· ALTRON • 4TH PROOF Our people continue to be our greatest asset. Through their deep...

ALTRON • 4TH PROOF

One Company, Many Minds

A N N U A L R E P O R T 2 0 0 6

ALLIED ELECTRONICS CORPORATION LIMITED

ALLIED

ELECTR

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LIMITED

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Our people continue to be our greatest asset.Through their deep understanding of customer needs, we develop solutions that improve customer productivity and enhance our brands

www.altron.co.za

Allied Electronics Corporation Limited(Incorporated in the Republic of South Africa) (Registration number 1947/024583/06) (Share code: ATN) (ISIN: ZAE000029658) (Share code: ATNP) (ISIN: ZAE000029666)

(“Altron”)

ALTRON ANNUAL REPORT 2006

Nature of businessAltron, through its principal subsidiaries, Allied Technologies Limited,

Bytes Technology Group Limited and Power Technologies (Pty) Limited,

is invested in the telecommunications, multi-media, information

technology and power electronics industries.

CONTENTS01 – Financial highlights02 – Mission and core values03 – Strategic philosophies04 – Six-year financial review06 – Corporate structure08 – Executive committee10 – Chairman’s statement16 – Chief Executive’s review

44 – Sustainability report Through the Altron F1 x 2 SA grand prix R6 million was donated to the Nelson Mandela Children’s Fund and Unite Against Hunger

46 – Mission statement47 – Corporate code of conduct48 – Message from the Chief Executive50 – JSE SRI Index 200551 – Value-added statement

52 – Transformation/Broad-based black economic empowerment

56 – Corporate social investment 62 – Our people 70 – Preferential procurement and

enterprise development 73 – Safety, health and environment 82 – Shareholders 89 – Corporate governance102 – Remuneration report

28 – Operational Review28 – Telecommunications

Netstar subscriber base for stolen vehicle recovery services now exceeds 362 000 vehicles

32 – Power Electronics and Multi-media38 – Information Technology

108 – Financial statements171 – GRI content index184 – Directorate profile188 – Letter from the chairman189 – Notice of annual general meeting194 – Annual general meeting – explanatory notes195 – Form of proxy197 – Corporate data

1

Feb 06 Feb 05 % change

Revenue R14.0 bn R12.2 bn 14

Operating profit R1 040 m R963 m 8

Operating margin (%) 7.4 7.9

Operating margin excluding non-recurring losses* (%) 7.8

HEPS (cents) 189 162 17

Diluted HEPS (cents) 178 153 16

RONA (%) 26.5 24.9

Cash on hand R2.2 bn R1.5 bn

Employees 11 038 11 800

*Adjusted to exclude losses from Econet (divested) and Aberdare Telecoms (closed)

Financial highlights for the year ended 28 February 2006

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HEPS increases by

17%

Revenue growth of

14%

Operating profit exceeds

R1 billion

Dividend up

24%

2


Mission and core values

Altron’s mission is to:

Ü Be the leading South African-controlled information and communications

technology and power electronics group that offers high technology

products and services of quality to global markets

Ü Generate profits and create shareholder value through outstanding

customer service

Ü Remain dedicated to technological innovation

Ü Continue its commitment to the transformation process of South Africa

through broad-based black economic empowerment initiatives

Ü Integrate sustainable development into our business at every level –

our future depends on it.

Core values

Ü Customers

Ü Innovation

Ü Teamwork

Ü Accountability

Ü Sustainable development

Through these values we promote:

Ü Best business practices

Ü Environmental conservation

Ü Corporate governance

Ü Broad-based black economic

empowerment and transformation

Ü Transparency

Ü Considering the needs of all stakeholders

3

Improve existing operations

Expand organically

Acquisition criteria

Increase shareholder value

Focus on high-growth opportunities

Quality of income

International expansion

Broad-based black economic empowerment

Strategic alliances

Value-added services

Ownership of IPR

Annuity income

Market leadership/critical mass

Track record

Ü 41-year history as leading ICT and power electronics group in southern Africa

Management

Ü Decentralised management with proven track record

Competitive edge

Ü Leading market positions in most activities

Ü Exclusive relationships with leading multi-nationals including ABB, NCR, Xerox, Alcatel, Arrow and Axalto

Financial strengths

Ü Strong financial controls

Ü Strong balance sheet

Ü Strong revenue growth driven by key acquisitions and organic growth

Ü Operating profit growth to over R1 billion this year

Ü Increasing percentage of annuity-based business in the group

Risk profile

Ü Manages risk through diversified sector involvement

Ü Conservative acquisition policy

Ü High cash generation

Ü Strong internal controls

Good governance

Ü Record of sound corporate governance

Ü Responsible and transparent disclosure

Ü Listed on the JSE Social Responsibility Investment Index

Investor proposition

Strategic philosophies

4


Six-year financial review

2006R million

2005*R million

2004R million

2003R million

2002R million

2001R million

INCOME STATEMENT

Revenue 13 969 12 206 10 045 11 397 9 900 8 951

Operating profit 1 040 963 718 909 763 627Financial income 112 100 145 131 110 82Financial expenses (53) (62) (26) (35) (18) (6)Share of profit from associates 32 24 9 19 24 11Capital items (54) (90) (139) 98 (133) 21

Profit before taxation 1 077 935 707 1 122 746 735Taxation (326) (339) (255) (269) (196) (146)

Profit after taxation 751 596 452 853 550 589

Attributable to minority interests 257 148 148 396 242 291Attributable to Altron equityholders 494 448 304 457 308 298

Dividends paid 176 143 117 100 90 89

BALANCE SHEET

AssetsAssociates and other investments 228 453 183 181 167 301Deferred taxation 118 112 113 132 127 80Other non-current assets 1 768 1 848 1 322 1 423 2 008 1 847Cash and cash equivalents 2 152 1 520 2 004 1 510 1 444 1 082Other current assets 3 271 3 022 2 447 2 947 3 234 2 985

Total assets 7 537 6 955 6 069 6 193 6 980 6 295

Equity and liabilitiesShareholders’ equity 2 931 2 679 2 489 2 283 1 945 1 761Minority interest 1 103 964 1 082 1 292 1 636 1 642

Fixed capital 4 034 3 643 3 571 3 575 3 581 3 403

Non-current loans 297 716 277 281 784 618Current loans 238 59 247 193 179 137

Loans 535 775 524 474 963 755

Non-current liabilities 46 83 41 120 158 165Current liabilities 2 922 2 454 1 933 2 024 2 278 1 972

Total equity and liabilities 7 537 6 955 6 069 6 193 6 980 6 295

*Restated for effect of IFRS

5

2006 2005* 2004 2003 2002 2001

RATIOS AND STATISTICS

EarningsBasic earnings per share (cents) 176.4 162.0 111.5 169.9 111.9 103.3Diluted basic earnings per share (cents) 167.8 155.1 109.3 168.3 107.5 101.0Headline earnings per share (cents) 189.2 161.7 138.1 155.3 129.2 101.5Diluted headline earnings per share (cents) 178.2 152.9 135.4 145.7 124.1 99.3Dividend proposed per share (cents) 78.0 63.0 52.0 43.0 37.0 31.0Headline dividend cover (times) 2.4 2.6 2.7 3.6 3.5 3.3Ordinary shares in issue (millions) – at year end 94 94 94 94 94 96 – weighted average 94 94 94 94 95 97Participating preference shares in issue (millions) – at year end 188 184 180 177 174 192 – weighted average 186 182 179 175 181 191ProfitabilityOperating profit to revenue (%) 7.4 7.9 7.1 8.0 7.7 7.0Return on shareholders’ equity (%) 18.2 16.8 16.0 14.3 24.1 15.1Return on capital employed (%) 22.8 21.8 17.5 22.4 16.8 15.1Return on operating assets (%) 20.6 19.8 19.1 20.8 14.6 17.2FinancialBorrowings ratio (%) 13.3 21.3 14.7 13.3 26.9 22.2Current ratio 1.9:1 1.9:1 2.0:1 2.0:1 1.9:1 1.9:1Acid test ratio 1.4:1 1.4:1 1.5:1 1.5:1 1.3:1 1.3:1Net asset value per share 1 039.6 962.6 907.0 842.9 725.9 611.7SharesNumber of shareholders – ordinary shares 1 738 1 616 1 202 1 058 1 067 510 – participating preference shares 3 396 2 916 2 722 2 685 1 471 2 184Price earnings ratio (times) – ordinary shares 13.5 9.6 8.0 5.3 5.9 7.8 – participating preference shares 11.9 9.5 8.1 4.8 5.8 7.8Market value per share at year end (cents) – ordinary shares 2 550 1 555 1 105 820 760 795 – participating preference shares 2 250 1 538 1 125 750 755 790OtherConsumer price index (percentage increase) 3.9 2.6 0.7 10.3 5.9 7.8Production price index (percentage (decrease)/increase) 5.5 1.2 (1.0) 6.2 13.2 9.1Number of employees 11 038 11 800 10 712 10 449 11 232 13 292

*Restated for effect of IFRS

DEFINITIONS

Earnings – Attributable earnings as

disclosed in the income statement.

Borrowings – All interest-bearing

liabilities, including redeemable

preference shares in subsidiaries.

Capital employed – The total of fixed

capital and borrowings.

Operating profit – is stated before

goodwill impaired and capital items.

Fixed capital – Shareholders’ equity

interest, plus minority shareholders’

equity interest in subsidiaries.

Total assets – Property, plant and

equipment, investments and loans

together with current assets.

Operating assets – Total assets less

investments, loans, deferred tax and

cash.

Acid test – The ratio of current assets

excluding inventories to current liabilities.

Borrowings ratio – The percentage of

borrowings to fixed capital.

Current ratio – The ratio of current assets

to current liabilities.

Headline dividend cover – Headline

earnings per share divided by dividends

per share.

Market value per share – The sellers’

price quoted by the JSE Limited.

Net asset value per share –

Shareholders’ equity divided by the

number of shares in issue at year end.

Price : earnings ratio – The market value

per share divided by the headline

earnings per share.

Return on capital employed – The

percentage of operating income to capital

employed.

Return on operating assets – The

percentage of operating profit to

operating assets.

Return on shareholders’ equity – The

percentage of attributable earnings to

shareholders’ equity, adjusted for net

capital items, goodwill impaired and

translation gains/losses.

6


Corporate structure

TELECOMMUNICATIONS AND WIRELESS COMMUNICATIONS

Altech Autopage Cellular, Altech Supercall Cellular, Altech Mobile Direct, Altech Mobile Express – sales, distribution and services provision for cellular network operators.

Altech Netstar – Stolen Vehicle Recovery (SVR) business.

Altech Alcom Matomo and Altech Alcom Radio Distributors – design, installation and project management of Motorola radio systems.

MULTI-MEDIA AND ELECTRONICS

Altech UEC Multi-Media, Media Verge Solutions, 3CTV, Altech Global Decoder Logistics – the design and manufacture of satellite and terrestrial digital set-top decoders.

Altech Arrow Altech Distribution – the distribution of a range of professional electronic components and products.

INFORMATION TECHNOLOGY

Altech Card Solutions, Altech Data, Altech Cardtronic, Altech NamITech, Integrated Technology Solutions, Altech Isis – telecommunications middleware, payment systems and solutions, secure solutions and smartcard technologies.

OTHER

Altech Leasing

Altech Management Services

ALTECH 57.7%

7

POWER ELECTRONICS

Aberdare Cables, Alcobre (Portugal), ABB Powertech Transformers, Desta Power Matla, Willard Batteries, Sabat Battery, DC Power Systems, Dynamic (UK), Crabtree Electrical Accessories SA, Strike Technologies, Calidus/Whiteleys, Yelland Control, Tridonic SA

Ü Medium and low-voltage power cables

Ü Power and distribution transformers

Ü Automotive batteries and DC power systems

Ü Electrical accessories

Ü Lighting control gear.

TELECOMMUNICATIONS

Aberdare Network Services, Cables de Comunicaciones (Spain), Lambda Cables, Battery Technologies, Rentech

Ü Telecommunication cables and accessories

Ü Data cable systems

Ü Standby power and rectifier systems

Ü Solar systems.

BYTES TECHNOLOGY GROUP SOUTH AFRICA (BTG SA)

Bytes Document Solutions (BDS), Bytes Specialised Solutions (BSS), Bytes Managed Services (BMS), Bytes Communications Systems (BCS), Bytes Systems Integration (BSI), Bytes Outsource Services (Outsource Services), Bytes People Solutions (People Solutions), Digital Healthcare Solutions (DHS) – Xerox office products, Document management services, NCR products, Desktop services and support, Remote monitoring of computer facilities, Business communications solutions, Network and solutions management, Software sales, development, implementation and application maintenance, SAP implementation, IT infrastructure, training and education solutions, transaction switching services, practice management and informatics solutions to the healthcare industry.

BYTES TECHNOLOGY GROUP – INTERNATIONAL OPERATIONS

Bytes Technology Group UK – Software Services, Bytes Technology Group UK – IT Solutions (Plato), Xclusive Solutions, BTG Botswana, BTG Namibia, BTG Mozambique, BTG Mauritius – Microsoft licensing, Systems integration, Microsoft certified solution provider, Consulting, Document management services, Specialised equipment services, Network solutions and maintenance, Corporate internet provider.

POWERTECH 100% BTG 57.6%

8


“Altron’s senior leadership team brings a wealth of

knowledge, experience and enthusiasm. Their personal,

hands-on commitment and integrity set the tone for

team Altron.”

Robert Venter

Executive Committee

Diane Radley

David Redshaw

9

ROBERT VENTER (46) Altron Chief Executive and Chairman of the Altron Executive Committee

DIANE RADLEY (40) Altron Chief Financial Officer

DOUGLAS RAMAPHOSA (49) Group Executive: Corporate Affairs

PETER CURLE (60) Director Corporate Finance: Altech

NORBERT CLAUSSEN (45) Chief Executive Officer of Powertech

DAVID REDSHAW (64) Chief Executive Officer of BTG

CRAIG VENTER (43) Chief Executive Officer of Altech

Peter Curle Douglas Ramaphosa

Norbert Claussen

Craig Venter

10


Chairman’s statement

Introduction

Having successfully celebrated its 40th

anniversary during the period under review, our

group achieved significant progress in its

financial and transformation performances, as

well as sustained growth in virtually all of our

underlying operations.

Revenue increased by 14% to a record

R14 billion, while operating profit exceeded the

R1 billion mark for the first time, further

consolidating our position as a foremost player

sin our chosen markets.

The economy

The South African economy remains buoyant

and, during the period under review, was

characterised by the continued strength of the

rand, lower inflation levels, stable domestic

interest rates and sharply higher equity markets.

In particular, the commitment to accelerated

infrastructure spending has once again reinforced

government’s intention to ensure sustainable

GDP growth. I am happy to report that the sound

economic climate has created a favourable

business environment for our companies.

Inadequacies are, however, beginning to show in

certain governmental planning and spending

programmes and it is hoped that Eskom will

start to dramatically increase capacity to meet

the government’s GDP growth commitments as

we move towards 2010.

In the meantime, the long-awaited decision to

move ahead with the Gautrain project as well as

the construction of several sports arenas and

related building programmes for Soccer World

Cup 2010 augur well for many companies in

our group.

Despite the numerous challenges which the

group faced during the year, particularly

competitive imports from the East and escalating

commodity prices, our balanced portfolio of

operations has enabled us to show strong

resilience to these and other market-related

pressures. Another major strength lies in our

“I am happy to report that the sound economic climate

has created a favourable business environment for

our companies.”

11

traditional ability to adapt more readily than our

competitors to the ever continuing changes in

the global business environment.

I believe we have largely weathered the

exchange rate fluctuations, which, on the positive

side, has afforded us the opportunity to invest

further in capital equipment and thus improve

the overall competitiveness of our group.

Vision 2010

We continued to make significant progress in

our Vision 2010 transformation programme

with our internal broad-based black economic

empowerment scorecard providing the

benchmark against which we measured our

company’s progress.

This scorecard incorporates targets with specific

time frames which the group has set itself in

terms of equity ownership, management and

board representation, preferential procurement,

skills development and corporate social

investment.

Our main objective is to focus our organisation

on creating greater value by meeting the

expectations of our stakeholders and we are

achieving this through the efficient utilisation of

our capital, our people and our innovative

technologies.

The draft Codes of Good Practice on Broad-Based

Black Economic Empowerment (BBBEE),

published in December 2005 by the Department

of Trade and Industry, provides more certainty as

to how the BBBEE scorecards will be measured in

future. It is clear, however, that the significant

administrative and cost implications of these

codes on companies, in their present format, will

have to be addressed as a matter of urgency.

We stand ready with the rest of the private

sector to assist the dti in their efforts

Dr Bill Venter (Chairman and founder)

31 May 2006

12


Chairman’s statement continued

to provide the most appropriate and relevant

tools for accelerating the country’s

transformation process.

Certainly, our Vision 2010 commitment has

been widely recognised as both exciting

and innovative, and has placed us in the

forefront of the local industry as far as BBBEE

is concerned.

In this regard, our anchor partnerships with

our leading empowerment companies,

Pamodzi, Kagiso and Izingwe, have added

significant value in helping us to achieve our

targets and my appreciation goes to them for

their much valued contribution.

Likewise, I have pleasure in thanking the Altron

transformation committee for the excellent

progress which is being achieved by our various

operations throughout the group. In this regard,

they have provided comprehensive comment on

our extensive progress in the Sustainability

Report.

It behoves me to welcome former senior

ABSA and Anglo American Executive,

Douglas Ramaphosa, to our group. Douglas has

been appointed Altron Group Executive for

Corporate Affairs and will sit on our various

boards and executive committees.

One of his main tasks will be to continue the

work of our Vision 2010 programme, largely

initiated by Advocate Dali Mpofu, who has left

Altron to take up the position of Chief Executive

Officer of the SABC, but who remains a non-

executive director of Altron.

Financial performance

Our financial performance this past year has been

most satisfying with healthy profitability being

driven by better-than-expected performances

from most of our operations. As pleasing as our

results are, we remain humble and far from

satisfied, although I personally believe we are

now well on our way to becoming a truly first

class, cost-effective, customer-driven group.

“Our Vision 2010 commitment has been widely

recognised as both exciting and innovative.”

13

Corporate governance

The Altron board remains cognisant of the

Listings’ Requirements of the JSE Limited, with

our companies continuing to observe sound

corporate governance principles, such as

independence, transparency and accountability.

The group benchmarks itself against the

recommendations of King II by constantly

reviewing and improving its governance

standards, full details of which are included

elsewhere in this annual report.

Share price

The market has continued to recognise Altron’s

reputation as an industry leader and confidence

in the group was clearly reflected in the

continued upward trend in our share price –

increasing by more than 90% in the 12 months

to April 2006.

Highlights

During the year a highlight was the extensive

celebration of our 40th anniversary, with several

events being held to mark this special year in

the group’s history. Particularly memorable

was an address made to the group’s senior

management by Nobel Peace Prize Winner and

Bishop Emeritus, Desmond Tutu, last July when

he congratulated Altron on its significant

contribution to the development of the local

high-technology industry and to the

transformation of South Africa as a whole.

14


Chairman’s statement continued

We do, of course, value our history highly

because it has given us both the reach and

capability of our future, and this momentum

continues. Our market capitalisation, for

instance, has now exceeded the R8 billion

mark, while firm assurance in our future has,

once again been demonstrated by Vodacom

and MTN who have each concluded service

provider and incentive agreements with

Altech Autopage Cellular.

Outlook

Altron remains both enthusiastic and

optimistic about the future growth of South

Africa and looks forward to the years ahead

with confidence.

We have entered our new financial year well

positioned to take full advantage of the

commitment to infrastructural spending as

well as other exciting opportunities which

have arisen in sub-Saharan Africa. These

include increased investment in the sub-

continent’s power generation, transmission

and distribution capacity, its extensive IT and

telecommunications networks and continued

growth in the building and construction

industries. And, who better to tackle these

immense challenges than our group?

As I enter my 42nd year with Altron,

I continue to be impressed by the

performance of a fine and honourable group

and, of course, our 11 000 committed and

highly dedicated people. I heartily thank

them, our loyal customers and our many

partners and suppliers world-wide for their

continued confidence and ongoing

commitment as we continue to meet our

goals for the current year. I am also grateful

for the wise counsel of our non-executive

directors, who, in their own right, are

talented leaders or directors of other large

South African corporations and service

groups. I would like to take this opportunity

of welcoming the new board members who

“Altron remains both enthusiastic and optimistic about

the future growth of South Africa and looks forward to

the years ahead with confidence.”

15

joined the Altron board during the year,

namely Mark Lamberti and Norbert Claussen.

In particular, I applaud the outstanding

leadership abilities of our Chief Executive,

Robert Venter, and the commendable

achievements of his executive team for

continuing to shape our group and its heritage,

and for making the past year one to remember

with pride and satisfaction.

Their outstanding management skills, coupled

with their ongoing focus on costs and efficiencies,

as well as the pursuit of opportunities available

to us, will help Altron to remain a winning

company and underpin our performance

going forward.

16


Chief Executive’s review

The highlight of the period under review was

the celebration of Altron’s 40th anniversary.

From its humble beginnings 40 years ago,

Altron’s principal operating subsidiaries –

Altech, Powertech and BTG – today represent

some 140 businesses, employing more than

11 000 people. Our market capitalisation

recently passed the R8 billion mark but – in an

impersonal world – personal relationships

remain the hallmark of our group. From our

international technology partners to our

operational empowerment shareholders to the

men and women of Altron, the common thread

is a desire for excellence, dedication to service

delivery and a focus on customers.

Financial overview

I am pleased to report that during the period

under review Altron posted increases in both

revenue which was up 14% to R14.0 billion

from R12.2 billion, and operating profit which

exceeded R1 billion for the first time. Our

headline earnings per share increased by 17%

to 189 cents per share and a dividend of 78

cents per share was declared representing a

24% increase on the prior year.

Based on the overall performance of our

underlying operations, we were able to

improve our return on capital employed to

23% and our return on net assets to 27%. Our

balance sheet remains strong with cash on

hand of R2.2 billion, compared to R1.5 billion

in the prior year. We remain committed to

investing in capacity within our operations and

in the light of this, we incurred capital

expenditure of R315 million during the year

under review.

Altech’s growth in headline earnings per share

of 12% to 379 cents per share was driven by

better-than-expected performances from most

of its operating companies including Altech

“Based on the overall performance by all our

underlying operations we were able to improve our

return on capital employed to 23% and our return on

net assets to 27%.”

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Autopage Cellular, Altech Netstar, Altech

UEC Multi-media, Altech Card Solutions and

Altech Isis. However, performance was

disappointing at Altech NamITech which

experienced pricing pressures, adversely

impacting on profitability. As a result of this

underperformance and the closure of certain

operations, a goodwill impairment of

R82 million has been raised in the current year.

The necessary corrective actions have been

taken at Altech NamITech in terms of

management changes, a business realignment

and a restructuring exercise. Altech’s balance

sheet remains strong with a net asset value of

1 721 cents per share and cash of R1.5 billion.

Return on capital employed is 32%. A five-year

service provider and incentive agreement, with

an option to renew for a further five years, was

signed between Altech Autopage Cellular and

Vodacom and similar agreements are also in

place with Cell C and MTN.

BTG recorded a strong performance with

headline earnings per share growing by 48%

to 127.7 cents from 86.4 cents, which, on an

adjusted basis and when excluding the once-

off impact of raising a deferred tax asset,

shows an increase of 27% to 109.4 cents.

BTG’s revenue growth of 19% to R3.5 billion

compared to R2.9 billion for the prior year

reflects organic growth of 10%, the inclusion

of the businesses acquired from CS Holdings

for the full year as well as the consolidation of

100% of Digital Healthcare Solutions revenues

for the first time.

The improvement by 28% in operating profit

to R282 million compared to R221 million in

the previous year is as a result of margin

Robert Venter (Chief Executive)

31 May 2006

18


Chief Executive’s review continued

improvements at all the BTG operations,

as well as the return to profitability of the

BTG UK operations. Operating margin at

BTG now exceeds 8%.

Powertech recorded strong results on the

back of positive performances from its

operating business units, including ABB

Powertech Transformers, Aberdare Cables,

the Powertech Battery Group and the

Powertech Industrial Group. Revenue

increased by 19% to R4.5 billion from

R3.7 billion in the prior year and operating

profit grew by 14% from R245 million to

R280 million. Aberdare’s power cable

business delivered good results for the year

but the continued downturn in the telecoms

market required a restructure of the copper

and fibre telecoms cable operations resulting

in the closure of the manufacturing plant in

Port Elizabeth.

The group’s finance operations produced an

improved contribution to the group’s overall

results. This was mainly due to higher

secondary rental income. During the year,

Altron disposed of its 33% stake in

Fintech (Pty) Limited to Fintech management

and Sanlam Investment management, in line

with the group’s long-term objectives.

Fintech Receivables 1 (FR1), Altron’s

securitised interest in the financing book, is

amortising in line with expectations.

Strategic philosophies and growth

drivers

Over the past five years, the group has

remained committed to achieving the broad

strategic philosophies and growth strategies

which are illustrated on page 3. Looking back

over the year, management is well satisfied

that many of our financial objectives and

“Looking back over the year, management is well

satisfied that many of our financial objectives and

targets have been met in terms of our strategic

philosophy to improve shareholder value.”

19

strategic targets have been met allowing us

to further improve shareholder value. In this

regard, our market capitalisation has

increased from R4.7 billion in February 2005

to R8.7 billion as at 8 May 2006 which

represents an 85% increase over this period.

In terms of our strategy to build annuity

income throughout our group, this income

grew, on a contractual revenue basis, to

approximately 50% to 60% of total revenue.

As far as the group’s commitment to

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strategic alliances is concerned, service

provider and incentive agreements have

been concluded between Altech Autopage

Cellular and Vodacom and MTN. Existing

relationships and alliances with international

partners were further strengthened and new

territories were acquired from, among

others, Xerox (Kenya) for Bytes Document

Solutions in the BTG group. Similar progress

was made in terms of the group’s strategic

philosophies with regards to broad-based

20



black economic empowerment; focus on

high-growth opportunities; international

expansion and the ownership of intellectual

property rights (IPR).

The various opportunities in the relevant

sectors have been consolidated into a

number of strategic growth drivers for our

group. These key growth drivers were

identified and outlined in 2004 and continue

to form the basis of our operational growth

strategy through 2005 and 2006.

Growth drivers

Public sector infrastructure spend

To ensure that the full potential of this growth

driver is exploited, Powertech’s focus remains

on expanding its products and services

offering which span all three segments of

the power continuum, namely generation,

transmission and distribution. Systems are

being developed to maximise synergies in

the group by optimising production and

distribution capabilities and additional

manufacturing capacity is being installed in

appropriate areas. During the period under

review Powertech’s range of offerings was

enhanced with the purchase of Calidus Von

Roll Isola, a supplier of electrical insulation

materials for the high-voltage, generation

and traction industries. Additional bolt-on

acquisitions are under consideration.

Key growth drivers for the groupA positive medium to long-term outlook for Altron

Public sector infrastructure

spend

Powertech

Deregulation of the

telecoms industry

Altech BTG

Mobile telecoms market in

Africa

Altech Powertech

Conversion to Europay/Mastercard/Visa (EMV) standard

Altech BTG

Integrated IT offering

BTG

21

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Ten-year track record

22



“The various opportunities in the relevant

sectors have been grouped into a number of

strategic growth drivers for our group.”

Deregulation of the South African telecoms

industry

Altech Autopage Cellular is expected to benefit

from the changing telecoms landscape in

South Africa, specifically in terms of the new

Electronic Communications Act and the

acceleration towards voice over internet protocol

(VoIP) and the demand for more affordable

broadband offerings. As a result Altech

Autopage Cellular anticipates that it will be in

a position to offer a much broader range of

voice and data products in the future. The

company is currently finalising its virtual

network operator (VNO) and electronic service

provider (ESP) strategy and has secured a VANS

licence. The announced conversion from

analogue to digital TV standard in light of the

Soccer World Cup 2010 offers further

opportunities for Altech UEC Multi-Media.

BTG’s Bytes Communication Systems and

Bytes Systems Integration are also expected

to leverage off their existing VoIP offerings.

Mobile telecoms market in Africa

The African mobile telecoms market is growing

beyond expectations while cellular penetration

rates remain well below that of the rest of the

world. Growing wireless demand in Africa has

created a variety of opportunities for the group.

Altech NamITech opened a pre-paid voucher

manufacturing plant in Nigeria during the year

which has been successfully commissioned and

is operating at full capacity. Powertech’s

Battery Technologies, with its comprehensive

product range, is securing orders from

operators in Nigeria for DC power products and

will shortly establish Battery Technologies

Nigeria.

23

Conversion to Europay/Mastercard/Visa (EMV)

standard

The implementation of the EMV standard in the

South African banking industry has been slower

than expected but should gain momentum in

the forthcoming year. ATM and EFTPOS terminal

conversions in this regard, are well progressed,

benefiting BTG through its Bytes Specialised

Solutions operation who are the suppliers and

distributors of NCR ATM products, and Altech Card

Solutions, the suppliers of Axalto EFTPOS

terminals and related software. The supply of

chip-based cards is expected to benefit Altech

NamITech as the standard is progressively

introduced. Future opportunities lie ahead for

EMV within the African banking industry.

An integrated information technology (IT)

offering

Through the group’s IT focused businesses, BTG is

able to leverage off a blue-chip customer base

by offering an integrated IT service. The IT

market in the United Kingdom offers growth

potential for the group’s data solutions and

document solutions business. In line with this

strategy, BTG finalised the acquisition of Xclusive

Solutions, a Xerox partner in the UK, post year

end. The successful integration of CS Holdings

and the acquisition of Digital Healthcare

Solutions by BTG as well as the acquisition by

Altech Isis of MobiMaster, a French billing

24



software provider, have significantly enhanced

the group’s products and services offering and

further acquisitions in this regard are being

actively explored.

Broad-based black economic

empowerment

Through its anchor partnerships with Pamodzi

within Altech, Kagiso within BTG and Izingwe

within Powertech, significant value has been added

during the year in terms of commercial input and

in meeting our Altron Transformation Vision 2010

targets for broader-based BEE indicators, namely

skills development, employment equity,

preferential procurement, enterprise development

and corporate social investment. The Altron

Transformation Vision 2010 is a dynamic document

that will be aligned with the ICT charter and the

Department of Trade and Industry’s Broad-Based

Black Economic Empowerment (BBBEE) Codes of

Good Practice once these are finalised.

The draft BBBEE codes released in December

2005 provide more certainty as to how the

BBBEE scorecards will be measured, but it is

clear that the significant administrative and cost

implications of these codes on companies, in

their present format, will have to be addressed.

A comprehensive evaluation of the codes was

undertaken by the Altron transformation

committee during the past few months and a

detailed response was submitted to the

Department of Trade and Industry before

31 March 2006.

Our annual Sustainability Report (pg 44 – 88) is

based on an evolving process which relies on

feedback from our stakeholders and continual

improvement to reach the goal of responsible

citizenship. This transformation process has

grown in importance throughout our group

companies and receives the highest level of

management focus. As a group, we endeavour

to improve our measurement and reporting

“Through its anchor partnerships with Pamodzi

within Altech, Kagiso within BTG and Izingwe within

Powertech, significant value has been added.”

25

structures throughout our operations. This is

being achieved through internal performance

evaluations against scorecards and building an

internal information system to capture

sustainability data and facilitate the reporting

process. Sustainability throughout our business

practices remains an intrinsic element of

corporate success.

Key market conditions and outlook

In the telecommunications sector, the

momentum towards a liberalised market is

accelerating with the licensing of the second

network operator, the imminent introduction of

mobile number portability, the Electronic

Communications Act (signed in March 2006) and

ICASA’s announced desire to license additional

operators in the satellite television broadcast

market. The Altron group, primarily through

Altech as well as BTG, is well positioned to

benefit from this trend, given the healthy growth

of the mobile telecommunications market, both

in South Africa and in Africa.

Favourable conditions in the power electronics

and multi-media sector, as reflected through

increased capital expenditure on infrastructure

projects and accelerated spending on power

capacity, are expected to continue to bode well in

26



terms of demand for Powertech products and

services. Healthy growth levels are also expected

to continue in the building and construction

industry although import competition –

particularly from China and other emerging

markets – remains a reality, highlighting the

need for internal manufacturing efficiencies and

external customer focus.

The outlook for the information technology

sector is improving, with increased local

investment supported by current levels of

company profitability. The slower-than-

anticipated adoption of the global EMV

standard is expected to gain momentum

and we anticipate that this will benefit

a number of our businesses. The continued

consolidation of the IT industry in

South Africa and offshore is expected to

generate more opportunities for Altron

to enhance critical mass and broaden our

product portfolios.

In light of these market conditions, further

real growth in earnings is expected for the

year ahead.

Acknowledgement

I would like to take this opportunity to express

my appreciation to all of our suppliers,

customers, staff, business partners and

shareholders, for their ongoing contributions and

support to our group. It is through this ongoing

support that we are able to continue to grow as

one of the leading ICT and power electronics

groups in Africa. It also behoves me to thank my

Executive Committee and other members of the

Altron board for their ongoing support and wise

counsel which they have provided to both me

and the Altron group over the past year.

“I would like to take this opportunity to express my

appreciation to all of our shareholders, customers,

staff, business partners and shareholders.”

27

Corporate activity during the period under review

During the year, the following transactions and developments took place:

Ü Altech Autopage Cellular successfully concluded five-year service provider and

incentive agreements with Vodacom and MTN;

Ü Altron increased its holding in BTG to 57.6% with the acquisition of 11 million

shares for R118 million;

Ü BTG purchased Altron’s interest in the funding structure of BTG’s inter-group lease

financing business for R43 million;

Ü BTG SA increased its shareholding in Digital Healthcare Solutions from 39.3% to

100%;

Ü Powertech acquired Calidus Von Roll Isola for R32 million; and

Ü Altech disposed of its 50% plus 1 share in Econet Wireless Global (EWG) to the

remaining EWG shareholders for US$87.5 million, plus interest.

Subsequent to year end, the following transactions took place:

Ü Altech purchased French-based MobiMaster, a specialist telecommunications real-

time converged billing system provider business;

Ü BTG acquired Xclusive Solutions, a leading provider of document and print

solutions and Xerox partner in the United Kingdom, for an initial consideration

of £3.2 million that could increase to a maximum of £4.5 million depending on

future profit performance.

28


Operational review

Telecommunications contributed some 39%

towards total group revenue by generating

R5.4 billion during the year. The contribution

from telecommunications to operating profit

improved to 43% at R449 million from 37% or

R356 million the previous year on the back of

the excellent performances from the group’s

wireless communications businesses. The South

African telecommunications sector is rapidly

moving towards deregulation through a number

of regulatory initiatives, including mobile number

portability (expected in September 2006), the

investigation of handset subsidies, the Electronic

Communications Act and the award of the

second network operator’s licence.

Altech Autopage Cellular (Altech

Autopage) remains the largest independent

cellular service provider in South Africa and

has performed well ahead of expectations.

The market for cellular services has

continued to evolve, resulting in increasing

volumes of post-paid and hybrid (post-paid/

pre-paid) consumer connections. High-end

connections through corporate and fixed

cellular enabled Altech Autopage to retain

the average revenue per subscriber (ARPU)

of last year and increase its subscriber base

by more than 67 900 net connections to a

total subscriber base that now exceeds

700 000. Notable achievements during the

year included the signing of five-year service

provider and incentive agreements with

both Vodacom and MTN.

TELECOMMUNICATIONS

29Contribution by Telecommunications

Innovation: ALTECH NETSTAR

Altech Netstar’s subscriber base has grown to over 362 000 vehicles for SVR services.

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Operational review

Altech Netstar maintained its impressive

market position in the stolen vehicle

tracking and recovery (SVR) market and

exceeded expectations in terms of profit and

cash flow. Altech Netstar’s subscriber base

has grown to over 362 000 vehicles for SVR

services. The Netstar Vigil fleet management

system increased subscribers to over 6 400

vehicles. A new low-cost GSM-based product

“Cyber Sleuth” has been developed to

provide positioning and SVR capabilities for

commercial fleets and vehicles. The Altech

Netstar Malaysian business is growing

steadily with over 32 800 vehicles on the

system and the company is planning further

expansion into Africa.

