COMMENTS

Review of operations
ELECTRICAL ENGINEERING
Turnover grew by 36% to R2 billion while operating profit increased to R324 million up 49%.

Both CBI and African Cables experienced a period of outstanding growth. Residential and industrial construction continued to grow strongly and the necessary expansion in infrastructure for the distribution of electricity increased the demand for their products. ATC finally turned the corner and earned a modest profit with volumes increasing towards the end of the year.

ELECTRONICS
The divisions’ turnover increased by 4% to R6,0 billion and operating profit grew 9% to R714 million.

Nashua’s volumes grew by 22% in the multi-function machine market. Its aggressive entry into the colour laser printers resulted in significant market share gains in little over a year. The Finance Company discounted more deals than ever before and the book now exceeds the R1 billion mark after the sale of its receivables book in December 2003.

The consumer businesses, Nashua Mobile and RC&C Holdings, experienced strong demand with turnover growth of 11% to R3,8 billion and operating profit up 29% to R324 million.

Panasonic is recognised as South Africa’s premier consumer electronics brand, while Futronic at the more affordable end made big inroads in the local market. The Akai brand was launched during the year and will focus on the middle range of the market.

Nashua Mobile has continued delivering quality service to more than 415 000 contract customers. Subsequent to the year-end a five-year agreement was entered into with Vodacom securing the future of this business. Nashua Mobile’s aim is to continue as an independent service provider offering all three networks. Growth in the cellular phone market has been above expectations in recent years but inevitably this must tail off at some stage with resultant pressure on margins.

Siemens Telecommunications, in which Reunert holds a 40% share, experienced good order intake. Turnover on an attributable basis increased by 7% to R1 billion while operating profit increased to R132 million.

Reutech’s defence businesses struggled and turnover dropped by 33% resulting in a significant reduction in operating profit to R2 million. While prospects for Reutech remain uncertain, today it forms a small part of the company’s business.

Prospects
It remains our aim to grow headline earnings per share at a rate higher than inflation in a sustainable way. However, it is unlikely that this year’s growth rate will be achieved in the coming financial year.

Directorate
During the year Derek Cooper resigned as chairman and director. The board records its great appreciation for his leadership, support and guidance and wishes him well in the future.

Martin Shaw was appointed chairman of the board. Kingsley Fuller joined the board in June 2005 and was appointed as chairman of the audit committee.

Reviewed results
The above results have been reviewed by the group auditors, Deloitte & Touche, and a copy of their unqualified review report is available for inspection at the company’s registered office.

Dividend
Notice is hereby given that final ordinary share dividend No 159 of 170 cents per share (2004: 120 cents per share) has been declared by the directors for the year ended 30 September 2005. In compliance with the requirements of STRATE, the following dates are applicable: