Black women to further their educational needs through the provision of bursaries and support for their tertiary studies, and supports them in their subsequent pursuit for employment. This support augments our primary corporate social investment responsibility, which focuses on the improvement of the education of young Black learners through both the Reunert College and the Rebatona Educational Trust.
In our new BEE ownership structure, Reunert's Black ownership will increase by 3%, resulting in a Black shareholding of 13% through this structure. Of this 13%, an additional 1.5% of shares will be allocated to the Rebatona Educational Trust, raising its effective shareholding in Reunert from 7%-8.5%. The remaining 4.5% will be allocated towards the creation of an employee share ownership trust or an ESOP. This ESOP will provide all of our qualifying permanent employees with an opportunity to participate in the shareholding of Reunert with effect from the first of April of this year. Reunert believes this structure not only achieves our CSI objectives, but also assists in the creation of an environment within Reunert that is conducive to high performance, innovation, and strong ethical standards.
It enables the economic interest of our employees to be aligned to Reunert's future success and to those of our current shareholders. The new structure is in place for 10 years and received overwhelming support from shareholders at the special general meeting that was held in February. Should any shareholder or investor like more details, the SENS and the circular that accompany the special general meeting notice are available for further investigation. I'll now hand over to Nick, who will take us through the detailed financial analysis.
On this first slide, dealing with the statement of profit or loss, you will see on the right-hand side of the slide that we have indicated that there has been a restatement. To reassure shareholders, this restatement is simply to bring the format and presentation of these half-year results in line with the full year results of last year, in which the 2020 comparators were restated in order to comply with the JSE guidance that all expenditure, fair value movements, and impairments should be included in operating profit. There were no errors or omissions that had to be corrected via restatement in either the 2021 annual financial statements or this set of interim results. Hopefully, this will be the last period for which this caveat will have to be presented. The first set of numbers at the top of this slide is group revenue.
The group's revenue increased by ZAR 500 million or 10.8%. Of this, 66% or ZAR 332 million was generated in the Electrical Engineering segment, and 30% or ZAR 150 million in the Applied Electronics segment. The increase in Electrical Engineering segment revenue largely resulted from the pass-through of high metal prices through the contracting mechanisms with customers. The average price of copper per ton in the first half of 2022 was nearly $10,000 per ton, compared to the average price in the first half of 2021 of $7,500 a ton, an increase of 30%. Aluminum, the other major input into cable manufacturing, increased from around $2,400 a ton to $2,900 per ton, an increase of 20%.
The abnormally high increase in metal prices was offset by the 10% lower volume sold by the South African power cable business, resulting from this three-week strike in the South African business in the segment. The strike was called by NUMSA to put pressure on the bargaining council as part of the negotiations for the new three-year wage agreement. Positively, after the strike, the uncertainty of wage negotiations is now behind the segment for the next three years, and labor relations have changed or returned to normal. Although the South African switchgear operations were impacted by the strike, it was largely able to recover the sales not made during the period of the strike. This business has just concluded wage negotiations within Lesotho for the pay rates applicable to the Lesotho operation without any industrial action being experienced.
The Applied Electronics segment's revenue increase was primarily due to the release by government of various export permits needed to allow the fulfillment of several delayed export contracts and the positive performance of the renewable energy cluster. These export sales were all made in the second quarter with insufficient time to convert the resulting receivables into cash. This contributed to the increase in working capital, which I will unpack later. ICT's revenue generation was in line with the prior period, with the Total Workspace Provider business successfully overcoming product shortages that impacted the second half of last year. These shortages were caused by a fire at a component manufacturer, which resulted in our primary supplier of multifunction printers not being able to meet the demand for entry-level models.
The recovery was achieved by onboarding a range of new brands and products, which required both the renegotiation and negotiation of new framework agreements and the training of the channel in the support of the new products. It also necessitated an increase in working capital. The communication cluster continued to suffer from a loss of minutes in its base during parts of the economic environment as customers make fewer and shorter calls, and also due to the number of hours of load shedding experienced during the first half, which impacts customers' ability to initiate and receive calls. Looking at the segmental operating profit, on this slide is a reconciliation of segmental operating profit, which is extracted from the segmental analysis contained in the condensed consolidated interim financial statements to the statutory operating profit in the statement of profit or loss.
As can be seen on the slide, segment operating profit is the operating profit before items such as fair value remeasurements, impairments, ECL movements, and the profit or loss from the sale of assets. This metric is what executive management reviews to understand the true progress business units are making before taking into consideration these largely non-cash items. Overall segment profit improved by 1% over that of the prior comparative period. The main reason for this was despite the positive increase from both the ICT and applied electronics segments, the electrical engineering segment's contribution to segment operating profit declined by 7%, resulting in a total segment operating profit increase of the 1% achieved. The 7% reduction in the electrical engineering segment's profit was achieved despite the 10% reduction in the South African power cables volume output due to the strike.
Very positively, the power cable business substantially increased its contribution to the segment profit due to the benefits of both an improved sales mix as a high voltage order was delivered at the end of the first half, and improved efficiencies and reduced wastage due to the successful implementation of various Lean Six Sigma improvement initiatives, which commenced in the prior year. The power cable factory throughput, adjusting for the impact of the strike, is still at 80% of 2017 throughput levels, which accords very closely with gross domestic fixed investment as a percentage of GDP, which was slightly above 16% of GDP in 2017 and is now just above 13%.
By way of comparison, developed countries' fixed investment is around 25% of GDP, reflecting the huge gap between what South Africa should be investing in its infrastructure and productive base and what is in reality being invested. This either bodes well for the future of this business as and when the promised infrastructure programs are initiated, or means that South Africa's infrastructure competitiveness will continue to deteriorate if fixed investment is not meaningfully increased. Zamefa's operating profit declined sharply in the first half due to the impact of various maintenance issues in its upcast furnaces, which both reduced throughput and increased its operating cost, combined with the Forex losses resulting from a weakening of the Zambian kwacha against the US dollar. This is as against the substantial Forex gain in the comparative period.
Very positively, Zamefa has received a further ZMW 54 million from the Zambia Revenue Authority in respect of arrear VAT refunds. This was received just after the end of the period under review, with the expectation that the balance of ZMW 43 million will be received before the end of the calendar year. These refunds bolster the working capital available to this company. CBi Low Voltage continued to perform well in both its export and local markets, but did come under some input cost pressure, resulting from high commodity prices and logistics costs, which impacted its gross margin and therefore its contribution to the segment operating profit. These cost pressures are being actively addressed through both price increases to customers where possible, as well as various cost initiatives.
The overall segment operating profit also includes the group share of losses from CBi Telecom Cables, which increased over those of the prior period, with the operating loss increasing from ZAR 1 million in the prior period to ZAR 11 million in the current period. The ICT segment improved its contribution to the overall segment operating profit by 4%, in part from the increased contribution of +OneX as this business continued to add service lines to its business through acquisition and as the combined offering of its service lines increased its ability to gain new customers and generate additional revenues. The revenue benefit of the new brand offerings in the Total Workspace Provider business, referred to in the revenue analysis, pulled through to a corresponding improvement in operating profit.
The communication cluster continued to deliver an operating profit in line with the prior period, despite the revenue pressure it experienced. This was achieved through cost optimization. The Applied Electronics segment's operating profit improved from ZAR 31 million- ZAR 55 million, primarily due to the export fuze contracts delivered into the second quarter as governments' issuing of export permits resumed. This improvement was sufficient to grow the overall segment operating profit, offsetting the reduction in the contribution from other business units in the segment whose recently acquired export contracts are only going to be delivered into the second half.
These new export contracts are a combination of contracts acquired in the current financial period as international travel restrictions due to Omicron eased, as well as contracts acquired at the end of the prior year when for a brief period, COVID travel restrictions were lifted. These orders, as set out in the 2021 prospectus statement, are going to start being delivered in the second half of 2022. Looking at the reconciling items between segment operating profit and statutory operating profit, the reconciling items in the current period are not particularly large and primarily comprised of the impact of fair value remeasurements and a financial guarantee cost of ZAR 5 million related to CBi Telecom Cables.
However, I would like to draw your attention to the fair value remeasurements in the 2021 full year column, which were a very large positive net fair value remeasurement of ZAR 65 million, which comprised the positive revaluation of CAFCA of ZAR 103 million, a contingent consideration gain of ZAR 13 million, which was offset by the fair value loss of a put and call for Terra Firma of ZAR 51 million. This level of fair value remeasurement is very unlikely to be repeated in the current financial year. As a result, the statutory operating profit for the full year is expected to be much closer to segment operating profit than in the prior year. The only other item that requires explanation in the segmental operating profit analysis is that there is a reasonable increase in other segment cost.
This increase has two main components, below the normal 2021 half-year cost due to the benefit of ZAR 15 million released from a provision in that period, and in the current period, the ZAR 10 million incurred to affect the restructure of the group's BEE transaction, which was approved by the shareholders at the February AGM. Adjusting for these items results in the cost in these two periods being very comparable. Returning to the statutory statement of profit and loss, the next item discusses the impairment of financial assets. The improvement in the credit environment, both at Quince, the group's rental finance company, and more broadly in trade receivables, allowed for a release from the ECLs, which was partly, partially offset by a partial write-off or credit loss required against the group's short-term loans made to CBi Telecom Cables, the group's fiber and copper communication joint venture.