Altech Alcom Matomo produced strong

results on the back of its R500 million

Gauteng South African Police Services’ digital

Trunked Radio (TETRA) network contract

which included high site installations and

prefabrication and equipment testing at the

integration facility which had largely offset

expected project delays. The contract to

replace and manage the City of Cape Town’s

public safety TETRA communications network

was awarded to Motorola and Altech Alcom

Matomo post year end. Altech Alcom Radio

Distributors exceeded its financial targets

for the year and continues to distribute

leading Motorola two-way radio products to

the southern African market through its

network of authorised dealers.

TELECOMMUNICATIONS continued

“The contribution from telecommunications to

operating profit improved to 43% at R449 million

from 37% or R356 million the previous year.”

31

Despite continuing pressure in the telecoms

market for cable, both locally and offshore,

some improvement was seen during the

year, particularly from the operations in

Spain. The local Aberdare Telecoms

operation has been restructured and the

manufacturing plant in Port Elizabeth closed,

effective 31 August 2005.

The Powertech Battery Group outperformed

expectations on the back of improving

demand in the telecommunications sector,

the implementation of cost-management/

reduction initiatives and the successful drive

into the sub-Saharan region and Nigeria in

particular. Battery Technologies secured

a significant portion of the Nigerian cellular

telecoms market and successfully penetrated,

albeit to a lesser extent, other sub-Saharan

markets. Despite the world-wide shortage

of solar panels, Rentech delivered pleasing

results, mainly due to stringent fixed-cost

savings.

32


Operational review

Altron’s power electronics and multi-media

sector contribution to total revenue is

R4.4 billion and remained stable in terms of its

contribution at 31% or R4.4 billion for the year

under review. Of the total group operating profit,

this sector contributed 27% or R276 million

compared to the 23% or R227 million for the

previous year based on increased demand from

infrastructural spend and the growth in the

building and construction industry.

Power Electronics

The demand for Aberdare’s power cables

remained high as the ongoing construction boom

resulted in a substantial increase in demand for

the low-voltage product range. The buoyant

infrastructure development also positively

impacted demand for the medium-voltage

product range. Given the planned expansion

programmes of Eskom and Transnet, the

anticipated infrastructure spend required for the

Soccer World Cup 2010, and the Gautrain project,

coupled with various other planned projects, it is

expected that future demand for power and

energy products will remain high for some time.

ABB Powertech Transformers exceeded

expectations as the strong growth for medium

and small power transformers in the domestic

market continued, mainly due to Eskom’s

planned increase in spending over the next

five years. The first Regional Electricity

POWER ELECTRONICS AND MULTI-MEDIA

33Contribution by Power Electronics and Multi-Media

Innovation: ABERDARE CABLES Power Cables

Demand for Aberdare’s power cables remained high due to the ongoing strength in the construction industry resulting in a substantial increase in demand for the low- and medium-voltage product range.

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Operational review

POWER ELECTRONICS AND MULTI-MEDIA continued

Distributor (RED) was established in Cape

Town, effective July 2005. The establishment of

the remaining five metropolitan municipality

REDs are expected during the new financial

year and will increase demand for small and

medium power transformers as emphasis is

expected to be placed on refurbishment of the

electricity grid. The sub-Saharan African export

market has increased, driven by demand from

Nigeria where a large number of projects is

being planned and which are expected to be

of benefit to ABB Powertech Transformers. In

the forthcoming year, quality improvement

measures will continue to receive major focus,

including the ongoing education and training

of employees with regard to best practices,

quality objectives and winder recertification.

Raw material prices, specifically copper and

core steel, remain a concern in light of

increasing demand from the Chinese market,

placing some pressure on security of supply.

Desta Power Matla experienced buoyant trading

conditions due to the increased demand from

Eskom Distribution and municipalities for large

distribution transformers (LDT), small

distribution transformers (SDT) and miniature

substations. The strong rand has, however,

slightly lowered demand from the mining

sector, which impacted negatively on the

demand for medium distribution transformers

(MDT), but this was offset by an increase in

demand from industrial plants.

The Powertech Battery Group performed

above expectations and the automotive

business, despite intense volume and margin

pressure from low-cost imports, managed to

produce good results due to careful fixed-cost

“It is expected that future demand for power and

energy products will remain high for some time.”

35

management. Dynamic Batteries, the offshore

automotive battery-marketing operation,

produced a steady performance throughout the

year despite poor margins in the UK market.

The Willard DC Power operation produced

excellent results on the back of strong demand

from the mining sector.

The Industrial Group showed growth in revenue

and improved working capital. Both revenue and

profit growth were up due to manufacturing

efficiencies and a focus on margin-improvement,

as well as the acquisition of Calidus Von Roll

Isola, a processor and supplier of high

temperature insulation material to the electric

motor manufacturing and repair industry.

Crabtree’s revenue growth was positively

affected by continuing buoyancy in the

residential construction industry but adversely

impacted by the entry of low-priced imports and

a deliberate reduction of unprofitable product

sales. In order to provide the Powertech

Industrial Group wih a competitive strategy in

this regard and to assist the smaller businesses

in the group with strategic and marketing

assistance, the EPC product-development,

marketing and sales department is being

merged with that of Strike Technologies, whilst

Whiteleys was merged with Calidus. The focus

36


Operational review

POWER ELECTRONICS AND MULTI-MEDIA continued

on a go-forward-basis will remain on new

product development, strong marketing

programmes and complementary acquisitions in

order to sustain the group’s competitive edge.

Tridonic SA (Pty) Limited experienced

extremely difficult trading conditions during the

year which lead to the restructuring of the

company from a manufacturing facility into a

trading operation only. Emphasis will be placed

on growing its niche markets of electronic

ballasts, building management systems,

emergency control gear, dimming products

and light emitting diodes.

Multi-media

The acceleration of converging technologies in

the multi-media sector continues to provide

opportunities for specialist companies such as

Altech UEC Multi-Media a company that

develops, manufactures and deploys innovative

and advanced set-top-box (STB) products and

associated software for the television and

entertainment market. The period under review

saw the restructuring and turnaround of Altech

UEC Multi-Media being completed, resulting in

improved results and a full order book going

forward. The highly successful launch of the

MultiChoice dual-view personal video recorder

(PVR) decoder in November 2005 was positively

received and is also attractive to offshore

customers with orders received from Greece and

Dubai. Strong consumer demand for local pay

television resulted in record quantities of STB

units being sold to MultiChoice South Africa.

Sales were also increased into other regions of

Africa, including Nigeria, which has shown strong

growth over the past two years.

“The acceleration of converging technologies in the

multi-media sector continues to provide opportunities.”

37

Altech Arrow Altech Distribution (AAD)

reported improved results for the year, driven by

increased margins and supported by further

growth in revenue from new sales initiatives.

AAD’s positive trading figures reflect the benefit

of past restructuring strategies designed to

reduce operating costs, and improve operational

procedures that focus on value-added operating

segments which offer better opportunities.

38


Operational review

The contribution by the Information Technology

(IT) businesses of the Altron group in terms of

group revenue was R4.3 billion while

remaining constant at 31% in terms of its

contribution to total group revenue. The

contribution to group operating profit declined

somewhat from 39% the previous year to 31%

at R321 million due to margin pressures

experienced at Altech NamITech.

During the period under review Bytes

Technology Group (BTG) successfully

completed the integration of CS Holdings

and Digital Healthcare Solutions. These

acquisitions have increased the BTG products

and services offering and significantly

contributed towards revenue and operating

profit. Post year end, BTG acquired Xclusive

Solutions, a leading provider of document

and print solutions and Xerox partner in the

United Kingdom, for an initial consideration

of £3.2 million that could increase to a

maximum of £4.5 million depending on

future profit performance.

Bytes Document Solutions (BDS), BTG SA’s

Xerox operation, has achieved another year

of solid revenue and unit growth in the face

of stiffening competition aggravated by

product price deflation due to currency and

technology changes. Equipment sales were

impacted by a significant shift in product

mix with stronger sales of lower-priced

systems while demand and installation

activity accelerated for key products such as

INFORMATION TECHNOLOGY

39Contribution by Information Technology

Innovation: BYTES SPECIALISED SOLUTIONS

In the ATM sector BSS has benefi ted from the impact of the major banks upgrading their ATM base to become EMV compliant.

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40


Operational review

INFORMATION TECHNOLOGY continued

networked desktop multifunctional devices

and entry-level colour production systems.

Bytes Specialised Solutions (BSS) is the

exclusive distributor for NCR products and

systems in South Africa and markets,

supports and maintains enterprise-wide

information products and services for the

banking industry. During the period under

review, Teradata, a data solution provider for

the banking sector and various other

organisations, recorded significant operating

profit. In the ATM sector BSS has benefited

from the impact of the major banks

upgrading their ATM base to become EMV

compliant, while the new EMV encryption

and security regulations have played a

major role in improving the division’s

revenue.

Bytes Communications Systems (BCS)

reported a satisfactory operating

performance, maintaining good margins in

both the services and product sales arenas.

This has been realised through increased

small- and medium-enterprise product sales

and improved efficiencies in delivering

services. Bytes Managed Services, a focused

workspace management and equipment

maintenance business with 70 service points

around South Africa, benefited from the

integration and consolidation of CS Holdings

which delivered significant value to all

stakeholders from a financial, service delivery

and growth perspective.

Bytes Outsource Services (BOS) was

acquired by BTG as part of the greater

CS Holdings acquisition. During the period

“Bytes Document Solutions (BDS), BTG SA’s Xerox

operation, has achieved another year of solid

revenue and unit growth.”

41

under review pleasing growth in revenue

and profitability was recorded. A solid

operating performance and close working

relationships with existing clients ensured

the retention of their client base. Bytes

People Solutions (BPS), another former

CS Holdings operation, has performed in line

with IT industry averages and showed

satisfactory year-on-year growth despite a

slow start due to changes in 2005 to the

ISETT SETA funding model. Bytes Systems

Integration (BSI) also enjoyed its first full

year of operation subsequent to the merger

and restructuring of several businesses from

both BTG and CS Holdings. The division has

entered the new financial year on a

markedly lower cost base and with exciting

prospects. Digital Healthcare Solutions

(DHS), a wholly-owned subsidiary of BTG

which comprises

a transaction switching and a software

business, reported a further significant

improvement over the previous year in

terms of operating profit. Its two

subsidiaries, Digital Healthcare Switch

(Swítch) and Med-e-Mass, both grew their

respective contributions to the group’s

revenue and profit.

42


Operational review

INFORMATION TECHNOLOGY continued

BTG’s international businesses, both those in

southern Africa and in the United Kingdom,

showed good progress with significant

improvement. Bytes Software Services,

one of Microsoft’s top three large account

resellers (LARs) in the UK, has significantly

improved its net profits as a result of

substantial restructuring and additional focus

on its core competencies. UK-based

IT Solutions, which offers Application

Development services specialising in large-

scale e-commerce style systems to blue chip

clients, also returned to profitability after a

significant restructuring exercise was

completed.

Altech NamITech, a leading player in Africa

for cellular SIM cards, pre-paid vouchers and

magnetic stripe bank cards, experienced a

disappointing year due to the continued

strength of the rand and pricing pressures.

A re-engineering process and a significant

cost-reduction exercise were completed to

reposition Altech NamITech as a competitive

player in this sector of the market. It is

expected that the roll-out of EMV-compliant

smart cards will contribute significantly to

Altech NamITech’s financial success in future.

In line with its pan-African strategy, Altech

NamITech’s new pre-paid cellular voucher

manufacturing facility in Lagos, Nigeria, is

now profitable and is producing more than

one million vouchers per day.

Altech Card Solutions benefited from the

continued migration to the EMV payment

standard through the ongoing deployment

of EFTPOS terminals, as the banking industry

prepares to issue EMV smart cards. The

ongoing personalisation infrastructure

“Altech Card Solutions benefited from the continued

migration to the EMV payment standard.”

43

upgrades by card issuers and outsource

bureaus benefited Altech DataCard. Altech

Cardtronic also performed well with the

recapitalisation project complete, which

enabled it to compete more effectively in

the higher-volume business segment.

Altech ISIS recorded significant financial and

organic growth during the year,

strengthening its position as a supplier of

end-to-end operational support systems

(OSS) solutions in South Africa and Africa.

Altech ISIS has further entrenched its

position in this market through the purchase

of MobiMaster, a French business that owns

and develops a billing system for pre- and

post-paid voice and data services.

46 – Mission statement

47 – Corporate code of conduct

48 – Message from the Chief Executive

50 – JSE SRI Index 2005

51 – Value-added statement

52 – Transformation/Broad-based black economic empowerment

56 – Corporate social investment

62 – Our people

70 – Preferential procurement and enterprise development

73 – Safety, health and environment

82 – Shareholders

89 – Corporate governance

102 – Remuneration report

SU

STA

INA

BIL

ITY

REP

OR

T

THROUGH ALTRON’S VALUES,WE PROMOTE :




Ü BBBEE and transformation

Ü Transparency

Ü Consideration of the needsof all our stakeholders

Altron’s mission is to:Ü Be the leading South African-controlled information and communications technology

and power electronics group that offers high-technology products and services of

quality to global markets

Ü Generate profits and create shareholder value through outstanding customer service

Ü Remain dedicated to technological innovation

Ü Continue its commitment to the transformation process of South Africa through

broad-based black economic empowerment initiatives

Ü Integrate sustainable development into our business at every level – our future

depends on it.

We will achieve this through a motivated and loyal team that always:

Ü Places customer service first

Ü Has mutual trust and respect

Ü Prioritises quality, best practice and productivity improvement

Ü Adheres to the highest standards of integrity

Ü Aims at achieving excellence in financial and technical performance

Ü Takes pride in what we do and in being part of the Altron group.

Core valuesÜ Customers

Ü Innovation

Ü Teamwork

Ü Accountability

Ü Sustainable development

Through these values we promote:




Ü Broad-based black economic empowerment and transformation

Ü Transparency

Ü Considering the needs of all stakeholders.

46


Sustainability report

Mission statement

47Corporate code of conduct

Altron is committed to excellence, integrity, professionalism and the growth

and development of all its operations. Our people are our most important asset

and are expected to share in the group’s values and beliefs, in a manner that

demonstrates:

Ü Respect for one another

Ü Honesty and integrity in dealings with one another and with all stakeholders

Ü Confidentiality and discretion in the use of information proprietary

to the Altron group

Ü Avoidance of any conflicts of interest that may interfere with the

independent exercise of their judgement in the best interests of the group

and its stakeholders

Ü Adherence to all laws and regulations determining the group’s legal

and moral obligations

Ü Fostering a non-racial, non-discriminatory work environment in

promoting a climate of harmony and tolerance

Ü Respect for the environment

Ü Commitment to the development of our nation.

Endorsed and guided by the board, the Altron code of corporate conduct

commits the group to the highest standards of behaviour expected by all its

stakeholders. In response to the obligations this places on Altron as the

controlling shareholder, Altron retains control over:

Ü Policy and strategy

Ü Key operating standards

Ü Acquisitions and disposals.

48


Message from the Chief Executive

For the past four decades, Altron and its

subsidiaries have adopted a way of doing

business that attempted to benefit all

stakeholders. This approach has long been

dictated by humanity and common decency. It

will continue to guide us as we take Altron into

a future where sustainable development is an

intrinsic element of corporate success – a future

where every person who interacts with our

group, in however small a fashion, contributes to

our success. A future where our responsibility to

repay that contribution will determine our

survival on the triple bottom line of financial,

social and environmental accountability.

In this Sustainability Report, much attention is

focused on transformation, guided by the targets

set in our Altron Transformation Vision 2010

(Vision 2010). In the South African context,

transformation specifically refers to broad-based

black economic empowerment in the workplace.

This is a process we fully support and one that

we are attempting to accelerate in our own

business and in all organisations in our supply

chain.

However, we believe transformation is much

broader than the empowerment necessary to

build an equitable economic base for our nation.

Transformation is at the heart of sustainable

citizenship – and at every level, from equity

ownership to gleaming new soccer kits that see

children take to the field with dignity and hope,

the use of academics creating a useful tool for

our 11 official languages to safe products and

recycling initiatives that conserve our natural

environment. This is the ambit of sustainable

citizenship and a challenge we are meeting –

at every level.

Although our Vision 2010 is being reviewed in

light of recent draft codes and industry charters,

the principles behind its development remain

firmly in place and our group companies are

being measured accordingly. The first round of

reporting against our internal scorecard began

last year and the amount of progress is indeed

Robert Venter (Chief Executive)

49

heartening. Every effort is being made to

address areas that are behind on target.

Altron is based in South Africa, and proudly

so, but we transact in the global marketplace.

Accordingly, in reporting to stakeholders, we

have incorporated the Global Reporting

Initiative (GRI) sustainability guidelines on

triple bottom-line reporting. GRI is the

accepted international benchmark for

reporting on economic, social and

environmental performance to stakeholders.

The 2002 GRI guidelines have been updated

and are currently receiving international

feedback. As these are finalised, they will be

reviewed and incorporated into our own

framework to ensure that the communication

between our group and all stakeholders is

meaningful and dynamic.

Sustainability reporting is an evolving process

which relies on feedback from stakeholders

and continual improvement to reach the goal

of responsible citizenship. We accept this

challenge. We are committed to

incrementally improving our processes,

systems and skills – and measuring our

performance against international standards –

to ensure that our business is sustainable on

every level and touches the lives of

stakeholders as they touch ours.

Making a difference

Ü Altron is among the top 300

empowerment companies in

South Africa as rated by

Impumelelo, an annual publication

that researches over 9 000 public,

private and institutional

organisations in 150 sectors of

the economy.

Ü Altron was awarded gold as a top

future company on the JSE and first

place in the general industries

category for electronic and electrical

equipment in the PMR (Professional

Management Review) Magazine’s

annual Top Future Companies

survey.

Ü The 2005 Altron annual report won

a merit award in the South African

Institute of Chartered Secretaries

and Administrators annual report

assessment, regarded as one of

the most prestigious of its type in

the country.

Ü BTG was ranked tenth in the annual

Financial Mail Top Empowerment

Companies’ Survey and fourth in the

ICT industry. The survey ranked the

top 200 JSE-listed companies on

their contributions to broad-based

black economic empowerment

in 2005.

50


JSE SRI index 2005

Final score sheet

Company classification

Environmental impact: High

Category Score

Pass/

fail

Overall categories


Environment

Economy

Society

35

56

41

60

Pass

Pass

Pass

Pass

Core criteria

requirements


Environment

Economy

Society

8/9

8/8

6/6

10/10

Pass

Pass

Pass

Pass

Overall final

assessment Pass

The JSE Social Responsibility Investment (SRI)

Index is the first of its kind in an emerging

market. It showcases the listed companies that

comply with increasingly-stringent criteria on

triple bottom-line performance and commitment

in four areas: corporate governance,

environment, economy and society.

Altron has qualified as a constituent of the index

since its inception in 2004. More encouragingly,

Altron has year-on-year incrementally improved

both its performance and ranking. Importantly,

our inclusion in this index underscores our

commitment to sustainability as a business

practice – an integral part of our survival and

success and our corporate duty to contribute to

the wellbeing of all our stakeholders.

In assessing Altron’s performance in the 2005

survey, the adjudicators commented on three

areas for possible improvement:

Ü Communicating non-financial challenges

Ü Reporting guidelines to inform on non-

financial issues

Ü Influencing suppliers and contractors to

improve non-financial performance.

Altron has made excellent progress on the first

two issues by implementing its own reporting

system to provide a holistic appraisal of group

performance. Progress on the third issue will be

more complex, given the quantum of factors

beyond the group’s control. However, the

inclusion of sustainability issues in our group

discretionary procurement criteria will facilitate

improvement in this area.

51Value-added statement

Value-added is the measure of wealth the group has created in its operations by “adding value” to the cost of raw materials, products and services purchased. The statement below summarises the total wealth created and shows how it was shared by employees and other parties who contributed to its creation. Also set out below is the amount retained and re-invested in the group for the replacement of assets and the further development of operations.

2006 2005R million % R million %

Revenue 13 969 12 206 Suppliers of material and services (10 216) (8 866)

3 753 3 340 Investment income 144 124 Capital items (54) (90)

Total value added 3 843 3 374

Applied as follows:To remunerate employeesSalaries, wages, pensions and other benefits 2 500 65 2 185 65

To reward providers of capital 335 9 286 8

Interest on loans 53 62 Dividends to Altron equity holders 176 143 Dividends to minority shareholders 106 81

To the state 326 8 339 10

Company taxation 291 311Secondary taxation on companies 35 28

To maintain operationsDepreciation and amortisation 213 6 192 6

To expand the group 469 12 372 11

Net earnings retained – Altron equity holders 318 305 – minority shareholders 151 67

3 843 100 3 374 100

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52


TRANSFORMATION/BROAD-BASED BLACK ECONOMIC

EMPOWERMENT

Transformation in Altron is guided by a unique

internal charter that commits our group to a

steady process of empowerment through training,

shareholding and development of disadvantaged

communities.

Altron is proud to have empowerment partners

that are measured not by their political profile but

by their capacity to add value.

Although the concept of transformation is

decades old in our group, by now focusing on

areas with the maximum long-term benefit –

education, training, health, social welfare and job

creation – Altron supports a national programme

that is both a commercial and moral imperative.

The need for transformation is clear in a nation

polarised by economic disparities. What has

become blatant in recent years is that the speed

of transformation was lacking and restricted to, in

many cases, a handful of beneficiaries. This, then,

was the genesis of the Altron Transformation

Vision 2010 – a methodical and carefully-

considered blueprint for achieving set targets in

the areas that underpin sustainable

transformation:

Ü Ownership

Ü Board and management control

Ü Employment equity and skills development

Ü Preferential procurement and enterprise

development

Ü Corporate social investment.

Our transformation vision is not an isolated one.

Nor is it static. In developing the framework, we

considered national guidelines, sectoral

empowerment charters and legislation. We

have studied and submitted a comprehensive

report to the Department of Trade and Industry

regarding the draft Codes of Good Practice. These

collective inputs will guide us as we continue to

53

Altron group internal empowerment scorecard

Year 1%

Year 2%

Year 3%

Year 4%

Year 5%

Year 6%

Ownership

Board and management representation

Employment equity & skills development

● senior management

● middle management

● junior management

● training (% payroll)

Preferential procurement and enterprise development (% potential spend)

Corporate social investment (% profit before tax)

20

10

20

25

1

10

1

25

15

20

25

1

15

1

30

20

25

30

1

20

1

33

25

30

35

1

25

1

40

30

35

40

1

30

1

25.1

40

35

35

40

1

50

1

These targets will be reviewed as required to ensure that we remain abreast of current practices and

developments. Once clarity is obtained on recent government guidelines, these targets will also form

part of our performance scorecard for management.

crystallise our map towards achieving sustainable

growth of our businesses and the broader

economy, while redistributing some of the

proceeds of that growth across society to achieve

the maximum level of skills and participation in

the economy.

We firmly believe transformation is an attainable

goal. We also believe there are some ingredients

that will accelerate achieving this goal, first among

which is commitment from the top. Pre-determined

targets and ongoing monitoring to ensure steady

progress, as to the flexibility and the willingness to

learn from setbacks. This must all take place

within the daily business of managing a company,

complying with legislation and seeking growth

opportunities.

Against this background, the overarching

ingredient therefore is commitment – a deep-

seated belief that this is the correct way forward

for our nation and our economy. Encouragingly,

this commitment is evident throughout our

group and at every level. It is also evident in our

participation at sector and national levels in

developing frameworks that will make

transformation commercially feasible and

therefore sustainable. It is articulated in our

Altron Transformation Vision 2010, which

includes a group scorecard with annual targets

for broad-based black economic empowerment

beginning in financial year 2004/5, and applying

until 2010.

54


Drawing on quarterly reports to the Altron board, we compile our internal BBBEE analysis. This is a

reporting discipline which highlights the companies that are progressing well (green), acceptable

progress (amber) and those failing to meet progress targets (red).

Progress to date

Group target year 1

% Altech Powertech BTG

Ownership (25.1% by 2010)

Board and management representation 20

Employment equity & skills development:

● senior management 10

● middle management 20

● junior management 25

● training (% payroll) 1

Preferential procurement and enterprise development (% potential spend) 10

Corporate social investment (% profit before tax) 1

Altron’s transformation committee is a sub-

committee of the Altron executive committee and

includes representatives of the underlying

companies. Following the launch of our Vision 2010

blueprint, the committee’s mandate was extended

from driving economic transformation and broad-

based black economic empowerment in our group

to ensuring uniform application of this vision across

the group. A formal presentation was made to

senior group executives on the draft Codes of

Good Practice and their impact on business

strategy, recruitment and procurement. Once

these codes have been finalised, the Altron

blueprint will be reviewed to closely align it with

the legislated codes and relevant sectoral

charters on empowerment.

Transformation/Broad-Based Black Economic Empowerment continued

55

Ownership

To ensure equity empowerment at ownership

level, Altron has focused on creating anchor

partners in its three major operating subsidiaries

where the following broad-based black economic

empowerment (BBBEE) equity partnerships are

now well entrenched:

Ü Altech with Pamodzi through Altech NamITech

and Altech Data

Ü Powertech with Izingwe through Aberdare

Cables

Ü BTG with Kagiso through BTG SA.

In line with Altron policy, this structure allows

value to be added at operating level, in some

cases governed by service level agreements as

with Aberdare Cables and Izingwe. Shareholder

agreements include specific activities to be

performed by BBBEE partners spanning

employment equity, skills development and

career planning, preferential procurement and

customer relations.

During the period under review, Pamodzi

Investment Holdings further entrenched its

partnership with Altech by acquiring 25.01% of

Altech Data’s issued share capital – which

incorporates Altech Isis and Altech Card Solutions.

In addition, Pamodzi holds a 28% equity stake in

Altech NamITech.

At operational level there are other equity BBBEE

partners such as Matomo and Mahogany Capital.

An internal measurement system is currently

being investigated and a BBBEE scorecard

reporting template is being developed.

Empowerment partners

Altech Powertech BTG

Pamodzi

Ü 28% Altech NamITech

Ü 25.01% Altech Data

Ü Key principal: Ndaba Ntsele, Solly Sithole

Matomo

Ü 30% Altech Alcom Matomo

Ü Key principal: Thozamile Botha

Izingwe Capital

Ü 30% Aberdare Cables (in consortium with Matomo)

Ü Key principal: Sipho Pityana

Matomo

Ü 6% Aberdare Cables (in consortium with Izingwe)

Ü 20% Rentech

Ü Key principal: Thozamile Botha

Kagiso

Ü 25.01% Battech

Ü Key principal: Eric Molobi

Wiphold

Ü 20% ABB SA – 10% ABB Powertech Transformers

Ü Key principal: Louisa Mojela

Power Matla

Ü 25.01% Desta Power Matla

Ü Key principal: Mathews Phosa

Mahogany Capital

Ü 25.01% Calidus/ Whiteleys

Ü Key principal: Taurai Muranda

Kagiso Ventures

Ü 27% BTG SA

Ü Key principal: Eric Molobi

56


CORPORATE SOCIAL INVESTMENT

The Altech Grand Prix generated R6 million for charities.

Corporate social investment is an integral

part of our group’s mainstream activities –

both as a component of our scorecard for

internal transformation and a cornerstone

of our corporate accountability and

governance programme. Collectively, Altron

companies spent approximately R10 million

on corporate social investment projects

during the year.

Each year, corporate social investment

practitioners throughout the group convene

to share information, successes and lessons

learned to ensure a co-ordinated approach

and capitalise on synergies between group

companies and maximise the impact for

individual projects.

Recognising that no single company can

meet all the needs of a developing nation,

one of our group companies, Altech, for

instance, continually looks for opportunities

to maximise the impact of its social

investment funds through its own marketing

activities and those of its subsidiaries.

A prime example of this approach was the

R4-million sponsorship of the Altech Grand

Prix in the previous reporting period which

generated R6 million for Unite Against Hunger

and the Nelson Mandela Children’s Fund.

Activities and projects supported by group

companies are aligned with formal guidelines

instituted in the prior reporting period and

supplemented by workshops across the group

on implementation at operational level. This

has brought an important element of

cohesion to social investment and channelled

activities towards attaining common goals –

57

particularly in the areas of education and

training and bridging the digital divide. Some

highlights of the period include:

Ü The official opening of the R1-million Langa

Multi-media Centre in Cape Town – a

project spearheaded by BTG with the

assistance of other group companies. At

the launch, the Minister of Education,

Naledi Pandor remarked, “The Langa Multi-

media Centre is an investment not only in

the education of the Langa youth attending

the school; but an investment in future

generations. The need for computer literacy

skills cannot be overemphasised in today’s

world.”

The new centre, which benefits over 1 300

learners and the surrounding community,

features 31 of the latest Hewlett Packard

Altron CE Robbie Venter and CFO Diane Radley at the opening of the BTG Langa Multi-media Centre in Cape Town.

workstations and desks, a server, network

and power system, air-conditioning, a

state-of-the-art projector, laptops for

educators and a work centre with copier,

fax and scanner-printer. The centre also has

a complete security system.

Training is being provided to teachers –

from basic to internationally advanced

courses – and on-site training support is in

place to enable teachers already trained to,

in turn, train others. Apart from supplying

equipment and training, BTG will also

support the centre financially for a further

two years – from infrastructure and

technical support to paper supplies and

security monitoring.

58


Ü An investment of almost R1 million in

soccer development by Altech Autopage

Cellular which will see hundreds of

young players from underprivileged

communities run onto the field in

new kit. This is intended to become

a five-year project.

Ü The fully-equipped computer centre for

the 900 scholars at Boikanyo Primary

School in Garankuwa which is an excellent

example of the benefit of collaboration

between the community, provincial

government and the private sector,

spearheaded by Altech NamITech.

Ü The Altech UEC Multi-Media winter school,

in conjunction with Protec, which

continues to expose scholars to careers in

the fields of science and mathematics

while developing their skills in these key

subjects.

Ü A joint venture with Foundation Beersheba of

The Netherlands, which Aeromaritime

International Management Services (AIMS) has

spearheaded for the electrification of Bertharry

Private School in Tembisa. AIMS has also funded

the construction of six classrooms at the school.

Supporting education

Bursaries covering various fields of study relevant

to the group, and predominantly for disadvantaged

students, are awarded by many subsidiaries.

Corporate social investment continued

Altech Autopage Cellular invested about R1 million in soccer development.

Altech NamITech spearheaded a computer centre at Boikanyo Primary School.

59

The BTG bursar programme follows a long-

term policy of development and

placement of young, highly-skilled talent.

Many of the bursars shown here are in the

final year of their BSc Technology degree

or in an Honours programme at a local

university. Two bursars already have full-

time employment in BTG companies, and

another three are scheduled to join full-

time in 2006.

Volunteerism is an important element in

the success of many of these initiatives

and, at every level, Altron’s people are

willing participants:

Ü At Bytes Technology Group the staff

donated food and clothing to the Kidz

Crisis Centre and Yenzani Children’s

Home, both in Gauteng.

Design your life as you want it

JP Roos, a newly-appointed mechanical designer at

ABB Powertech Transformers, is living proof that it pays

to follow your dreams, even if it means digging deep into

your pockets and your leave allocation.

JP had always wanted a seat with his name on it in the

mechanical design office. After hearing about a possible

vacancy and finding out where to obtain the necessary

qualifications, he approached his department manager.

However, because these studies were not job-related, he

did not qualify for financial support or study leave. Even

worse, there were no after-hours classes. JP was

compelled to take annual leave and pay for the course

himself. He did just that and eight months later he was

appointed as mechanical designer. The seat with his name

on it became a reality.

In recognition of JP’s determination and diligence,

ABB Powertech Transformers has agreed that when he

passes the advanced studies he is currently undertaking,

the company will reimburse him his fees.

Bytes bursars clockwise from left to right:

Back row: Rogers Sithole with his new wife Tebogo on his left (Bytes SI), behind Rogers, Mlungisi Khumalo (Bytes SI), Motlatsi Mamatela (Bytes SI), Simiso Linda, (BDS), Reuben Abrahams (Bytes SI), Siju Mammen (BCS), Rekha Varghese (DHS), Skip Franzsen (Bytes Corporate), Tumelo Monageng (BTG), and Goodlucky Magagula. (Bytes SI) Clarissa is a guest that has applied to become a bursar next year.

Monthly food parcels are supplied to the Aids orphans of kwaNxamalala community in KwaZulu-Natal by the staff

of Aberdare Cables.

60


Arts and culture

Altron is a significant sponsor of

South Africa’s arts and culture. This is

effected through the group’s CSI

programme and, by chairman

Dr Bill Venter in his personal capacity.

The Bill Venter/Altron Literary Awards

date back 19 years and is presented

annually to recognise outstanding

contributions to research published in

book form by tertiary educators. This

award, prized as much for its significant

monetary value as for its prestige, helps

to promote specialised works locally

and internationally and alternates

between contributions to the

Our rainbow nation

In a nation with 11 official languages,

multi-lingualism can be both a challenge

and an advantage if well managed,

which spurred Bytes Document Solutions

to become a major funder of North West

University’s Centre for Text Technology

(CTexT).

Human language technology is a rapidly-

growing field, but relatively new in

South Africa. The applications developed

by CTexT will enable every South African

to learn to communicate in any language

they choose using multi-media

applications to acquire the basics of a

new language in 45 hours at home or in

the office. Products already developed at

CTexT include two language-learning

software packages, Ngenani! isiZulu and

Tsenang! Setswana.

CTexT is working closely with Microsoft’s

local language programme which

facilitates the development of localised

software and proofing tools for minority

languages. Apart from localisation work

for Afrikaans and Setswana, spell-checkers

are also being developed for isiXhosa,

isiZulu, Sesotho sa Leboa and Setswana.

In a collaborative effort between various

disciplines, organisations and the

university, researchers hope to contribute

significantly to the promotion of multi-

lingualism and diversity in the country.

Corporate social investment continued

The donor of the prize, Dr Bill Venter, presenting a certificate and R50 000 cheque to the 2006 prize winner, Professor Achille Mbembe of Wits University for his groundbreaking work “On the Postcolony.”

61

humanities and natural sciences each year. The 2006 recipient was Professor Achille Mbembe from

the WISER faculty of Wits University for his work, “On the Postcolony”. Past recipients include:

Year Recipient Research

2000 Prof Vivian Bickford-Smith (University of Cape Town)

Prof Michael Chapman (University of KwaZulu-Natal)

Ethnic Pride and Racial Prejudice in Victorian Cape Town

Southern African Literatures

2001 Prof Elemer E Rossinger (University of Pretoria)

Parametric Lie Group Actions on Global Generalised Solutions of Nonlinear PDEs

2002 Prof George Devenish (University of KwaZulu-Natal)

Prof John Higgins (University of Cape Town)

A Commentary of the SA Bill of Rights

Raymond Williams – Literature, Marxism and Cultural Materialism

2003 Prof Detlev Kröger (University of Stellenbosch)

Air-cooled Heat Exchangers and Cooling Towers

2004 Prof Jeff Guy (University of KwaZulu-Natal)

Prof Jeremy Seekings (University of Cape Town)

The view across the river: Harriette Colenso and the Zulu struggle against Imperialism

The UDF: A history of the United Democratic Front in South Africa

2005 Prof Vanessa Watson (University of Cape Town)

Change and continuity in spatial planning – Metropolitan planning in Cape Town under political transition

Bursaries and awards are also offered to students of journalism and music for international studies.

There are currently six young classical musicians studying in various foreign countries on the

Bill Venter/Altron/FAK music bursary project.

62


OUR PEOPLE

Employment equity and skills

development

By implementing our policies on employment

equity and skills development, we can make a

significant contribution to urgent national

imperatives.

Equal opportunity and fair treatment have been

cornerstones of Altron’s human resources

practices for over four decades. The group is

committed to meeting the targets contained in

the Altron Transformation Vision 2010 and

ensuring equitable representation in all

occupational categories and levels in the

workplace. This is driven by co-ordinating

committees and progress is regularly reported to

the Altron board and executive committee.

63

Group workforce profile

Altech Powertech BTGConsolidated

total

Total workforce

Total employees with disabilities

Number

2 720

18

Number

4 974

42

Number

3 344

18

Number

11 038

78

Workforce profile

Racial and gender profile:

Non-designated group

White females

Black males

Black females

1 489

407

415

409

1 021

322

3 091

538

1 242

600

1 017

485

3 752

1 329

4 523

1 432

Occupational level profile:

Management

Non-management

130

2 590

1 073

3 901

2 313

1 031

3 516

7 522

Management profile by gender:

Females

Males

30

100

157

916

610

1 703

797

2 719

Management profile by race:

Whites (male and female)

Designated groups

110

20

610

463

1 594

719

2 314

1 202

Non-management profile by gender:

Females

Males

1 262

1 328

712

3 189

475

556

2 449

5 073

Non-management profile by race:

Whites (male and female)

Designated groups

936

1 654

546

3 355

248

782

1 730

5 791

Employees with disabilities in management 3 5 16 24

Employees with disabilities in non-management 15 37 2 54

Employees with disabilities by gender:

Females

Males

5

13

10

32

3

15

18

60

Workforce movement

Total employees before reporting cycle: 2 507 2 696 3 485 8 688

Less Resignations

Deaths

Dismissals

Retirements

Retrenchments

Appointments

(338)

(12)

(47)

(9)

(20)

44

(197)

(12)

(348)

(64)

(276)

207

(432)

(3)

(17)

(26)

(99)

436

(967)

(27)

(412)

(99)

(395)

687

Notes:1. The above figures reflect only permanent employees at SA operations.

2. Figures with regard to “Workforce Movement” exclude other possible reasons for employees being removed from companies’

Employment Equity reporting statistics (for example, transfers) as well as additions to the workforce during the reporting cycles

as a result of recruitment and acquisitions.

3. Group operations report individually to the Department of Labour on their Employment Equity progress. The above

consolidated figures are sourced from reports submitted on the reporting dates for 2005 and include acquisitions and disposals

up to 28 February 2006.

64


Our people continued

Skills training and

development initiatives

In order to redress the country’s

critical skills shortage and ensure

that all employees have access to an

integrated and outcomes-based

learning system, Altron companies

allocate between at least 1% to 2%

of payroll annually, towards training

and development, particularly for

previously disadvantaged South

Africans.

Throughout the group, initiatives are

under way to accelerate progress

towards our goals for skills

development. These include bursary

programmes, management trainee

The maths and science academyThis Powertech Battery Group project in

Port Elizabeth involves 90 high school

learners from previously disadvantaged

communities, attending mathematics and

science classes over a period of 10 weeks.

The main focus of the project is to assist

these learners with examination preparation

in these subject areas. Project cost is

R35 000 per annum.

This project will continue and will link into a

Graduate-in-Training programme.

Noeleen Ferreira – Laboratory Manager at Aberdare Cables Standford Road addressing her team during their daily Mission Directed Work Team (MDWT) meeting.

Hubert Gagu (Health and Safety Representative at Aberdare Cables Standford Road) providing safety tips to some of his fellow employees.

65

Janica Nhlapo, a communications graduate

from Bond University with a diploma in

marketing from Vega, joined the Altron

corporate communications department in

January 2005 on a graduate internship

programme. To date, she has been involved

in research projects, corporate presentations and internal rebranding campaigns. Janica

says, “Information and communications technology was a new sector for me, but I have

learned that branding and marketing are key elements in any business, in any sector.

The practical experience I have gained is invaluable.”

schemes, experiential learning projects,

learnerships and educational assistance. In

many companies, mentorship programmes

are being implemented to add practical

experience to academic knowledge and

fully prepare candidates for the business

world.

All Altron companies have based their

skills development programmes on the

National Qualifications Framework (NQF)

and are working closely with their sector

education and training authorities to

ensure that learnerships have lifelong

benefits for the individual concerned.

Learnerships are in place in many group

companies.

Altron launched an Adult Basic Education Training (ABET) programme last year. During the course of the year achievements awards took place where the students who completed Communication Level 1 or 2 modules received certificates. Pictured above are Altron’s graduates with their proud classmates:

Left to right (standing): Kenneth Nicya (Lecturer), Patricia Mpange, Wilheminah Makamo, Chatiki Banda, Cynthia Molefe, Rose Mahapa, Kenneth Khoza.

(Seated): Percy Graham, James Ramoloko, Carol Mimana and Sophie Malekane.

66



Ü At BTG, learnerships at different levels

are benefiting some 200 students.

During the year, BTG also introduced

the first learnership for 40 disabled

people in the information technology

field in South Africa.

Ü In another first, Aberdare Cables

introduced learnerships in the power

cable industry, with five learners

completing certificate courses during

the year.

Experiential training programmes are also

in place in several group support

departments, including corporate

communications and company secretariat.

Through these programmes, young people

augment their tertiary education with

practical experience relevant to the world

of business and, in several cases,

experience not available through any

institutional practical training programmes.

Where possible, departments collaborate

with the relevant SETA.

Tomorrow’s leaders

In addition to skills development initiatives

throughout the group, there are also specific

projects in place to develop the future

leaders of our group. The first of these, the

Young Presidents’ Club (YPC), was formed in

1990 as a vehicle to hone the full potential

of promising managers in support of the

growth of our group. This includes

mentorship, developing strong networks and

exposing these individuals to the full array

of business issues that senior managers

must be equipped to deal with. A similar

forum was established in Powertech,

namely the Powertech Leadership Process

(PLP). The PLP has formed a partnership

with the Gordon Institute of Business

Science to deliver nine management

development modules. The strategy behind

home-grown talent is evident in our ability

to promote internal appointments to senior

positions, most recently the new chief

executive officer of ABB Powertech

Transformers, Leon Viljoen.

Worker participation

Altron encourages employees to develop

their full potential in a participative

environment. Consultative structures,

established with trade unions and other

employee representatives in our operating

companies, handle issues that affect

67

employees directly and significantly and

support constructive dialogue, information

sharing and conflict resolution.

Cordial relations with organised labour

were maintained during the review period

and all matters brought to the table were

concluded to the satisfaction of all parties.

Occupational health and safety

The future of our group’s operations

depends on the good health and safety of

our people. In addition to complying with

the stipulations of South African legislation

such as the Occupational Health and Safety

Act, many Altron companies have, or are

preparing for, international accreditation

such as International Standards

Organisation.

Sister Fikiswa Mqolomba examining Charlie Gouws who sustained an injury whilst on duty.

HIV/Aids policy

Altron has a well-defined policy relating to

HIV/Aids and other life-threatening

diseases, which provides guidelines on:

Ü managing these diseases in the

workplace

Ü protecting employees’ legal rights

Ü treating staff with respect, dignity,

fairness and equity

Ü creating awareness

Ü supporting appropriate behavioural

changes

Ü complying with statutory and labour

legislation.

The development and implementation of this

policy, is the responsibility of management,

together with human resources.

The Safety Board at Aberdare Cables Long Street, Johannesburg factory.

68


Numerous HIV/Aids policies exist throughout the

group in different operating units. These are

currently being reviewed with the objective

being to consolidate them into one groupwide

HIV/Aids policy.

Altron is, furthermore, planning to professionally

assess the economic impact of HIV/Aids on the

group through an accredited, independent

agency. This will be done by determining the

nature, mechanisms and determinants of

the disease on the workforce which includes

prevalence rates, workforce separations and the

impact on workforce turnover.

A highlight of the year was the extensive HIV/

Aids programme implemented by Altech

NamITech, monitored and maintained by an

external expert, and commencing with

leadership training for management and

roadshows at factory-floor level to communicate

the intention and benefits of the programme.

Altech NamITech staff elected 34 peer educators

who then underwent an intensive training course

and will continue HIV/Aids education within the

company. Monthly coaching sessions monitor

their progress and performance as peer

educators. Voluntary counselling, testing and

treatment is available from the Altech NamITech

clinic and conducted by the occupational health

nurse who has been trained on HIV/Aids

counselling, testing and treatment. Free

prophylactic treatment is provided to HIV+

employees in the early stages of the disease.

Employees who are in the advanced stage of the

disease are put onto the HIV programme

provided by the group medical aid.

A similar campaign is under way at Aberdare

Cables to ensure that employees and

management are informed about this disease


Sister Fikiswa Mqolomba (occupational health nurse) explaining some of the initiatives aimed at promoting HIV and Aids awareness at Aberdare Cables Standford Road.

69

and its impact on productivity. This programme

includes education, counselling on status and

treatment, influencing behavioural change

through condom distribution and liaison with

external doctors, medical-aid clinic coordinators

and community resource centres.

In 2005, Aberdare Cables consolidated its activities

into an HIV/Aids and wellness programme so that

all the aspects of the disease and occupational

activities can be managed holistically. Some 53%

of the workforce underwent voluntary counselling

and testing in November and December,

revealing a low prevalence rate of 4%.

Employees testing positive were treated with

anti-retrovirals and regularly monitored. These

employees have responded positively to

treatment, with measurable improvements in key

indicators such as CD4 cell counts, viral load and

weight gain. The company has also contributed

to the establishment of a day-care centre in

Motherwell where some employees on disability

are treated for opportunistic infections.

ABB Powertech Transformers embarked on a

Knowledge Attitude and Practices (KAP) Study in

2000 which was a qualitative study. Arising

therefrom, an HIV/Aids committee was formed

and is chaired by the human resources officer

with input from the on-site occupational health

practitioner and the occupational medical health

practitioner. Peer educators have also been

appointed and trained and have been equipped

with posters and a lecture plan to provide

training in the various departments. An HIV/Aids

awareness programme is ongoing through poster

and pamphlet communication, free condoms,

individual counselling and regular screening of

educational videos.

Derrick Hoshe (Industrial Departmental Manager) discusses performance graphs for the Industrial Plate Making Department at Willard Batteries Port Elizabeth with Gerald Peter (Industrial Quality Inspector).

HIV/Aids Peer Educators:

Left to right: Llewellyn Ho Chong, Brevin Jason, Annelize Nxele (Occupational Health Nurse) and Tony Klaasen.

70


PREFERENTIAL PROCUREMENT AND ENTERPRISE

DEVELOPMENT

Altron is committed to creating a vibrant black

small, medium and micro enterprise (SMME)

sector and to encourage the formation of new

enterprises of all sizes. Accordingly, Altron

emphasises the need to procure goods and

services from previously disadvantaged

companies. This is commercially driven and the

group’s cost, quality, reliability and safety

standards are not compromised.

In terms of the Altron Transformation Vision

2010, our target for preferential procurement

began at 10% in 2005, rising to 50% by 2010.

Reporting on this area of transformation will be

monitored in the near future by the group’s new

empowerment scorecard platform which will be

based on the Department of Trade and Industry’s

BBBEE Codes of Good Practice.

During the review period, many Altron

companies met or exceeded our internal

scorecard target of 10% of discretionary

expenditure on preferential procurement and

enterprise development:

Ü Altech Netstar – 66% with black SMMEs

Ü Altech UEC Multi-Media – R25m or most of its

limited (10%) discretionary budget

Ü BTG spent 28% of discretionary purchases on

BBBEE procurement as was verified by

Empowerdex.

Ü The Powertech group averaged 28% of its

budget allocated to black companies – from a

high of 51% to a low of 2% for companies

restricted to international suppliers. Aberdare

Cables, for instance, spent R132.4 million on

preferential procurement which represents

48% of eligible spend and the group has 199

SMMEs in their supply chain – many of which

were assisted by Aberdare Cables.

Cable manufacture at Aberdare Cables Long Street factory, Johannesburg.

71

Willard Batteries assists start-up business

Willard Batteries with the assistance of financiers, Business Partners, arranged for a

former employee, Solly Nkosinkulu, to start his own business, Mlamli Sivuyile

Transport cc.

Solly purchased a truck through the company’s corporate social investment fund and

has, for the past five months, been successfully operating his waste removal business.

He has four permanent staff and two casuals.

Willard Batteries has also benefited financially as Mlamli Sivuyile Transport has been

able to clear Willard Batteries waste in a single trip per day and not two as was

previously the case.

Business Partners assigned a mentor to assist Nkosinkulu for a six-month period with

the day-to-day and financial management of his business, which he came through

with flying colours.

Story below:

Gary Paul (left) and Solly Nkosinkulu (right)

72


Enterprise development

Logistix, a Durban copy centre using Xerox copiers and printers, is a project initiated by

two former employees of Bytes Document Solutions (BDS) and supported by BDS as part

of its BBBEE enterprise development initiatives. BDS has

undertaken a number of similar ventures during the year

under review. Apart from providing start-up management

expertise and advice as well as sponsoring the centre’s

signage, BDS supplied equipment at preferential rates

with favourable repayment terms for two years. After the

two years, ownership of the equipment will vest with

Logistix. BDS has a reciprocal business arrangement with

Logistix, as well as a preferential payment arrangement.

One of Aberdare Cables’ enterprise development

initiatives is a drum company in Port Elizabeth, which

manufactures wooden drums for power cable

manufacturers and which is 60% black-owned and

employs some 15 people. Aberdare Cables assists the

company with its plant layout, safety compliance,

labour issues, timber supply and provides engineering

assistance on machine breakdowns. Machines and

equipment were supplied to the company on a loan basis at a value of R300 000.

Aberdare Cables purchases wooden drums from this company and, during the last year,

drums to the value of R12.5 million were procured from this company.

Preferential procurement and enterprise development continued

Logistix is a provider of Xerox copiers and printers.

73

SAFETY, HEALTH AND ENVIRONMENT

A safe and healthy working environment

allied to responsible use and management

of our natural resources are integral

elements of Altron’s commitment to

sustainable development. Throughout the

group, Safety, Health and Environment (SHE)

policies and systems are in place to ensure

that our manufacturing and production

facilities conform to best human resources

and environmental practices wherever

possible and that any negative impact from

waste disposal or pollution is appropriately

managed and mitigated.

A formal environmental management

reporting system is being implemented

throughout the group to comply with the

reporting requirements of the JSE Social

Responsibility Investment (SRI) Index. Both

Altron and Altech have qualified for this

index annually since its inception and BTG

qualified for the first time in 2005.

Regular audits are conducted by internal audit

and by an accredited external independent

consultant and quarterly reports are submitted

to the various audit and risk management

committees and boards. Reported issues

include: water use and discharge; land use;

solid and hazardous waste output and disposal;

gaseous emissions; major environmental

violations; safety and security; prosecutions

and fines; accidents and incidents.

During the period under review, no

prosecutions were brought against any

company of the group for the contravention

of any environmental laws.

Final inspection of industrial battery cells by Quality Department – Port Elizabeth Factory, before being booked into stock and despatched to Ophirton DC Power Marketing warehouse.

74


Safety and health

Operational risk management committees

continue to emphasise SHE issues as a

pivotal component of our key business

objectives. Beyond legal compliance, Altron

is committed to achieving a high level of

SHE performance at both a corporate and

operational level.

Safety regulations on all sites are not

negotiable, and performance is reported

quarterly at board meetings throughout the

group. Using the Occupational Health and

Safety Act as the minimum benchmark, a

risk and safety policy at operational level

throughout the group spans health and

safety representatives; occupational injury;

disease and accidents; first aid; fire

procedures; and record keeping and training.

ISO Certification

Several group operations, particularly those in

our primary manufacturing group, Powertech,

have ISO 14001 certification governing the

implementation and maintenance of

environmental management systems.

They also have defined roles and responsibilities

including: procedures for monitoring and

measuring; procedures for training, guidelines

and awareness; emergency plans; objectives and

targets; audit and review; and corrective and

preventive actions. All operations maintain

aspect and impact registers and conduct monthly

audits which are externally reviewed. Operator

and staff training is an ongoing requirement of

these certifications, and new and existing

employees undergo specific training in their

work-related skills.

On-site medical facilities at the Aberdare Cables factory in Johannesburg.

Safety, health and environment continued

75

A recycling success

One of the most exceptional environmental success stories of our time lies in the recycling of

lead-acid batteries. In the USA, lead-acid batteries are the most highly-recycled consumer

products at 93% (42% for newspapers, 55% for aluminium cans, and 40% of plastic soft-

drink bottles). This success story is partly due to the life cycle of the lead-acid battery – such

as those used for electric wheelchairs – which is 98% recyclable.

At Willard and Sabat Batteries the recycling of lead-acid batteries is a multi-stage process.

Initially, the battery is broken apart in a hammermill. Broken pieces go into a vat or flotation

pond where the lead and heavy materials sink to the bottom while the plastic floats. At this

stage, polypropylene (or plastic) pieces are scooped away and liquids drawn off, leaving the

lead and heavy metals behind. The plastic pieces are washed, air-dried and melted together

into an almost liquid state. The molten plastic is then put through an extruder that produces

small uniform pellets, which are used to manufacture new battery cases.

The lead grids, lead oxide and other lead parts are cleaned and melted in a smelting furnace

with additives to help remove impurities. The molten lead is poured into ingot moulds. After

a couple of minutes, the impurities (or dross) float to the top of the still-molten lead in the

moulds and are scraped away. The ingots are then left to cool, after which they are removed

and ready to be resmelted to produce new lead plates and other parts for new batteries.

Old battery acid is handled in two ways:

Ü The acid is neutralised with an industrial compound similar to household bicarbonate of

soda. This turns the acid into water which is treated, cleaned and tested to ensure it

meets clean water standards, and then released into the sewerage system.

Ü Old battery acid is processed and converted into sodium sulphate, an odourless white

powder used in laundry detergent, glass and textile manufacturing. In this way, a

potentially noxious substance is transformed into a useful, reusable product.

Scrap battery cells at the Willard Batteries Port Elizabeth factory being loaded onto a Sutherland Transport company truck, for delivery to Frys Metals, for recycling.

76


Business ISO OHASA Other

Altech

Altech NamITech 9001 VMC*

Altech UEC Multi-Media 14001

Powertech

Aberdare Cables

● Standford Road

● Lambda

● Pietermaritzburg

● Aberdare Network Services

● Edenvale

● Gauteng

● Jet Park

● Alcon Marepha

9001 14001 (2005)

9001

9001 14001 (2005)

9001

9001

9001

9001

9001

BASEC/ISO 9001 compliant

BASEC/ISO 9001 compliant

ABB Powertech Transformers

14001, 18001 (2005), 9001

Compliant

Crabtree 9001 14000, 18000 (2005)

Whiteleys 9001 (2005)

Desta Power Matla 9001 14000 (2005)

Strike Technologies

Tridonic SA 9001 ENEC (European standard, including VDE and CE marks)

Willard Batteries

● Port Elizabeth

● Industrial

● Automotive

14001

9001

ISO-TS 16949 Q1 (Ford); QS 9000 (GM), VDA 6 (VW and BMW).

Years in brackets denote latest certification.


77

Blood-lead monitoring

Managing the lead content in the blood levels of relevant employees is a priority at

Willard and Sabat Batteries. Using legal compliance as a minimum benchmark, the

company has developed rigorous standards for monitoring blood-lead levels in

employees exposed to inorganic lead while working – from annual tests in non-lead

areas to monthly monitoring for employees working in lead areas.

If an employee’s blood-lead level exceeds the company’s prudent limits, explicit

mitigation steps are immediately instituted. These include removing the affected

worker from the lead area, investigating the possible source and notifying the

appropriate co-workers and safety representatives. No employees are returned to

the lead area until their blood-lead levels are well below the stipulated threshold.

The potential biological effects of lead are constantly monitored, and the company

has a range of additional investigations which are conducted when lead is

suspected of causing ill-health.

Education and counselling sessions ensure that employees are thoroughly familiar

with the sources of lead in the workplace, the potential dangers of exposure and the

importance of biological monitoring and medical surveillance. Precautionary

measures are emphasised, including the use of protective equipment and adherence

to environmental, housekeeping and personal hygiene practices. In addition,

meticulous training is conducted on disposing of waste material containing lead and

cleaning sites at which lead or material containing lead has been used, handled or

processed.

78


Waste management

Waste management projects at the

manufacturing and operational level in Altron

include the controlled separation and disposal of

hazardous waste; transport, storage or trading of

this waste; recycling and reclamation of waste

materials, and the auditing of the legal

compliance of contracted waste disposal

companies.

For operating companies handling hazardous

chemical substances, the highest level of

housekeeping standards is required. These

standards must prevent fire, spillage, ingestion

and contamination. In monitoring hazardous

chemicals, daily checks take place and waste

disposal is offsite, conducted by reputable waste

disposal contractors with verified certification.

In the Altron group, the process with the largest

environmental impact is soldering at Altech UEC

Multi-Media which results in lead waste. The

waste is disposed of according to strict

regulations by contractors that have supplied

Altech UEC Multi-Media with proof of their

compliance with water and waste bye-laws and

the National Environmental Management Act of

1998 (as amended). To comply with European

Community requirements, the company has

implemented a programme to remove lead from

the soldering process during 2006 for products

supplied into European markets. Processes


Left to right: Moegamat Abrams and Peter Louw of Aberdare Cables Standford Road demarcating excess paper from the Paper Department for recycling.

Effluent pH reading check being taken on raw factory battery effluent by Chemical Initiatives employee at Willard Batteries Port Elizabeth factory. All battery effluent is held in retainer tanks and treated before being released into the municipal sewerage system. Acid is neutralised before being released in terms of the Company ISO 14001:2004 standards.

79

involving volatile organic compounds (VOC) are

also being phased out, with a water-based

process due in mid-2006. All other waste

material generated in manufacturing Altech UEC

Multi-Media decoders is recycled. Additionally, in

terms of its product design, only recyclable

packaging material is used. A modern water-

based paint plant has been installed to eliminate

the use of harmful solvents in traditional oil-

based paints.

For the remainder of Altron’s non-manufacturing

operations, the environmental effects are

managed as far as possible. The electricity that is

consumed is limited to use for lights and

computers and other office equipment. Water

consumption is for drinking purposes and

bathroom facilities. Both these resources are

monitored. No ground water is drawn for any of

Altron’s operations. The operational activities in

the Altron group do not impact on biodiversity,

protected or sensitive areas, heritage sites,

fresh water resources or related ecosystems.

During the review period, considerable

modifications took place at the Battery Group

factories in Port Elizabeth to address the

emission of pollutants – such as acid vapour

and lead dust – into the atmosphere. In

addition, considerable capex has been

allocated to ensuring emissions of liquid acid

effluent are neutralised and managed within

legal requirements. The required permits for

these processes are in place. Water from the

battery-charging baths is pumped into a

holding sump, pH corrected and re-used in

the charging process. All lead waste is

recycled and re-used in the battery

manufacturing process.

Altech NamITech’s manufacturing process is

toxin free. Waste material that cannot be

recycled is disposed of using specialist waste

disposal companies which all comply with

environmental best practices. Water is no

longer used in any part of the manufacturing

process and an electricity-saving project has

been implemented.

80


Floor refurbishment

In the manufacturing of lead-acid batteries, two

hazardous chemical substances, namely sulphuric

acid and lead, are used. Sulphuric acid is a highly

corrosive chemical substance and about 95% of

its usage on site is concentrated in the battery/

cell accumulator charging facilities or charge

rooms. The handling of the acid causes continual

minor spillages which, if not effectively

controlled, can detrimentally affect the

environment in terms of contamination or

pollution of the soil and subterranean water

systems under the concrete floor.

Willard Batteries accepts the responsibility for

ensuring that the environment is not

compromised. Care is, therefore, taken to

protect the floors in the charge room areas, as

well as in areas where smaller quantities of

sulphuric acid are used. This is done by means

of a floor coating which seals and protects the

areas to which it is applied. The floor coating

consists of a mixture of “silicone sand” and an

A.B.E. sealant and is applied to the floor areas

as an epoxy coating. The coating prevents any

seepage into the subterranean soil and water

and is either completely stripped off once a

year (during shutdown), if the wear and tear of

the year has been particularly severe, or

carefully repaired where the coating has been

breached.

Global reporting initiative

Altron’s incremental progress towards compliance

with GRI guidelines is detailed on pages 171 – 183.


81

Recycling toxic lead-acid batteries into indigenous trees

Willard Batteries has embarked on an

innovative venture which is contributing to

enhancing our environment and improving the

quality of life for fellow South Africans.

Through this project, every scrap battery

traded in on a new Willard Battery will result in

money being invested to plant indigenous trees

in disadvantaged community areas. The funds are

donated to Food and Trees for Africa for various

urban greening projects around the country.

In the past decade, a vast number of people

have relocated from rural to urban areas, largely

due to perceived job opportunities in and around

major cities. The result of this influx has been

the formation of large informal settlements

with little or no town planning. Use of space is

poor and characterised by ever-decreasing

quality in the land, the water and the air.

The environmental and social consequences of

rapid urbanisation on our environment cannot

be ignored. Food and Trees for Africa recognised

that environmentally-sound urban development

must include urban greening. This is a

comprehensive term used to describe all urban

vegetation management (green spaces or

urban vegetated areas) including urban

agriculture/permaculture and urban forestry.

Urban forestry is the planning and management

of trees, forests and related vegetation to

create, or add value to, the local community in

an urban area. Through urban greening, areas

become more pleasant to live in, contribute to

the quality of the air, the reduction of global

warming and carbon dioxide, and eventually to

civic pride and a sense of community – the

essence of sustainable urban development.

To date, Willard Batteries has been

instrumental in planting over 4 000 indigenous

trees – a project which promises to reap untold

and sustainable rewards for future generations

of urban residents.

Willard Batteries has been instrumental in planting over 4 000 indigenous trees.

82


Shareholders

One of the group’s stated objectives is the enhancement of shareholder value. Both ordinary and

participating preference shareholders enjoyed share price appreciation over the past financial

year and the dividend was increased by 24%.

Presentations of financial results are held in October and May of each year once interim and

year-end results are known. The group’s corporate website www.altron.co.za is also utilised to

communicate with shareholders. A considerable amount of information is available on this

website including:

Ü presentations of financial results; Ü media releases; and

Ü interim and annual reports; Ü operational news.

Contact details

Corporate communications Secretarial and administration

Salomé Brown Andrew Johnston

Telephone: 27 11 645 3604 Telephone: 27 11 645 3609

Telefax: 27 11 726 3009 Telefax: 27 11 482 6489

Email: [email protected] Email: [email protected]

Shareholders

83

Altron shareholder analysis – compiled by the company’s transfer secretaries as at 24 February

2006 (STRATE close off)

Shareholder spread – ordinary shares

Number ofshareholders %

Number ofshares

% of sharesin issue

1 – 500 shares 369 21.23 101 737 0.11

501 – 1 000 shares 346 19.91 300 778 0.31

1 001 – 5 000 shares 671 38.61 1 663 067 1.72

5 001 – 10 000 shares 117 6.73 899 790 0.93

10 001 – 50 000 shares 155 8.92 3 498 746 3.60

50 001 – 100 000 shares 23 1.32 1 587 292 1.61

Over 100 000 shares 57 3.28 89 122 705 91.72

1 738 100.00 97 174 115 100.00

Shareholder spread – ordinary shares


Number ofshares

% of sharesin issue

Holding companies 2 0.11 56 649 124 58.30

Repurchased shares 1 0.06 3 246 469 3.34

Banks 25 1.44 1 024 871 1.05

Close corporations 20 1.15 29 682 0.03

Endowment funds 18 1.04 422 707 0.44

Individuals 1 158 66.63 5 875 993 6.05

Insurance companies 21 1.20 2 641 203 2.72

Investment companies 13 0.75 3 981 748 4.09

Medical aid schemes 3 0.17 19 872 0.02

Mutual funds 40 2.30 7 212 472 7.42

Nominees & trusts 267 15.36 1 546 294 1.59

Other corporations 17 0.98 165 401 0.17

Pension funds 86 4.95 13 283 349 13.67

Private companies 62 3.57 1 031 624 1.06

Public companies 5 0.29 43 306 0.05

1 738 100.00 97 174 115 100.00

84


Shareholder spread – participating preference shares


Number ofshares

% of sharesin issue

1 – 500 shares 1 518 44.69 181 860 0.08

501 – 1 000 shares 322 9.48 265 108 0.12

1 001 – 5 000 shares 852 25.09 2 077 695 0.98

5 001 – 10 000 shares 183 5.39 1 396 372 0.66

10 001 – 50 000 shares 273 8.04 6 821 237 3.21

50 001 – 100 000 shares 80 2.36 5 856 034 2.75

Over 100 000 shares 168 4.95 195 681 022 92.20

3 396 100.00 212 279 328 100.00

Shareholder spread – participating preference shares


Number ofshares

% of sharesin issue

Holding companies 2 0.06 34 029 256 16.03

Repurchased shares 1 0.03 24 310 492 11.45

Banks 38 1.12 1 519 695 0.72

Close corporations 36 1.06 159 926 0.08

Endowment funds 20 0.59 822 066 0.39

Individuals 2 525 74.35 6 855 751 3.23

Insurance companies 12 0.34 14 157 292 6.67

Investment companies 13 0.39 16 803 100 7.92

Medical aid schemes 3 0.09 159 827 0.08

Mutual funds 124 3.65 53 233 807 25.08

Nominees & trustees 366 10.78 7 598 794 3.57

Other corporations 26 0.77 1 149 498 0.54

Pension funds 140 4.12 47 121 075 22.19

Private companies 77 2.27 3 420 066 1.61

Public companies 13 0.38 938 683 0.44

3 396 100.00 212 279 328 100.00

Shareholders continued

85

Stock exchange performance during the past six years

2006 2005 2004 2003 2002 2001

Ordi-nary

Partici-pating

pre-ference

Ordi-nary

Partici-pating

pre-ference

Ordi-nary

Partici-pating

pre-ference

Ordi-nary

Partici-pating

pre-ference

Ordi-nary

Partici-pating

pre-ference

Ordi-nary

Partici-pating

pre-ference

Market value per share (cents)

– at year-end 2 550 2 250 1 555 1 538 1 105 1 125 820 750 760 755 795 790– highest 2 610 2 350 1 725 1 665 1 150 1 150 900 890 880 845 830 820– lowest 1 460 1 385 1 100 1 099 740 680 740 720 710 700 520 485

Number of shares traded (000) 20 079 49 069 18 879 49 903 6 634 23 504 7 604 22 980 5 556 19 576 14 763 33 914

Value of shares traded(R000) 398 947 903 016 254 339 649 083 61 880 199 927 61 542 179 560 44 824 156 886 97 559 201 898

Total volume traded as % of total issued shares 21 23 19.4 23.9 6.8 11.5 7.8 11.4 5.7 9.9 15.2 17.6

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86



Shareholder spread

Ordinary shares Participating preference shares

Number ofshareholders

Number ofshares %

Number ofshareholders

Number ofshares %

Public 1 727 34 121 210 35.11 3 382 149 680 980 70.51

Non-public 11 63 052 905 64.89 14 62 598 348 29.49

Major shareholders holding 2% or more of the Company’s listed ordinary shares

as at 24 February 2006

Ordinary

Name of shareholdersNumber of

shares %

Biltron (Pty) Limited 30 478 076 31.36

Perrington Investments (Pty) Limited 26 171 048 26.93

Old Mutual Life Assurance Company SA Limited 3 774 822 3.88

Public Investment Corporation 3 255 704 3.35

Altron Finance (Pty) Limited 3 246 469 3.34

Dr WP Venter 2 641 639 2.72

Liberty Group (Holdings & Funds) 2 075 626 2.14

Major shareholders holding 4% or more of the Company’s listed participating

preference shares as at 24 February 2006

Participating preference

Name of shareholdersNumber of

shares %

Biltron (Pty) Limited 30 392 400 14.32

Altron Finance (Pty) Limited 24 310 492 11.45

Public Investment Corporation 22 160 097 10.44

Old Mutual Group (Holdings & Funds) 21 057 373 9.92

Nedcor (Holdings & Funds) 13 090 289 6.17

Liberty Group (Holdings & Funds) 12 369 056 5.83

Allan Gray (Holdings & Funds) 9 882 547 4.66

Investment Solutions (Holdings & Funds) 9 025 277 4.25

87

Summarised terms of the Altron

participating preference shares

Altron has two securities listed on the JSE,

namely ordinary shares and participating

preference shares. The ordinary and participating

preference shares, other than in respect of

voting, rank pari passu for earnings and

dividends. The participating preference shares

have been classified by the JSE Limited as an

“N” share, due to their lower voting rights.

Accordingly, both classes of shares must be taken

into account when determining the market

capitalisation of Altron. The terms of the

participating preference shares are summarised

below:

Par value (nominal value)

The participating preference shares have a par

value of 0.01 cent per share while the ordinary

shares have a par value of 2 cents per share.

Earnings and dividends

The participating preference shares rank pari

passu with the ordinary shares in terms of

earnings and dividends.

Voting

Holders of participating preference shares

may attend general meetings of the

company but may only vote in the following

circumstances:

Ü where no dividend on the participating

preference shares in respect of any financial

year has been declared and paid within six

months of the end of the financial year;

Ü upon the winding-up of Altron;

Ü the resolution before the meeting involves

the disposal of the whole or substantially the

whole of the undertaking of the company or

the whole or the greater part of the assets of

the company;

Ü the resolution before the meeting directly

affects the rights attaching to the

participating preference shares;

Ü where dividends remain in arrears and unpaid

for more than six months; and

Ü otherwise in accordance with Altron’s articles

of association.

In such circumstances, a holder of the

participating preference shares will be entitled

on a poll, to that proportion of the total votes of

Altron which the aggregate of the nominal value

of the participating preference shares held by

him/her bears to the aggregate nominal value

of all the shares in Altron.

Holders of participating preference shares are

entitled to receive financial statements, notices

88


of general meetings and other reports issued by

the company from time-to-time.

No resolution for the voluntary winding-up of

Altron or the creation of shares ranking in priority

to or pari passu with the participating preference

shares may be passed, unless the participating

preference shareholders have given their prior

consent thereto at a separate class meeting of

the participating preference shareholders.

Bonus or capitalisation awards


entitled to participate in any bonus or

capitalisation issues or other offer of securities

made to the holders of the ordinary shares on the

basis that, in respect of each participating

preference share so held, the holder thereof will

be offered or entitled to receive such number of

participating preference shares or like securities

having the same voting rights as the particular

preference shares on a basis and terms relative to

each ordinary share.

Distribution of assets


entitled to participate in any offer or distribution

of assets made by Altron to ordinary

shareholders. The offer or distribution in terms

thereof in respect of each participating

preference share shall be on the basis and terms

relative to each ordinary share.

Winding-up


entitled on winding up to receive out of the

surplus assets in priority to the holders of the

ordinary shares, payment of the nominal value

per participating preference share. Thereafter,

once the ordinary shares have received a

distribution of the equivalent nominal value

per participating preference share, each

participating preference share shall rank equally

with the ordinary shares in any surplus then

remaining.

Variation of rights

The rights attaching to the participating

preference shares may be varied only with

the prior consent thereto at a separate class

meeting of the participating preference

shareholders.


89

Altron has long been a forerunner in

employment equity and black economic

empowerment, before either concept became an

integral part of modern business practices.

Certain characteristics pervade our group – the

Altron hallmarks of the way we do business,

every day:

Ü strong bias for action

Ü acknowledgement of the dignity of all our

people

Ü the skill to treat customers and suppliers with

respect

Ü ability to enhance profits by controlling costs

Ü attention to detail

Ü remaining at the forefront of the technology

curve

Ü the courage and tenacity to deal with rapid

change.

These values were recognised by a 2005 merit

award from the South African Institute of

Chartered Secretaries and Administrators which,

in conjunction with the JSE, evaluates annual

reports on corporate information and

governance, among other elements.

Compliance

Altron subscribes to the values of good corporate

governance contained in King II and its key

principles are reflected in our governance


“For more than 70 years, Altron

people have created an asset of

incalculable value – the company’s

reputation for integrity and high

standards of business conduct.

That reputation, built by so many

people over so many years, rides

on each business transaction we

make.”

Internal memorandum,

August 1994

Introduction

Since its founding in April 1965, Altron has

transformed from a small electronics firm

with five employees to one of the leaders in

South Africa’s high-technology industry – focused

on power electronics, telecommunications,

multi-media and information technology.

Today, the Altron group employs approximately

11 000 people through over 140 companies and

associates on five continents. It is Africa’s

foremost diversified technology group with

revenue exceeding R14 billion, a sound balance

sheet and a business founded on honesty,

sustained performance, good corporate

governance, sound management practice and

supportive leadership.

90


Corporate governance continued

structures. These are regularly reviewed to

incorporate changes and developments in this

field.

The directors recognise the need to conduct the

group’s business with integrity and according

to sound corporate practices. These include

discipline, independence, responsibility, fairness,

social responsibility, transparency and

accountability of directors to all stakeholders.

These principles are entrenched in Altron’s

internal controls and policy procedures governing

corporate conduct. In assessing the practices and

conduct of the group, two factors have been

balanced:

Ü entrepreneurial freedom to take business risks

and initiatives leading to satisfactory levels of

performance and return on shareholders’

investment

Ü conforming to corporate governance standards,

which can impose constraints on

management.

The board is satisfied that Altron has made every

practical effort to comply with all material aspects

of King II during the review period. In the new

financial year, and reflecting our determination to

constantly improve our standards, Altron will be

among the forerunners in South Africa by having

its corporate governance assertions independently

audited and assured.

Approach

Leadership

The board supports the long-term sustainability of

corporate capital, triple bottom-line performance

and balancing the interests of stakeholders with

the good of the group. The detailed responsibilities

of the board, as set out in its charter (initially

approved in April 2002, revised and adopted by

the board in February 2006), include the duty to:

Ü exercise objective, informed judgement on the

business affairs of the company

Ü determine and monitor the implementation of

strategic plans and financial, environmental and

social objectives

Ü ensure that a system of policies and procedures

is in place and maintained and that suitable

governance structures exist to ensure the

efficient and prudent stewardship of the

company

Ü ensure Altron complies with all relevant laws,

regulations and codes of practice

Ü regularly review and evaluate business risks

and ensure comprehensive, appropriate internal

controls are in place

Ü define levels of authority, reserving specific

powers and delegating other matters to the

chief executive

Ü continually monitor the exercise of delegated

authority

91

Ü ensure an appropriate balance of power and

authority on the board so that no one person

or a block of persons has unfettered power

Ü identify and monitor non-financial aspects

relevant to the company’s business and

ensure that the company acts responsibly

towards all relevant stakeholders with a

legitimate interest in its affairs.

Accountability

The board takes overall responsibility for the

company. Its role is to exercise leadership and

sound judgement in directing the company to

achieve continuing prosperity and to act in the

best interests of all stakeholders.

Transparency

Full and timeous disclosure of information to

stakeholders is prescribed by various policies

governing communication and conduct with

stakeholders.

Board structure and related matters

Composition

Altron has a unitary board consisting of

15 directors. Of these, five are independent non-

executive directors while two are non-executive

and eight are executive directors. Subsequent

to the financial year-end, and effective

1 May 2006, Douglas Ramaphosa was appointed

an alternate director to Dr HA Serebro and a

member of the Altron executive committee.

The board charter is reviewed from time-to-time

to ensure its continued compliance with local

and international best practices and changes to

the South African regulatory environment.

Chairman and chief executive

In line with best practice, the roles of chairman

and chief executive are separate. The board is

led by Dr Bill Venter. Operational management of

the group is the responsibility of the chief

executive, Robert Venter.

Particular areas of responsibility for the chairman

include strategic planning, relationships with

principals, government and customers, group

economic empowerment, corporate relations,

top-level contact with regulatory bodies, and

advice and guidance on local and overseas

acquisitions.

This level of material involvement is considered

essential by the board, given the intrinsic

knowledge and experience the chairman brings

to bear in the effective running of the board and

guidance to the operational team. It is governed

by a formal board-approved mandate which is

reviewed from time-to-time where appropriate,

regulating the terms of reference of the office of

the chairman.

92



Directors

The non-executive directors bring value and insight

to the board. They are individuals of high calibre

and integrity and provide a depth of wisdom

based on knowledge and experience on an array

of issues. The composition of the board ensures

a balance of power and authority, and negates

individual dominance in decision-making processes.

The non-executive directors have no fixed term

of appointment and no service contracts with

Altron. Their fee is independent of the group’s

financial performance and they receive no share

options.

Executive directors are bound by the standard

terms and conditions of employment for all

Altron employees where their notice periods are

short term, not exceeding 60 days.

Directors are subject to retirement by rotation

and re-election by shareholders at least once

every three years under article 16 of Altron’s

articles of association.

To avoid conflicts of interest, board members

must disclose their interests in material contracts

involving the group, including shareholdings in

Altron as well as any other directorships. Board

members must recuse themselves when

participation in deliberations or decision-making

processes could in any way be affected by

vested interests.

Effectiveness of the board

The board evaluates its own effectiveness at least

every two years or more often if required by board

changes. In 2005, all directors participated in this

self-assessment. Overall ratings improved

substantially, indicating a greater understanding of

statutory and fiduciary responsibilities, improved

collective and individual functioning and effective

communication between board members.

The level of commentary and constructive

criticism, and areas identified for improvement,

are a sound platform from which to further

improve the value of the board to the group and

its governance structures.

Company secretary

All directors have access to the advice and services

of the group company secretary, who is

responsible to the board for ensuring compliance

with procedures and applicable statutes and

regulations. To enable the board to function

effectively, all directors have full and timely access

to all information that may be relevant to the

proper discharge of their duties and obligations.

This includes information such as corporate

announcements, investor communications and

any other developments which may affect Altron

or its operations. The office of the group

company secretary is responsible for facilitating

this access.

93

All directors, executive or non-executive, may

liaise with the group company secretary on

agenda items for board meetings. Where

appropriate, directors may also consult with

independent professionals, at Altron’s expense,

for advice on certain issues.

The group company secretary provides counsel

and guidance to the board, individually and

collectively, on their powers and duties. The

group company secretary is also responsible for

the development of director training. All new

directors, where relevant, are appropriately

inducted to Altron by the group company

secretary, which includes a briefing on their

fiduciary and statutory duties and responsibilities

as well as two- to three-day induction visits to

group operations around South Africa.

The group company secretary is responsible for

the functions specified in section 268(G) of the

Companies Act, of 1973 (as amended). All

meetings of shareholders, directors, and board

committees are properly recorded as per the

requirements of section 242 of the same Act.

The removal of the group company secretary

would be a matter for the board as a whole.

Board meetings

A minimum of four board meetings are scheduled

per financial year. Additional board meetings

may be convened when necessary. Four board

meetings and two strategy sessions were held

during the past financial year. Details of

attendance by each director at board and

committee meetings appear on page 101.

Board committees

The board has established several committees in

which non-executive directors play an active and

pivotal role. All committees operate under board-

approved terms of reference which, with the

exception of the executive committee’s terms of

reference, were reviewed and updated in February

2006 to further align them with best practice. All

committees, except the executive committee, are

chaired by an independent non-executive director,

who also attends the annual general meeting to

respond to stakeholder queries.

Members of each committee, except the executive

committee, are re-elected every year at the first

board meeting following the annual general

meeting.

Executive committee

Members – Robert Venter (executive committee

chairman), Diane Radley, Craig Venter, David

Redshaw, Norbert Claussen and Peter Curle (the

executive structure appears on pages 8 to 9).

Subsequent to the financial year end, Douglas

Ramaphosa was appointed to the Altron

executive committee.

94



Composition and proceedings – the

committee meets monthly with additional

meetings convened when necessary.

Role – this committee comprises the chief

executive and certain senior executives of the

group. It is responsible for the operational

activities of the group, developing strategy and

policy proposals for consideration by the board

and implementing the board’s directives. It has a

properly-constituted mandate and terms of

reference which are reviewed from time-to-time.

Audit committee

Members – Peter Wilmot (chairman), Mark

Lamberti, Mike Leeming and Jacob Modise.

Composition and proceedings – Diane Radley

(chief financial officer) has right of attendance,

while Dr Bill Venter (Altron chairman) and

Robert Venter (chief executive) attend

committee meetings by invitation. The

committee meets periodically with the group’s

external and internal auditors and Altron’s

executive management. It also carefully

monitors the use of the external auditors for

non-audit related services: a formal policy

dealing with the appointment of auditors for

non-audit related services precludes services

which would impair audit independence.

Services rendered by the external auditors

during the year comprised mainly compliance

and other assurance-based engagements.

External auditors attend meetings by invitation.

At the year-end audit committee meeting, the

chairman ensures that senior management and

the external and internal auditors are able to

candidly, and independently of each other, report

back to the committee chairman on any aspect.

Two meetings are scheduled annually,

with special meetings called as required.

The committee met twice during the

period under review.

Role – the committee has written terms of

reference and its responsibilities include:

Ü considering the appointment and/or

termination of the external auditors,

including the audit fee, and their

independence and objectivity

Ü considering and setting mandatory term

limits on the period the external auditors or

audit partner may serve the company

Ü confirming internal audit’s charter and audit

coverage plan

Ü determining with the external auditors the

nature and scope of the audit and ensuring

co-ordination where more than one firm is

involved

Ü reviewing the risk areas of the company’s

operations to be covered in the scope of

internal and external audits

Ü reviewing half-year and annual financial

statements before submission to the board

focusing on:

95

– any changes in accounting policies and

practices

– major judgemental areas

– significant adjustments arising from the

audit

– the going-concern statement

– compliance with accounting standards

– compliance with stock exchange and

statutory requirements

– reliability and accuracy of the financial

information provided by management and

other users of financial information

Ü discussing any problems and reservations

arising from the interim and final audits and

any related matters that the external

auditors may wish to discuss.

The internal and external auditors have unlimited

access to the chairman of the committee. The

internal audit department reports directly to the

audit committee and is also responsible to the

chief financial officer on day-to-day matters.

Remuneration committee

Members – Jacob Modise (chairman),

Myron Berzack, Peter Wilmot and Dr Bill Venter.

Composition and proceedings – The committee

comprises a majority of non-executive directors.

Robert Venter (chief executive) has right of

attendance at committee meetings, and

Diane Radley (chief financial officer) attends by

invitation. No executives participate in discussions

on their own remuneration and benefits. Two

meetings are scheduled annually, with special

meetings called as required. The committee met

twice during the period under review.

Role – this committee, in consultation with

executive management, ensures that the

group’s directors and senior executives are fairly

rewarded for their individual contributions to

overall performance and in line with the Altron

remuneration philosophy. Further details appear

in the remuneration report on page 102.

Risk management committee

Members – Mike Leeming (chairman),

Norbert Claussen, Dali Mpofu, Diane Radley,

David Redshaw, Dr Harold Serebro, Dr Bill Venter,

Craig Venter, Robert Venter and Peter Wilmot.

Subsequent to the financial year-end,

Dr Bill Venter has resigned as a member of this

committee.

Composition and proceedings – The committee

has two scheduled meetings each year and met

twice during the review period.

Role – as the objective of risk management is

to identify, assess, manage and monitor risks to

which the business is exposed, Altron’s selected

approach involves identifying strategic risks,

reviewing their impact, assessing the probability

96



of occurrence and monitoring the perceived

effectiveness of existing controls.

In understanding the risk universe, both the

impact and probability of risk are ranked on

nine-point scales: from catastrophic to

negligible for the former; from negligible to

confidently expected for the latter. Inherent

risk is ranked similarly to the impact of risk

while control effectiveness is measured as

either good, satisfactory, corrective action

required or deficient.

Depending on the value of the residual risk

exposure, management will decide on the

acceptance of the identified residual risk or

exposure. If considered high, an action plan

– stipulating the responsible person, required

action and timeframe – will be put in place

to reduce the level of risk to a more

acceptable level.

The major consolidated risks identified at the

beginning of the review period were:

Ü the lack of black economic empowerment

partners in certain operating companies

Ü the dependence on network operators

(Altech Autopage Cellular)

Ü not achieving employment equity targets

in certain subsidiaries

Ü the lack of adequate systems to extract

operational management information.

The board has made good progress in

addressing the level of empowerment

partners in key operating companies (Altech

and Pamodzi, BTG SA and Kagiso, Powertech

and Izingwe). It is also liaising closely with the

Department of Trade and Industry on issues

relating to the department’s recently-

published draft Codes of Good Practice and

creating a sustainable business environment.

Initiatives to find suitable empowerment

partners for other operations are ongoing, in

line with the targets set and currently being

reviewed in Altron’s Transformation Vision

2010. These initiatives are championed by the

respective human resources departments and

monitored by the Altron executive committee

and transformation sub-committee.

The dependence on network operators has

been carefully mitigated through the 2005

signing of five-year service provider

and incentive agreements with Vodacom

and MTN, acknowledging the vital role

played by independent service provision in

the cellular industry in South Africa. Altech

Autopage Cellular’s existing agreement with

Cell C expires in 2009.

The implementation of a corporate

information system project aimed at

providing accurate non-financial group

information was fully implemented at BTG

97

by the end of 2005 and will be rolled out to

the rest of the group in the new financial

year.

Presently, management is focusing on two

significant group risks:

Ü the liberalisation of the telecommunications

market in South Africa

Ü the impact of import competition due to the

strength of the rand, predominantly at

Powertech.

Internal controls and internal audit

Internal controls comprise methods and

procedures adopted by management to assist

in achieving the objectives of safeguarding

assets, preventing and detecting error and

fraud, ensuring the accuracy and completeness

of accounting records and preparing reliable

financial statements. The group’s approach is

detailed in the directors’ report on page 111

dealing with the approval of annual financial

statements.

The internal audit function serves management

and the board by performing independent

evaluations of the adequacy and effectiveness

of group companies’ controls, financial

reporting mechanisms and records, information

systems and operations and provides additional

assurance on safeguarding group assets and

financial information.

The internal audit department assists

management in ensuring proper compliance

with controls and procedures while maintaining

an appropriate degree of independence to

render impartial judgements in performing its

duties. A fraud hotline, established three years

ago, enables Altron associates and employees

to anonymously report suspected irregularities

and has proved an effective tool. Throughout

the group, 77 cases of theft, fraud and other

dishonesty were recorded during the year.

This is down significantly from 140 in 2002

and reflects the benefits of a proactive approach

and the long-standing group policy on criminal

prosecution.

During October 2005 PriceWaterhouseCoopers

performed an independent current state

assessment of the Altron internal audit

department. The department was found to

be in adherence to the Standards for the

Professional Practice of Internal Auditing as

issued by the Institute of Internal Auditors and

was highly commended.

Nomination committee

Members – Dr Penuell Maduna (chairman),

Myron Berzack, Mike Leeming and Dr Bill Venter.

Composition and proceedings – This committee

comprises a majority of non-executive directors

and was established in the 2004/5 reporting

period. Robert Venter (chief executive) has right

of attendance at committee meetings. There is

98



no formal meeting schedule for this committee,

which meets when required. The committee

met twice during the period under review.

Role – the committee is responsible for

identifying and evaluating suitable potential

candidates for appointment to the board as

well as succession planning. It does not have

the authority to appoint directors, which is a

board function. A formal succession-planning

policy is being finalised and will be

implemented throughout the group in the

new financial year.

The appointment of directors is a transparent

and formal procedure governed by the Altron

board charter. Factors influencing the selection

process include skills, knowledge and

qualifications: these are examined against the

backdrop of Altron’s strategies. Availability,

number of external board appointments,

diversity in demographics and experience in

relevant sectors are also considered.

Transformation committee

Members – This is a sub-committee of the

Altron executive committee, with

representatives from underlying group

companies.

Composition and proceedings – the

transformation committee was established

three years ago and has continued to drive

economic transformation and broad-based

empowerment across the group.

Role – Following the launch of the Altron

Transformation Vision 2010 blueprint, the

committee’s mandate has been extended to

develop a practical implementation plan and

guiding manuals to ensure uniform application

of the empowerment vision across the group.

The committee is currently studying the draft

Codes of Good Practice published by the

Department of Trade and Industry and

participated in industry comment on these

codes. Once this process is completed, the

Altron blueprint will be reviewed to closely

align it with the legislated codes and relevant

sectoral charters on empowerment.

Communicating with stakeholders

We believe the collective aim of corporate and

political leaders should be achieving sustainable

growth of their businesses and the economy

as a whole. Altron, therefore, presents an

integrated report to stakeholders each year,

detailing triple bottom-line performance –

economic, social and environmental.

While the directors are responsible for the

preparation of the annual financial statements,

management is responsible for maintaining

adequate accounting records to ensure the

integrity of these statements.

99

Building long-term and mutually-beneficial

relationships with our shareholders and all

stakeholders is fundamental to our ongoing

business success. This includes providing timely,

accurate announcements and circulars to

shareholders in accordance with JSE Listings

Requirements. In addition, Altron manages its

relations with stakeholders by regular contact

with domestic and international institutional

shareholders and analysts through investor road

shows, presentations and liaison with major

shareholders.

Altron recognises the importance of shareholder

attendance at annual general meetings. We

believe this presents an important opportunity

for shareholders – institutional and individual – to

raise issues and participate in discussions relating

to items in the notice of meeting. Every effort is

made to encourage this attendance and

participation.

Human capital

A fundamental requirement for achieving Altron’s

goal of continuing superior performance is

employing dedicated and competent personnel,

based on equitable recruitment practices. Our

objective is to employ, train, use and retain the

best personnel available and make diligent

efforts to develop and motivate all employees to

higher standards of performance.

Worker participation

Altron encourages employees to reach their full

potential in a more participative management

style environment. The group has numerous

participative structures at operating company level

for handling issues that affect employees directly

and significantly. These structures have been

established with trade unions and other employee

representatives, and are designed to achieve good

relations through effective sharing of relevant

information, consultation and resolution of conflict.

Currently, Altron’s various employers have

collective agreements with recognised trade

unions which regulate these relationships. Some

30% of the group’s base of employees belong to

a union.

“As all employees are aware,

. . . the Altron Group is committed

to improving the working

conditions of all their employees,

irrespective of sex, race, religion

or colour.”


April 1977

100



Affirmative action and employment equity

An affirmative action programme forms part of

the group’s business plan. Where possible, internal

promotion is preferred and employees are given

the opportunity to develop their potential.

Altron fully supports the government’s initiative

to achieve greater equity in the workplace and

management of all group companies and is fully

committed to complying with the Employment

Equity Act of 1998 (as amended). Co-ordinating

committees ensure that group companies

achieve their employment equity objectives and

that policies are properly implemented.

Our equity objectives include training and

development programmes, appropriate sharing

of information between employer and employee,

and providing equal, non-discriminatory

employment opportunities. Progress is regularly

reported to the various boards and executive

committees of Altron, Altech, BTG and Powertech

and their respective business risk and audit

committees.

“Dishonesty of any nature

whatsoever will be reported to

the appropriate authorities for

action by the courts. Suspension

or dismissal will follow if found

guilty.”


September 1977

Corporate code of conduct

Altron is committed to promoting the highest

standards of behaviour and the group’s corporate

code of conduct (page 47) sets out the expected

behaviour of all employees in their dealings with

our stakeholders. A detailed code of conduct

forms part of the Altron group policy manual and

outlines our ethos. All employees are required to

maintain the highest ethical standards in

ensuring that our business practices are

conducted in a manner which, in all reasonable

circumstances, is above reproach.

Share dealings

Altron and its sub-holdings have approved written

policies on directors’ dealings in securities. These

require all directors who wish to deal in Altron or

its sub-holdings’ securities to obtain prior written

101

clearance from any two of the following senior

executives – the chairman, chief executive or chief

financial officer. The same restriction applies to

the group company secretary. The chairman

requires prior written clearance from the non-

executive chairman of the Altron audit committee

and the group company secretary.

The group operates closed periods as defined in

the JSE’s Listings Requirements. These periods

are communicated to directors, officers and

employees in the group policy manual and a

specific policy for directors. In addition, electronic

and printed notices advise staff of imminent

closed periods. During these periods, the group’s

directors, officers and employees may not deal in

the securities of Altron, Altech or BTG as the case

may be. Additional closed periods are enforced,

when required, in terms of corporate activities.

Attendance of meetings

Director

Board Audit Remuneration Risk Nomination

2005 2006 2005 2005 2006 2005 2005

May Aug Oct Feb May Oct April Feb April Oct Oct Nov

Dr WP Venter ✓ ✓ ✓ ✓ ✓1 ✓1 ✓ ✓ ✓ ✓ ✓ ✓

RE Venter ✓ ✓ ✓ ✓ ✓ ✓5 ✓2 ✓2 ✓ ✓ ✓2 ✓2

MC Berzack ✓ ✓ ✓ ✓ n/a n/a ✓ ✓ n/a n/a ✓ ✓

N Claussen n/a3 n/a3 n/a3 ✓ ✓1 ✓1 n/a n/a ✓ ✓ n/a n/aPMO Curle ✓ ✓ ✓ ✓ n/a n/a n/a n/a n/a n/a n/a n/aMJ Lamberti n/a3 n/a3 n/a3 ✓ n/a n/a n/a n/a n/a n/a n/a n/aMJ Leeming ✓ ✓ ✓ ✓ ✓ ✓ n/a n/a ✓ ✓ ✓ ✓

Dr PM Maduna ✓ ✓ ✓ ✓ n/a n/a n/a n/a n/a n/a ✓ ✓

JRD Modise ✓ ✓ ✓ ✓ ✗ ✓ n/a4 ✓ n/a n/a n/a n/aDC Mpofu ✓ ✗ ✓ ✓ n/a n/a n/a n/a ✓ ✗ n/a n/aDC Radley ✓ ✓ ✓ ✓ ✓2 ✓2 ✓1 ✓1 ✓ ✓ n/a n/aPD Redshaw ✓ ✓ ✓ ✓ ✓1 ✗1 n/a n/a ✓ ✓ n/a n/aDr HA Serebro ✓ ✗ ✓ ✓ n/a n/a n/a n/a ✓ ✓ n/a n/aCG Venter ✓ ✓ ✓ ✓ ✗1 ✗1 n/a n/a ✗ ✗ n/a n/aPL Wilmot ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ n/a n/a

✗ submitted apologies and was granted leave of absence in terms of the company’s articles of association.

1 Attends by invitation and is not a member of the committee.

2 Has right of attendance but is not a member of the committee.

3 Messrs Claussen and Lamberti were appointed to the board on 12 October 2005.

4 Mr Modise was appointed as a member of the remuneration committee on 2 August 2005 and as the chairman of the remuneration committee effective 1 February 2006.

5 Mr RE Venter resigned as a member of the audit committee on 7 October 2005 and will attend future audit committee meetings by invitation.

102


In a competitive and rapidly-evolving industry,

finding and retaining the calibre of people

required to effectively run the group and its

subsidiary companies is an ongoing challenge –

one that Altron has successfully met over the

years through attractive and appropriate

remuneration packages that are aligned with the

interests of shareholders.

Membership

The remuneration committee has a majority

of non-executive directors and is chaired by

Jacob Modise (independent non-executive).

Other members are Myron Berzack,

Peter Wilmot and Altron chairman,

Dr Bill Venter.

Remuneration philosophy and policies

Altron’s philosophy is to set appropriate remuneration levels to attract, motivate and

retain the calibre of directors and executives needed to run the group and its subsidiaries

successfully, while aligning their interests with those of shareholders over the short,

medium and long term. The overall policy is to ensure that executive directors are fairly

rewarded for their individual contribution to the group’s operating and financial

performance, and that this reward is aligned with industry and market benchmarks.

For each executive director, group policy is to provide a remuneration package

comprising a base salary, an ability to earn a cash bonus, long-term incentives through

participation in share incentive schemes or similar instruments, pension contributions,

medical aid benefits and other benefits in kind.

The objective is to establish a level of guaranteed pay that is competitive with the upper

quartile level for similar companies. The variable element of short-term incentives is

intended to provide superior total pay opportunities should corporate performance merit

it as well as reward individual performance. Long-term incentives have been based on

multiples of base pay and structured to align with shareholders’ interests.

Remuneration report

103

The chief executive has right of attendance at

meetings unless deemed inappropriate and the

chief financial officer attends meetings by

invitation, but neither participates in discussions

regarding their own remuneration.

Composition and proceedings

The committee meets bi-annually, unless

additional meetings are required. During the

review period, the committee met twice.

Role

The committee operates under a board-approved

mandate and terms of reference, updated in the

prior period and aimed at:

Ü ensuring that Altron’s chairman, executive

directors and other senior executives are fairly

rewarded for their individual contributions to

group performance. Packages are structured to

be competitive with the upper-quartile level

of peer companies and market benchmarks

Ü ensuring that Altron’s remuneration strategies

and packages, including short- and long-term

incentive plans, are based on performance

and are appropriately competitive

Ü recommending fees for non-executive

directors for service on the board or its

committees. Once approved by the board,

these are submitted to shareholders at the

annual general meeting for ratification

Ü balancing the interests of shareholders with the

financial and commercial viability of the group.

Altron’s sub-holdings, Altech and BTG, have their

own remuneration committees which review and

recommend remuneration and related awards for

executive directors and senior management, to

their boards and within the parameters of group

policies. The Altech and BTG CEO’s remuneration,

once approved by their respective boards, is

submitted to the Altron remuneration committee

for noting and confirmation.

Service contracts

Executive directors are subject to Altron’s

standard terms and conditions of employment

where notice periods are between 30 and

60 days. In line with the stipulations of the

Companies Act of 1973 (as amended), group

policy prevents any director from being

compensated for loss of office.

Advisors

The committee regularly consults with a range of

external independent advisors on market

information and remuneration trends as well as

other advice necessary to fulfil its

responsibilities. It also considers the views of the

chief executive, Robert Venter, on the

remuneration and performance of his colleagues

on the Altron executive committee.

104


Remuneration report continued

Executive directors’ salaries

The remuneration committee reviewed and

revised the salaries of executive directors at its

meeting in February 2006. The salaries of

executive directors were compared to a market

information survey on companies of similar

size and structure and adjusted to reflect levels

in the median to upper-quartile levels of the

survey.

Annual incentive plans

Executive directors and Altron executive

committee members participate in an annual

bonus plan that rewards the achievement of

group and subsidiary financial performance as

well as strategic and personal performance

objectives agreed with the chief executive. All

objectives are approved beforehand by the

remuneration committee. Under this plan, the

chief executive may earn a bonus of up to 75%

of his base salary. Other executive directors and

executive committee members may earn

55% to 65% of their base salaries.

Group and subsidiary financial performance

targets include:

Ü headline earnings per share growth

Ü return on capital employed

Ü return on operating assets

Ü cash generation.

These targets vary according to individual

company needs. In all cases, 60% of the bonus

is based on financial objectives with the balance

relating to strategic and personal performance,

benchmarked against identified key performance

indicators.

At its meeting in April 2005, the remuneration

committee reviewed the performance of

executives participating in the bonus plan

against their agreed targets. Within these

parameters, and subject to meeting the noted

criteria, bonuses were approved. Performance

measures are stringently monitored and

penalties imposed in cases where targets are

missed.

Share option schemes

Altron’s share option scheme grants options to

all senior employees within Altron and

Powertech. Grants have historically been made

annually and capped at 8.5 x base salary for the

chief executive, and 6.5 x to 7.5 x base salary for

Altron executive committee members. Options

may be exercised after three years and vest in

equal tranches in years 3, 4 and 5. All options

granted expire within a six-year period. The

share option scheme includes options granted

under a previous scheme which is in run-off and

has an expiry period of no later than 2012.

Additional options, based on both corporate and

105

individual performance, may be granted annually

to ensure that the multiple-of-base salary

parameter reflects increases in base salary.

As a result of recent changes in tax legislation

and accounting requirements, shareholders

approved certain amendments to the Altron

Share Incentive Scheme at the company’s annual

general meeting on 15 July 2005. In terms of the

amendments, rights to acquire shares may now

include achieving set performance targets,

including growth in headline earnings per share.

These share acquisitions will occur in equal

tranches over three years, starting from the third

anniversary of the rights being granted. The

quantum of shares that can be acquired may

vary, depending on the extent to which

performance targets are met.

Pensions

During the year, the companies made

contributions for executive directors to the Altron

Group Pension Fund. The rate of contribution is

12%, based on the cash salaries of these

individuals. The value of contributions for each

executive director appears in the summary of

directors’ emoluments on page 106.

Other benefits

Executive directors receive medical aid

assistance, a company car or car allowance and a

death-in-service benefit.

Non-executive directors’ fees

The fees of non-executive directors are

recommended by the remuneration committee,

approved by the Altron board and ratified by

shareholders at the annual general meeting.

Fees for the 2005/6 financial year were

reviewed and revised in April 2005, with the

basic annual fee set at R80 000.

Annual fees for membership of various

committees for the review period were:

Audit committee

– chairman

– member

R50 000

R25 000

Nomination committee

– chairman

– member

R10 000

R10 000

Remuneration committee

– chairman

– member

R50 000

R25 000

Risk management committee

– chairman

– member

R50 000

R25 000

106


Remuneration report continued

The table below provides an analysis of the emoluments paid to directors for the financial year ended

28 February 2006

Disclosure for directors’ emoluments

R’000

Non-executive directors Subsidiaries Altron2006Total

2005Total

Fees for services as directors

IM Ayob* 35 35 70

MC Berzack 115 115 80

DA Hawton** 103 103 143

MJ Leeming 165 165 143

MJ Lamberti† 36 36

JRD Modise 120 120 70

Dr PM Maduna 85 85 23

DC Mpofu‡ 61 61

PL Wilmot 268 180 448 355

268 900 1 168 884

* Resigned as an independent non-executive director of Altron on 30 June 2005.

**Resigned as an independent non-executive director of Altron on 10 October 2005.

† Appointed as an independent non-executive director of Altron on 12 October 2005.

‡ Resigned from the employment of Altron on 31 July 2005 and remained as non-executive director of Altron from 1 August 2005.

R’000

Full-time directorsBasic

salary

Perfor-mancerelated

bonuses(Accrued)

Shareoption

expenseAllow-ances

Definedcontribu-

tionpension

paymentsOther

benefits2006Total

2005Total

Chairman

Dr WP Venter* 3 249 — — 120 — 1 884 5 253 4 777

Executive

Dr HA Serebro 1 569 — — 120 — 4 1 693 1 689

RE Venter 3 243 2 310 218 120 389 157 6 437 5 760

DC Radley 2 061 1 369 79 240 247 18 4 014 3 596

CG Venter 2 512 1 693 283 262 301 143 5 194 4 542

PD Redshaw 2 384 1 650 176 — 286 170 4 666 4 048

PMO Curle 1 537 859 182 127 184 16 2 905 2 605

N Claussen** 667 1 003 28 82 80 8 1 868 —

DC Mpofu# 541 — — 111 65 10 727 2 313

17 763 8 884 966 1 182 1 552 2 410 32 757 29 330

*Remuneration as Chairman of Altron includes remuneration as a director of Altech and Powertech and Chairman of BTG.

**Represents remuneration received as a director, from 1 October 2005.

#Represents remuneration received as an executive director from 1 March 2005 to 31 July 2005.

107

Directors’ options

Directors’options Entity

Strikeprice

Balance1 Mar

05 Awarded ExercisedExercise

date

NetgainsR’000

Exerciseprice

Balance28 Feb

06Expiry

date

CG Venter Altron 6.50 3 400 — 1 720 7/21/05 20 18.00 1 680 May 06

Altech 12.80 106 400 — 53 222 7/21/05 1 654 44.20 53 178 Apr 10

Altech 20.35 113 200 — 37 733 7/21/05 899 44.50 75 467 Mar 08

Altech 32.25 63 500 — — 63 500 Sept 10

Altech CRI 50.99 — 337 100 — 337 100 Dec 11

DC Radley Altron 7.25 937 900 — 312 633 11/4/05 3 914 19.92 625 267 Oct 08

Altron 11.20 134 100 — — 134 100 Jul 10

Altron CRI 22.50 — 477 520 — 477 520 Feb 12

HA Serebro Altron 6.10 5 800 — 2 920 10/13/05 34 18.00 2 880 Sep 06

BTG 4.50 50 000 — 50 000 10/13/05 — Exercised — Aug 07

N Claussen Altron 7.25 19 600 — — 19 600 Oct 08

Altron 11.20 115 100 — — 115 100 Jul 10

Altron CRI 22.50 — 466 190 — 466 190 Feb 12

PD Redshaw Altron 6.50 6 300 — 6 300 7/1/05 60 16.20 — Apr 05

Altron 4.80 12 000 — 6 000 12/20/05 92 20.20 6 000 Dec 06

BTG 4.50 833 333 — — 833 333 Aug 07

BTG 2.90 166 667 — — 166 667 Sep 08

BTG 3.85 100 000 — — 100 000 Oct 09

BTG 5.58 477 100 — — 477 100 Aug 11

BTG CRI 11.56 — 1 234 000 — 1 234 000 Feb 12

PMO Curle Altech 20.35 10 000 — 3 333 10/21/05 84 46.00 6 667 Mar 08

Altech 32.25 40 000 — — 40 000 Sept 10

Altech CRI 50.99 — 219 460 — 219 460 Dec 11

RE Venter Altron 4.85 1 068 700 — 534 050 11/9/05 8 807 21.50 534 650 Jun 10

Altron 7.25 136 100 — 45 366 11/9/05 — Exercised 90 734 Oct 08

Altron 11.20 368 500 — — 368 500 Jul 10

Altron CRI 22.50 — 837 360 — 837 360 Feb 12

WP Venter Altron 6.10 9 600 — 4 800 10/13/05 57 18.00 4 800 Sep 06

CRI = conditional rights.

PAGE 108

110 – Certifi cate from the company secretaries

110 – Report of the independent auditors

111 – Directors’ report

115 – Accounting policies

126 – Balance sheet

127 – Income statement

128 – Statement of changes in equity

130 – Cash fl ow statement

131 – Notes to the fi nancial statements

154 – Annexure 1 - Associates,other investments and joint ventures

158 – Annexure 2 - Segment information

162 – Annexure 3

166 – Financial statements of the company

FIN

AN

CIA

L ST

ATE

MEN

TS

F INANCIAL HIGHLIGHTS

Revenue ▲ 14%

Operating profi t ▲ 8%

Headline earnings per share ▲ 17%

Return on equity ▲ 18.2%

Andrew Johnston (Group Company Secretary)

Report of the independent auditors

We have audited the annual financial statements and group annual financial statements of Allied Electronics Corporation Limited set out on pages 111 to 170 for the year ended 28 February 2006. These financial statements are the responsibility of the company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the company and the group at 28 February 2006 and the results of their operations and cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act in South Africa

KPMG Inc. Chartered Accountants (SA)Registered Accountants and Auditors

Johannesburg

8 May 2006

To the members of Allied Electronics Corporation Limited

In terms of section 268G(d) of the Companies Act, 1973, as amended, we certify that, to the best of our knowledge and belief, the company has lodged with the Registrar of Companies for the financial year ended 28 February 2006, all such returns as are required of a public company in terms of the Companies Act, 1973, as

amended, and that all such returns are true, correct and up to date.

Altron Management Services (Pty) Limited (Secretaries)

per: Andrew Johnston (Group company secretary)

8 May 2006

110


Certificate from the company secretaries

111

The directors have pleasure in submitting the

annual financial statements of the Altron group

for the year ended 28 February 2006.

NATURE OF BUSINESS

Altron is an investment holding company. Its

principal subsidiaries, Allied Technologies

Limited, Power Technologies (Pty) Limited and

Bytes Technology Group Limited, are invested in

the power electronics, telecommunications,

multi-media and information technology

industries.

FINANCIAL RESULTS

Group attributable earnings for the year ended

28 February 2006 were R494 million (2005:

R448 million), representing earnings per share of

176 cents (2005: 162 cents). Headline earnings

per share were at 189 cents (2005: 162 cents).

Full details of the financial position and results of

the Altron group are set out in these financial

statements.

DIVIDENDS

The following dividends were declared in respect

of the year ended 28 February 2006:

Ü ordinary dividend No. 58 of 78.0 cents per

share (2005: 63.0 cents); and

Ü participating preference dividend No. 12 of

78.0 cents per share (2005: 63.0 cents).

It remains policy to declare dividends annually at

the time of announcing the Altron group’s results

in May of each year.

SUBSIDIARIES, ASSOCIATE COMPANIES AND OTHER INVESTMENTS

Particulars of the principal subsidiaries of the Altron group are given on page 169 whilst particulars of the associate companies, joint ventures and other investments are provided in Annexure 1 on page 154.

The attributable interest of the companies in the income and losses of their subsidiaries for the year ended 28 February 2006 is:

2006R million

2005R million

Aggregate amount of income after taxation 878 695

Aggregate amount of losses after taxation 127 99

Digital Healthcare Solutions (Pty) Limited (DHS)

On 26 April 2005, BTG SA acquired the entire issued share capital of DHS for a consideration of R132.2 million. Of the shares acquired, 39.13% were previously owned by BTG with the balance being acquired from various third parties. The consideration was settled out of BTG SA’s existing cash resources.

Econet Wireless Global Limited

On 1st September 2005, Altech disposed of its 50% plus one share interest in Econet Wireless Global Limited (EWG) to the remaining shareholders of EWG for US$87.5 million (R561 million).

Directors’ report

To the members of Allied Electronics Corporation Limited

112


Directors’ report continued

Purchase of 6.7% of BTG

During the period under review, the company took advantage of several opportunities to purchase 6.7% of the issued share capital of BTG on the open market at a cost of R118.17 million.

SHARE CAPITAL

Full details of the authorised, issued and unissued capital of the company at 28 February 2006 are contained in note 9 to the financial statements.

Share schemes

Particulars relating to the Altron Share Incentive Scheme and The Allied Electronics Corporation Limited Share Trust are set out in note 9.6 to the financial statements.

At the date of this report, a total of 4 847 855 ordinary shares and 15 495 042 participating preference shares remain reserved for the purposes of the company’s employee share schemes.

The remaining unissued ordinary shares and participating preference shares are the subject of a general authority granted to the directors in terms of section 221 of the Companies Act, 1973, as amended, and which authority remains valid only until the next annual general meeting which will be held on Friday, 14 July 2006. At that meeting, shareholders will be asked to place 10% of the unissued ordinary and participating preference shares under the control of the directors. Shareholders will also be asked to waive their pre-emptive rights in favour of the directors to allot and issue ordinary and/or participating preference shares for cash as and when suitable circumstances arise.

DIRECTORATE

The Altron directorate is referred to on pages 184 to 187 of this report.

Appointments:12 October 2005 Mr N Claussen

Mr MJ Lamberti

Resignations:30 June 2005 Mr IM Ayob10 October 2005 Mr DA Hawton

In terms of the company’s articles of association,

Messrs N Claussen and MJ Lamberti retire at

the forthcoming annual general meeting and

Messrs RE Venter, PMO Curle, DC Mpofu and

Ms DC Radley retire by rotation. All the retiring

directors are eligible and available for re-election.

Their profiles appear on pages 184 to 187.

SECRETARIES

Altron Management Services (Pty) Limited act

as secretaries to the company. The secretaries’

business and postal addresses appear on

page 197 of this annual report.

SEGMENTAL REPORTING

Segmental information is included in this annual

report as part of the operational reviews and

shareholders are referred to annexure 2 on

page 158.

Headline earnings contributions to Altron were as

follows:

2006R million

2005R million

Altech 214 192

BTG 111 73

Powertech 170 150

Corporate 34 30

113

DIRECTORS’ INTERESTS

At 28 February 2006 the present directors of the

company held direct and indirect beneficial

interests, including family interests, in

59 791 936 of the company’s issued ordinary

shares (2005: 59 751 636 ordinary shares) and

34 511 558 of the company’s issued participating

preference shares (2005: 34 491 192). Details of

shares held per individual director are listed

below. A total of 3 684 381 participating

preference share options and conditional rights

are allocated to directors in terms of the

company’s employee share schemes.

Chairman and director, Dr WP Venter, through his

family and related trusts, is the controlling

shareholder of the company.

Direct beneficial

Name of directorOrdinary

shares

Partici-pating

preferenceshares

Dr WP Venter 2 641 639 8 039

MC Berzack — 426 332

Dr HA Serebro 495 163 1 555

MJ Leeming 2 500 —

RE Venter — 45 366

Indirect beneficial

Name of directorOrdinary

shares

Partici-pating

preferenceshares

Dr WP Venter 56 649 124 34 029 256

Dr HA Serebro 1 010 1 010

MJ Leeming 2 500 —

At the date of this report, these interests remain

unchanged.

RESOLUTIONS

The company passed and registered two special

resolutions on 26 July 2005, one approving the

acquisition by the company or any of its

subsidiaries of the company’s shares and the

other adopting amended articles of association.

At subsidiary level, Altech passed and registered

two special resolutions on 5 October 2005, one

approving the acquisition by Altech or any of its

subsidiaries of Altech’s shares and the other

adopting amended articles of association.

BTG passed and registered one special resolution

on 21 July 2005 adopting substituted articles of

association.

Except for the above, no other special

resolutions, the nature of which might be

significant to shareholders in their appreciation

of the state of affairs of the Altron group, were

passed by the company or its subsidiaries during

the period covered by this annual report.

APPROVAL OF THE ANNUAL FINANCIAL

STATEMENTS

The annual financial statements set out in this

annual report have been prepared in accordance

with International Financial Reporting Standards

and are based on appropriate accounting

policies, which are supported by reasonable and

prudent judgements and estimates.

The directors of the company are responsible for

the preparation of the annual financial

statements and related financial information that

fairly present the state of affairs and the results

of the company and the Altron group.

114


Directors’ report continued

These financial statements have been prepared

on the going-concern basis, since the directors

have every reason to believe that the company

and the Altron group have adequate resources in

place to continue in operation for the

foreseeable future.

The auditors have concurred with the directors’

going-concern statement. The annual financial

statements for the year ended 28 February 2006

which appear on pages 111 to 170 were

approved by the board and signed on its behalf

on 8 May 2006.

For: Allied Electronics Corporation Limited

Dr Bill Venter (Chairman)

RE Venter (Chief Executive)

DC Radley (Chief Financial Officer)

115

Allied Electronics Corporation Limited (the “company”) is a South African registered company. The consolidated financial statements of the company for the year ended 28 February 2006 comprise the company and its subsidiaries (together referred to as the “group”) and the group’s interest in associates and jointly controlled entities.

STATEMENT OF COMPLIANCE

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the interpretations adopted by the International Accounting Standards Board (IASB) and the requirements of the South African Companies Act.

Adoption of IFRS

The group has adopted IFRS for the year ended 28 February 2006. These are the group’s first consolidated financial statements prepared in compliance with IFRS and hence IFRS 1 – First time adoption of IFRS has been applied in preparing these financial statements. The group has adopted all applicable IFRS statements and interpretations issued or revised and effective up to the annual reporting date, 28 February 2006.

An explanation of how the transition to IFRS has affected the reported financial position and performance of the group is provided in Annexure 3 to the financial statements.

Circular 7/2005 – Straight-lining of operating lease payments

The group has simultaneously changed the interpretation of the basis of the straight-line recognition of operating lease payments whereby payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Previously operating leases were expensed on a

payments basis. The adjustment has been made in accordance with IAS 8 – Accounting Policies, changes in accounting estimates and errors with the necessary restatement of comparative figures. The effect of the change is provided in Annexure 3 to the financial statements.

BASIS OF PREPARATION

The annual financial statements are prepared in millions of South African rands (Rm) on the historical cost basis, except for the following assets and liabilities which are stated at fair value: derivative financial instruments and financial intruments classified as available-for-sale.

Non-current and disposal groups held for sale are stated at the lower of carrying amount and fair value less cost to sell.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that may affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision only affects that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in Annexure 3 and note 30.

Accounting policies

116


Accounting policies continued

The accounting policies set out below have been applied consistently to the periods presented in these consolidated financial statements and in preparing the opening IFRS balance sheet at 1 March 2004 for the purposes of transition to IFRS.

The accounting policies have been applied consistently by all group entities.

BASIS OF CONSOLIDATION

Subsidiaries

Subsidiaries are those entities over whose financial and operating policies the group has the power to, directly or indirectly, exercise control, so as to obtain benefits from their activities.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Associates

An investment in an associate is an investment in a company in which the group exercises significant influence but not control. The equity method of accounting for associated enterprises is adopted in the group financial statements. In applying the equity method, account is taken of the group’s share of accumulated retained earnings and movements in reserves from the effective date on which the enterprise became an associate and up to the effective date of disposal.

Goodwill arising on the acquisition of associates is included in the carrying amount of the associate and is treated in accordance with the group’s accounting policy for goodwill. The share of associated retained earnings and reserves is generally determined from the associate’s latest audited financial statements but, in some instances, interim results are used. Dividends received from associates are deducted from the carrying value of the investment. Where the group’s share of losses

of an associate exceeds the carrying amount of the associate, the associate is carried at no value. Additional losses are only recognised to the extent that the group has incurred obligations or made payments on behalf of the associate.

Joint ventures

Joint ventures are those enterprises over which the group exercises joint control in terms of a contractual agreement. Joint ventures are proportionately consolidated, whereby the group’s share of the joint venture’s assets, liabilities, income, expenses and cash flows are combined with similar items, on a line-by-line basis, in the group’s financial statements from the date the joint control commences until the date the joint control ceases.

Eliminations on consolidation

Intra-group balances and transactions, and any unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associated companies and joint ventures are eliminated to the extent of the group’s interest against the investment in these enterprises. Unrealised losses on transactions with associated companies and joint ventures are eliminated in the same way as unrealised gains except that they are only eliminated to the extent that there is no evidence of impairment.

Goodwill

All business combinations are accounted for by applying the “purchase method”. Goodwill represents amounts arising on the acquisition of subsidiaries, associates and joint ventures. In respect of business combinations that have occurred since the IFRS transition date, 1 March 2004, goodwill represents the difference between the cost of the acquisition and the fair value of

117

the net identifiable assets and contingent liabilities acquired.

The group made an election in terms of IFRS 1 that in respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous SA GAAP on 1 March 2004. The classification and accounting treatment of business combinations that occurred prior to 1 March 2004 has not been reconsidered in preparing the group’s opening IFRS balance sheet at 1 March 2004.

From 1 March 2004 goodwill is stated at cost less accumulated impairment losses.

Goodwill is allocated to cash-generating units and is no longer amortised but tested annually for impairment. Previously goodwill arising on each acquisition was amortised over its useful life on a straight-line basis and subjected to annual impairment testing.

Negative goodwill arising on an acquisition is recognised directly in the income statement.

Premiums and discounts arising on subsequent purchases from, or sales to, minority interests in subsidiaries

Any increases and decreases in ownership interests in subsidiaries without a change in control are recognised as equity transactions in the consolidated financial statements. Accordingly, any premiums or discounts on subsequent purchases of equity instruments from, or sales of equity instruments to, minority interests are recognised directly in the equity of the parent shareholder.

Black economic empowerment (BEE) transactions

BEE transactions involving the disposal or issue of equity interests in subsidiaries are only

recognised when the accounting recognition criteria have been met. Although economic and legal ownership of such instruments may have transferred to the BEE partner the derecognition of such equity interest sold or recognition of equity instruments issued in the underlying subsidiary by the parent shareholder is postponed until the accounting recognition criteria have been satisfied. A dilution in the earnings attributable to the parent shareholders (in the interim period) is adjusted for in the diluted earnings per share calculation by an appropriate adjustment to the earnings used in such calculation.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the group’s cash management are included as a component of cash and cash equivalents for the purposes of the cash flow statement.

CAPITALISATION OF BORROWING COSTS

Interest on borrowings raised specifically to finance the construction of assets that require a substantial period of time to prepare them for sale or use, is capitalised up to the date that the assets are substantially complete.

CAPITAL ITEMS

Capital items are items of income and expense relating to the acquisition, disposal or impairment of property, plant and equipment, investments, intangible assets as well as closure of businesses.

118



EMPLOYEE BENEFITS

Short-term employee benefits

The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service. The accruals for employee entitlements to salaries, performance bonuses and annual leave represent the amounts which the group has as a present obligation to pay as a result of the employee’s services provided. The accruals have been calculated at undiscounted amounts based on current salary levels.

Retirement benefits

The majority of the group’s employees are members of the Altron group Pension Fund.

After the acquisition of subsidiaries, certain employees remained members of their previous funds. A number of these are defined benefit plans. These industry-managed retirement benefit schemes are dealt with as defined contribution plans as the group’s obligations under the schemes are equivalent to those arising in a defined contribution plan.

The group’s contributions to defined contribution funds are charged to the income statement in the year they are incurred.

Defined benefit obligations

Certain members of the Altron group Pension Fund who were members prior to 1 September 1996 are entitled to a minimum benefit equal to the previously provided defined benefit pension. Members prior to November 1999 are entitled to some medical assistance.

The projected unit credit method is used to determine the present value of these defined benefit obligations, the related service cost and, where applicable, the past service cost.

The fair value of plan assets is deducted from the present value of the defined benefit obligation to the extent permitted by IAS 19 – Employee benefits. Past service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested. Past service costs, which are already vested, are expensed immediately.

Actuarial gains and losses are recognised as income or expense if the net cumulative unrecognised actuarial gains or losses at the end of the previous financial year exceeded the greater of:

Ü 10% of the present value of the defined benefit obligation at that date before deducting plan assets, and

Ü 10% of the fair value of the plan assets at that date.

The amount recognised is the excess determined above, divided by the expected average remaining working lives of the employees participating in the plan.

Post-retirement medical aid benefits

The group has an obligation to provide post-retirement medical aid benefits to certain eligible employees and pensioners. This obligation has been provided for in full.

FINANCIAL INSTRUMENTS

Measurement

Financial instruments are initially measured at fair value, which includes transaction costs, except for those items carried at fair value through profit or loss, when the group becomes a party to the contractual arrangements as set out below. Subsequent to initial recognition these instruments are measured as set out below.

119

Interest-bearing borrowings

Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Investments

Investments held-for-trading are classified as current assets and are stated at fair value, with any resultant gain or loss recognised in the income statement.

Other investments held by the group are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity, except for impairment losses and, in the case of monetary items, foreign exchange gains or losses, which are recognised in the income statement. When these investments are disposed of, the cumulative gain or loss previously recognised directly in equity is recognised in the income statement as a capital item. Where these investments are interest-bearing, interest, calculated using the effective interest method, is recognised in the income statement.

Trade and other receivables/payables

Trade and other receivables/payables originated by the group are stated at amortised cost less impairment losses.

Derivative instruments

The group uses derivative financial instruments to manage its exposure to foreign exchange and commodity price risks arising from operational, financing and investment activities. The group does not hold or issue derivative financial instruments for trading purposes.

Derivative instruments comprise foreign exchange contracts and metal future contracts. Subsequent to initial recognition they are measured at fair value. Fair value adjustments are recognised in the income statement. Fair value is determined by comparing the contracted forward rate to the present value of the current forward rate of an equivalent contract with the same maturity date. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged.

Hedging

Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, a firm commitment, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity.

When the hedged firm commitment or forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the cumulative amount recognised in equity up to the transaction date is adjusted against the initial measurement of the asset or liability. For other cash flow hedges, the cumulative amount recognised in equity is recognised in the income statement in the period when the commitment or forecast transaction affects the income statement.

Where the hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative unrealised gain or loss remains in equity and is recognised in accordance with the above policy when the underlying transaction occurs. If the hedged transaction is no longer expected to occur, the cumulative unrealised gain or loss is immediately recognised in the income statement.

120



Where a derivative financial instrument is used to economically hedge the foreign exchange exposure of a recognised monetary asset or liability, no hedge acounting is applied and any gain or loss on the hedging instrument is recognised in the income statement.

Offset

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when the company has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

FOREIGN CURRENCIES

Foreign currency transactions

Foreign currency transactions are converted to South African rands at the rates of exchange ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to South African rands at the rates ruling at that date. Gains or losses on translation are recognised in the income statement.

Financial statements of foreign operations

The assets and liabilities of all foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to rands at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to rands at rates approximating the foreign exchange rates ruling at the date of the transactions.

Foreign exchange differences arising on translation are recognised directly in a separate component of equity – the foreign currency translation reserve. The foreign currency

translation reserve applicable to a foreign operation is released to the income statement as a capital item upon disposal of that foreign operation.

IMPAIRMENT OF ASSETS

The carrying amounts of the group’s assets are reviewed at least annually to determine whether there is any indication of impairment. If there is an indication that an asset may be impaired, its recoverable amount is estimated.

For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated annually.

The recoverable amount is the higher of an asset’s net selling price and its value in use.

In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised in the income statement whenever the carrying amount of an asset exceeds its recoverable amount.

For an asset that does not generate cash inflows that are largely independent of those from other assets the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised in the income statement whenever the carrying amount of the cash-generating unit exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating-units are allocated first to reduce the carrying amount of any goodwill allocated to the cash generating units, and then to reduce the carrying amount of other assets in the unit on a pro rata basis.

121

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that has been recognised directly in equity is recognised in the income statement even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the income statement is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the income statement.

Reversal of impairment

A previously recognised impairment loss is reversed if there is an indication that the impairment loss no longer exists and the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount, but not to an amount higher than the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior years, except as detailed below.

An impairment loss in respect of an investment in an equity instrument classified as available-for-sale is not reversed through the income statement. An impairment loss in respect of goodwill is not reversed.

INTANGIBLE ASSETS

Goodwill

Refer “Basis of consolidation” above.

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised as an expense as incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the product or process is technically and commercially feasible and the group has sufficient resources to complete development.

The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. These items are stated at cost less accumulated amortisation and impairment losses. Other development expenditure is recognised as an expense as incurred.

Other intangible assets

Other intangible assets that are acquired by the group are stated at cost less accumulated amortisation and impairment losses.

Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Goodwill and intangible assets with an indefinite useful life are tested annually for impairment.

Other intangible assets are amortised from the date they are available for use. The current estimated useful lives are as follows:

Patents and trademarks – 5 years

Customer relationships – 2 to 6 years

Distribution rights – indefinite life

Proprietary software – 3 years

122



INVENTORIES

Inventories are valued at the lower of cost and net realisable value taking account of market conditions and technology changes. Cost is determined on the first-in, first-out and average cost methods. Work and contracts in progress and finished goods include direct costs and an appropriate portion of attributable overhead expenditure based on normal production capacity.

NON-CURRENT ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

Non-current assets held for resale are classified as held-for-sale if their carrying amount will be recovered principally through a sale transaction, not through continuing use. These assets may be a component of an entity, a disposal group or an individual non-current asset. Upon initial classification as held-for-sale, non-current assets and disposal groups are recognised at the lower of carrying amount and fair value less cost to sell. Any impairment losses arising are recognised in the income statement as capital items.

A discontinued operation is a component of the group’s business that represents a separate major line of business or geographical area of operations or a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs upon the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. Discontinued operations are separately recognised in the financial statements once management has made a commitment to discontinue the operation without a realistic possibility of withdrawal.

OPERATING LEASES

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are charged against income on a straight-line basis over the period of the lease.

PROPERTY, PLANT AND EQUIPMENT

Owned assets

Property, plant, equipment and vehicles are stated at cost less accumulated depreciation and impairment losses. When components of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items.

Leased assets

Leases that transfer substantially all the risks and rewards of ownership of the underlying asset to the group are classified as finance leases. Assets acquired in terms of finance leases are capitalised at the lower of fair value and the present value of the minimum lease payments at inception of the lease, and depreciated over the estimated useful life of the asset.

The capital element of future obligations under the leases is included as a liability in the balance sheet. Lease payments are allocated using the effective interest rate method to determine the lease finance cost, which is charged against income over the lease period, and the capital repayment, which reduces the liability to the lessor.

Subsequent costs

The group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when the cost is incurred if it is probable that additional

123

future economic benefits embodied within the item will flow to the group and the cost of such item can be measured reliably. All other costs are recognised in the income statement as an expense when incurred.

Depreciation

Depreciation is charged to the income statement for each category of assets on a straight-line basis over their expected useful lives to estimated residual values. Land is not depreciated.

The current estimated useful lives are as follows:

Ü buildings 20 to 50 years

Ü plant and equipment 3 to 20 years

Ü furniture and fittings 5 to 20 years

Ü motor vehicles 4 to 8 years

Ü software and IT systems 2 to 8 years

Ü leasehold improvements over period of lease

The depreciation methods, useful lives and residual values, if not insignificant, are reassessed annually.

Gains and losses arising on disposal of property, plant and equipment are included in capital items.

PROVISIONS

General

Provisions are recognised when the group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation. Where the effect of discounting is material, provisions are discounted. The discount rate used reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities.

Restructuring

A provision for restructuring is recognised when the group has approved a detailed and formal restructuring plan, and the restructuring either has commenced or has been announced publicly. Future operating costs are not provided for.

Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the group from a contract are lower than the unavoidable cost of meeting the obligations under the contract.

SHARE-BASED PAYMENT TRANSACTIONS

Equity settled

The fair value of share options and deferred delivery shares granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to the equity instruments. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. The amount recognised as an expense is adjusted to reflect the actual number of share options and deferred delivery shares that vest except where forefeiture is only due to share prices not achieving the threshold for vesting. This accounting policy has been

124



applied to all equity instruments granted after 7 November 2002 that had not yet vested at 1 January 2005. The fair value of share-based payments was not recognised under the group’s previous accounting policies.

Cash settled

Share-linked instruments have been granted to certain employees in the group. The fair value of the amount payable to the employee is recognised as an expense with a corresponding increase in liabilities. The fair value is initially measured at grant date and expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to payment. The fair value of the instruments granted is measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. The liability is remeasured at each balance sheet date and at settlement date.

Black Economic Empowerment transactions

Where goods or services are considered to have been received from black economic empowerment partners as consideration for equity instruments of the group, these transactions are accounted for as share-based payment transactions, even when the entity cannot specifically identify the goods or services received. This accounting policy is applicable to equity instruments that had not vested by 1 January 2005 (as above).

RENTAL FINANCE ADVANCES

Rental finance advances to customers are supported by finance leases and are stated at the outstanding capital balances. The income earned is computed at the interest rates inherent in each contract, applied to the capital balance

outstanding under such contract and is included in revenue.

REVENUE

Revenue comprises net invoiced sales to customers excluding value-added tax, investment income and other non-operating income. Sales to customers are recognised when the related products are delivered or services are rendered.

Dividends and grants are recognised when the group’s right to receive the revenue is established.

Interest revenue is recognised on a time- apportionment basis that takes into account the effective yield on the investment.

SHARE CAPITAL

Preference share capital

Preference share capital is classified as equity if it is non-redeemable and any dividends are discretionary, or is redeemable but only at the company’s option. Dividends on preference share capital classified as equity are recognised as distributions within equity.

Preference share capital is classified as a liability if it is redeemable on a specific date or at the option of the shareholders or if dividend payments are not discretionary. Dividends thereon are recognised in the income statement as interest expense.

Repurchase of share capital

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity. Repurchased shares held by subsidiaries are classified as treasury shares and presented as a deduction from total equity.

125

SEGMENTAL REPORTING

A segment is a distinguishable component of the group that is engaged in providing products or services which are subject to risks and rewards that are different from those of other segments.The primary basis for reporting segment information is business segments and the secondary basis is by significant geographical region, which is based on the location of assets. The basis of segment reporting is representative of the internal structure used for management reporting.

Segment results include revenue and expenses directly attributable to a segment whether from external transactions or from transactions with other group segments.

Segment assets and liabilities comprise those operating assets and liabilities that are directly attributable to the segment or can be allocated to the segment on a reasonable basis.

TAXATION

Current taxation

Current taxation comprises tax payable calculated on the basis of the expected taxable income for the year, using the tax rates enacted or substantively enacted at the balance sheet date, and any adjustment of tax payable for previous years.

Deferred taxation

Deferred taxation is provided using the balance sheet liability method, based on temporary differences. Temporary differences are differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax values.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax is recognised in the income statement except to the extent that it relates to a transaction that is recorded directly in equity, or a business combination that is an acquisition. The effect on deferred tax of any changes in tax rates is recognised in the income statement, except to the extent that it relates to items previously charged or credited directly to equity.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Secondary taxation on companies

Secondary taxation on companies (STC) is recognised in the year dividends are declared, net of dividends received. A deferred taxation asset is recognised on unutilised STC credits when it is probable that such unused STC credits will be utilised in the future.

126


GROUP

Notes2006

R million2005

R million

ASSETS

Non-current assets 2 114 2 413

Property, plant and equipment 1 905 848

Intangible assets 2 773 925

Associates and other investments 3 228 453

Rental finance advances 4 90 75

Deferred taxation 5 118 112

Current assets 5 423 4 542

Inventories 6 1 295 1 158

Trade and other receivables 7 1 976 1 864

Cash and cash equivalents 8 2 152 1 520

Total assets 7 537 6 955

EQUITY AND LIABILITIES

Total equity 4 034 3 643

Equity holders of Altron 2 931 2 679

Minority interest 1 103 964

Non-current liabilities 343 799

Loans 12 124 544

Empowerment funding obligation 13 173 172

Provisions 14 25 30

Deferred taxation 5 21 53

Current liabilities 3 160 2 513

Loans 12 238 59

Trade and other payables 15 2 680 2 223

Provisions 14 55 67

Taxation payable 187 164

Total equity and liabilities 7 537 6 955

Net asset value per share (cents) 1 040 963

Balance sheet at 28 February 2006

127

GROUP

Notes2006

R million2005

R million

Revenue 17 13 969 12 206

Operating costs before capital items (12 929) (11 243)

Material and services (10 121) (9 063)

Employees’ remuneration (2 500) (2 185)

Depreciation and amortisation (213) (192)

Net change in inventories (95) 197

Operating profit before capital items 18 1 040 963

Capital items 19 (54) (90)

Financial income 20 112 100

Financial expenses 21 (53) (62)

Share of profit from associates 22 32 24

Profit before taxation 1 077 935

Taxation 23 (326) (339)

Profit after taxation 751 596

Attributable to:

Minority interest 257 148

Altron equity holders 494 448

Basic earnings per share (cents) 24 176 162

Diluted basic earnings per share (cents) 24 168 155

Dividends per share (cents) – paid 63 52

– proposed 78 63

Income statement for the year ended 28 February 2006

128


Attributable to equity holders of Altron Attributable to equity holders of Altron

GROUP

Share capital and

premium(note 9)

R million

Treasuryshares

(note 9)R million

Foreigncurrency

translationreserves

R million

Premium/discount

on minority

equity transaction

R million

Cash flowhedgingreserves

R million

Share- based

paymentsreserve

R million

Statutoryreserves

R million

Fair value and other

reservesR million

RetainedearningsR million

TotalR million

Minorityinterest

R million

Totalequity

R million

Balance at 1 March 2004 (IFRS restated) 789 (222) 132 43 (1) — 9 64 1 712 2 526 1 037 3 563

Recognised income and expense

Profit for the year — — — — — — — — 448 448 148 596

Foreign currency translation differences — — (35) — — — — — — (35) 13 (22)

Release of translation surpluses (note 19) — — (67) — — — — — — (67) — (67)

Cash flow hedging reserve — — — — 1 — — — — 1 1 2

Share-based payments — — — — — 1 — — — 1 1 2

Fair value adjustments — — — — — — — (16) — (16) — (16)

Transfer between reserves — — — — — — — (22) 22 — — —

Transactions with shareholders

Dividends — — — — — — — — (143) (143) (81) (224)

Issue of share capital 17 — — — — — — — — 17 — 17

Changes in shareholding of subsidiaries — — — (53) — — — — — (53) (210) (263)

Minorities arising on acquisitions — — — — — — — — — — 55 55

Balance at 28 February 2005 (IFRS restated) 806 (222) 30 (10) — 1 9 26 2 039 2 679 964 3 643



Foreign currency translation differences — — (3) — — — — — — (3) (1) (4)


Cash flow hedging reserve — — — — (3) — — — — (3) (1) (4)

Share-based payments — — — — — 2 — — — 2 — 2

Fair value adjustments — — — — — — — 8 — 8 — 8


Dividends — — — — — — — — (176) (176) (106) (282)


Changes in shareholding of subsidiaries — — — (82) — — — — — (82) — (82)

Disposal of subsidiary — — — — — — — — — — (10) (10)

Balance at 28 February 2006 827 (222) 18 (92) (3) 3 9 34 2 357 2 931 1 103 4 034

Statement of changes in equity for the year ended 28 February 2006

129

Attributable to equity holders of Altron Attributable to equity holders of Altron

GROUP

Share capital and

premium(note 9)

R million

Treasuryshares

(note 9)R million

Foreigncurrency

translationreserves

R million

Premium/discount

on minority

equity transaction

R million

Cash flowhedgingreserves

R million

Share- based

paymentsreserve

R million

Statutoryreserves

R million

Fair value and other

reservesR million

RetainedearningsR million

TotalR million

Minorityinterest

R million

Totalequity

R million

Balance at 1 March 2004 (IFRS restated) 789 (222) 132 43 (1) — 9 64 1 712 2 526 1 037 3 563



Foreign currency translation differences — — (35) — — — — — — (35) 13 (22)


Cash flow hedging reserve — — — — 1 — — — — 1 1 2

Share-based payments — — — — — 1 — — — 1 1 2

Fair value adjustments — — — — — — — (16) — (16) — (16)

Transfer between reserves — — — — — — — (22) 22 — — —


Dividends — — — — — — — — (143) (143) (81) (224)


Changes in shareholding of subsidiaries — — — (53) — — — — — (53) (210) (263)

Minorities arising on acquisitions — — — — — — — — — — 55 55

Balance at 28 February 2005 (IFRS restated) 806 (222) 30 (10) — 1 9 26 2 039 2 679 964 3 643



Foreign currency translation differences — — (3) — — — — — — (3) (1) (4)


Cash flow hedging reserve — — — — (3) — — — — (3) (1) (4)

Share-based payments — — — — — 2 — — — 2 — 2

Fair value adjustments — — — — — — — 8 — 8 — 8


Dividends — — — — — — — — (176) (176) (106) (282)


Changes in shareholding of subsidiaries — — — (82) — — — — — (82) — (82)

Disposal of subsidiary — — — — — — — — — — (10) (10)

Balance at 28 February 2006 827 (222) 18 (92) (3) 3 9 34 2 357 2 931 1 103 4 034

130


Notes2006

R million2005

R million

Cash flows from operating activities 819 750

Cash generated by operations 31 1 412 1 200 Interest received 93 82 Dividends received 32 — 6 Interest paid (54) (48) Taxation paid 33 (350) (266)

Cash available from operating activities 1 101 974 Dividends paid – to Altron equity holders (176) (143) – to minority shareholders (106) (81)

Cash flows from investing activities (62) (1 381)

Acquisition of subsidiaries and joint venture 34 (126) (985)

Proceeds on disposal of subsidiaries and joint venture 35 472 — Proceeds on disposal of property, plant and equipment 36 46 75 Net repayment of rental finance advances 13 83 Acquisition of property, plant, equipment and intangibles (315) (333)

Replacement capital expenditure (173) (218) Expansion capital expenditure (142) (115)

Change from subsidiary to associate 37 — (3) Other investing activities 38 (152) (218)

Cash flows from financing activities (122) 155

Repayment of loans (166) (20) Proceeds from empowerment funding obligation — 158 Proceeds on issue of shares 21 17 Changes in minority interests 39 23 —

Net increase/(decrease) in cash and cash equivalents 635 (476) Cash and cash equivalents at the beginning of the year 1 520 2 004 Effect of foreign exchange translation on cash balance (3) (8)

Cash and cash equivalents at the end of the year 8 2 152 1 520

Cash flow statement for the year ended 28 February 2006

131

Land andbuildingsR million

Plant andmachinery

R million

Motor vehicles,

furniture andequipment

R million

IT equipment

and softwareR million

TotalR million

1. PROPERTY, PLANT and EQUIPMENTCostBalance at 1 March 2004 221 1 217 196 396 2 030 Additions at cost 21 123 112 77 333 Arising on business combinations 10 120 54 86 270 Disposals (27) (29) (62) (11) (129)Translation and reclassification (4) (2) (36) (4) (46)

Balance at 28 February 2005 221 1 429 264 544 2 458

Additions at cost 15 152 76 67 310Arising on business combinations — 8 12 72 92Disposals (5) (10) (49) (88) (152)Disposals of subsidiaries and joint ventures (2) (11) (5) (16) (34)Translation and reclassification (11) (3) (11) (4) (29)


Depreciation and impairment lossesBalance at 1 March 2004 57 914 137 251 1 359 Depreciation for the year 4 75 32 77 188 Arising on business combinations 2 76 27 51 156 Disposals (4) (14) (28) (13) (59)Translation and reclassification (1) (28) (2) (3) (34)


Depreciation for the year 5 85 36 76 202Impairment losses — 17 — — 17Arising on business combinations — 5 4 70 79Disposals (4) (17) (11) (81) (113)Disposals of subsidiaries and joint ventures (2) (4) (5) (15) (26)Translation and reclassification — (16) (12) (1) (29)


Carrying amount at 1 March 2004 164 303 59 145 671 Carrying amount at 28 February 2005 163 406 98 181 848

Carrying amount at 28 February 2006 161 472 109 163 905

Land and buildingsDetails of land and buildings are available, on request, for inspection at the registered office of the company.

Encumbered assetsThe group leases certain property, plant and motor vehicles under finance lease agreements. They are included in the above amounts.

2006Rm

2005Rm

The net carrying amount of the leased assets is: 20 16

Assets under constructionIncluded in the cost of assets are the following items of capital work in progress:

Plant and machinery 81 87IT equipment and software 14 7Other equipment 1 7

96 101

Impairment lossesImpairment losses relate to the assets of businesses closed during the year.Useful livesUseful lives are reflected under accounting policies on page 123.

Notes to the financial statements

132


Notes to the financial statements continued

GoodwillR million

Customerrelationships

R million

Patents andtrademarks

R million

Licence agreements

R million

Proprietary softwareR million

Total R million

2. INTANGIBLE ASSETS

CostBalance at 1 March 2004 436 — 7 23 — 466Adjustments (4) — — — — (4)Arising on business combinations 639 — — 31 1 671Disposals (3) — — — — (3)

Balance at 28 February 2005 1 068 — 7 54 1 1 130

Additions at cost — — 1 4 — 5Adjustments (38) — — — — (38)Arising on business combinations 95 26 — — 5 126Disposals of subsidiaries and joint ventures (117) — — (31) — (148)Translation differences — — — (3) — (3)

Balance at 28 February 2006 1 008 26 8 24 6 1 072

Amortisation and impairment lossesBalance at 1 March 2004 — — 2 — — 2Amortisation for the year — — — 4 — 4Impairment losses 200 — — — — 200Disposals (1) — — — — (1)

Balance at 28 February 2005 199 — 2 4 — 205

Amortisation for the year — 9 — — 2 11Impairment losses 82 — 1 — — 83

Balance at 28 February 2006 281 9 3 4 2 299

Carrying amount at 1 March 2004 436 — 5 23 — 464Carrying amount at 28 February 2005 869 — 5 50 1 925

Carrying amount at 28 February 2006 727 17 5 20 4 773

133

2006R million

2005R million

2. INTANGIBLE ASSETS (continued)

Adjustments to goodwillA reduction of goodwill was adjusted in the income statement in respect of tax losses and deductible temporary differences realised or recognised as deferred tax assets after acquisition of a subsidiary that did not meet the recognition criteria of a deferred tax asset at acquisition.

Impairment tests for cash-generating units containing goodwillThe following units have significant carrying amounts of goodwill:

Altech NamlTech 332 414

Plato Computer Services UK 50 50

CS Holdings 105 105

Digital Healthcare Solutions 64 —

Bytes Document Solutions 67 67

Econet — 117

Multiple units without significant goodwill 109 116

727 869

Description of impairment tests and key assumptionsImpairment tests are conducted on an annual basis using a discounted cash flow valuation model.

The impairment tests are prepared on the basis of forecast profits generated by the cash generating unit.

Management forecasts typically cover a two-year period and thereafter a reasonable rate of growth is applied based on current market conditions.

In assessing future cash flows, management has used assumptions relating to the growth in the units market potential, new market opportunities as well as reductions in manufacturing costs based on business plans.

Discount rates used in the discounted cash flow models are based on price-earnings ratios of similar businesses in the same sector and of generally similar size.

Impairment lossesIn view of the trading loss incurred by Altech NamITech the directors concluded that the carrying value of goodwill relating to the Altech NamITech acquisition was impaired by an amount of R82 million. Impairment losses of R176 million in the prior year primarily related to Plato Computer Services UK.

2006R million

2005R million

3. ASSOCIATES AND OTHER INVESTMENTS

Associates 14 249

Investments 94 153

Loans 120 51

Refer annexure 1 for details 228 453

4. RENTAL FINANCE ADVANCES

AssetsPresent value of minimum lease payments receivable 146 159

Less: current portion (note 7) (56) (84)

Non-current finance lease asset 90 75

Liabilities (included under loans)

Present value of minimum lease payments payable (note 12) 95 53

Less: current portion (27) (29)

Non-current finance lease liability 68 24

Group entities sell certain document-processing equipment to third parties, on a finance lease basis.

The lease asset arising is, in turn, financed by a reciprocal lease agreement with financial institutions.

The underlying loans receivable and payable are settled in monthly instalments over periods up to six years and bear interest at rates linked to the prime bank overdraft rate. The loans are secured by the underlying equipment sold.

5. DEFERRED TAXATION

5.1 Deferred taxation movementBalance at beginning of year (59) (76)

Charged to the income statement (47) 31

Charged directly in equity – available-for-sale investments 1 (3)

Acquisitions and disposal of subsidiaries 8 (11)

Balance at end of year (97) (59)

134



2006R million

2005R million

5. DEFERRED TAXATION (continued)

5.2 Deferred taxation balancesAttributable to the following temporary differences:

Property, plant and equipment 56 35

Intangible assets 5 —

Construction work in progress — (1)

Prepaid expenditure 5 —

Receipts in advance (41) (34)

Receivables (16) (3)

Contract allowances 21 21

Provisions (69) (41)

Tax losses (53) (22)

Investments and other 6 (2)

Secondary taxation credits (11) (12)

(97) (59)

The above balance comprises:

Deferred taxation liabilities 21 53

Deferred taxation assets (118) (112)

(97) (59)

Tax lossesEstimated tax losses available for set-off against future taxable income 356 240

Applied to reduce deferred taxation (183) (80)

173 160

Attributable to minority shareholders (27) (8)

146 152

2006R million

2005R million

6. INVENTORIES

Raw materials 403 429

Work in progress 226 256

Finished goods 570 428

Merchandise 89 82

Consumable stores 21 19

1 309 1 214

Less: receipts in advance (14) (56)

1 295 1 158

Inventories carried at cost 1 103 932

Inventories carried at fair value less cost to sell 192 226

1 295 1 158

7. TRADE AND OTHER RECEIVABLES

Trade receivables 1 879 1 776

Less: impairment losses (129) (137)

Current portion of rental finance advances (note 4) 56 84

Derivative assets at fair value 7 3

Other receivables 163 138

1 976 1 864

8. CASH AND CASH EQUIVALENTS

Cash at bank 954 968

Cash on deposit 1 198 552

2 152 1 520

135

GROUP AND COMPANY

2006Number

of shares

2005Number

of shares2006

R million2005

R million

9. SHARE CAPITAL AND PREMIUM

9.1 AuthorisedOrdinary shares of 2 cents each 247 500 000 247 500 000 5 5

Participating preference shares of 0.01 cents each 500 000 000 500 000 000 * *

5 5

9.2 IssuedOrdinary sharesIn issue at beginning of year 97 174 115 97 174 115 2 2

Issued in terms of share schemes — — — —

In issue at end of year 97 174 115 97 174 115 2 2

Less: own shares acquired by subsidiary (3 246 469) (3 246 469)

Net ordinary shares 93 927 646 93 927 646

Participating preference sharesIn issue at beginning of year 208 698 664 204 790 976 * *

Issued in terms of share schemes 3 623 838 3 907 688 * *

In issue at end of year 212 322 502 208 698 664 * *

Less: own shares acquired by subsidiary (24 310 492) (24 310 492)

Net participating preference shares 188 012 010 184 388 172

Total number of shares in issue at the end of the year net of own shares acquired 281 939 656 278 315 818

9.3 Share premiumBalance at beginning of year 804 787

Share premium arising from issue of shares 21 17

Balance at end of year 825 804

9.4 Total issued share capital and premium 827 806

*Less than R1 million

136



2006 Number

of shares

2005Number

of shares

9. SHARE CAPITAL AND PREMIUM (continued)

9.5 UnissuedOrdinary shares Shares reserved for allocation under employee share schemes 4 847 855 4 847 855

Shares under the control of the directors until the forthcoming annual general meeting 145 478 030 145 478 030

150 325 885 150 325 885

Participating preference sharesShares reserved to meet the requirements of:

Allied Electronics Corporation Limited Share Trust 2 399 162 5 247 687

Altron Group Share Incentive Trust 3 845 773 5 211 600

Conditional Rights Scheme 4 243 940 —

Shares reserved for allocation under employee share schemes 15 495 042 19 148 468

Shares under the control of the directors until the forthcoming annual general meeting 261 693 581 261 693 581

287 677 498 291 301 336

The members in a general meeting on 15th July 2005 reserved shares for the Altron share schemes provided that issues in the aggregate in any one financial year shall not exceed 10% of the number of shares of any class of shares in issue, less any shares issued during the year pursuant to the exercise of share options.

Terms of equity shares

Ordinary sharesThe holders of ordinary shares are entitled to receive dividends as declared from time-to-time and are entitled to one vote per share at meetings of the company.

Participating preference sharesHolders of participating preference shares rank pari passu with the ordinary shares with regard to entitlement to dividends and the company’s residual assets. The shares have limited and diluted voting rights only in specific and limited circumstances (refer page 87).

Treasury sharesThe directors have a general authority to repurchase shares of the company not exceeding 20% of the company’s ordinary and/or participating preference issued share capital in any one financial year until the next annual general meeting. No shares were repurchased during the year.

9.6 Employee share options – participating preference shares

Allied ElectronicsCorporationShare Trust

Altron Group Share

Incentive TrustConditional

Rights SchemeTotal share

options

Number of options allocated at beginning of year 5 247 687 5 211 600 — 10 459 287

Number of options granted — — 4 243 940 4 243 940

Number of options lapsed/forfeited (275 214) (315 300) — (590 514)

Number of options exercised (2 573 311) (1 050 527) — (3 623 838)

Number of options allocated at end of year 2 399 162 3 845 773 4 243 940 10 488 875

137


9.7 The Altron Group Share Incentive Trust, Allied Electronics Corporation Limited Share Trust and the Conditional Rights Scheme.Details of rights outstanding at the end of the year under review:

Options and deferred delivery shares outstanding

at 28 February 2006

Date grantedExercise price

per share

Allied Electronics CorporationShare Trust

Altron GroupShare

Incentive Trust

ConditionalRights

Scheme

6 April 95 R6.50 8 000

6 April 96 R6.50 1 100

10 May 96 R6.50 1 680

2 September 96 R6.10 7 680

20 December 96 R4.80 129 300

6 March 97 R5.05 117 292

12 January 98 R8.30 20 000

15 September 98 R3.49 601 372

26 January 99 R4.70 39 400

5 March 99 R5.25 419 164

30 May 00 R5.00 169 580

28 June 00 R4.85 837 994

10 April 01 R7.00 26 400

7 June 02 R7.40 20 200

1 October 02 R7.25 2 410 373

The following options are subject to IFRS 2

14 February 03 R7.70 50 000

1 April 03 R7.00 41 000

11 December 03 R10.00 30 000

27 July 04 R11.20 1 314 400

9 February 06 R22.50 4 243 940

2 399 162 3 845 773 4 243 940

Terms of schemesAllied Electronics Corporation Share TrustThe Allied Electronics Corporation Limited Share Trust is a ten-year scheme and is currently in run-off where the last of the options so granted are exercisable in March 2012. It has a vesting period of three years from initial date of grant before the options may be exercised.

Altron Group Share Incentive TrustThe Altron Group Share Incentive Trust is a six-year scheme. The vesting period is three years from initial date of grant before the options may be exercised in equal tranches over a three-year period.

The Conditional Rights SchemeUnder the Conditional Rights Scheme participants are granted rights to acquire shares subject to meeting future performance vesting conditions. Vesting of Conditional Rights occurs in equal tranches over a three-year period commencing on the third anniversary of the granting of the Conditional Rights, subject to meeting the vesting conditions.

Please refer to the remuneration report for details of options held by directors.

138




9.8 Share-based paymentsThe number and weighted average exercise prices of share options accounted for under IFRS 2 are:

Weightedaverage

exercise price2006

R

Numberof options

2006000’s

Weightedaverage

exercise price2005

R

Numberof options

2005000’s

AltechOutstanding at the beginning of the period 34.44 485 30.00 30

Forfeited during the period 32.25 (15) — —

Exercised during the period — — — —

Granted during the period 50.99 2 179 34.74 455

Outstanding at the end of the period 48.07 2 649 34.44 485

Exercisable at the end of the period — —

BTGOutstanding at the beginning of the period 5.19 3 011 3.61 650

Forfeited during the period — — —

Exercised during the period 5.44 (811) 3.63 (67)

Granted during the period 11.566 524

5.582 428

Outstanding at the end of the period 9.93 8 724 5.19 3 011

Exercisable at the end of the period 869 150

Altron

Outstanding at the beginning of the period 10.96 1 589 8.03 121

Forfeited during the period 11.20 (154) — —

Exercised during the period — — —

Granted during the period 22.504 244

11.201 468

Outstanding at the end of the period 19.58 5 679 10.96 1 589

Exercisable at the end of the period 17 —

Share options granted before 7 November 2002 or vested before 1 January 2005 have not been accounted for under IFRS 2 in accordance with the transitional provisions in IFRS 1 and IFRS 2.

The fair value of services received in return for share options granted is measured by reference to the fair value of the share options granted. The estimate of the fair value of the services received is measured based on the Black Scholes Model. Options are assumed to be exercised midway between the vesting date and the expiry date. There is no difference between the options granted to key management and senior employees. All awards are made up of three equal tranches, which vest three, four and five years after grant date.

139


Fair value of share options and assumptionsFair value at measurement date:

2005Share Incentive Scheme Altech BTG AltronFair value at measurement date (Rand) 4.92 to 9.14 1.14 to 1.77 2.02 to 2.61

Share price 32.00 to 39.94 5.575 11.20Exercise price 32.00 to 39.94 5.575 11.20Expected volatility 14.30% 38.80% 20.00%Option life 3.5 to 5.5 1.5 to 3.5 3.5 to 5.5Dividend yield 3.13% to 3.91% 3.95% 4.64%Risk-free interest rate 9.50% 9.50% 9.50%2006Conditional Rights Altech BTG AltronFair value at measurement date (Rand) 12.20 to 13.85 3.12 to 3.42 5.09 to 5.69

Share price 50.99 11.56 22.50Exercise price 50.99 11.56 22.50Expected volatility 24.5% to 26.4% 26.60% 19.4% to 19.9%Option life 4.5 to 5.5 4.5 to 5.5 4.5 to 5.5Dividend yield 3.41% 2.67% 2.80%Risk-free interest rate 7.27% 7.09% 7.27%

The expected volatility is based on the historic volatility over a similar period to the option life, adjusted for once-off events in the historic volatility and for any expected changes to future volatility due to publicly available information.

Share options granted in periods prior to the current financial year had a service condition attached. The new conditional rights scheme implemented in the current financial year includes both a service condition and a non-market performance condition. The non-market performance conditions are not taken into account in the grant date fair value measurement of the services received. There are no other market conditions associated with any of the share option grants.

Employee expenses Group

2006R million

2005R million

Share options granted between 7 November 2002 and 28 February 2005 3 2Share options granted in 2006* 1 —Expense arising from share appreciation rights granted in 2006 9 —

Total expense recognised as employee costs 13 2

Total carrying amount of cash-settled transaction liabilities 9 —

* Share options in Altron and BTG were only granted in late February 2006 and so there is no charge in respect of these options in the current financial year.

The fair value of the share appreciation rights at grant date is determined based on the Black Scholes Model. The fair value of the liability is remeasured at each balance sheet date and at settlement date. The model inputs at 28 February 2006 were as follows:

Altech BTG AltronShare price 51.50 12.00 22.50Exercise price 32.25 5.575 11.20Terms (years) 1.4 to 3.4 1.4 to 3.4 1.4 to 3.4

Volatility 24.1% to 27% 22.7% to 26.6% 20.2% to 23%Dividend yield 3.38% 2.67% 2.80%Risk-free interest rate 7.20% 7.20% 7.20%

140



GROUP

2006R million

2005R million

10. RESERVES

10.1 Retained earnings 2 357 2 039

Are distributable and would be subject to secondary tax on companies.

10.2 Foreign currency translation reserve 18 30

Comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations.

10.3 Premium/discount on minority equity transactions (92) (10)

Comprises the premium or discount on subsequent purchase or sale of equity instruments in existing subsidiaries.

10.4 Cash flow hedging reserve (3) —

Comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments that have not yet occurred.

10.5 Share-based payments reserve 3 1

Comprises the net fair value of equity instruments granted to employees under share schemes expensed.

10.6 Statutory reserves 9 9

Comprises the Capital Redemption Reserve Funds as well as legal reserves of a foreign subsidiary.

10.7 Fair-value reserve 34 26

Comprises the cumulative net change in the fair value of available-for-sale investments until the investment is derecognised.

Total reserves 2 326 2 095

11. BLACK ECONOMIC EMPOWERMENT (BEE) TRANSACTIONS

The group entered into the following material BEE transactions during the previous year:

11.1 Altech group – NamITech Holdings Limited (NamITech) – Pamodzi Investment Holdings (Pty) Limited (Pamodzi) The Altech group acquired an interest in NamITech. Simultaneously with the acquisition, NamITech issued preferred ordinary shares to Pamodzi, a BEE company. The preferred ordinary shares entitle Pamodzi to 28% of the voting rights in respect of the total issued share capital of NamITech and to 28% of the earnings in excess of predetermined base earnings of NamITech. Pamodzi will be entitled to dividends on the earnings in excess of base-year earnings at the rate of 32%, with a guideline dividend policy being a dividend equal to one-third of NamITech’s earnings, subject to the discretion of the directors.

At the time the dividends on the preferred ordinary shares equal the dividends on the ordinary shares then the preferred ordinary shares will be entitled to 28% of the total annual earnings of NamITech and 28% of its shareholders equity. In the event of a liquidation or sale of NamITech, Pamodzi will be entitled to 28% of the proceeds at that date.

Assuming that any of the above events had occurred at the dates of transactions the interest of Pamodzi would have equated to R93 million (2005: R115 million). A transfer to the Pamodzi minority will be made from retained earnings when they are entitled thereto in the year that the dividends on the preferred ordinary shares are equal to the dividends on the ordinary shares.

A diluted earnings adjustment has not been made in respect of the preferred ordinary shares as the earnings of NamITech have yet to meet the level at which the shares would have full participative rights to earnings and dividends of the company.

11.2 Powertech group – Aberdare Cables (Pty) Limited (Aberdare) – Izingwe Aberdare Cables Investments (Pty) Limited (Izingwe)Powertech entered into an agreement with Izingwe to dispose of 30% of its equity interest and shareholders’ loans in Aberdare. The purchase price was funded by a financial institution. The financing arrangement includes certain put and call options to Altron and Powertech and includes a number of terms and conditions that need to be maintained or fulfilled before the risks attached to repayment of the loan fully transfer to Izingwe.

Although the rewards of ownership have fully vested in Izingwe, due to the requirements of the current accounting framework, the recognition of the disposal has been deferred in the financial statements until the obligation to repay the funding has been fully transferred to Izingwe.

141

11.2 Powertech group - Aberdare Cables (Pty) Limited (Aberdare) – Izingwe Aberdare Cables Investments (Pty) Limited (Izingwe) (continued)The funding obligation is consequently reflected as a liability of the group (refer note 13).

A diluted earnings adjustment has not been made as the recognition of the 30% minority interest with a settlement of the outstanding balance on the funding obligation is currently antidilutive (refer note 24.4).

11.3 BTG group – BTG South Africa (Pty) Limited (BTG SA) – Kagiso Strategic Investments (Pty) Limited (Kagiso)BTG entered into an agreement with Kagiso to effectively dispose of 5% of its equity interest in BTG SA for a cash consideration fully funded by Kagiso. In addition Kagiso were granted options to acquire a further 22% equity interest in BTG SA for R198 million. In the interim period Kagiso is entitled to 27% of the voting rights of the total issued share capital of BTG SA in respect of the ordinary shares acquired and class B non-participative shares held by them. The class B shares are cancellable upon Kagiso exercising its options.

A diluted earnings adjustment amounting to a net R16 million (2005: R9 million) has been calculated based on the profit that would be attributable to the additional 22% shareholding adjusted for the dilutive effect of the option price at the BTG SA level (refer note 24.4).

GROUP

2006R million

2005R million

12 LOANS

12.1 Non-current loansPreference shares of subsidiary (a) 206 206

Rental finance liabilities note 4 95 53

Finance leases (b) 27 24

Spanish Government (c) 2 3

Minority shareholders loans (d) 32 31

Venopt (e) — 208

Barclays Bank (f) — 78

362 603

Less: payable within one year shown as current loans (238) (59)

Total non-current loans 124 544

GROUP

2006R million

2005R million

12.2 Current loansCurrent portion of loans 238 59

238 59

(a) Cumulative redeemable preference shares in a subsidiary are regarded as a loan. These shares have a variable dividend coupon rate of 68% of the prime bank overdraft rate. The dividends are payable half yearly in arrear commencing 31 March 2004 and were redeemed on 2 March 2006.

(b) Capitalised finance leases and the property sale and leaseback liabilities are settled in monthly instalments over periods of up to seven years and bear interest at rates linked to the prime bank overdraft rate. The property lease runs over a period of ten years, of which three years remain. The lease liabilities are secured by land and buildings with a net book value of R13.5 million and plant and motor vehicles with a book value of R6 million.

(c) Euro loans from the Spanish Government which are interest free and repayable in four equal annual instalments.

(d) Minority shareholders’ loans

Arrow Altech Holdings (Pty) Limited: The loan is unsecured and bears interest at a 12-month fixed deposit rate and has no fixed terms of repayment 24 31

NamITech West Africa Limited: The loan is unsecured and bears interest at 2% per annum above the South African prime rate and has no fixed terms of repayment 6 —

Desta Power Matla (Pty) Limited: The loan is unsecured and bears no interest with no fixed terms of repayment 2 —

32 31

142



12. LOANS (continued)

(e) The loan granted by Venopt (Pty) Limited, a company controlled by Kagiso Strategic Investments (Pty) Limited, was a five-year term loan at an interest rate of JIBAR plus 2.1%, funded in equal parts by Absa and Nedcor. The loan was repaid during the year.

(f) The Barclays Bank facility was an Econet Wireless Global Limited US Dollars based loan at LIBOR plus 2.5% which was disposed of during the year.

2006R million

2005R million

12.3 Borrowing facilitiesIn terms of the articles of association, the borrowing powers of the group are unlimited.

Unutilised banking facilities 2 248 1 854

2006R million

2005R million

13. EMPOWERMENT FUNDING OBLIGATION

Opening balance 172 165

Interest accrued 15 14

Dividend paid (16) (7)

Capital costs accrued 2 —

173 172

The dividends on the preference shares bear an indicative dividend rate of 9.61% (2005: 9.61%). The expected redemption period is from March 2008 to March 2014. (refer note 11.2)

Warranties andcontract losses

R million

Post-retirementmedical aid

benefitsR million

TotalR million

14. PROVISIONS

Non-current provisions 20 10 30

Current portion included in current liabilities 67 — 67

Total provisions at 28 February 2005 87 10 97

Provisions raised during the year 3 — 3

Disposals of subsidiaries and joint ventures (3) — (3)

Provisions utilised/released during the year included in operating profit (17) — (17)

Total provisions at 28 February 2006 70 10 80

Provisions comprise:

Non-current 15 10 25

Current portion included in current liabilities 55 — 55

70 10 80

Refer to accounting policies for description of provisions.

143

2006R million

2005R million

16.1 Value of obligationsFair value of plan assets 1 809 1 412 Present value of funded obligations (1 271) (1 169)

Surplus at year-end 538 243 Unrecognised due to paragraph 58 limit (132) (105)Unrecognised actuarial gains (406) (138)

Asset recognised on the balance sheet — —

16.2 Components of income statement expenseCurrent service cost 72 74 Interest cost 97 95Expected return on plan assets (limited by paragraph 58) (103) (113)

Current service cost 66 56

16.3 Reconciliation of the net assets recognised on the balance sheetAmount recognised at beginning of year — — Unrecognised due to paragraph 58 limit at beginning of year 105 104 Net expense recognised in the income statement (66) (56)Contributions 66 56 Current year unrecognised return on assets due to paragraph 58 limit 27 1

Net asset at end of year 132 105 Unrecognised due to paragraph 58 limit at end of year (132) (105)

Amount recognised at end of year — —

IAS 19 – Employee Benefits paragraph 58 only allows an asset to be recognised on the company’s balance sheet to the extent that economic benefits are available to the company in the form of refunds or reductions in future contributions. The Pension Funds Act, 1956, as amended, precludes the company from accessing the asset in 16.1 above and accordingly, it has not been recognised on the group’s balance sheet.

2006R million

2005R million

15. TRADE AND OTHER PAYABLES

Trade payables 2 501 2 022

Derivative liability at fair value 21 9

Other payables 158 192

2 680 2 223

16. RETIREMENT BENEFIT PLANS

Defined contribution plans The majority of the group’s employees are members of the Altron Group Pension Fund which is a defined contribution fund and is governed by the Pension Funds Act, 1956 as amended. The contribution rate of the employers is 10% (2005: 10%), calculated on the pensionable emoluments of members.

Additionally, the group provides retirement benefits for certain of its employees through the Altron Group Provident Fund. The fund is a defined contribution fund and is governed by the Pension Funds Act, 1956 as amended. Contributions to the fund comprise between 8% and 20% of pensionable emoluments.

The group’s contribution to these funds amounted to R86 million (2005: R70 million).

Multi-employer plans Post-acquisition of subsidiaries, certain employees remained members of their previous funds. A number of these are defined benefit plans. These industry-managed retirement benefit schemes are dealt with as defined contribution plans where the group’s obligations under the schemes are equivalent to those arising in a defined contribution plan. The group’s contribution to these other funds amounted to R31 million (2005: R23 million).

Defined benefit plans Members of the Altron Group Pension Fund who were members prior to 1 September 1996 are entitled to a minimum benefit equal to the previously provided defined benefit pension. Certain members who were members prior to 1 November 1999 are entitled to post-retirement medical assistance. The benefit plan disclosed below is only in respect of those defined as benefit pension and medical assistance.

144



2006R million

2005R million

16. RETIREMENT BENEFIT PLANS (continued)

16.4 Principal actuarial assumptions Discount rate 7.5% 8.5%

Inflation rate 4.5% 4.0%Salary increase rate 5.5% 5.5%Expected return on assets 9.0% 9.5%Pension increase allowance 4.5% 4.0%Actual return on the Altron Group Pension Fund 29.5% 22.1%

17. REVENUE

Goods sold 8 756 8 065 Services rendered 5 169 4 101 Rental finance income 44 40

13 969 12 206

18. OPERATING PROFIT BEFORE CAPITAL ITEMS

Is stated after taking account of the following items:

18.1 Auditors’ remunerationAudit fees 15 12 Fees for other services 2 2

17 14

18.2 Directors’ remunerationRefer to remuneration report on page 106 34 30

18.3 Employee remuneration (including directors’ remuneration)Salaries and wages 2 262 1 993 Share-based payments – equity settled (note 9.8) 4 2 Share-based payments – cash settled (note 9.8) 9 — Retirement and provident funds 117 95 Medical aid and other 108 95

2 500 2 185

18.4 Fees paidManagerial fees 14 13 Technical, consultancy and administration 64 54

78 67

2006R million

2005R million

18.5 Foreign exchange gains/(losses)Gains 27 44 Losses (9) (28)Forward exchange contracts fair value adjustments (2) (3)

16 13

Being:

Realised 19 17 Unrealised (3) (4)

18.6 Net decrease in provisions (14) (28)

18.7 Operating lease chargesProperty 107 92 Plant, equipment and vehicles 12 24 Additional cost of straight- lining of leases 10 4

129 120

18.8 Other incomeGovernment grants and other allowances 7 12

18.9 Research and development expenditure 90 56

19. CAPITAL ITEMS

Net gain on disposal of property, plant and equipment 7 7 Impairment of property, plant and equipment (17) —

Impairment of intangible assets (83) (200)Goodwill adjustment on utilisation of at acquisition tax losses (38) (4)Net gain/(loss) on disposal and closure of businesses 65 (4)Profit on disposal of associate 3 —Foreign currency translation reserves realised 9 67 Release of discontinuance provision — 44

(54) (90)

145

2006R million

2005R million

20. FINANCIAL INCOME

Interest received 93 82

Dividends from preference share investments 19 18

112 100

21. FINANCIAL EXPENSE

Interest paid 24 33

Interest on empowerment funding obligation 15 14

Dividends on preference shares of subsidiary 14 15

53 62

22. SHARE OF PROFITS FROM ASSOCIATES

Attributable earnings 32 24

23. TAXATION

23.1 Taxation chargeCurrent taxation

– normal 314 280

– capital gains taxation 24 —

Deferred taxation

– current year (10) 29

– change in rate — 1

– tax losses recognised (39) (13)

Adjustment to prior years

– deferred taxation 2 14

291 311

Secondary tax on companies 35 28

326 339

2006R million

2005R million

23.2 Reconciliation of rate of taxation % % South African normal tax rate

29.0 30.0

Adjusted for:

Disallowable expenditure 2.8 3.8

Goodwill impaired and adjusted 3.2 6.4

Non-taxable income (5.4) (7.5)

Capital gains tax rate differential 2.2 —

Foreign tax rate differential — (0.1)

Prior period tax losses recognised (3.6) —

(Utilisation)/creation of tax losses not capitalised (0.4) 0.1

Income from associates (0.9) (0.3)

Change in rate of taxation — 0.2

Prior year adjustments 0.2 0.7

(1.9) 3.3

Secondary tax on companies 3.2 3.0

Net increase 1.3 6.3

Effective tax rate 30.3 36.3

24. EARNINGS PER SHARE

24.1 Reconciliation between earnings and headline earningsAttributable earnings to Altron equity holders 494 448

Adjustments for:

Capital items 54 90

Tax effect on capital items 9 (10)

Minority interest in capital items (28) (83)

Headline earnings 529 445

Headline earnings per share (cents) 189 162

146



2006 2005

24. EARNINGS PER SHARE (continued)

24.2 Reconciliation of weighted average number of sharesIssued shares at beginning of year (ordinary and participating preference shares) 305 872 779 301 965 091

Effect of own shares held (27 556 961) (27 556 961)

Effect of shares issued in June 498 826 467 721

Effect of shares issued in July 337 541 —

Effect of shares issued in August 80 633 1 123 575

Effect of shares issued in November 566 442 81 699

Effect of shares issued in January 10 364 25 008

Effect of shares issued in February 7 642 36

Weighted average number of shares 279 817 266 276 106 169

24.3 Reconciliation between number of shares used for earnings per share and diluted earnings per shareWeighted average number of shares 279 817 266 276 106 169

Dilutive options 2 792 366 5 463 428

Number of shares to calculate dilution 282 609 632 281 569 597

2006R million

2005R million

24.4 Reconciliation between earnings attributable to Altron equity holders and fully diluted earnings are as follows:Attributable earnings to Altron equity holders 494 448 Additional earnings attributable to BEE minorities in subsidiaries (28) (18)Minority interest in adjustments 12 9Additional earnings attributable to dilutive options at subsidiary level (3) (1)

Fully diluted earnings 475 438

24.5 Reconciliation headline earnings attributable to Altron equity holders and fully diluted headline earnings are as follows:Headline earnings 529 445 Additional earnings attributable to BEE minorities in subsidiaries (38) (19)Minority interest in adjustments 16 9Additional earnings attributable to dilutive options at subsidiary level (3) (5)

Fully diluted headline earnings 504 430

Diluted headline earnings per share (cents) 178 153

Basic earnings per share is calculated by dividing the earnings attributable to Altron equity holders by the weighted average number of ordinary and participating preference shares in issue during the year.

Basic headline earnings per share is calculated by dividing headline earnings by the weighted average number of ordinary and participating preference shares in issue during the year.

For diluted earnings per share the weighted average number of ordinary shares is adjusted to assume conversion of not yet released purchased shares under the Employee Share Option Scheme, net of shares held by the scheme for releasing purposes.

Fully diluted earnings and headline earnings have been calculated on the basis that:

147

2006R million

2005R million

Ü Kagiso Strategic Investments (Pty) Limited exercised its full option on 22% of the shares in Bytes Technology Group South Africa (Pty) Limited effective 1 March 2004 adjusted for the dilutive effect of the option price at the BTG SA level.

Ü The recognition of the deferred sale of the 30% interest of the Izingwe Consortium in Aberdare Cables based on the assumption that a portion of the purchase price will be settled in cash of R173 million. The effective option was antidilutive in the current and prior year and consequently, no dilution was calculated.

Ü The earnings effect of dilutive options at BTG Limited and Allied Technologies Limited subsidiary level.

25. DIVIDENDS PROPOSED

Ordinary dividend No 58 of 78.0 cents 73 (2005: 63.0 cents per share) 59

Preference dividend No 12 of 78.0 cents 147 (2005: 63.0 cents per share) 117

220 176

26. COMMITMENTS

26.1 Capital expenditureContracts for capital expenditure not provided for in the financial statements 23 43

Capital expenditure authorised but not contracted for 47 34

70 77

This expenditure will be incurred in the ensuing year and will be financed from existing cash resources.

2006R million

2005R million

26.2 Amounts outstanding under operating lease agreementsAt the balance sheet date the group had outstanding commitments under non-cancellable operating leases, which fall due as follows:

Within one yearproperty 85 92

plant, equipment and vehicles 33 41

118 133

One to five yearsproperty 233 233

plant, equipment and vehicles 18 36

251 269

Thereafterproperty 115 40

Total 484 442

27. CONTINGENT LIABILITIES

The South African Revenue Services had disallowed certain assessed losses in a prior year to the value of R27 million, excluding interest, in group companies which had previously been allowed. Objections have been lodged against the revised assessments and the group is confident, based on the opinion from senior counsel, that the objections will be upheld by the Income Tax Court.

148



28. FINANCIAL INSTRUMENTS

Exposure to currency, interest rate and credit risk arises in the normal course of the group’s business.

28.1 Foreign currency riskForeign exchange contracts are used as a means of reducing exposure to fluctuations in foreign exchange rates. The group incurs currency risk as a result of transactions which are denominated in a currency other than the group entity’s functional currency in respect of purchases, sales and borrowings. The currencies, giving rise to currency risk, in which the group primarily deals are British Pounds, US Dollars and Euros. The group entities hedge payables, receivables and borrowings denominated in a foreign currency.

28.2 Foreign exchange contractsThe principal or contract amounts of foreign exchange contracts for trade payables, receivables and borrowings including forecast transactions, at balance sheet date, were:

2006 2005Foreign amount

R million

Rand amount

R million

Foreign amount

R million

Rand amount

R million

Net foreign exchange contracts to pay/(receive)British Pounds 9.9 107.1 6.4 71.7

US Dollars 64.5 400.5 17.2 101.8

Euros 18.5 136.5 18.4 142.7

Swedish Kroners 8.4 6.6 15.1 13.0

New Zealand Dollars 1.7 7.0 1.3 5.5

Swiss Francs 0.4 2.0 0.7 3.4

Australian Dollars (2.8) (12.9) — —

Various — 0.7

646.8 338.8

Comprising foreign exchange contracts:

– to pay 894.9 445.3

– to receive (248.1) (106.5)

646.8 338.8

Value of contracts at marked-to-market 661.6 344.7

Contracts in respect of forecast transactions

The group has entered into certain forward exchange contracts, included above, which do not relate to specific items appearing on the balance sheet, but were entered into to cover foreign commitments not yet due. The contracts will be utilised for purposes of inventory procurement and sales during the following year.

– to pay 84 82

– to receive — (1)

84 81

149

28.3 Monetary assets/(liabilities) Monetary assets and liabilities denominated in currencies other than South African Rands and not covered by forward exchange contracts into South African Rands were as follows:

2006 2005Foreign amount

R million

Rand amount

R million

Foreign amount

R million

Rand amount

R million

Net assets/(liabilities) British Pounds — (0.1) (0.2) (2.0)

US Dollars (8.9) (55.0) 4.5 25.6

Euros (0.2) (1.8) 3.0 27.1

Australian Dollars 6.8 30.8 8.5 39.2

Other — (0.6) — (16.4)

(26.7) 73.5

28.4 Interest rate risk

Financial assets and liabilities that are sensitive to interest rate risk are cash and cash equivalents and loans receivable/payable, rental finance advances/liabilities and preference share liabilities. The interest rates applicable to these financial instruments are in line with those currently available in the market.

28.5 Credit risk

Management has a credit risk policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. Credit guarantee insurance is taken where appropriate. The maximum exposure to credit risk is represented by the carrying value of each financial asset in the balance sheet. The maximum exposure to credit risk arising from derivative financial instruments are the contractual amounts receivable in respect of foreign exchange contracts.

28.6 Fair values

The fair values of all financial instruments are substantially identical to the carrying values reflected in the balance sheet. Unlisted equity investments are fair-valued based on directors’ valuations using the discounted cash flow method. Forward exchange contracts are marked-to-market using listed market prices. Interest-bearing borrowings and receivables are generally at interest rates in line with those currently available in the market on a floating-rate basis.

29. RELATED PARTY TRANSACTIONS

The group has a related party relationship with its subsidiaries (see note 3 page 169), associates and joint ventures (see Annexure 1), its directors (see page 106) and key management personnel (refer below)

2006 R million

2005R million

29.1 Associates and joint ventures

Sale of goods and services to associates 32 1

Interest earned from associates 1 1

Finance costs with joint venture 4 1

29.2 DirectorsDetails relating to directors’ emoluments and shareholdings in the company are disclosed in the remuneration report on page 106 and in the Directors’ report on page 113.

150



2006R million

2005R million

29. RELATED PARTY TRANSACTIONS (continued)

29.3 Key management personnelKey management personnel are defined as directors of the company and its principal subsidiary companies, Allied Technologies Limited (Altech), Bytes Technology Group Limited (BTG) and Power Technologies (Pty) Limited (Powertech). The key management personnel compensations were as follows:

Short-term employee benefits, including salaries and bonuses 52 44

Post-employment benefits 4 3

Equity compensation benefits 1 1

57 48

29.4 Shareholders

The principal shareholders of the company are detailed in the Analyses of Shareholders on page 86 of the annual report. Directors’ shareholdings are detailed in the directors’ report on page 113.

30. JUDGEMENTS MADE BY MANAGEMENT

In preparing financial statements in conformity with IFRS, estimates and assumptions that affect the reported amounts and related disclosures are:

Ü Deferred taxation assets

Deferred taxation assets have been raised at year-end on income tax losses and temporary differences in certain of the former CS Computer Services Holdings operations. Consequently, a further adjustment to goodwill has been made as these operations have made, and are expected to continue making taxable profits resulting in the utilisation of tax losses. Goodwill approximating the taxation which would have been recognised at acquisition has now been expensed in the income statement.

Ü Assets’ lives and residual values

The useful life of the rights to distribute Xerox equipment in 23 African territories is considered to be indefinite as these rights will automatically be renewed at no further cost upon the renewal of the group’s South African distribution agreement. Software, patents and trademarks and customer relationships are amortised over their remaining useful lives of up to six years. These intangible assets have no residual values as the group has no intention of disposing them.

Ü Impairment of assets

The impairment of goodwill is considered at least annually. Property, plant and equipment as well as intangible assets are considered for impairment when conditions indicate that impairment may be necessary. These conditions include economic conditions of the operating unit as well as the viability of the asset itself. The discounted cash flow method is used, taking into account future expected cash flows, market conditions and the expected useful lives of the assets.

151

2006R million

2005R million

31. CASH GENERATED BY OPERATIONS

Operating profit before capital items 1 040 963

Adjustments for:

Depreciation and amortisation 213 192

Closure cost of subsidiaries (44) —

Unrealised foreign exchange losses 3 4

Movement in provisions and other non-cash movements (14) (37)

Cash generated before movements in working capital 1 198 1 122

Increase in inventories (142) (153)

(Increase)/decrease in trade and other receivables (176) 51

Increase in trade and other payables 532 180

1 412 1 200

32. DIVIDENDS RECEIVED FROM ASSOCIATES AND OTHER INVESTMENTS

Dividends receivable at beginning of year 37 25

Attributable income per the income statement 19 18

Dividends receivable at end of year (56) (37)

— 6

33. TAXATION PAID

Amounts unpaid at beginning of year (164) (116)

Amounts charged to the income statement (373) (308)

Relating to acquisitions, disposals and translation — (6)

Amounts unpaid at end of year 187 164

(350) (266)

30. JUDGEMENTS MADE BY MANAGEMENT (continued)

Ü Post-employment benefit obligations

Post-retirement defined benefits are provided for certain existing and former employees (see note 16). The actuarial valuation method used to value the obligations is the Projected Unit Method. The assumptions used include a discount rate, inflation rate, salary increase rate, expected rate of return on assets and a pension increase allowance.

Ü Pension fund surplus investigation

The Pension Fund Second Amendment Act, 2001 requires that the trustees of all retirement funds undertake a surplus investigation. This investigation was undertaken on the Altron Group Pension Fund as at 31 December 2002. The investigation involved comparing assets of the fund to the liabilities and reserves of the fund at the valuation date and investigating instances of fund surpluses having been utilised improperly by the employer. The investigation was completed by the trustees and revealed that no instances of improper uses of any surplus, as defined in the Act, have occurred and that the assets in the fund as at 31 December 2002 did not exceed the liabilities and reserves of the fund at that date.

Ü Fair value of investments-held-for-sale

The investments in Fintech Receivables 1 (FR1) and Technologies Acceptances Receivables (TAR) (see Annexure 1) have been designated as available-for-sale financial assets and as such have been fair valued using the discounted cash flow method.

Ü Valuation of financial instruments

In note 28 a detailed analysis is given of the foreign exchange exposure of the group and risks in relation to foreign exchange movements.

152



2006R million

2005R million

35. PROCEEDS ON DISPOSAL OF SUBSIDIARIES AND JOINT VENTURE

Property, plant and equipment 8 —

Goodwill and intangible assets 148 —

Investments 311 —

Trade and other receivables 57 —

Trade and other payables (98) —

Provisions (3) —

Deferred tax and taxation 8 —

Net loans (78) —

Net cash 89 —

Minority interest (10) —

432 —

Profit on disposal 129 —

561 —

Less: cash disposed (89) —

Net proceeds on disposal 472 —

During the year the joint venture with Econet was disposed of comprising:

Joint venture – Econet Wireless Global 121Associate – Mascom Wireless Botswana (Pty) Ltd 226Econet Wireless Nigeria Investment 85Profit on disposal 129

561

2006R million

2005R million

34. ACQUISITION OF SUBSIDIARIES AND JOINT VENTURE

Property, plant and equipment (13) (114)

Intangibles – fair value adjustment (31) (32)

Investments — (272)

Inventories (14) (103)

Trade and other receivables (21) (294)

Trade and other payables 23 354

Provisions — 16

Taxation — 7

Deferred tax 1 (11)

Net loans 3 5

Net cash (4) 52

(56) (392)

Minority interest — 55

Costs — (2)

Shares issued in subsidiary — 45

Investment in associates eliminated 21 —

Goodwill paid (95) (639)

Cash paid (130) (933)

Less: cash acquired 4 (52)

(126) (985)

The following subsidiaries were acquired during the yearThe remaining 60,87% share in Digital Healthcare Solutions 85Nicor Printing Solutions 12Calidus 33

130

Results of subsidiaries acquired

From acquisition

Fullyear

Revenue 188 209

Profit after tax 22 25

153

2006R million

2005R million

36. PROCEEDS ON DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

Carrying amount 39 68

Surplus on disposal 7 7

46 75

37. CHANGE FROM SUBSIDIARY TO ASSOCIATE

Property, plant and equipment — 2

Goodwill — 2

Inventories — 3

Trade and other receivables — 6

Trade and other payables — (1)

Taxation — (1)

Increase in investment in associate — (12)

Reductions in minority interest — (2)

Net cash and cash equivalents removed — (3)

2006R million

2005R million

38. OTHER INVESTING ACTIVITIES

Acquisition of additional shares in BTG (118) —

Proceeds on sale of investment in associate 17 —

Proceeds on disposal of partial investment in subsidiaries 11 46

Net increase in loans with associates and other investments (62) (1)

Treasury shares in Altech — (257)

Redemption of share in associate — (6)

(152) (218)

39. CHANGES IN MINORITY INTERESTS

Proceeds on shares issued in subsidiaries 18 —

Capital introduced by minority 5 —

23 —

154


ASSOCIATES, OTHER INVESTMENTS AND JOINT VENTURES

Altron controlled interest

Investment at cost less amounts written off

Attributable share of retained income Indebtedness Total investment

2006%

2005%

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

ASSOCIATE COMPANIES

– UnlistedAeromaritime International Management Services (Pty) Limited 50.0 50.0 — — 4 3 — — 4 3 Fintech (Pty) Limited — 33.0 — — — 4 — 8 — 12 Digital Healthcare Solutions (Pty) Limited — 39.1 — — — 21 — — — 21 Mascom Wireless Botswana (Pty) Limited — 20.0 — 187 — 12 — — — 199 Alcon Marepha (Pty) Limited 49.0 49.0 1 1 3 2 6 11 10 14

1 188 7 42 6 19 14 249

Directors’ valuation based on a price-earnings ratio relevant to the market within which the associates operate. 23 282

Investments at fair value

Preference dividend receivable Indebtedness Total investment

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

OTHER INVESTMENTS

– UnlistedFintech Receivables 1 (Pty) Limited (preference share) 20 31 55 36 27 27 102 94Technologies Acceptances Receivables (Pty) Limited (preference share) 18 — 1 1 93 24 112 25 Econet Wireless Nigeria Limited — 85 — — — — 85

Total 38 116 56 37 120 51 214 204

Directors’ valuation based on the discounted cash flow method over a five- to seven-year period using discount rates of 13.5% to 15.4%. 214 204

The loan in Technology Acceptances Receivables earns interest at JIBAR plus 2.5%.The loan in Fintech Receivables 1 earns interest between 15% and 20%.The loans are repayable when cash is available in accordance with the priority of payments.

ALTRON-CONTROLLED INTEREST IN JOINT VENTURES

2006%

2005%

ABB Powertech Transformers 50.0 50.0Tridonic SA 50.0 50.0Econet Wireless Global — 50.1

Annexure 1

155

ASSOCIATES, OTHER INVESTMENTS AND JOINT VENTURES

Altron controlled interest

Investment at cost less amounts written off

Attributable share of retained income Indebtedness Total investment

2006%

2005%

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

ASSOCIATE COMPANIES

– UnlistedAeromaritime International Management Services (Pty) Limited 50.0 50.0 — — 4 3 — — 4 3 Fintech (Pty) Limited — 33.0 — — — 4 — 8 — 12 Digital Healthcare Solutions (Pty) Limited — 39.1 — — — 21 — — — 21 Mascom Wireless Botswana (Pty) Limited — 20.0 — 187 — 12 — — — 199 Alcon Marepha (Pty) Limited 49.0 49.0 1 1 3 2 6 11 10 14

1 188 7 42 6 19 14 249

Directors’ valuation based on a price-earnings ratio relevant to the market within which the associates operate. 23 282

Investments at fair value

Preference dividend receivable Indebtedness Total investment

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

OTHER INVESTMENTS

– UnlistedFintech Receivables 1 (Pty) Limited (preference share) 20 31 55 36 27 27 102 94Technologies Acceptances Receivables (Pty) Limited (preference share) 18 — 1 1 93 24 112 25 Econet Wireless Nigeria Limited — 85 — — — — 85

Total 38 116 56 37 120 51 214 204

Directors’ valuation based on the discounted cash flow method over a five- to seven-year period using discount rates of 13.5% to 15.4%. 214 204

The loan in Technology Acceptances Receivables earns interest at JIBAR plus 2.5%.The loan in Fintech Receivables 1 earns interest between 15% and 20%.The loans are repayable when cash is available in accordance with the priority of payments.

ALTRON-CONTROLLED INTEREST IN JOINT VENTURES

2006%

2005%

ABB Powertech Transformers 50.0 50.0Tridonic SA 50.0 50.0Econet Wireless Global — 50.1

156


Annexure 1 continued

INFORMATION IN RESPECT OF INTEREST IN ASSOCIATES, JOINT VENTURES, FR1 AND TAR

Joint ventures Associates FR1 and TAR

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

Abridged balance sheets

Non-current assets 38 437 3 433 660 730 Net current assets/ (liabilities) (excluding liquid resources) 41 (9) 3 (90) (16) (31) Liquid resources 67 158 8 197 161 107 Long-term liabilities (3) (75) (6) (111) (750) (774)

Equity 143 511 8 429 55 32

Abridged income statements

Revenue 431 350 54 652 365 355 Expenditure (381) (302) (48) (518) (338) (330)

Income before taxation 50 48 6 134 27 25 Taxation (17) (16) (2) (39) (7) (7)

Income after taxation 33 32 4 95 20 18

157

Nature of businesses

Associates

Aeromaritime International Management Services

Provides services of clearing for both imports and exports, international forwarding on both seafreight

and airfreight, local and national freight distribution and cross-border roadfreight to neighbouring

countries in Africa.

Alcon Marepha

Manufacturers of medium-voltage power cable.

Fintech

An independent lease originator, underwriter and administrator of business equipment was sold during

the year.

Mascom Wireless Botswana

Mascom, a cellular operator in Botswana, was sold as part of the Econet disposal during the year.

Digital Healthcare Solutions

A provider of transaction switching services, practice management and informatics solutions, was fully

acquired during the year.

Joint ventures

ABB Powertech Transformers

Manufacturer of power and distribution transformers. ABB Powertech Transformers is a 50% joint venture

with ABB Sub-Sahara.

Tridonic SA

Distributor of lighting control gear. Tridonic SA is a 50% joint venture with Tridonic (Austria).

Econet Wireless Global

An international company with telecommunication interests in Africa, the United Kingdom and the

Asia Pacific region was sold during the year.

158


SEGMENT INFORMATION – INCOME STATEMENT

Consolidated TelecommunicationsMulti-Media and

Electronics Information TechnologyCorporate and eliminations

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

BUSINESS SEGMENTATION

Revenue Goods sold 8 756 8 065 1 988 1 799 4 271 3 587 2 519 2 655 (22) 24 Services rendered 5 169 4 101 3 385 2 908 74 66 1 710 1 156 — (29) Rental finance income 44 40 — — — 4 30 23 14 13 Inter-segment revenue — — 14 6 57 66 11 1 (82) (73)

Total segment revenue 13 969 12 206 5 387 4 713 4 402 3 723 4 270 3 835 (90) (65) Expenditure (12 716) (11 051) (4 905) (4 322) (4 043) (3 422) (3 853) (3 383) 85 76 Depreciation and amortisation (213) (192) (33) (35) (83) (74) (96) (80) (1) (3)

Segment operating profit 1 040 963 449 356 276 227 321 372 (6) 8 Financial income 112 100 31 38 4 7 22 14 55 41 Financial expense (53) (62) (4) (4) (13) (11) (39) (22) 3 (25) Share of profit from associates 32 24 26 12 2 1 — 8 4 3

Profit before capital items and taxation 1 131 1 025 502 402 269 224 304 372 56 27

GEOGRAPHIC SEGMENTATION

Revenue by market 13 969 12 206 5 387 4 713 4 402 3 723 4 270 3 835 (90) (65)

South Africa 11 707 9 982 4 783 4 228 3 646 2 897 3 368 2 922 (90) (65) Rest of Africa 670 641 127 54 275 245 268 342 — — Europe 1 359 1 242 420 371 305 300 634 571 — — Rest of world 233 341 57 60 176 281 — — — —

Segment operating income by location 1 040 963 449 356 276 227 321 372 (6) 8

South Africa 987 933 435 343 263 220 295 362 (6) 8 Rest of Africa 29 22 8 1 13 12 8 9 — — Europe 22 5 6 12 (2) (8) 18 1 — — Rest of world 2 3 — — 2 3 — — — —

Segment revenues and expensesRevenues and expenses that are directly attributable to segments are allocated to those segments. Those that are not directly attributable to segments are allocated on a reasonable basis.Segment operating profit is stated before capital items.

Inter-segment transfersSegment revenue, segment expenses and segment results include transfers between business segments and between geographical segments.These transfers occur at market prices and are eliminated on consolidation.

Annexure 2

159

SEGMENT INFORMATION – INCOME STATEMENT



2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million


Revenue Goods sold 8 756 8 065 1 988 1 799 4 271 3 587 2 519 2 655 (22) 24 Services rendered 5 169 4 101 3 385 2 908 74 66 1 710 1 156 — (29) Rental finance income 44 40 — — — 4 30 23 14 13 Inter-segment revenue — — 14 6 57 66 11 1 (82) (73)

Total segment revenue 13 969 12 206 5 387 4 713 4 402 3 723 4 270 3 835 (90) (65) Expenditure (12 716) (11 051) (4 905) (4 322) (4 043) (3 422) (3 853) (3 383) 85 76 Depreciation and amortisation (213) (192) (33) (35) (83) (74) (96) (80) (1) (3)

Segment operating profit 1 040 963 449 356 276 227 321 372 (6) 8 Financial income 112 100 31 38 4 7 22 14 55 41 Financial expense (53) (62) (4) (4) (13) (11) (39) (22) 3 (25) Share of profit from associates 32 24 26 12 2 1 — 8 4 3

Profit before capital items and taxation 1 131 1 025 502 402 269 224 304 372 56 27


Revenue by market 13 969 12 206 5 387 4 713 4 402 3 723 4 270 3 835 (90) (65)

South Africa 11 707 9 982 4 783 4 228 3 646 2 897 3 368 2 922 (90) (65) Rest of Africa 670 641 127 54 275 245 268 342 — — Europe 1 359 1 242 420 371 305 300 634 571 — — Rest of world 233 341 57 60 176 281 — — — —

Segment operating income by location 1 040 963 449 356 276 227 321 372 (6) 8

South Africa 987 933 435 343 263 220 295 362 (6) 8 Rest of Africa 29 22 8 1 13 12 8 9 — — Europe 22 5 6 12 (2) (8) 18 1 — — Rest of world 2 3 — — 2 3 — — — —

Segment revenues and expensesRevenues and expenses that are directly attributable to segments are allocated to those segments. Those that are not directly attributable to segments are allocated on a reasonable basis.Segment operating profit is stated before capital items.

Inter-segment transfersSegment revenue, segment expenses and segment results include transfers between business segments and between geographical segments.These transfers occur at market prices and are eliminated on consolidation.

160


SEGMENT INFORMATION – BALANCE SHEET



2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million


ASSETS Property, plant and equipment 905 848 110 129 469 455 299 237 27 27 Intangible assets 773 925 21 128 21 — 731 797 — — Associates and other investments 228 453 — 284 11 15 53 23 164 131 Rental finance advances 90 75 — — — — 68 24 22 51 Inventories 1 295 1 158 147 187 898 742 250 229 — — Trade and other receivables 1 976 1 864 432 443 709 611 732 685 103 125

Operating assets 5 267 5 323 710 1 171 2 108 1 823 2 133 1 995 316 334

Deferred tax assets 118 112 Cash and cash equivalents 2 152 1 520

Total assets per balance sheet 7 537 6 955

LIABILITIES Trade and other payables 2 680 2 223 951 894 661 526 924 831 144 (28) Provisions 80 97 7 14 42 40 29 37 2 6

Non-interest-bearing liabilities 2 760 2 320 958 908 703 566 953 868 146 (22)

Non-current loans 297 716 Current loans 238 59 Taxation payable 187 164 Deferred tax liabilities 21 53

Total liabilities per balance sheet 3 503 3 312



South Africa 4 671 4 423 463 507 1 948 1 691 1 944 1 891 316 334 Rest of Africa 121 33 — — — — 121 33 — — Europe 448 830 247 664 133 95 68 71 — — Rest of world 27 37 — — 27 37 — — — —


South Africa 2 402 1 947 811 718 636 488 809 763 146 (22) Rest of Africa 31 24 — — — — 31 24 — — Europe 320 304 147 190 60 33 113 81 — — Rest of world 7 45 — — 7 45 — — — —

Capital expenditure 315 333 28 26 101 113 178 172 8 22

South Africa 235 312 23 23 98 100 106 167 8 22 Rest of Africa 68 2 — 1 — — 68 1 — — Europe 11 11 5 2 2 5 4 4 — — Rest of world 1 8 — — 1 8 — — — —

Segment assets and liabilitiesSegment assets include all operating assets used by a segment and consist principally of operating receivables, inventories, investments and fixed assets net of related allowances and provisions. While most such assets can be directly attributable to individual segments, the carrying amount of certain

assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities, and consist principally of accounts, accruals and provisions.


161

SEGMENT INFORMATION – BALANCE SHEET



2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million

2006R million

2005R million


ASSETS Property, plant and equipment 905 848 110 129 469 455 299 237 27 27 Intangible assets 773 925 21 128 21 — 731 797 — — Associates and other investments 228 453 — 284 11 15 53 23 164 131 Rental finance advances 90 75 — — — — 68 24 22 51 Inventories 1 295 1 158 147 187 898 742 250 229 — — Trade and other receivables 1 976 1 864 432 443 709 611 732 685 103 125


Deferred tax assets 118 112 Cash and cash equivalents 2 152 1 520

Total assets per balance sheet 7 537 6 955

LIABILITIES Trade and other payables 2 680 2 223 951 894 661 526 924 831 144 (28) Provisions 80 97 7 14 42 40 29 37 2 6


Non-current loans 297 716 Current loans 238 59 Taxation payable 187 164 Deferred tax liabilities 21 53

Total liabilities per balance sheet 3 503 3 312



South Africa 4 671 4 423 463 507 1 948 1 691 1 944 1 891 316 334 Rest of Africa 121 33 — — — — 121 33 — — Europe 448 830 247 664 133 95 68 71 — — Rest of world 27 37 — — 27 37 — — — —


South Africa 2 402 1 947 811 718 636 488 809 763 146 (22) Rest of Africa 31 24 — — — — 31 24 — — Europe 320 304 147 190 60 33 113 81 — — Rest of world 7 45 — — 7 45 — — — —

Capital expenditure 315 333 28 26 101 113 178 172 8 22

South Africa 235 312 23 23 98 100 106 167 8 22 Rest of Africa 68 2 — 1 — — 68 1 — — Europe 11 11 5 2 2 5 4 4 — — Rest of world 1 8 — — 1 8 — — — —

Segment assets and liabilitiesSegment assets include all operating assets used by a segment and consist principally of operating receivables, inventories, investments and fixed assets net of related allowances and provisions. While most such assets can be directly attributable to individual segments, the carrying amount of certain

assets used jointly by two or more segments is allocated to the segments on a reasonable basis. Segment liabilities include all operating liabilities, and consist principally of accounts, accruals and provisions.

162


Annexure 3

TRANSITION TO IFRSAs stated in the accounting policies on page 115 these are the group’s first consolidated financial statements prepared in accordance with IFRS. In preparing the opening IFRS balance sheet the group has adjusted amounts previously reported under SA GAAP. Accounting policies adopted under IFRS have been applied consistently in preparing the financial statements for the year ended 28 February 2006, the comparative information for the year ended 28 February 2005 and the opening balance sheet on 1 March 2004.An explanation of how the transition has affected the group’s previously reported financial position and performance is set out in the following tables and notes. The cash flow statement was not affected by any of these adjustments.

Reconciliation of equity

Notes

At 28 Feb2005

R million

At 1 Mar2004

R million

Equity previously reported under SA GAAP 3 566 3 571 Impact of adopting IFRS and other adjustments 77 (8)

Equity reported under IFRS 3 643 3 563

Equity adjustmentsRetained earnings: Net reversal of goodwill amortised

and impaired 1 96 — Expensing of share-based payments 2 (2) — Foreign operations 3 3 — Property, plant and equipment 4 1 — Intangible assets (2) — Operating leases straight-line adjustment 5 (13) (9) Minorities’ share of adjustments (40) 4 Share-based payment reserve 1 —Foreign currency translation reserve (3) —Fair value reserve 6 26 42Treasury shares reclassified 8 16 16Premium/discount on minority equity transactions 8 (16) (16)Minorities’ shareholder loans reclassified (31) (41)Minorities’ share of adjustments 41 (4)

77 (8)

Assets and liabilities adjustmentsProperty, plant and equipment 1 —Intangible assets and goodwill 94 —Associates and other investments 30 49Deferred tax (1) (5)Non-current loans (31) (41)Accounts payable (16) (11)

77 (8)

163

Reconciliation of profit for the year ended 28 February 2005

NotesAs reported

previouslyEffect

of IFRSIFRS

restated

Operating profit before capital items 2, 3, 4, 5 968 (5) 963 Financial income 100 — 100 Financial expense (62) — (62)Profit from associates 24 — 24 Goodwill amortised and impaired 1 (300) 96 (204)Capital items 114 — 114

Profit before taxation 844 91 935 Taxation (340) 1 (339)

Profit for the period 504 92 596

Attributable to:Altron shareholders 400 48 448 Minority shareholders 104 44 148

504 92 596

EPS 145 17 162 HEPS 161 1 162

NOTES SUPPORTING THE IFRS ADJUSTMENTS

1. Goodwill

All business combinations are accounted for by applying the “purchase method”. Goodwill represents amounts arising on acquisition of subsidiaries and associates. In respect of business combinations that have occurred since the IFRS transition date, 1 March 2004, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets and contingent liabilities acquired.

The group made an election in terms of IFRS 1 that in respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, which represents the amount recorded under SA GAAP on 1 March 2004. The classification and accounting treatment of business combinations that occurred prior to 1 March 2004 has not been reconsidered in preparing the groups opening IFRS balance sheet at 1 March 2004.

From 1 March 2004 goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is no longer amortised but tested annually for impairment. Previously goodwill arising on each acquisition was amortised over its useful life on a straight-line basis and subjected to annual impairment testing.

2. Share-based payments

The fair value of share options and deferred delivery shares granted to employees is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and expensed over the period during which the employees are required to provide services in order to become unconditionally entitled to the equity instruments. The fair value of the instruments granted is

164



measured using generally accepted valuation techniques, taking into account the terms and conditions upon which the instruments are granted. This accounting policy has been applied to all equity instruments granted after 7 November 2002 that had not yet vested at 1 January 2005. The fair value of share-based payments was not recognised under the group’s previous accounting policies.

3. Foreign operations

The assets and liabilities of all foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to rands at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to rands at rates approximating the foreign exchange rates ruling at the date of the transactions. Foreign exchange differences arising on translation are recognised directly in a separate component of equity – foreign currency translation reserve. The foreign currency translation reserve applicable to a foreign operation is released to the income statement upon disposal of that foreign operation. The functional currencies of all entities in the group have also been reconsidered. Previously, the non-monetary assets and liabilities of all foreign subsidiaries considered to be integrated foreign operations were translated at historic exchange rates, and the foreign exchange gains and losses arising on translation of monetary assets and liabilities were recognised in operating income.

4. Intangible assets

Intangible assets other than goodwill that are acquired by the group are stated at cost less accumulated amortisation and impairment losses.

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life are tested annually for impairment.

Other intangible assets are amortised from the date they are available for use. Currently the estimated useful lives are as follows:

Ü Patents and trademarks 5 years

Ü Distribution rights indefinite life

Previously distribution rights were included with goodwill and not separately identified on the balance sheet and amortisation charged to the income statement as part of goodwill amortisation on a straight-line basis over the useful life of the intangible asset.

5. Straight-lining of operating leases

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

Past practice, whereby operating lease payments were expensed on a payments basis, was based on an interpretation that was generally accepted in the South African financial reporting community. This interpretation considered the contractual-payments basis as being most representative of the time pattern of the entity’s benefit obtained from the leased property. The global spotlight has led to the view that the entity is obliged to adopt the straight-line basis of accounting for all lease payments. The adjustment has been made as required by IAS 8 – Accounting Policies, changes in accounting estimates and errors with the necessary restatement of comparative figures.

165

6. Designation and fair valuing of available-for-sale investments

Available-for-sale investments are non-derivative financial assets other than:

(a) those that the group upon initial recognition designates as at fair value through profit or loss;

(b) held to maturity assets; and

(c) those that meet the definition of loans and receivables.

Gains or losses from fair valuing these available-for-sale investments are recognised directly in equity. The investments in Fintech Receivables One and Technologies Acceptances Receivables meet this criteria and as such have been designated as available-for-sale assets and are measured at fair value. The comparative figures have been restated.

7. Black Economic Empowerment (BEE) transactions

Where goods or services are considered to have been received from BEE partners as consideration for equity instruments of the group, these transactions are accounted for as share-based payment transactions, even when the entity cannot specifically identify the goods or services received. This accounting policy is applicable to equity instruments that had not vested by 1 January 2005 and consequently had no impact on the group.

8. Premiums and discounts arising on subsequent purchases from, or sales to, minorities

Any increase or decrease in ownership interests in subsidiaries without a change in control are recognised as equity transactions in the consolidated financial statements.

Accordingly, any premium or discount on subsequent purchases or sales of equity instruments from or to minority interests are recognised directly in the equity of the parent shareholder.

Previously premiums on subsequent sales of equity instruments to minorities were taken to profit as a capital item in the income statement and premiums on subsequent purchases of equity instruments were classified as goodwill.

9. Reclassification of finance lease receivables and payables

Previously certain finance lease receivables and payables were offset. These have been grossed up and reported separately as the criteria for offset are no longer considered applicable. The effect of the reclassification at 28 February 2005 is as follows:

Assets

Decrease in rental finance advances (31)

Increase in accounts receivable (short-term portion of rental finance advances) 84

53

Liabilities

Increase in non-current loans 24

Increase in current loans 29

53

166

ALLIED ELECTRONICS CORPORATION LIMITED ANNUAL REPORT 2006

COMPANY

Notes2006

R000’s2005

R000’s

ASSETS

Non-current assets 1 015 223 896 565

Property 2 50 50 Investment in subsidiaries 3 1 015 173 896 515

Current assets 356 673 455 426

Receivables 11 — Amounts receivable from subsidiary 3 356 565 455 357 Cash at bank 97 69

Total assets 1 371 896 1 351 991

EQUITY AND LIABILITIES

Shareholders’ equity 4 1 371 366 1 351 559

Current liabilities 530 432

Accounts payable 507 409 Taxation payable 23 23

Total equity and liabilities 1 371 896 1 351 991

Balance sheet at 28 February 2006

167

Statement of changes in equity for the year ended 28 February 2006

COMPANY

R000’s

Ordinary share capital

Preferenceshare

capitalShare

premiumRetained earnings

Totalequity

Balance as at 29 February 2004 1 943 20 787 885 414 575 1 204 423 Profit after taxation — — — 287 732 287 732 Dividends paid — — — (157 556) (157 556)Share issue — 1 16 959 — 16 960

Balance as at 28 February 2005 1 943 21 804 844 544 751 1 351 559 Profit after taxation — — — 192 767 192 767 Dividends paid — — — (193 187) (193 187)Share issue — — 20 227 — 20 227

Balance as at 28 February 2006 1 943 21 825 071 544 331 1 371 366

COMPANY

2006R000’s

2005R000’s

Operating expenditure (428) (153)Dividends received from subsidiaries 193 195 287 831 Gain on disposal of property — 77

Profit before taxation 192 767 287 755 Taxation — (23)

Profit after taxation 192 767 287 732

Income statementfor the year ended 28 February 2006

168


COMPANY

Notes2006

R000’s2005

R000’s

Cash flows from operating activities 98 459 (7 437)

Cash utilised by operations (428) (153)Dividends received 193 195 287 831 Taxation paid 5 — — Changes in working capital 87 2 776 Movement of loan with subsidiary 98 792 (140 335)

Cash available from operating activities 291 646 150 119 Dividends paid (193 187) (157 556)

Cash flows from investing activities (118 658) (9 509)

Proceeds on disposal of property 6 — 180 Increase of investment in subsidiaries (118 658) (9 689)

Cash flows from financing activities

Shares issued 20 227 16 960

Cash resourcesNet increase in cash 28 14 Cash and cash equivalents – at beginning of year 69 55

– at end of year 97 69

Cash flow statementfor the year ended 28 February 2006

169Notes to the financial statementsfor the year ended 28 February 2006

COMPANY

2006R000’s

2005R000’s

1. ACCOUNTING POLICIES

Please refer to the group accounting policies on pages 115 to 125

2. PROPERTY

Balance at beginning of year 50 153

Disposals — (103)

Balance at end of year 50 50

3. INTEREST IN SUBSIDIARIES

Issued capital Effective holding

Shares at cost less amounts written off Indebtedness

Rm2006

%2005

%2006

R000’s2005

R000’s2006

R000’s2005

R000’s

Allied Technologies Limited (Altech) 62 57 58 48 541 48 541 — —

Bytes Technology Group Limited (BTG) 716 57 52 595 017 476 359 — —

Power Technologies (Pty) Limited (Powertech) 411 100 100 249 869 249 869 — —

Altron Finance (Pty) Limited – ordinary shares — 100 100 235 235 356 565 455 357

Altron Finance (Pty) Limited – preference shares 80 — — 121 509 121 509 — —

Other 3 100 100 2 2 — —

1 015 173 896 515 356 565 455 357

Notes: The above details are given in respect of interest in subsidiaries, where material. A full list of South African subsidiaries is available on request, at the registered office of the company.

All subsidiaries are incorporated in South Africa.

170


COMPANY

2006R000’s

2005R000’s

4. SHARE CAPITAL AND PREMIUM

Please refer to the group note 9 on page 135

5. TAXATION PAID

Amounts unpaid at beginning of year 23 —

Charged to the income statement — 23

Amounts unpaid at end of year (23) (23)

— —

6. PROCEEDS ON DISPOSAL OF PROPERTY

Carrying amount — 103

Surplus on disposal — 77

— 180

7. RELATED PARTIES

The company has a related party relationship with its subsidiaries (see note 3)

DividendsThe company received dividends from subsidiaries 193 195 287 831

ShareholdersThe principal shareholders of the company are detailed in the Analysis of shareholders on page 86 of the annual report.


171GRI content index

GRI benchmark Page Comment

GENERAL PERFORMANCE INDICATORS

1.1 Mission statement 2

1.2 Chief executive’s report 16, 48 Chief Executive’s review

2.1 Name of organisation Cover

2.2 Major products and services IFC Operational reviews

2.3 Operational structure 6 Group structure

2.4 Description of operating

companies’ business

28 – 43 Operational reviews

2.6 Nature of ownership 82 – 86 Shareholders

2.10 Contact information 197 Corporate administration

2.11 Reporting period 108 – 170 Annual Financial Statements

2.12 Date of most recent

previous report

2005 annual report

2.13 Boundaries of report Predominantly South Africa

2.14 Significant changes in size,

structure, ownership

or products/services that

have occurred since the

previous report

27

28 – 43

Chief Executive’s review,

Operational reviews

2.15 Basis for reporting 16 – 27

108 – 170

Chief Executive’s review;

Annual financial statements

2.16 Explanation of the nature

and effect of any

restatement

108 – 170 Annual Financial Statements

2.17 Decisions not to apply GRI

principles or protocols

Not applicable

2.18 Criteria/definitions 108 – 170 Annual Financial Statements

2.19 Significant changes in

measurement

Not applicable


172


GRI content index continued


2.20/

2.21

Policies and internal

practices to enhance and

provide assurance about the

accuracy, completeness and

reliability of the

sustainability report

Policies available on request

2.22 Additional information and

reports on sustainability

Corporate Communications

3.1 Governance structure 89 – 101 Corporate governance

3.2 Percentage board of

directors that are

independent non-executives

89 – 101

184 – 187


Directorate profile

3.3 Board member expertise 184 – 187 Directorate profile

3.4 Board level processes 89 – 101 Corporate governance

3.5 Link between executive

compensation and

objectives

102 – 107 Remuneration Report

3.6 Organisational structure and

key responsibilities

8 – 9

93

Executive committee


3.7 Mission statement and code

of conduct

46 Sustainability Report

3.8 Mechanisms for

shareholders to provide

comment

98 Annual general meetings

Direct communication to the group

3.9 Major stakeholders 44 – 88 Sustainability Report

3.10 Stakeholder consultation 44 – 88

189

Sustainability Report

Annual general meetings

3.11 Stakeholder information 98

44 – 88


Annual report; Interim report


3.12 Use of stakeholder

information

Annual report; Interim report

173


3.13 Precautionary approach Not applicable

3.14 Economic, environment and

social charters

44 – 88 Sustainability Report

3.15 Industry and business

associations


3.16 Policies/systems to manage

upstream and downstream

impacts

44 –88 Sustainability Report

3.17 Approach to manage

impacts

78 – 81 Sustainability Report – Environment

3.18 Decisions regarding

locations and change in

operations


3.19 Programmes and procedures

relating to economic and

environmental performance:

– priority and target setting 44 –88 Sustainability Report

– major programmes to

improve performance

16 – 27 Chief Executive’s review

– internal communication

and training


– performance monitoring 44 – 88 Sustainability Report

– internal and external

auditing

95 – 97 Corporate governance – risk

management

– senior management

review

16 – 27

92, 111

Chief Executive’s review, Corporate

governance, Directors’ Report

3.20 Certification status 50, 76 Sustainability Report

174




ECONOMIC PERFORMANCE INDICATORS

EC1 Revenue 127 Income statement

EC2 Geographic break-down of

markets

158 – 161 Segment information

EC3 Cost of goods 131 Notes to financial statements

EC4 Percentage of contracts paid

in accordance with terms

Not measured

EC5 Employment costs 51 Value-added statement

EC6 Distributions to providers

of capital

51

131

Value-added statement

Notes to financial statements

EC7 Increase/decrease in

retained earnings

128 Statement of changes in equity

EC8 Taxes paid 51 Notes to financial statements

EC9 Subsidies received Not disclosed

EC10 Donations to communities 56 – 61 Sustainability Report

EC11 Supplier breakdown Not disclosed

EC12 Total spend on non-core

infrastructure

Not disclosed

EC13 Organisation’s direct

economic impact

Not disclosed

175


EN1 Total material use, other

than water

EN2 Percentage of materials

used that are wastes from

sources external to the

reporting organisation

EN3 Direct energy use

EN4 Indirect energy use

EN5 Total water use

EN6 Location and size of land

owned, leased or managed

in biodiversity rich habitats

EN7 Description of the major

impacts on biodiversity

EN8 Greenhouse gas emissions

EN9 Use and emissions of ozone-

depleting substances

Limited impact – certain operations

are ISO compliant, – see

Sustainability Report pages 73 – 81

EN10 Significant air emissions by

type

EN11 Total amount of waste by

type and destination

EN12 Significant discharges to

water by type

EN13 Significant spills of

chemicals, oils and fuels

EN14 Significant environmental

impacts of principal products

and services

EN15 Percentage of weight of

products sold that is

reclaimable versus the

percentage that is actually

reclaimed

176




EN16 Incidents of and fines for

non-compliance associated

with environmental issues


EN17 Initiatives to use renewable

energy sources

n/a

EN18 Energy consumption

footprint of major products


EN19 Other direct (upstream/

downstream) energy use

and implications

n/a

EN20 Water sources and related

ecosystems/habitats

significantly affected by use

of water

*

EN21 Annual withdrawals of

ground and surface water

*

EN22 Total recycling and re-use of

water

*

EN23 Total amount of land

owned, leased or managed

for production activities or

extractive use

*

EN24 Amount of impermeable

surface as a percentage of

land purchased or leased

*

EN25 Impacts of activities on

protected and sensitive areas

n/a

EN26 Changes to natural habitats n/a

EN27 Strategies for protecting and

restoring native ecosystems

and species in degraded

areas

n/a

*Under development

n/a Not applicable

177


EN28 Number of IUCN Red List

species with habitats in

areas affected by operations

n/a

EN29 Business units currently

operating or planning

operations in or around

protected or sensitive areas

n/a

EN30 Other relevant indirect

greenhouse gas emissions

*

EN31 All production, transport,

import or export of any

waste deemed hazardous

under the terms of the

Basel Convention

n/a

EN32 Water sources and related

ecosystems/Habitats

significantly affected by

discharges of water and

runoff

*

EN33 Performance of suppliers

relative to environmental

components or programmes

and procedures

not measured

EN34 Significant environmental

impacts of transportation

used for logistical purposes

*

EN35 Total environment

expenditure by type

*

*Under development

n/a Not applicable

178




SOCIAL PERFORMANCE INDICATORS

Labour practices

LA1 Breakdown of workforce 63 Sustainability Report

LA2 Employment creation and

average revenue

51 Value-added statement

LA3 Trade Union representation 99 Corporate governance

LA4 Policy and procedures

involving information,

consultation and negotiation

with employees over

changes in the reporting

organisation’s operations

99 Corporate governance

LA5 Occupational accidents and

diseases

73 Sustainability Report – SHE

LA6 Health and Safety

Committees

74 Sustainability Report – SHE

LA7 Injury, lost days and

absentee rates

*

LA8 HIV/Aids policies or

programmes


LA9 Training per employee level,

gender and ethnic split

*

LA10 Equal opportunity policies or

programmes and the

monitoring thereof

64

100



LA11 Composition of senior

management and corporate

governance bodies

89 – 101 Corporate governance

LA12 Employee benefits beyond

those legally mandated

Not disclosed

LA13 Provision for formal worker

representation in decision-

making


*Under development

179


LA14 Compliance with the ILO

guidelines for occupational

health management systems

73 – 81 Sustainability Report – SHE

LA15 Formal agreements with

trade unions covering health

and safety at work and

proportion of workforce

covered by such agreements

96 – 97 Corporate governance

LA16 Programmes to support the

continued employability of

employees and to manage

career developments

62 – 66

100



LA17 Policies and programmes for

skills management

62 – 66

100



Human rights

HR1 Policies, guidelines,

corporate structure and

procedures to deal with all

aspects of human rights


HR2 Evidence of consideration of

human rights impacts as

part of investment and

procurement

47 Corporate code of conduct

HR3 Policies and procedures to

evaluate and address

human rights performance

within the supply chain and

contractors


HR4 Global policy procedures/

programmes preventing all

forms of discrimination in

operations


*Under development

180




HR5 Freedom of association

policy

99 Corporate governance statement

HR6 Child labour policy

HR7 Forced and compulsory

labour policy

HR8 Employee training on

policies and practices

concerning all aspects of

human rights relevant to

operations

HR9 Appeal practices

HR10 Non-retaliation policy and

employee grievance system

HR11 Human rights training for

security personnel

Human rights are recognised

and observed in all of Altron’s

internal policies

HR12 Description of policies,

guidelines and procedures

to address the needs of

indigenous people

HR13 Description of jointly

managed community

grievance mechanisms/

authority

HR14 Share of operating revenues

from the area of operations

that are redistributed to

local communities

Society

SO1 Policies to manage impacts

on communities


SO2 Policy/procedures for

addressing bribery and

corruption

47

97

Corporate code of conduct


181


SO3 Description of policy,

procedures/management

systems for managing

political lobbying and

contributions

Government, regulatory authority

SO4 Awards received 49 Chief Executive’s review

SO5 Money paid to political

parties


Articles of association

SO6 Court decisions regarding

cases pertaining to anti-trust

and monopoly regulations

No court cases instituted against

Altron

SO7 Policies/procedures for

preventing anti-competitive

behaviour

Procedures are in place at the

operating company level

Product responsibility

PR1 Policy for preserving

customer health and safety

during use of products and

services

PR2 Policy/procedures related to

product information and

labelling

PR3 Policy/procedures relating

to consumer privacy

Internal policies are in place at the


PR4 Non-compliance with

customer health and safety

regulations

PR5 Complaints upheld by

regarding the health and

safety of products and

services

182




PR6 Voluntary code compliance,

product labels or awards

with respect to social and

environmental responsibility

PR7 Non-compliance concerning

product information and

labelling

PR8 Policies/procedures and

mechanisms related to

customer satisfaction

Internal policies are in place at the


PR9 Policies/procedures for

adherence to standards and

voluntary codes related to

advertising

PR10 Breaches of advertising and

marketing regulations

PR11 Complaints regarding

breaches of consumer

privacy

Corporate social responsibility management

CSR1 Social elements of CSR

policy


CSR2 Structure and relevant CSR

responsibilities


CSR3 CSR audit *

CSR4 Procedures for handling

issues sensitive to

stakeholders


CSR5 Non-compliance incidents

with any law or regulatory

code of conduct

95 Corporate governance – risk

management

CSR6 Stakeholder dialogue and

involvement procedures


*Under development

183


Internal social performance

INT1 Social responsibility issues

covered in the human

resources policies


INT2 Staff turnover 63 Corporate governance –

Employment Equity/Workforce

profile

INT3 Employee satisfaction *

INT4 Remuneration of senior

management and board of

directors

102 – 107 Remuneration Report

INT5 Bonuses that contain

additional sustainability

elements

Not applicable

INT6 Ratio of female to male

salaries, including bonuses,

per hierarchy level

*

INT7 Employee profile per

hierarchy level

*

Performance to society

SOC1 Contributions to charitable

causes, community

investments and commercial

sponsorships


SOC2 Economic value added 51 Sustainability Report

Value-added statement

Suppliers

SUP1 Policies/procedures to

screen suppliers’ social

performance

52 – 55 BBBEE – Sustainability Report

SUP2 Supplier satisfaction *

*Under development

184


Directorate profile

Date of birth: 29 July 1934

Qualifications: CEng; Fellow IEE (UK); MBA (Wales); MPhil (Bus Man) (UJ – Cum laude); DCom (hc) (UP, UFS and UPE); DSc (Eng) (hc) (Natal); DEng (hc) (Wits)

A UK Chartered Engineer and founder of Altron, through Allied Electric in 1965 and recipient of the Order of Meritorious Service (Gold), as awarded by the State President of South Africa for his significant contribution to South Africa’s electronics industry.

Titles: Ü Chairman of Altron and BTG

Ü Director of Altech, BTG and Powertech. Former Chairman of the CSIR, and past Director of AMIC Limited and Nedcor Bank Limited

Ü Member of the Altron Nomination Committee and Remuneration Committee

Experience: Some 41 years devoted to entrepreneurial endeavours and initiatives in the electronics, telecommunications and power electrical industries, both in South Africa and offshore, firstly as design engineer then marketing manager at STC (SA) and thereafter Chief Executive and latterly as Chairman of the Altron group. Dr Venter has played an important role in developing the South African electronics and electrical industry into the key component of the national economy that it is today. He is a trustee of the Nelson Mandela Children’s Fund and a member of its Finance Committee.

Date of birth: 7 May 1960

Qualifications: BSc (Econ) (UCLA); MBA (UCLA) Dean’s List

Titles: Ü Chief Executive of Altron

Ü Director of Altech, BTG, Powertech, Zetex plc (formerly Telemetrix plc) and various other group companies

Ü Chairman of Aberdare Cables

Ü Chairman of the Altron Executive Committee

Ü Member of the Altron Risk Management Committee

Experience: Four years’ merchant banking experience in the United States, the latter part as Vice-President, Bear Stearns and Co. Inc (1987 to 1990). Sixteen years’ experience in senior management positions in the Altron group (1990 to current).


Titles: Ü Non-executive Director of Altron Ü Chairman of Voltex Holdings and Non-executive Director of Amap Ü Executive Director of the Bidvest Group and numerous subsidiaries thereof Ü Member of the Altron Nomination Committee and Remuneration Committee

Experience: 35 years’ experience in the cable manufacturing industry. 14 years’ experience in the electrical distribution industry.

DR WP (BILL) VENTER omsg

RE (ROBERT) VENTER

MC (MYRON) BERZACK

185

Date of birth: 10 December 1960

Qualifications: BEng (Stellenbosch); MEng (UP); MBA (UCT); PrEng (ECSA)

Titles: Ü Executive Director of Altron

Ü Chief Executive Officer of Powertech

Ü Director of ABB Powertech Transformers, Aberdare Cables and Powertech Industries

Ü Member of the Altron Executive committee and Risk Management Committee

Experience: Norbert joined the Altron group in 1996 as the Chief Executive Officer of Willard Batteries which expanded over five years to become the Powertech Battery Group, comprising Willard Batteries, Dynamic Batteries, SABAT Batteries and Battery Technologies.

In March 2001 Norbert was appointed Chief Executive Officer of Powertech. Since 1989, he has been a registered professional engineer with the Engineering Council of South Africa.


Qualifications: MA (Oxon)


Ü Executive Director of Altech: Corporate Finance

Ü Member of the Altron Executive Committee

Experience: 36 years in merchant banking/corporate finance activities in South Africa and internationally.

Re-joined the Altron group in 1997, having previously served the group in a senior executive capacity from 1979 to 1986.

Date of birth: 4 August 1950

Qualifications: BCom (Wits); MBA (Wits); PPL (Harvard)

Titles: Ü Independent Non-executive Director of Altron

Ü Chief Executive Officer and Deputy Chairman of Massmart Holdings Limited

Ü Member of the Altron Audit Committee

Experience: In 1988 Mark was appointed Managing Director of Makro. With the successfully repositioned Makro as a base, he founded Massmart in 1990 as a vehicle for multi-chain growth in food, liquor and general merchandise distribution. Massmart was listed on the JSE Limited on 4 July 2000. In 1984, Mark won the IMM Raymond Ackerman Marketing Director of the Year award. In 2001 he was the winner of the Ernst & Young South Africa’s Best Entrepreneur award and was one of 22 finalists in the 2001 Ernst & Young World Entrepreneur competition. Mark was also the 2001 winner of the Institute of Marketing Management’s Marketer of the Year award and in 2004 was named the Italian – South African Businessman of the Year by the Italian South African Chamber of Commerce.

Date of birth: 26 October 1943

Qualifications: BCom (Rhodes); MCom (Wits); FIBSA (Wits); FCMA; AMP (Harvard)


Ü Chairman of the Altron Risk Management Committee

Ü Member of the Altron Audit Committee and Nomination Committee

Experience: Retired banker. Director of companies.

N (NORBERT) CLAUSSEN

PMO (PETER) CURLE

MJ (MARK) LAMBERTI

MJ (MIKE) LEEMING

186


Directorate profile continued

Date of birth: 29 December 1952

Qualifications: Bluris (Unisa); LLB (Zimbabwe); LLM (Wits); HDIP Tax Law (Wits); LLD (Unisa)


Ü Chairman of the Altron Nomination Committee

Experience: Former Deputy Minister of the Department of Home Affairs (1994 to 1996) and former Minister of the Departments of Minerals and Energy (1996 to 1999) and Justice and Constitutional Development (1999 to 2004). Attorney, notary and conveyancer. Visiting Scholar of Constitutional Law at Columbia University Law School (New York). Founder member of the ANC’s Constitutional Committee. Currently an active partner at Bowman Gilfillan Attorneys as well as a member of the Executive Committee at Bowman Gilfillan Attorneys and a senior special advisor of Sasol Limited. Date of birth: 9 September 1966

Qualifications: BCom (Wits); BAcc (Wits); CA(SA); MBA (Wits); AMP (Samford); AMP (Harvard)

Titles: Ü Independent Non-executive Director of Altron Ü Member of the Altron Audit Committee Ü Chairman of the Altron Remuneration Committee Ü Executive Chairman of Batsomi Investments (Pty) Limited

Experience: Past Chief Operating Officer of Johnnic Holdings Ltd. Prior to that he held various senior financial executive positions at Eskom, Teljoy and JCI. Qualified as a Chartered Accountant while serving his articles at Deloitte & Touche.

Current board member of Blue IQ Holdings Limited and Eskom Holdings Limited and finance and audit committee of the Development Bank of South Africa. Serves on the Advisory Board of the Nelson Mandela Children’s Fund. Member of the South African Institute of Chartered Accountants and Association of Black Accountants of South Africa.

Previous board memberships include MTN, M-Net.

Date of birth: 26 September 1962

Qualifications: BProc (Wits); LLB (Wits)


Ü Chief Executive Officer of the SABC

Ü Member of the Altron Risk Management Committee

Experience: Former acting judge in the Labour Court of South Africa. Director of Deutsche Securities. National executive member of the National Association of Democratic Lawyers. Member of the Johannesburg Bar Council. President of the Electronics Industry Federation. Member of Council of the University of Johannesburg.

Date of birth: 7 February 1966

Qualifications: BComm (Rhodes); BCompt (Hons) (Unisa); CA(SA); MBA (Wits)

Titles: Ü Chief Financial Officer of Altron Ü Director of Altech, BTG and Powertech Ü Member of the Altron Executive Committee and Risk Management Committee Ü Chairman of the Powertech Audit Committee

Experience: Some 15 years as an accounting professional and was the former Partner-in-charge: Transaction Services at PricewaterhouseCoopers in South Africa.

Currently serves as an Independent Non-executive Director on the board of Omnia Holdings Limited and chairman of their Audit Committee.

DC (DALI) MPOFU

DR PM (PENUELL) MADUNA

JRD (JACOB) MODISE

DC (DIANE) RADLEY

187

Date of birth: 29 January 1942

Qualifications: BA (Hons) (Birmingham); ACMA

Titles: Ü Executive Director of Altron Ü Chief Executive Officer of BTG Ü Executive Chairman BTG SA Ü Member of the Altron Executive Committee and Risk Management Committee

Experience: 41 years in senior financial and general management positions.

Date of birth: 12 October 1938

Qualifications: MB BCh (Wits); MD (Rand); FCRP (Canada); FACP (USA); PhD (Economics) (hc) (UFS)

Titles: Ü Senior Altron Executive Director Ü Director of Altech, Altech Autopage Holdings, BTG, and Bytes Specialised Solutions Ü Chairman of the Altron Group Purchasing and Export Councils Ü Member of the Altron Risk Management Committee Ü Trustee of the State President Empowerment Award Programme and of the Duke of

Edinburgh Trust

Experience: 24 years in the electronics industry with the Altron group.

Date of birth: 4 July 1962

Qualifications: BSc (Econ) (UCLA); BA (Psychology) (UCLA); MBA (USC); MSc (Mgmt Science) (USC)


Ü Chief Executive Officer of Altech

Ü Director of Altech Netstar, Altech Autopage Cellular and various other wholly-owned subsidiaries

Ü Chairman of Altech Autopage Holdings; Arrow Altech Holdings, Altech Alcom Matomo, Altech UEC Multi-Media and Altech NamITech

Ü Member of the Altron Executive Committee and Risk Management Committee

Experience: 17 years in senior management positions in the Altech group.

Date of birth: 13 March 1940

Qualifications: CA(SA)

Titles: Ü Independent Non-executive Director of Altron, Director of Altech and BTG

Ü Chairman of the Altron Audit Committee

Ü Member of the Altron Remuneration Committee and Risk Management Committee

Experience: Former Chairman of Deloitte & Touche and past president of the South African Institute of Chartered Accountants having spent over 40 years in the accounting and auditing profession. Director of companies.

PD (DAVID) REDSHAW

DR HA (HAROLD) SEREBRO

CG (CRAIG) VENTER

PL (PETER) WILMOT

188


Letter from the chairman

Altron House

4 Sherborne Road

Parktown

2193

31 May 2006

Dear Shareholder

Re: ALLIED ELECTRONICS CORPORATION LIMITED (“Altron”):

ANNUAL GENERAL MEETING

On behalf of the board of directors of Altron, I have pleasure in extending an invitation to you to attend

Altron’s annual general meeting, which will be held on Friday, 14 July 2006 at 09:30 in the Boardroom,

Altech Corporate Offices, 79 Central Street, Houghton. If you are unable to attend, please arrange to vote

by proxy in accordance with the instructions on the proxy form.

The board recognises the importance of its shareholders’ presence at the annual general meeting. This is

an opportunity for shareholders to participate in discussion relating to items included in the notice of

meeting. In addition, the chairmen of board-appointed committees as well as senior members of

management will be present to respond to questions from shareholders.

The notice of meeting, which is set out on pages 189 to 193 of the annual report, is accompanied by

explanatory notes setting out the effects of all proposed resolutions included in the notice.

I look forward to your presence at the meeting.

Yours faithfully

Dr WP Venter (Chairman)

189

Notice is hereby given that the sixtieth

annual general meeting of the shareholders

of Altron will be held in the Boardroom,

Altech Corporate Offices, 79 Central Street,

Houghton, Johannesburg on Friday, 14 July

2006 at 09:30 to conduct the following

business:

1. To receive, consider and adopt the annual

financial statements of the company and

of the Altron group for the year ended

28 February 2006.

2. To re-elect by way of separate

resolutions directors in the place of those

retiring in accordance with the company’s

articles of association. The directors

retiring are:

Messrs N Claussen, MJ Lamberti,

RE Venter, PMO Curle, DC Mpofu and

Ms DC Radley, all of whom being eligible

offer themselves for re-election.

An abbreviated curriculum vitae in respect

of each director offering himself for re-

election is contained on pages 184 to 187

of this annual report.

3. To ratify the remuneration paid to non-

executive directors during the past

financial year.

4. To re-appoint KPMG Inc. as independent

auditors of the company and to authorise the

directors to determine the remuneration of

the auditors for the past year’s audit as

reflected in note 18 of the annual financial

statements.

As special business to consider and, if deemed

fit, pass with or without modification the

following resolutions, that numbered 5 as a

special resolution and those numbered 6, 7 and

8 as ordinary resolutions.

5. SPECIAL RESOLUTION NUMBER 1: GENERAL

AUTHORITY TO REPURCHASE SHARES

That the company or any of its subsidiaries be

and are hereby authorised, by way of a

general approval, to acquire ordinary and/or

participating preference shares issued by the

company, in terms of Sections 85(2) and

85(3) of the Companies Act No 61 of 1973, as

amended (the Companies Act), and in terms

of the JSE Limited (the JSE) Listings

Requirements, being that:

Ü any such acquisition of ordinary and/or

participating preference shares shall be

effected through the order book operated

by the JSE trading system and done

without any prior understanding or

arrangement between the company and

the counter-party;

Allied Electronics Corporation LimitedIncorporated in the Republic of South Africa (Registration number 1947/024583/06) (Share code: ATN) (ISIN: ZAE000029658) (Share code: ATNP) (ISIN: ZAE000029666)

(“Altron” or “the company”)

Altron notice of annual general meeting

190


Altron notice of annual general meeting continued

Ü this general authority shall be valid until

the company’s next annual general

meeting, provided that it shall not extend

beyond 15 (fifteen) months from the

date of passing of this special resolution

number 1;

Ü an announcement will be published as

soon as the company or any of its

subsidiaries has acquired ordinary and/or

participating preference shares constituting,

on a cumulative basis, 3% of the number

of ordinary and/or participating preference

shares in issue and for each 3% in

aggregate of the initial number acquired

thereafter, in compliance with Rule 11.27 of

the JSE Listings Requirements;

Ü acquisitions of shares in aggregate in any

one financial year may not exceed 20% of

the company’s ordinary and/or participating

preference issued share capital, as the case

may be, as at the date of passing of this

special resolution number 1;

Ü ordinary and/or participating preference

shares may not be acquired at a price

greater than 10% above the weighted

average of the market value at which such

ordinary and/or participating preference

shares are traded on the JSE as determined

over the five business days immediately

preceding the date of repurchase of such


shares;

Ü the company has been given authority by

its articles of association;

Ü at any point in time, the company may

only appoint one agent to effect any

repurchase on the company’s behalf;

Ü the company undertaking that it will not

enter the market to repurchase the

company’s securities until the company’s

sponsor has provided written confirmation

to the JSE regarding the adequacy of the

company’s working capital in accordance

with Schedule 25 of the JSE Listings

Requirements;

Ü the company remaining in compliance

with the shareholder spread requirements

of the JSE Listings Requirements; and

Ü the company and/or its subsidiaries not

repurchasing any shares during a

prohibited period as defined by the JSE

Listings Requirements.

Before entering the market to effect the general

repurchase, the directors, having considered the

effects of the repurchase of the maximum

number of ordinary and/or participating

preference shares in terms of the aforegoing

general authority, will ensure that for a period of

12 (twelve) months after the date of the notice

of annual general meeting:

Ü the company and the Altron group will be

able, in the ordinary course of business, to

pay its debts;

Ü the consolidated assets of the company and

the Altron group, fairly valued in accordance

with International Financial Reporting

Standards, will exceed the consolidated

liabilities of the company and the Altron

group;

Ü the company and the Altron group’s ordinary

and/or participating preference share capital,

reserves and working capital will be adequate

for ordinary business purposes; and

191

Ü the working capital of the company and the

Altron group will be adequate for the

purposes of the business of the company and

the Altron group.

The following additional information, some of

which may appear elsewhere in the annual

report of which this notice forms part, is

provided in terms of the JSE Listings

Requirements for purposes of the general

authority:

Ü directors and management – pages 184 to

187

Ü major beneficial shareholders – page 86

Ü directors’ interests in ordinary shares –

page 113

Ü share capital of the company – page 135

LITIGATION STATEMENT

In terms of Section 11.26 of the JSE Listings

Requirements, the directors, whose names

appear on pages 184 to 187 of this annual

report of which this notice forms part, are not

aware of any legal or arbitration proceedings

that are pending or threatened, that may have

or had in the recent past, being at least the

previous 12 (twelve) months, a material effect

on the Altron group’s financial position.

DIRECTORS’ RESPONSIBILITY STATEMENT

The directors, whose names appear on pages

184 to 187 of this annual report, collectively and

individually accept full responsibility for the

accuracy of the information pertaining to this

special resolution and certify that, to the best of

their knowledge and belief, there are no facts

that have been omitted which would make any

statements false or misleading, and that all

reasonable enquiries to ascertain such facts have

been made and that this special resolution

contains all information required by law and the

JSE Listings Requirements.

MATERIAL CHANGES

Other than the facts and developments reported

on in this annual report, there have been no

material changes in the affairs or financial

position of the company and its subsidiaries

since the date of signature of the audit report

and up to the date of this notice.

The reason for and effect of this special

resolution is to grant the directors of the

company a general authority in terms of the

Companies Act and the JSE Listings Requirements

for the repurchase by the company, or a

subsidiary of the company, of the company’s

shares.

The directors have no specific intention, at

present, for the company to repurchase any of

its shares but consider that such a general

authority should be put in place should an

opportunity present itself to do so during the

year which is in the best interests of the

company and its shareholders.

6. ORDINARY RESOLUTION NUMBER 1: CONTROL

OF AUTHORISED BUT UNISSUED SHARES

That the general authority granted to

directors to allot and issue the unissued

ordinary and participating preference shares

of the company be renewed, after providing

for the allotment and issue of ordinary and

participating preference shares in terms of

the company’s share schemes, which

192


Altron notice of annual general meeting continued

authority shall be restricted to 10% of the

issued ordinary and/or participating

preference shares as at 28 February 2006,

upon such terms and conditions as they in

their sole discretion may determine; subject

to the provisions of the Companies Act, and

the JSE Listings Requirements.

7. ORDINARY RESOLUTION NUMBER 2: GENERAL

AUTHORITY TO ISSUE SHARES FOR CASH

That subject to renewal of the general

authority proposed in terms of 6 above and in

terms of the JSE Listings Requirements,

shareholders to grant a waiver in favour of

the directors for the allotment and issue of


shares in the capital of the company for cash

other than in the normal course by way of a

rights offer or pursuant to the company’s

share schemes or acquisitions utilising such

securities.

The allotment and issue of shares for cash, as

and when suitable situations arise, shall be

subject to the following limitations:

Ü any issue of securities shall be to public

shareholders as defined by the JSE Listings

Requirements;

Ü this authority shall only be valid until the

next annual general meeting of the

company but shall not endure beyond the

period of 15 (fifteen) months from the

date set down for the sixtieth annual

general meeting;

Ü a paid press announcement giving details,

including the impact on net asset value

and earnings per share, will be published

at the time of any such allotment and

issue of shares representing, on a

cumulative basis within one year, 5% or

more of the number of shares of that class

in issue prior to any such issues;

Ü that issues in the aggregate in any one

financial year shall not exceed 10% of the

number of shares of any class of the

company’s issued share capital less any

shares that may be issued during the

financial year arising from the exercise of

share options in the normal course; and

Ü that, in determining the price at which an

allotment and issue of shares will be

made in terms of this authority, the

maximum discount permitted will be 10%

of the weighted average traded price of

the class of shares to be issued over the

30 days prior to the date that the price of

issue is determined or agreed by the

directors of the company.

In terms of the JSE Listings Requirements, the

approval of a 75% majority of the votes cast

by shareholders present or represented by

proxy at this annual general meeting will be

required for this authority to become

effective.

8. ORDINARY RESOLUTION NUMBER 3:

SIGNATURE OF DOCUMENTS

That any one director or the secretary of the

company be and is hereby authorised to do

all such things and sign all documents and

take all such action as they consider

necessary to implement the resolutions set

out in the notice convening this annual

general meeting at which this ordinary

resolution will be considered.

193

VOTING AND PROXIES

Ordinary and participating preference

shareholders are entitled to attend and speak at

the meeting, but only ordinary shareholders are

entitled to vote.

Ordinary and participating preference

shareholders may appoint a proxy to attend,

speak and, in respect of an ordinary shareholder,

vote in their stead. Shareholders holding

dematerialised shares but not in their own name

must furnish their Central Securities Depository

Participant (CSDP) or broker with their

instructions for voting at the annual general

meeting should they wish to vote. If your CSDP

or broker, as the case may be, does not obtain

instructions from you, it will be obliged to act in

terms of your mandate furnished to it, or if the

mandate is silent in this regard, to complete the

relevant form of proxy attached. Unless you

advise your CSDP or broker, in terms of the

agreement between you and your CSDP or

broker by the cut-off time stipulated therein,

that you wish to attend the annual general

meeting or send a proxy to represent you at the

annual general meeting, your CSDP or broker

will assume you do not wish to attend the

annual general meeting or send a proxy. If you

wish to attend the annual general meeting or

send a proxy, you must request your CSDP or

broker to issue the necessary letter of authority

to you.

Shareholders holding dematerialised shares in

their own name, or who hold shares that are not

dematerialised, and who are unable to attend

the annual general meeting and wish to be

represented thereat, must complete the relevant

form of proxy attached in accordance with the

instructions therein and lodge it with, or mail it

to, the transfer secretaries.

Forms of proxy should be forwarded to reach the

company’s transfer secretaries at the address

given below by not later than 09:30 on Thursday,

13 July 2006. The completion of a form of proxy

will not preclude a shareholder from attending

the annual general meeting.

By order of the board

Altron Management Services (Pty) Limited

(Secretaries)

per: AG Johnston (Group Company secretary)

31 May 2006

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty)

Limited

70 Marshall Street

Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107)

194


1. ADOPTION OF ANNUAL FINANCIAL STATEMENTS

At the annual general meeting, the directors

must present the annual financial statements

for the year ended 28 February 2006 to

shareholders, together with the reports of the

directors and the auditors. These are contained

within the annual report.

2. RE-ELECTION OF DIRECTORS

In accordance with the company’s articles of

association, one third of the directors is

required to retire at each annual general

meeting and may offer themselves for re-

election. In addition, any person appointed to

the board of directors is similarly required to

retire and is eligible for re-election at the next

annual general meeting. Messrs N Claussen

and MJ Lamberti retire from the board and

Messrs RE Venter, PMO Curle, DC Mpofu and

Ms DC Radley retire by rotation at the annual

general meeting.

An abbreviated curriculum vitae in respect of

each director offering him/herself for re-

election is contained on pages 184 to 187 of

this annual report.

3. REMUNERATION OF NON-EXECUTIVE DIRECTORS

Shareholders are requested to ratify the fees

paid to non-executive directors during the past

financial year. Full particulars of all fees and

remuneration for the past financial year are

contained on pages 105 to 106 of the annual

report.

4. RE-APPOINTMENT OF INDEPENDENT AUDITORS

KPMG Inc has indicated its willingness to

continue in office and resolution 4 proposes the

re-appointment of that firm as the company’s

auditors until the next annual general meeting.

The resolution also gives authority to the

directors to fix the auditors’ remuneration.

5. SPECIAL RESOLUTION NO. 1 – GENERAL

AUTHORITY TO REPURCHASE SHARES

The effect of special resolution number 1 and

the reason therefor is to grant the company

or any of its subsidiaries a general approval in

terms of the Companies Act No 61 of 1973,

as amended (the Companies Act), for the

acquisition by the company or any of its

subsidiaries of the company’s shares, which

general approval shall be valid until the

earlier of such next annual general meeting

of the company or its variation or revocation

of such general authority by special resolution

at any subsequent annual general meeting of

the company, provided that the general

authority shall not extend beyond 15 months

from the date of the annual general meeting.

6. ORDINARY RESOLUTIONS NOs. 1 AND 2 –

CONTROL OF AUTHORISED BUT UNISSUED

SHARES AND GENERAL AUTHORITY TO ISSUE

SHARES FOR CASH

In terms of Sections 221 and 222 of the

Companies Act the shareholders have to

approve the placement of the unissued shares

under the control of the directors. A general

authority to issue shares for cash has also

been granted to the directors. The authorities

will be subject to the Companies Act and the

JSE Listings Requirements.

In terms of the JSE Listings Requirements

ordinary resolution number 2 requires the

approval of 75% of the shareholders present

or represented by proxy at the annual general

meeting, in order to become effective.

Annual general meeting – explanatory notes

195

FORM OF PROXY FOR THE SIXTIETH ANNUAL GENERAL MEETING TO BE HELD IN THE BOARDROOM, ALTECH CORPORATE OFFICES, 79 CENTRAL STREET, HOUGHTON, JOHANNESBURG ON FRIDAY, 14 JULY 2006 AT 09:30 – FOR USE BY CERTIFICATED ORDINARY SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WITH OWN NAME REGISTRATION ONLY

Holders of dematerialised ordinary shares other than “own name” registration must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP to issue them with the necessary authorisation to attend the annual general meeting in person or provide their CSDP or broker with their voting instructions should they not wish to attend the annual general meeting in person but wish to be represented thereat.

I/We(PLEASE PRINT)of address

being the registered holder(s) of ordinary shares in the capital of the company do hereby appoint

1. or failing him/her,


the Chairman of the annual general meeting as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held on Friday, 14 July 2006 at 09:30 for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares registered in my/our name/s, in accordance with the following instructions:

Number of ordinary shares

For Against Abstain

1. Adoption of annual financial statements

2. Re-election of directors 2.1 Mr N Claussen

2.2 Mr MJ Lamberti

2.3 Mr RE Venter

2.4 Mr PMO Curle

2.5 Mr DC Mpofu

2.6 Ms DC Radley

3. Remuneration of non-executive directors

4. Reappointment of independent auditors

5. Special Resolution Number 1: General authority to repurchase shares

6. Ordinary Resolution Number 1: Control of authorised but unissued shares

7. Ordinary Resolution Number 2: General authority to issue shares for cash

8. Ordinary Resolution Number 3: Signature of documents

Signed at on 2006

Signature

Assisted by me (where applicable)

Notes:1. An ordinary shareholder may insert the name of a proxy or the names of two alternative proxies of the ordinary shareholder’s choice in

the space provided and any such proxy need not be a shareholder of the company. Should a proxy not be specified, this will be exercised by the Chairman of the annual general meeting.

2. An ordinary shareholder is entitled to one vote on a show of hands and, on a poll, one vote in respect of each ordinary share held. An ordinary shareholder’s instructions to the proxy must be indicated by inserting the relevant number of votes exercisable by the ordinary shareholder in the appropriate box(es). An ordinary shareholder or his/her proxy is not obliged to use all the votes exercisable by the ordinary shareholder, or to cast all those votes exercised in the same way, but the total of the votes cast and in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the ordinary shareholder.

3. If any ordinary shareholder does not indicate on this instrument that his/her proxy is to vote in favour of or against any resolution or to abstain from voting, or give contradictory instructions, or should any further resolution(s) or any amendment(s) which may be properly put before the annual general meeting be proposed, the proxy shall be entitled to vote as he/she thinks fit.

4. Documentary evidence establishing the authority of a person signing the proxy form in a representative capacity must be attached to this form, unless previously recorded by the company or waived by the Chairman of the annual general meeting.

5. This proxy form should be completed and returned to the company’s transfer secretaries, Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), so as to reach them by not later than Thursday, 13 July 2006 at 09:30.

ADDITIONAL FORMS OF PROXY ARE AVAILABLE FROM THE TRANSFER SECRETARIES ON REQUEST.

Allied Electronics Corporation LimitedIncorporated in the Republic of South Africa

(Registration number 1947/024583/06) (Share code: ATN) (ISIN: ZAE000029658)


196


FORM OF PROXY FOR THE SIXTIETH ANNUAL GENERAL MEETING TO BE HELD IN THE BOARDROOM, ALTECH CORPORATE OFFICES, 79 CENTRAL STREET, HOUGHTON, JOHANNESBURG ON FRIDAY, 14 JULY 2006 AT 09:30 – FOR USE BY CERTIFICATED PARTICIPATING PREFERENCE SHAREHOLDERS AND DEMATERIALISED SHAREHOLDERS WITH OWN NAME REGISTRATION ONLY

Holders of dematerialised participating preference shares other than “own name” registration must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the necessary authorisation to attend the annual general meeting in person.

I/We(PLEASE PRINT)of address

being the registered holder(s) of participating preference shares in the capital of the company do hereby appoint



the Chairman of the annual general meeting as my/our proxy to attend and speak for me/us at the sixtieth annual general meeting of the company to be held on Friday, 14 July 2006 at 09:30 and at any adjournment thereof.

Signed at on 2006

Signature

Assisted by me (where applicable)

Notes:1. A participating preference shareholder may insert the name of a proxy or the names of two alternative proxies of the participating

preference shareholder’s choice in the space provided and any such proxy need not be a shareholder of the company. Should a proxy not be specified, this will be exercised by the Chairman of the annual general meeting.

2. A participating preference shareholder or his proxy is entitled to attendance at the annual general meeting, and to speak but not vote thereat in terms of the company’s articles of association.

3. Documentary evidence establishing the authority of a person signing the proxy form in a representative capacity must be attached to this form, unless previously recorded by the company or waived by the Chairman of the annual general meeting.

4. This proxy form should be completed and returned to the company’s transfer secretaries, Computershare Investor Services 2004 (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), so as to reach them by not later than Thursday, 13 July 2006 at 09:30.

ADDITIONAL FORMS OF PROXY ARE AVAILABLE FROM THE TRANSFER SECRETARIES ON REQUEST.

Allied Electronics Corporation LimitedIncorporated in the Republic of South Africa (Registration number 1947/024583/06) (Share code: ATNP) (ISIN: ZAE000029666)


197

SHAREHOLDERS’ DIARY

Financial year end 28 February 2006

Annual general meeting 14 July 2006

Reports and financial statements

Preliminary reports and

dividend announcements

(published) 9 May 2006

Annual financial statements

(mailed to shareholders) June 2006

Interim Reports October 2006

Dividend details

Dividend declared 8 May 2006

Record date 30 June 2006

Payable 3 July 2006

CURRENCY

To facilitate the interpretation of this report by

readers not familiar with the South African Rand,

we provide the following conversion guide:

At 28 February 2006 one Rand (ZAR) was

equal to:

2006 2005

UK £ 0.09208 0.08912

US$ 0.1613 0.1713

Euro 0.1355 0.1294

Yen 18.82 18.07

ADMINISTRATION

Business, secretaries and registered address

Altron House

4 Sherborne Road

Parktown 2193

(PO Box 981, Houghton 2041), South Africa

Telephone: National (011) 645-3600

International 27 11 645-3600

Telefax: (011) 482-6489

Transfer Secretaries

Computershare Investor Services 2004 (Pty) Limited

70 Marshall Street

Johannesburg 2001

(PO Box 61051, Marshalltown 2107), South Africa

Telephone: National (011) 370-5000

International 27 11 370-5000

Telefax: (011) 370-5271/2

Auditors

KPMG Inc

Bankers

ABSA Bank Limited

FNB Corporate Bank

(a division of FirstRand Bank Limited)

Nedbank, a division of Nedcor Bank Limited

The Standard Bank of South Africa Limited

Sponsor

Nedbank Capital

Corporate data

BASTION GRAPHICS

ALTRON • 4TH PROOFA

LLIED ELEC

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ALLIED ELECTRONICS CORPORATION LIMITED

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