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Press Release
26 November 2008

Fibre optics to light up earnings at Reunert

CENTURION, Gauteng – 26 November 2008 – Electronics Company Reunert expects a boost to its future earnings from increased demand for fibre optic cables by telecoms services companies. The company yesterday reported modest 14 percent growth in full-year revenues to R10.92 billion, saying its telecoms cable business had had a subdued year, mainly because of Telkom buying less copper cable than the previous year. However, exports of fibreoptic cable and demand for the product from companies such as Neotel and MTN are expected to continue growing, offsetting the decline in demand from Telkom. Telkom has been hard hit by copper cable theft, costing it millions of rands. MTN, Neotel, Vodacom and Dark Fibre Africa are some of the companies laying fibreoptic cables to provide fixed-line services. More companies, which were previously not allowed to build their own networks, are expected to enter the telecoms infrastructure market from next year.

“Our order book [for copper] is not very high at the moment but it has potential to increase because now most companies have intentions to self-provide [build their own network] and we hope to have a fair slice of that,” Reunert chief executive Gerrit Pretorius said yesterday. He added that there was strong demand from the Middle East and other African countries for the company’s products. Revenue for the copper division was 19 percent lower and the company is investing more money in the division to expand capacity. Reunert’s profit after tax was R1.15 billion from R498.5 million last year. In the 2007 full year the company recognised R556.6 million from black empowerment costs. Normalised headline earnings improved by 11 percent to R1.12 billion.

“Reunert’s profit was underpinned by strong cash flows,” Pretorius said. Excluding borrowings associated with its finance activity, the group had R782 million of cash at year-end. The electrical engineering division, CBI-electric, experienced buoyant market conditions and grew revenue by 19 percent to R3.95 billion, while operating profit grew from R554 million to R675 million. The defence business met expectations, contributing R137 million to operating profit. It expects to be part of the group of companies that will manufacture decoders for the digital television signal. The contract for the decoder manufacturing is estimated at more than R3 billion. Reunert has also increased the dividend to R2.41 a share, which together with the interim dividend of 78c makes a total distribution of R3.19 a share, from R3.14 last year. The decision to increase the dividend had been based on the uncertain economic landscape, said the company. Reunert shares rose 7.53 percent in Johannesburg trading yesterday, to close at R43.

DFA is the premier wholesale, open-access fibre-infrastructure and -connectivity provider in South Africa. We finance, build, install, manage, and maintain a world-class fibre network to transmit metro and long-haul telecommunications traffic. We started rolling out our fibre network in 2007, and to date, we have deployed over 13,000 km of ducting infrastructure in major metros, secondary cities, and smaller towns. Our network runs with an industry-leading uptime of 99.98%. We lease our secure transmission and backbone fibre infrastructure and provide associated connectivity services to telecommunications operators, Internet service providers, media conglomerates, tertiary education institutions, municipalities, government organizations, and other businesses, large and small, on equal terms. DFA is a Level 3 B-BBEE Contributor on the ICT Sector Codes.

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