This credit loss has resulted from the decision to place the business into business rescue. The expectation is that through the business rescue process, creditors, which include the group in respect of loans granted, will be paid in the order of 50 cents in the rand. These factors led to the group's operating profit increasing by 4% and the profit after tax by 7%. However, after taking into account the increased losses from the joint ventures, again predominantly from CBi Telecom Cables, profit for the period increased by 3%, with EPS and HEPS increasing by 1%. Turning to the statement of financial position.
As part of the half-year reporting process, the group considered the ongoing residual effects of the COVID-19 pandemic, the impact on the group's markets and customers of the Russia-Ukraine war, as well as the consequence of extended supply chains, high logistics cost, and the global shortage of electronic components, and the current high commodity prices. Although these factors are likely to have and continue to have an impact on Reunert's businesses, very pleasingly, there were no impairments considered necessary resulting from the review of future cash flows supporting the carrying value of goodwill or the asset base of the business units. The group does not have any direct exposure to Russia. Sales of mining radars to Russian mining operations have been made in the past, and historically, the Applied Electronics segment was selected to supply communication equipment onto a Russian airframe.
However, at present, there are no current orders for delivery into this geography, nor are there any assets that are situated in the conflict regions, so there are no receivables, stock, or physical assets that need to be impaired due to the war. In terms of items that have impacted the statement of financial position, CBi Telecom was placed into business rescue in early March. The reason for this decision was that a key customer had unexpectedly curtailed orders in order to reduce its own working capital. This was after substantial quantities of raw fiber had been ordered and received based on forecast orders from this company.
This led to CBi Telecom Cables incurring losses due to reduced throughput, which together with the reduced sales levels and the high inventory levels, could not be directed to other customers, which resulted in a decline in the business's cash flow. This culminated in the business not being able to meet its commitments to creditors as they fell due, and thus the decision was made for the business to enter business rescue. As a consequence of the company now being managed and directed by the business rescue practitioner, this company is no longer equity accounted for, but is held at fair value through other comprehensive income. The residual fair value of this investment is now held under other investments and loans.
Other items impacting the financial position are the ZAR 25 million put option liability to the management of Terra Firma raised in 2021 was fully settled in the current period, with the group acquiring a further interest of 4% for ZAR 24 million. The Lumika put and call raised in the prior year at a net liability of ZAR 51 million was revalued as of 31st of March , and there was an insignificant movement in the net fair value of ZAR 1 million. The other movements in the statement of financial position are largely relating to working capital movements, which we will discuss when going through the slide on the statement of cash flows. The group's financial position remains strong, with shareholder equity funding 66% of total assets and 92% of net assets after deducting current liabilities.
The group's current assets are robustly at two times its current liabilities. This, together with the group's ability to either gear or restructure its rental lease and loan book to return cash, puts the group in a very strong position to be able to implement the strategy and pursue investments in both the ICT segment and in its renewable energy. The group, in the same release on twentieth of May, announced the acquisition of Etion Create at a maximum purchase consideration of ZAR 210 million. The group has ample facilities to be able to settle this consideration in cash. The next slide details the group's cash flow for the six-month period to the thirty-first of March. The key aspects of this slide is the large investment into working capital during the period, totaling ZAR 312 million.
Firstly, before explaining the reasons for this investment, let me assure shareholders that there is a clear expectation that a significant portion of this investment will be unwound in the second half of the financial year. The primary reasons for the increase in the working capital are ZAR 159 million increase in inventory, in part due to high commodity prices, in part as a buffer against the consequences of the long supply chains and electronic component shortages. Lastly, as the Applied Electronics segment gears up for second-half execution of significant export orders.
A ZAR 208 million increase in receivables, partly due to the pass-through of the high commodity prices in line with the revenue increase of 11% in the first half and the timing of export sales in the Applied Electronics segment, which were largely late in the second half due to the timing of the receipt of the export permits. The latter part of this increase is expected to unwind in the second half. These investments were partially offset by advanced payments received and increased trade payables. This increase in working capital together with ZAR 99 million in tax paid in respect of provisional payments have resulted in free cash flow generation of ZAR 168 million or 53% of the profit for the period.
The expectation is that the conversion of full year profit for the year into cash will increase substantially in the second half. Other than capital expansion of ZAR 74 million, the group had an outflow of ZAR 65 million under financing activity as it settled the Terra Firma put option, settled the ZAR 10 million due to the exiting BEE partners, and settled various liabilities totaling ZAR 55 million. Against this, the group raised ZAR 24 million to finance various solar energy plants. The investment activity reflects the ZAR 93 million received from the sale of various assets and the reduction in the loan and lease book, offset by loans made to JVs of ZAR 36 million, and the cash consideration for the purchase of Code Maven of ZAR 16 million.
