CBI-electric

Low Voltage was the largest contributor to profit within the CBI-electric group and exceeded performance expectations in 2011. Revenue was up 9% and operating profit increased by 18% despite the tough conditions in markets into which Low Voltage sells its products. The operation maintains sales offices in the United States, Europe and Australia as well as a national network covering South Africa.

Maintaining our export performance proved to be challenging. The sales operation in Germany was closed and consolidated into our largest European distributor in Sweden. The move strengthened our cost advantage in preparation for increased demand from Eastern Europe. Much of the improvement in profitability can be ascribed to the continued improvement of our Australian operation, which achieved record sales that were largely attributable to expansion in mining in that country.

While the majority of exports are sold into the industrial market, Low Voltage remains linked to low levels of activity in the South African residential market.

The conditions under which Low Voltage operated during the year were successfully managed through a rigorous focus on improving exports and, in particular, cost management. Return on net operating assets improved while, at the same time, we continued to improve product quality.

A key development in 2011 was the acquisition of ITmatic, a system integrator and solutions provider with an Africa-wide footprint and extensive technical capability. ITmatic is able to meet the need for turnkey solutions for many customers in the public and private sectors and will serve as a sales conduit for the products of other CBI-electric companies. As at the end of this review period the integration of this business into Low Voltage was ongoing. It is anticipated that ITmatic will make a meaningful contribution to revenue and profits during 2012.

On the environmental monitoring side, external audits by a number of international customers have confirmed that the company’s environmental management systems meet requirements in force in the United States, Sweden and Canada.

Various initiatives were implemented in 2011 to reduce energy consumption. At the Elandsfontein factory these initiatives included changing from mouldings produced using the thermoplastic process to the thermoset process, which requires significantly lower temperatures and pressures. Through continued expansion of our international footprint and competitive pricing, we are confident of our ability to sustain growth in the next financial year. Telecommunications and transport upgrades, as well as ongoing mining investment in Australia will be key drivers of growth, while ITmatic should enable us to capture and grow new sources of income in the international mineral resources area.