Review of operations

Electronics
Nashua office automation had a good year with strong growth in earnings. The Nashua name continues to be recognised as one of the premier brands in the country based on its products and service delivery.

The successful merger of Nashua Cellular and NedTel Cellular into Nashua Mobile led to 15% growth in market share in an increasingly competitive industry. It has established itself as the leading independent contract service provider to corporate South Africa. The large increase in revenue and operating profit reflected in the segmental analysis is due to the merger that took place in July 2000.

Panasonic continues to improve with a 28% increase in profit on a 2% increase in turnover. This was partially due to improved asset management and tighter government control on the unlawful importation of goods by third parties.

RC&C Finance Company has been consolidated for the first full year. This has resulted in an apparent increase in the group's gearing; however, all borrowings are more than adequately covered by amounts payable to the finance company. The company has direct long-term banking facilities in place to cover its borrowings.

The remainder of the electronics group experienced a drop in turnover, but profits remained at the same level as the previous year. The selection of Siemens Telecommunications to supply the Cell C infrastructure and the Eskom Enterprises fibre optic network for the second fixed-line operator confirms its position as the leading telecommunications network supplier in Southern Africa.

Reutech had a difficult year with turnover declining by 5% and operating profits by 44% due to a drop in customer orders. We are, however, confident that order books will be restored to acceptable levels, although this might only happen in the 2003 financial year.

Electrical engineering and cables
Circuit Breaker Industries' (CBI) turnover increased by 26%, with export growth of 48%. Several acquisitions broadened the company's product offering providing a strong base for future growth.

The telecommunications cable market was difficult with the downturn in international spend impacting on fibre optic sales. The slump is expected to be temporary and ATC, which is expanding its capacity to one-million fibre kilometres, will be well positioned to take advantage of the upturn anticipated for 2003.

African Cables had a good year with revenue improving by 38%. Due to increased efficiencies, its operating margin increased almost tenfold from R3,9 million to R38 million. The scope for further improvements is limited.