This all resulted in a net cash inflow of ZAR 72 million for the period, which when combined with the opening net cash position of ZAR 290 million and the settlement of the final dividend from the prior year of ZAR 333 million, meant that the group ended the period with net cash on hand of ZAR 32 million. My last slide is in respect to capital expenditure, which was all financed from internal resources, with the majority of the expenditure being directed to the ICT segment and renewables in line with the group's strategy. These investments are all in the group's growth areas and will support the strategic execution outlined by Alan in his overview and in the segmental feedback to follow.
With that, I will hand you back to Alan to share the segmental feedback and the prospects for the second half of the financial year. Thank you.
Thanks, Nick. Our Electrical Engineering segment was impacted by the industry-wide wage-related strike in October. Wage negotiations take place every three years in the manufacturing industry. The conclusion of the agreement has resulted in a positive labor environment since October 2021, and we are expectant that this will remain for the duration of the three-year wage agreement. The impact of the strike was that effectively, we lost the whole of October's production or around 15% of the production time available in the first half of this year. This is particularly challenging for the factories, given that we have an annual December shutdown, which further negatively impacts the capability of those factories to pick up production in the first half of the financial year.
It's relevant that although the financial performance is down by 7% on the comparative period, if normalized for the effect of the strike and the foreign exchange impact at Zambia, this performance is reflective of the continuation of the improvement in performance of the segment that we've seen over the past 24 months. This has resulted in the revenue increasing by 11% to ZAR 2.9 billion, although the bulk of that is caused by increased metal prices as raw material prices continued their upward trajectory, and the segment's operating profit decreased by 7% to ZAR 151 million. The South African Power Cables company continued to improve their operational efficiencies, and together with a better mix of cables sold, resulted in a good improvement in financial performance from this operation.
In Zambia, the kwacha depreciated against the US dollar, resulting in a Forex loss of ZAR 16 million compared to the prior period's gain of ZAR 39 million. Pleasingly, improving market conditions in both Zambia and South Africa are being experienced, and the South African entity has concluded several long-term contracts, which, together with the operational efficiencies they've already achieved, should yield a continued full-year improvement in the cable businesses. The circuit breaker business had another good performance. The business was negatively impacted by the supply chain and logistics challenges, which resulted in input materials and export logistics costs rising faster than they could be recovered. There was some margin degradation that was experienced in the first half of the year. Looking forward, however, a positive second half is anticipated as this strategy continues to yield positive results.
The financial performance of the export markets continues to accelerate, and our subsidiaries, both in the USA and Australia, are performing stronger than even the record levels that they achieved in the prior financial year. An additional distribution channel has been opened and secured in the USA, which will further support volume growth into this important market for the circuit breakers. Circuit breaker company does expect supply chain and logistics to remain uncertain. Importantly, price increases have already been implemented in all of their markets, which will further support the performance in the second half of the year. Overall, the ICT segment delivered a solid period-on-period performance, with revenue up 1% to ZAR 1.3 billion, and segment operating profit increasing by 4% to ZAR 305 million.
The revenue growth only increasing by 1% resulted from lower revenues at Quince due to the last part of the strategic sale of the remaining PanSolutions book in the second half of last year. It also resulted from interruptions in product supply from Ricoh, which caused a slowdown in unit sales at Nashua. The last part of the revenue was caused by lower voice minutes reducing the revenue in the business communications cluster. Pleasingly, however, +OneX has had a notable increase in its revenue, and with the impact of these three factors above easing in the second half, segment revenue should improve to the full year.
Within the businesses at Quince, the operating environment improved again during this period as collections from end customers remained stable and the improving performance of the book and credit environment resulted in the release of ZAR 9 million worth of ECLs from our provisions. Going forward, the rising interest rates will steadily yield an improving return in the overall book. At +OneX, as mentioned in the strategy section, a positive growth in market penetration continued to validate their investment case and the market offering that they contain. The three acquisitions made so far have all been successfully integrated. This has been done by integrating these companies onto +OneX's single ERP platform and introducing the group's governance practice into all of these businesses.
In addition, they all trade under the single brand and culture of +OneX and adopt the group's values and code of ethics. This has enabled the successful integration of these acquisitions and them to access the scale offered by the segment's customer base and has led to a material increase in +OneX's contribution to the segment operating profit. At Nashua, they were negatively impacted by the continuation of Ricoh's inability to supply several key product lines, which resulted in effectively no supply of those ranges for almost the entire half of the year. I'm really pleased to report that the team pivoted exceptionally well and developed and launched a dual product strategy to offset what they believe will be a long-term supply problem from Ricoh.
This enabled Nashua to catch up nearly all of the lost sales caused by the loss of supply from Ricoh by the end of the half. This product performance was augmented by their continued acceleration of the complementary product and services, which now show a 22% compound growth over the past four years. They continue to launch new products and services to augment their Total Workspace Provider offering, and with the print supply issues now largely solved, they have emerged from this challenging period well-positioned for good growth. In the business communications cluster's voice business, it faced several challenges, primarily due to weak economic growth, and more importantly, the consistent load shedding, which removed a large volume of minutes from the network in the first half of the year.
Despite this, their complementary products, which have been focused on over the last five years, did very well, and their last-mile broadband connectivity, their VBX, and their data connectivity services all grew very well and enabled the cluster profit to remain at the same level as it was in the prior period. The segment expects an improved performance to the full year, as Nashua should have an uninterrupted six months of trading. The segment's complementary products and services continue to grow at high double-digit levels, and +OneX continues to accelerate. In our Applied Electronics segment, revenue increased by 16% to ZAR 1.1 billion, while the segment operating profit increased by 77% to ZAR 55 million. This much-improved result was driven by the commencement of deliveries into the large export orders that were secured once the COVID-19 travel lockdowns were lifted in June last year.
Pleasingly, after significant industry engagement, the export permits for all outstanding orders were received in quarter two of this financial year, and we are expectant that this will continue going forward. The receipts of these export permits enabled the segment to commence deliveries in February and March, primarily from our fuse company, and underpinned the improved results that we were able to deliver. Importantly, despite some new travel bans on South Africans in December and January, the demand for our products remained strong and further good progress was made in concluding export orders. In the first half of the financial year, ZAR 1.2 billion worth of new export orders were received, resulting in a segment outstanding order book of ZAR 1.8 billion, of which we expect that ZAR 1.1 billion is, will be executed prior to the year-end.
At Fuchs, our fuze company is operating at full capacity for the remainder of this year and for the entirety of the next financial year. This creates a very positive underpin to our export performance expectations over the next two years. On Friday, on the twentieth of May, we announced on SENS that we had concluded an agreement subject to the fulfillment of some conditions precedent to acquire 100% of the shares in an original design manufacturer company called Etion Create. Etion Create specializes in customized electronic subsystems and products and sells these into market sectors including mining, defense, and cybersecurity, both here locally and perhaps more importantly, into a number of export markets. The acquisition is strongly synergistic with our existing assets in our defense cluster, as firstly, it enhances our manufacturing and original design capability.
Secondly, and more importantly, it improves our export market access as they have contracts and sell into a number of the key targeted international geographies that the rest of our defense businesses sell into. In our renewable energy cluster, strong revenue continued, although supply chain logistics and increased competition keeps us a competitive market. As a result, some margin degradation was experienced. The cluster's contribution to the segment continues to grow, which is a positive effect, and we continue to expect this to continue as the renewable energy businesses accelerate in their revenue and their contribution. As we move into the second half, the solar energy company already has 80% of its orders on hand, and further demand is expected as load shedding looks to continue unabated for quite some time, and the accelerating energy prices make renewable energy increasingly attractive.
Project execution should also improve in the second half of the year as we have the required stock on hand and site conditions should improve. Ladies and gentlemen, in conclusion, the first half performance was largely in line with our expectations and the guidance that we provided at the end of last year. Importantly, the performance has ensured that we are well-positioned to deliver an improved full-year financial performance. This expectation is supported through all three of our segments. In the Electrical Engineering segment, the growth expectation is led by the improved operational efficiencies that have been achieved and the new contracted orders, which will lead to improved margins at the cable factories and the continued upward trajectory of the circuit breaker company. The ICT segment should grow in line with the real growth of the economy.
Finally, a strong full-year performance is expected from our Applied Electronics segment as they deliver our export orders and the renewable energy cluster continues to grow. The cash generating capability of the group remains fully intact, and we expect our cash position to improve to year-end as the half-year debt, debtors convert to cash and stockholding levels moderate off the half-year quantums. Whilst we recognize the volatility the current global economy presents, we remain confident to deliver an improved year-on-year financial performance. That brings us to the end of the webcast, and we'll now open the question and answer session. I thank you.
Good morning, everybody. There seems to be a bit of a technical glitch with Alan, and he's dropped off the call. He'll be obviously getting back in as soon as he can. We've had some questions that have been raised. I'm gonna take them in order of what they arrived. The first was from David Fraser of Peregrine Capital. The question that he asked is, "Is the high stock working capital levels expected to be released by year-end, or is there a structural element to higher stock levels?" Alan, did I hear you that you were back?
