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Financial highlights
Group @ a glance
Letter to shareholders
Board of directors
Management discussion ►
Electrical engineering
Building and developing people
Environmental issues
Corporate governance
Segmental analysis
Five-year financial review
Summary of statistics
Value added statement
Annual financial statements
Notice of annual general meeting - PDF 106kb
The electrical engineering division , now branded CBi-electric, consists of energy and telecommunication cables and low-voltage products. An integrated branding strategy was introduced in June 2006 and allows for the easy addition of other related businesses and products under the name CBi-electric.

Creating a strong brand will enable the group to promote its products and services in a more effective way locally as well as in the export market.

CBi-electric experienced exceptional growth on the back of countrywide strong demand to improve infrastructure. Revenue grew by 30% to R2,6 billion and operating profit soared by 66% to R552 million.

Growth is expected to continue albeit at a slower pace. Demand for low-cost housing continues at a constant level. Spending on infrastructure is expected to accelerate and should benefit the electrical businesses. The platinum mining industry is investing in order to satisfy demand.
CBi-electric: african cables
Demand remained strong across the range of product despite a rampant increase in the price of copper. The average copper price was R37 347 per ton compared to R20 668 per ton in the previous year.

The pricing model allowed us to pass price increases on to the customers and, consequently, it had no negative effect on profitability. Demand is not expected to decrease as a result of the higher copper price. Houses built need to be supplied with electricity, maintaining the demand for copper cable

The process of upgrading the reticulation networks of the utilities is ongoing and far from complete. The addition of thousands of residential houses, a multitude of shopping complexes and office parks are putting considerable strain on existing networks.

The strong increase in oil, gold and platinum prices stimulated growth in the mining and industrial sector which had a positive effect on demand for power cable. The platinum mining industry is booming and mining operations are expanding. Supplies to the mining industry currently constitute 8% of total sales. This is not expected to change materially.

Projects like the Gautrain and the upgrading of airports and stadiums in preparation for the Soccer World Cup in 2010 will further increase the demand for energy cables. Capital is being invested at our factory in Vereeniging on an ongoing basis to meet expected demand. State-of-the-art equipment is being installed to operate more efficiently and faster.

In light of the increased demand and expected positive growth in the economy, some R80 million will be invested in new equipment by the end of the 2007 financial year. Approximately R40 million has been spent in the current year.

The rapid increase in local demand absorbed most of the available capacity, necessitating a cutback in exports. This situation will be rectified once the upgrade programme has been completed.
Managing director:
CBi-electric: african cables
BSc (Eng)(Elec) Certificate of Competency
Born 13 July 1949
Appointed June 1999

Ernst started his career as a pupil engineer at the then Union Steel Corporation of SA Ltd’s non-ferrous division in 1973 after he obtained his engineering degree at the University of Pretoria .

He was later appointed as section engineer: electrical; maintenance engineer; production manager; marketing manager and general manager of Usko Ltd.

He served on the boards of Alustang (Pty) Ltd, EPI (Pty) Ltd, Transvaal Copper Rod Company and Usko Ltd.
CBi-electric: telecom cables
CBi-electric: telecom cables, previously ATC, experienced a complete turnaround from the previous few years due to the closure of a competitor’s telecoms manufacturing facility in Port Elizabeth . Copper cable volumes doubled and fibre optic cable market share went from 20% to 30%. Telkom, however, remains the dominant customer.

Demand for copper telecommunication cable is expected to remain relatively flat while fibre optic cable offers significant scope for growth. The lack of telecommunications infrastructure in Africa , in particular Nigeria , presents CBi-electric with potentially exciting opportunities. The company currently supplies fibre optic cables to Nigeria and the viability of a manufacturing plant is being investigated. Finality on this venture will be reached within the next few months.

Telkom’s planned capital expenditure of R30 billion for a new generation network, especially broadband services, over the next few years should benefit the company. In addition to increased demand for fibre optic cable, ADSL compatible copper cable should be high on the agenda.

In the non-Telkom market, demand will be stimulated by improving infrastructure. The Gautrain project; new and demothballed power stations; and the refurbishment of railway lines, to name a few, should lead to strong demand.

The second network operator, Neotel, and infrastructure company, Infracom, will invest in a telecommunications cable infrastructure. In all likelihood, it will be more fibre based than copper. Further deregulation of the telecom market would allow cellular operators to install cable networks to allow for self-provisioning. CBi-electric is well positioned and has excess capacity to satisfy increasing demand.

ATC (Pty) Ltd has made an offer to acquire the assets of Aberdare’s telecommunications cable manufacturing facility in exchange for a 50% shareholding in a new business to be formed. The matter is currently before the Competition Commission and will hopefully be adjudicated shortly.
Managing director:
CBi-electric: telecom cables
Born 28 May 1949
First employed by ATC in 1971

Koos started his career as assistant accountant at Standard Telephones and Cables (Pty) Ltd (STC) in 1969. He joined ATC (Pty) Ltd in 1971 as accountant and subsequently held the positions of chief accountant and financial director prior to his appointment as managing director in 1986, a position he held until 1999.

Koos joined Marconi South Africa (Pty) Ltd in 1999 as CEO. He left Marconi in 2001 and pursued his own private business interests until he rejoined ATC (CBi-electric: telecom cables) in Oct 2002 as managing director.
CBi-electric: low voltage
Unit sales with the exception of prepayment meters grew strongly across all market segments. Wiring accessories, in particular, albeit from a low base increased substantially. After years of modest spending, the mining sector bounced back with increased volumes, especially from platinum mines.

The shortage of generating capacity led to a slow down in the provisioning of electricity to low-cost housing projects, resulting in lower sales of prepayment meters. Sales of commercial and industrial breakers benefited from the strong demand from platinum and other mining operations. The residential housing boom, with the accompanying shopping centres, ensured good growth for residential products.

Despite the relatively strong rand, exports increased by 21% year-on-year. Results in the United States remained disappointing while European exports buoyed. Australian business was relatively flat.

Manufacturing capacity was increased by the opening of a second assembly operation in Lesotho . Ongoing investment in the components manufacturing facility will ensure sufficient capacity and ability to compete. Of a planned R62 million capital expenditure budget, R52 million will be spent on expansion/new products.

Older products are constantly being replaced by more modern versions that, in many cases, offer increased functionality. When sensible, products are sourced from other vendors in order to augment the product offering.

CBi-electric’s customer base is well diversified and more or less equally spread amongst residential, industrial, mining and exports. The export market presents the company with the opportunity to grow from a very low base. Continued strong growth is expected from this activity.

Higher inflation and interest rate increases are not expected to have a negative impact on the company. Lack of infrastructure, demand for raw materials and a shortage of housing will continue to stimulate demand for CBi-electric’s products. A weaker rand will benefit exports. On balance, the outlook for the company remains positive.
HH Fischer
Managing director:
CBi-electric: low voltage
Dipl.-Ing, Dipl.-Wirtschaftsingenieur
Born 13 September 1947 in Germany
Appointed in 1984

Helmuth the Technical University of Darmstadt, Germany where in 1972 he obtained a masters degree in mechanical engineering.

Thereafter he studied business administration at the Technical University of Munich, Germany where in 1974 he obtained a masters degree in industrial engineering (equivalent to MBA).

His association with Barlow
Rand/Reunert started in 1984 when he emigrated to South Africa to join Heinemann Electric (Pty) Ltd (then 70% owned by Barlow Rand) as manager for manufacturing coordination and information systems.

In 1989 he was appointed managing director of Circuit Breaker Industries.

From 1 January 2007 Helmuth will take divisional responsibility of CBi-electric.
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