Net cash at the end of the year amounted to R483 million despite having paid out R879 million to shareholders by way of special (R353 million) and normal (R526 million) dividends during the year.

The Electrical Engineering division, CBI-Electric, increased revenue by a pleasing 29% to R3,3 billion. However, operating profit of R554 million was similar to that achieved a year ago.

On 1 February 2007 the merger between ATC and the telecommunications cables business of Altron became effective. The results of the joint venture have been proportionately consolidated since that date.

Telecommunications cables exceeded our expectations despite the dilutionary effect of the loss of 50% of the profit since the merger with Altron’s telecommunications cable business. The merger increased capacity and gave the business an economy of scale and an expanded order book. Demand increased from existing wire line operators and the second network operator, Neotel, started to add volume to the business. Vodacom and MTN, being allowed to self provide, will shortly roll out their own fibre optic transmission networks.

Revenue growth in our energy cable operation was particularly strong, resulting in improved margins. A programme to modernise and increase capacity in the facility started two years ago and was completed in September. Unfortunately, some of the benefit in margin was lost due to industrial action that lasted about four weeks.

Two new product lines were added and, given the continued strong demand for energy cables, the next reporting period should see a continued strong performance from this business.

The low-voltage business of CBI-Electric took strain during the year. Revenue was flat and operating margins came under pressure mainly because of increases in material cost and more competition in the market place.

Action has been taken to increase efficiency in the manufacturing process and reduce material costs by improving procurement practices. Marketing efforts have been stepped up in order to reclaim some of the market share lost on the residential side to Chinese imports. Thus far indications are that the corrective steps taken have been effective.

The performance of our Australian operation has been disappointing and management changes have been made which are expected to yield results.

In the Electronics division revenue increased by 15% to R8 billion, including associate revenue of R1,8 billion. Operating profits increased by 15% to R995 million.

The Nashua group consisting of Nashua (office systems), Nashua Mobile (telecommunications service provider) and Nashua Electronics (distributor of the Panasonic range of products) now all benefit from promoting the valuable Nashua brand.

Nashua (office systems) maintained volumes, but margins declined. The rapid decline of the rand against the euro and our inability, in the short-term, to increase prices to customers, affected the bottom line negatively. In addition, in one particular category of the market our product offering was not competitive. Both these problems have been addressed and margins and revenues should be restored in the future.

Our stated strategy to get closer to our customers is slowly being implemented and, to date, we have acquired majority interests in the franchises in Tshwane and Eastern Cape. This process is ongoing and we hope to acquire interests in at least two more franchises during 2008.

Acuo Technologies, Nashua’s software integration business enabled Nashua to undertake projects and services higher up the technology chain. We believe these initiatives will enable us to be more competitive, thereby retaining our position as the number one supplier of office systems in the country.

Revenue in the Consumer Products and Services segment, which includes Nashua Mobile and Nashua Electronics, increased by 12% to R4,6 billion, however operating profit declined marginally to R368 million. Nashua Mobile had an excellent year increasing both sales and operating profits in excess of 17%. However, the consumer electronics business struggled to grow sales in a fiercely competitive market. Although trading profitably, operating profit was substantially lower.

It is expected that Nashua Electronics and in particular its consumer electronics business will face another tough year. Nashua Mobile on the other hand, is well positioned to produce good results.

Reutech, the defence business, had an excellent year contributing 7% (R109 million) (2006: R30 million) to Reunert’s operating profit. Revenue increased by 55% to R490 million. Indications are that future demand from the South African National Defence Force will ensure Reutech remains viable. Products that have been developed over the past five years are now nearing the production phase and should contribute meaningfully. Exports of airborne radios and electronic fuzes continued at an acceptable level and we are confident that these markets will provide a reasonable base in future.

Reutech Radar Systems has developed a product that detects moving slope walls in open pit mines. With mining safety becoming all-important, we are well positioned to benefit from this addition to our product portfolio. Systems have been sold to mining operations in South Africa, Australia and South America.

Siemens Telecommunications (Pty) Limited had its best year ever, contributing in excess of R120 million after tax profits. Effective 1 April 2007, Siemens merged their telecommunications operations with the networks businesses of Nokia to form Nokia Siemens Networks. We continue to own 40% of Nokia Siemens Networks South Africa (Pty) Limited.

Competitive pressures in the market for telecommunications infrastructure products are increasing and it is highly unlikely that the same result will be achieved in the 2008 financial year. However, our position in the market remains very strong and, if anything, the new entity is better equipped to counter any attacks from the opposition.

Apart from the traditional RCCF business (financing of office equipment) Quince also offers bridging finance (ZS Rationale) and lending against scrip (Scripfin). A capital injection of R379 million provided by the PSG Group in exchange for roughly 50% of the business has resulted in Quince being over capitalised in the short term. As foreseen, the contribution from Quince was dilutive compared to the wholly owned RCCF. This may continue for as long as Quince has excess capital. We anticipate that this position will reverse during the new year.

The local economic environment is characterised by efforts to curb consumer spending on the one hand and published intentions to invest vast sums of money on improving the infrastructure on the other.

Rising interest rates, food and oil prices coupled with the requirements of the National Credit Act are definitely slowing down consumer spending. The overall effect is to reduce demand, thus slowing growth. Margin pressure is inevitable.

On the fixed investment side, construction is booming with the exception of residential property. The Gautrain project is going ahead and the airport expansion projects and building of stadia are underway. Eskom has announced plans and, in certain cases, issued tenders to increase capacity – as has Transnet. The mining industry, especially platinum, continues to expand. We are well positioned to benefit from these developments. In particular our low voltage and cable businesses are well entrenched as suppliers and our electrical businesses have the products and capacity to meet increased demand.

On balance, we believe that the investments into the infrastructure will more than offset the slowdown in consumer spending, assisting Reunert to achieve real earnings growth.

Shareholders may not dematerialise or rematerialise their share certificates between Monday, 14 January 2008 and Friday, 18 January 2008, both days inclusive.

On behalf of the board

Directors: MJ Shaw (Chairman)*, G Pretorius (Chief Executive), BP Connellan*, KS Fuller*, BP Gallagher, SD Jagoe*, KJ Makwetla*, KC Morolo*, GJ Oosthuizen, ND Orleyn*, DJ Rawlinson, Dr JC van der Horst * *Non-executive

Registered office: Lincoln Wood Office Park
6 – 10 Woodlands Drive, Woodmead, Sandton
PO Box 784391, Sandton, 2146. Telephone +27 11 517 9000

Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107

Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)