Yes, I am. Sorry, I don't know what happened there. My team's just reset. Nick, what I was going to lead into it, we've got five questions on so far. Three of the five relate, first of all, to the working capital unwind and then how they relate to the dividend. I've just heard Nick is, first of all, going to deal with the working capital unwind, which is David's first question, and then I'll deal with the dividend thereafter. There's a couple of questions around it. Nick, can you take David's question, please?
Thanks, Alan. David, yes, there is always going to be a structural element to the working capital movements. The structural element comes from the increase in revenue. We've had about an 11% increase in revenue. If your days stock and your days debtors stay more or less the same, there will always be a slight increase in your inventory levels and in your receivable levels caused by the increase in your revenue. I think the increase in working capital in this first half goes way beyond the 11% increase because the 11% increase in revenue would have resulted in.
We've got extended supply chains, and we've had to hold a little extra stock in terms of buffer stock, to overcome and to make sure that we're able to produce, you know, against our orders as we need to produce against those. That's resulted in a little bit of an increase in allowed stockholding against these extended supply chains. Secondly, there have been abnormal increases, as everybody would be aware of, in terms of commodity prices and in terms of electronic chip components, that even though maybe the physical quantity of stock on hand won't have gone up substantially, what it would mean, though, is that the price attributable to that stock has gone up.
I think in the presentation we said that, if you take the Electrical Engineering segment, copper being one of the major components, you know, up 30% and then aluminum up 20%. That's obviously going to be factored through both into your inventory levels, but also through into your receivable levels because you pass through those prices to your customers. That's the sort of structural element of what's happened. In terms of expectation, we would be very disappointed if not more than 50% of what we put in in the first half doesn't come out in the second half. Where it will come out from is that there were quite significant sales in the Applied Electronics segment, in the last month of the - month last...
Let's call it the last six weeks of the financial period, and that wasn't sufficient time for those sales to translate through the receivable cycle and into cash, and that will obviously take place in the second half. Then also, we have a lot of inventory work in progress, which is all earmarked for delivery into our orders in the second half of the year. Yes, there is a good expectation or a real expectation of reduction of the investment that we've made. You know, we would set our stall up that it's going to be more than 50% of what you see in the slide, this 312. Thanks, Alan.
Thanks, Nick. The second two questions relate to the dividends. I'm going to read them both before I answer them. The first is from David Fraser, who asks, "Given continued acquisitions, investments into solar projects and higher working capital levels, do you anticipate any change in the dividend payout ratio at the year-end?" The second question relating to the dividend comes from Muneer Ahmed, who has asked, "Assuming a successful capital unwind in H2, can we expect a much stronger dividend payout?" I'm gonna try and answer the two in one way.
First of all, more specifically to David, when we and as Nick has just described, we do expect an unwind of the cash position in the half of the year, and we would always aspire to fund our working capital requirements and our dividend payments out of operating free cash flow during the portion of the year. We believe that will be sufficiently strong that we will be able to keep the dividend payout ratio nominally in line with the historic payout ratios that we have delivered. Despite us continuing to invest into the solar projects, we believe we would not reduce the dividend payout ratio at the end of the year.
That also plays out to Muneer's question, where we also, because we have a number of active areas in which we are driving within the business, including acquisitions into our ICT segment, including into the investments into the BEE, even despite a successful capital unwind in the second half, we are unlikely to significantly increase the dividend payout on the back of that. We are more likely to dedicate that towards the strategic growth engines of within the group. I trust that answers both David and Muneer's question around the dividend. The next question is from Paul Bradshaw. He's asked, "With reference to renewable energy, do you foresee government giving any form of tax relief in the future to homes or businesses installing solar?
This would be in line with some European countries. I'm going to answer this question. It's, I mean, I don't have a crystal ball, so I'm just going to try and give you how I think about it. In my mind, the government is properly committed to introducing new forms of generation capacity onto the grid, one of which is renewable energy through the form of embedded generation, and the REIPPPP windows that are taking place. I think government is focusing primarily on creating an enabling environment for that to take place. We see that through the lifting of the cap from 1 MW to 100 MW and other elements of that nature. I then reflect on are they likely then to focus on incentives.
My sense, first of all, on that is whether the fiscus has a capability to dedicate more funding to incentivize people to take on the renewable energy forms that we speak about. My sense on that is I'm not convinced that the fiscus has that capacity, and I also believe that the environment, the general environment for renewable energy is relatively positive. I think we're going to see a strong adoption in any event. I think we're going to see the market adopt quite strongly renewable energy without the need for incentives.
