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First Quarter Business Overview Three months ended 30 September 2001 With a view to providing stakeholders with regular updates of developments within the Group and its markets, Grintek will issue quarterly market overviews, covering the first and third quarters, in November and May each year respectively, in addition to its interim and final reports. These reports should enhance stakeholders' awareness of the Group's activities in line with current trends to ensure that information is shared with the market at more regular intervals. Additional information regarding the Group is also available on our web site at www.grintek.com. First Quarter performance overview for the three months ended 30 September 2001 The turnover of the Group for the period under review was marginally up on that for the comparable period of the previous year although lower than budget levels - a trend that could continue in line with prevailing market conditions. This is mainly as a result of delays in certain orders within the Telecoms division, and in particular within the corporate solutions business unit. Defence sales were substantially up on the previous year and in line with budgets. Industrial electronics sales were marginally below budget. Telecommunications The divisional turnover for the first quarter compared to the first quarter of the previous year remains unchanged. However, as expected the margins are under pressure. The demand for Tellabs, I-Net and Clarent products in the carrier markets remained stable, whilst sales of voice and data systems to the enterprise markets were slower than expected. Supply contracts with major clients were reconfirmed during this period. The Group continues to expand its intellectual property base by further investing in associate and subsidiary companies involved in systems integration, software and services. Industrial Electronics The recently announced partnership with the European telecommunications antenna supplier, Kathrein, positions the new Kathrein-Grintek Antennas venture as the dominant supplier of GSM antennas in the region as well as providing a platform for exporting locally designed products to other markets. Deliveries of telecommunications power rectifiers are on schedule. Increased local production of mid-sized rectifiers has provided further cost advantages against imported products. The energy management business is performing below expectation, however owing to substantial prospects in a changing regulatory environment, the Group will continue to invest in these opportunities. Defence Electronics Defence electronics sales improved, with growth in exports being the dominant contributor. Avionics subsystems delivered to the European market are performing to customer expectations and have been well received in the market. The Communication Systems division is experiencing temporary delays in confirming export orders. Prospects Business conditions in the Telecommunications market are expected to improve in the third quarter ending 31 March 2001. Subsidiary companies Centricity, Syrinx and AIS are expected to move out of their investment phase during the third quarter. The performance of the newly formed systems integration business is encouraging, having already been short-listed on two local tenders. New products introduced into the carrier market were well received and new contracts with operators in southern and central Africa are in the pipeline. Opportunities for growth in the telecommunications rectifier, antenna and special solutions businesses flowing from Cell-C and the potential SNO remain in place. Exports of defence electronics solutions are expected to experience further growth, particularly within the European market where extensions to existing orders are currently under negotiation. Whilst activity surrounding business proposals and prospects remains high, the Group is experiencing a flat level of order execution. The Group's ability to generate short-term profits is dependant upon the conversion of prospective deals into firm orders and consequently the profits for the six months ending 31 December 2001 may be marginally lower than those of the previous interim reporting period. Contact details: e-mail enquiries info@grintek.com Mr Sybrand Grobbelaar or Mr Eddie Strauss Phone number (012) 672-8300
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