Whilst I don't know what government will do, my sense on that would be, I would think it would be unlikely that we would see a tax incentive from the government that is going to further enable renewable energy at a home or residential or a business environment. That's my answer to Paul Bradshaw. We then have another question from David Fraser around Quince, and the question is, "Any progress or thoughts around selling the Quince book?" Is the first part of that question. The second part of that question is, "Are your customer contracts predominantly based on fixed or variable rates?" I'll ask Nick to answer those two questions, please.
Thanks, Alan. Answering the second part of the question first, because that's the easy part of the question. Yes, the our contracts are based on both fixed and variable. The variable portion of the book is just over 60% of the book, and the fixed portion of the book is 40% of the book. The implication of that is, whilst the interest rates were going down and were relatively low over the last three years, as the interest rate cycle is now turning and improving, we should see an increase in the overall margin of Quince because of the variable portion of the book as the interest rates improve. Looking then at the first part of the book, which is around the thoughts around selling the Quince book.
Yes, we've made very good progress on that. We have you know significant numbers of offers in terms of being able to finance the book, and we simply just want to finance the book through external sources to release capital back into the group projects. We also are looking at the opportunity to partner with other financial institutions and you know on a partnership basis, and the advantage of that is that that would effectively move the investment in Quince from the main part of the balance sheet into investments with joint ventures and associates, which would mean that the sort of gearing of that book wouldn't then affect the capacity of us to borrow against the rest of our book.
We've made very good progress in terms of looking at the respective structures, and we're probably looking to turn on our choice in the first half of next financial year. The reason for the first half of next financial year is that that's the expectation as to when some of the cash that we would like to return from Quince would be needed to invest in the solar and in the ICT acquisitions.
Thanks, Nick. The next question is from Rowan Gilmer. He asked, "In renewable energy, over what period is revenue and profit recorded for the group projects?" The period for which those revenues and profits are recorded typically connected to the power purchase agreement that we sign with the customer. There is a chance that we could renegotiate that, or we could go into an evergreen process at the end of that particular power purchase agreement period. The period across which we would then record the revenue and profit associated with those group projects is effectively the life of the power purchase agreement that we sign. It varies from customer to customer, but typically it's somewhere between 10 and 15 years that we are signing power purchase agreements for with customers at the moment.
The next question is from Muneer Ahmed. He has asked, "When you say we expect an improved full-year performance, do you mean a better H2 than H1, or relative to the full year of 2021?" We're hopeful, actually both parts of those should be true, Muneer. We expect that the H2 FY 2022 should be better than H1 FY 2022, and we're also hopeful that full year FY 2022 should be better than full year 2021. Paul Hosmer has asked, "Could we give an indication of organic growth in +OneX?" Paul, we don't go down to individual company level and sort of give guidance around that.
Although we've tried to give a little bit more insight through this presentation of how +OneX is growing because it's an important strategic initiative for us. What I can share for you on that, though, is that the growth in +OneX is a mixture of both organic growth. The team has done very well in managing the original managed services and communication capability that that business has, and then it has been further augmented by the acquisitions that have come in. Both parts of the organic capability and the acquisitive capability contributed to the improvement that we're seeing in +OneX this year. I'm going to go down to this gentleman called Guy Martin. He's asked, "Can we get more detail on Reunert's prospects in the defense sector?
Has the conflict in the Ukraine improved defense sector orders, and is there much movement on the military radar turret and communication sites? With the shrinking South African defense budget, will there be more focus on exports? And finally, what is the motivation for acquiring Etion Create? There's quite a few questions in there, and I'll try and give a quick overview on it. I think the first thought on it is we are seeing some stress in the local business, and we alluded to that. We've seen a delay in some of the larger capital programs that the group benefits from, being pushed out to only likely to be received, and executed on in next financial year, while we would have originally expected them in this financial year.
Really pleasingly, our export prospects across the group have improved since June of last year. We sit on a very healthy order book at the moment. We see increasing demand coming in, and we're hopeful that that order intake will continue. Our general view is that we're entering a period where our export orders in the defense segment are going to be on a positive trajectory. I'm not sure that there's too many of those that benefit specifically from the Ukraine and Russia war. That's primarily being funded by, let's call it NATO and the USA, which are not big customers of ours. I think there's a general environment worldwide where there is the spend and the export spend of what we're going to see is going to be improving.
That's what we are expecting over the next couple of years. That's positive for our defense business. The motivation for acquiring Etion Create really centers around two things. We already have an electronic manufacturing capability within Reunert, and their capability augments this, and their design and engineering capability also augments that. Perhaps even more important for us on our export drive in our defense environment, they have very good access and have secured some very large and long-term orders in key markets that we also participate in. We believe that that is very synergistic, not only with our manufacturing capability, but also in the markets that we're penetrating and the relationship that they have in those markets.
That's really the logic for us acquiring Etion Create, and we think it's going to be a positive contributor to the segment if we manage to get it all the way to closing. Franco de Silvestro has asked, "Can you give us some background on the accumulation of fiber inventory and the subsequent cancellation by customers?" Nick, do you want to take that? That's in telecoms.
Absolutely. This is basically the background as to why the business went into business rescue. We have one very large customer who supports CBi Telecom, and they indicated that there were gonna be significant orders placed on that business through the period of October through to March of this financial year. On the basis of those forecast orders and on the securing of a contract, but I must stress it's a framework contract, so it sets out the pricing mechanisms, and it sets out the sort of expected type of quantities, but there's no commitment to the quantities. It's on an as and when ordered basis, the actual underlying quantity. It means that you are pretty still tied to that customer.
We went out and ordered quite a significant quantity of raw fiber to be able to meet the lead times that the order should have come in on. That customer had to delay orders until after March of this financial year to manage its own working capital on its balance sheet. The impact of that is that we didn't have sales to them, which obviously impacts your cash flow. Secondly, we had all of this raw material fiber, which had been earmarked and was specific to their requirements. We couldn't move it on anywhere else. That had an impact, a very significant impact on cash flow, which then meant that we weren't able to meet creditors as they fell due.
As a consequence, the decision was taken to put it into business rescue.
Thanks, Nick. We have a question from Kobus Elias: "Morning, gents. Can you provide some detail on the current relationship with labor?" The current relationship with labor is good at our factories. We've had no interruptions after the October strike. In fact, even prior to that period, you know. Bear in mind that the strike that we had is an industry-wide strike, so it wasn't one that was specific to any Reunert factory. It was the negotiating between SEIFSA as manufacturers' representative and NUMSA as being the primary labor in our factories. At the culmination of that, the engagement with labor has been positive, the environment is good, and our factories are running well.
I think some of that is evidenced, as you can see, by the cables factory or the power cables factory, particularly here in South Africa, where the operational efficiencies have gone up. You can't do that in an environment where your relationship with labor is not very good. We've been pleased in the manner that it's come back, and we're hopeful and expectant that can continue and we have passed a disruption for the next three years and hopefully it'll be okay. The next question is from Rania Ahmed, who's asked, "Does a rising interest rate environment change our previous communication around external funding of the Quince book?" Nick, would you like to answer that?
Thanks, Alan. The key issue there is return on equity or shareholder equity. Even in an interest rate sort of environment with rising interest rates, it's going to be very difficult to get the kind of return on capital unless you highly leverage the book, which then comes onto your balance sheet anyway. The debt comes onto your balance sheet anyway. It's very difficult to get the cost of capital that's applicable to a sort of a conglomerate like Reunert. The answer is it doesn't really change our objective. We do believe that taking capital out of Quince and deploying it into the BOOs and into ICT acquisitions is a better deployment of shareholder capital.
Perfect. Thank you. The next question again is from Kobus Elias, who said, "Are there any interesting acquisitions in the market at present? If so, in which segments would that focus be for Reunert?" The primary focus of our acquisitions at the moment is in the ICT segment. We look and continue to look and scan the market for that, and there are a number of interesting acquisitions that we are investigating, or potential acquisitions, rather, that we are investigating. We'll continue to do so. The primary area for us is for key acquisition is really in that ICT segment. I think the Etion Create came as a result of Etion unbundling, and we were a very sensible and logical partner for that. It was positive for us and Etion, I believe, to do that.
Our primary focus is in the ICT, and so we are seeing a number of potential acquisitions that we're investigating. We'll move ahead, provided the price is right and the strategic fit is commensurate with what we're trying to do. I think the last question is from Charles Elias, who's asked, "Do we have a sense of the amount of capital likely to be applied to the solar segment in the next financial year?" Nick, I don't know. We haven't got an earmarked amount for it specifically. I mean, it's project dependent. What we are seeing is that the environment for concluding let's say slightly larger, better generation deals is looking up. Those deals, by definition, take a little bit longer to conclude.
The outflow of capital is really dependent on the execution of the contract. We haven't got a specific number because those orders we haven't concluded yet. We certainly have got sufficient capital to be able to deploy into it and have earmarked for it should those projects reach conclusion in the next financial year. Ladies and gents, I think that's everybody's questions. I think we've got to them all. If we either haven't answered them fully in the way that you would like, or there are questions that we haven't been able to answer, please just drop us an email and we'll either arrange to answer the question electronically or set up a one-on-one session with you where we can answer this or any other questions that you may have.
Ladies and gents, I think that pretty much brings us to the end of the session. Again, I'd like to thank you for your attendance today and your interest in Reunert. We look forward to a more positive second half of the year and going forward as well. Thank you for your interest and goodbye.