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AEL: ALLIED ELECTRONICS CORPORATION LIMITED.../02

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Release Date: 
18 May 2016

The Bytes UK operations have seen a 36% increase
in revenue and a 32% improvement in EBITDA, although approximately 15% of this growth can be
attributed to the depreciation of the Rand against the British pound.

Bytes Document Solutions is performing in line with expectations with its revenue and EBITDA decline
affected by the sale of the LaserCom business in the prior year and margin pressures from the
depreciation of the Rand. The Xerox business is performing better than in the prior year, however the
returns at NOR Paper remain poor and Altron has taken a decision to sell the inventory to a third party
and close this business.

Bytes Managed Solutions performed well despite a reduction in revenue and EBITDA, which was
expected given the total technology refresh that occurred in the prior year at one of its major
customers. The business was however affected by foreign exchange losses and the disposal of the
retail ATM business in August 2014, and faces some challenges in the coming year following certain
contract losses.

Bytes Secure Transaction Solutions, which includes the businesses of Bytes Healthcare Solutions,
Altech NuPay and Altech Card Solutions, continues to perform exceptionally well. The top performer
was Altech NuPay which achieved good revenue and profit growth, assisted by the Delter IT acquisition
in December 2015.

Bytes Universal Systems, which includes the operations of Alliance, Altech ISIS and the old Bytes
Universal Systems, experienced a decline in performance, though much of this was expected given the
end of the SAPS contract earlier this year. However, the business finished the year strongly with an
encouraging pipeline of prospects.

Revenue doubled at Bytes People Solutions and EBITDA also increased substantially following the
acquisition of Inter-Active Technologies, a call centre business. While this has reduced margins in the
operation, it has resulted in the achievement of critical mass in the call centre business, opening up
new opportunities.

Discontinued operations

Telecommunications

Altech Autopage experienced an extremely difficult last six months as it protected its subscriber bases
ahead of the disposal to the network operators in the face of on-going delays. Its results have also
been affected by some of the costs of disposing of the business.

The Altech Node business was closed on 31 October 2015, with all closure costs fully accounted for in
the 2015/2016 financial year.

Multimedia

Altech Multimedia was significantly impacted by reduced order intake in its core set-top box business in
Africa as a result of delays in the roll-out of various African DTT programs. Although demand in South
Africa remains at reasonable levels, the reduction in orders from Africa and the loss of the Samsung TV
assembly contract resulted in under recoveries in the factory. This also resulted in a significant
inventory obsolescence provision in the current reporting period. Action has been taken to right-size
the business with the headcount reducing by approximately 60% and the closure of the international
operations. Factory overheads have also been significantly reduced, halving the break-even point from
a volume perspective. The pipeline is more encouraging for the 2016/2017 financial year which will also
benefit from the reduced cost base.

Powertech

The 2015/2016 financial year has seen Powertech revenue decreasing by 13% with a substantial 171%
decrease in EBITDA levels compared to the prior year, with EBITDA margins slipping from 2.7% to
negative 2.2%. The business is reporting an operating loss of R269 million.

Overall the Powertech Cables group has seen a 12% decrease in revenue, with the local operations
down 19% and the international operations up 4%, assisted by the depreciation of the Rand against the
Euro. At an EBITDA level, margin has slipped from 4.2% to 0%, decreasing EBITDA to a loss of R3
million. The decline in revenue in the local operations is driven by weak demand in both the informal
(primarily building and construction) and formal (Eskom, municipalities and other large power users)
sectors and a resultant renewal of margin pressure. The international operations had a good year,
benefitting from increased infrastructure spend, particularly in Spain.

At Powertech Transformers, the continued absence of orders from Eskom for large power transformers
led to an unfavourable product mix and a significant under recovery at the Pretoria-West factory which
has been significantly downscaled. The distribution transformer side of the business also had a difficult
year, but has seen a recent improvement in order flow from both renewable projects and export
markets.

Powertech Batteries performed satisfactorily given that margins were under pressure due to an
increasing Rand lead price as well as on-going competition from imports despite the weak Rand and an
increase in import duties.

Powertech System Integrators' performance continues to disappoint as its reliance on capital projects
continues to negatively impact performance. Aggressive expansion into Africa is required to improve its
outlook. Powertech Quadpro, the turn-key substation business, has also seen very low order intake
this year with intense competition in both its local and targeted African markets.

Human capital

Altron has been rated as a Level 2 Broad-Based Black Economic Empowerment contributor for the
2015/2016 financial year while Altron TMT will remain a Level 2 contributor under the ICT Charter. This
can be attributed to a well-executed strategic intent to transcend from a compliance driven process to a
more transformative process.

Training of Altron group employees remains a priority and is managed through the Bill Venter Academy.

Sustainability

Altron's sustainable business strategy remains the driving force in terms of achieving its targets and
objectives. The four key value drivers for sustainable development remain Financial Capital, Human
Capital, Products and Services, and External Relationships.

Corporate governance

The Altron group continues to embrace and implement the recommendations of the King Report on
Governance for South Africa, 2009, as well as the King Code of Governance Principles for South Africa
2009.

Directorate

On 31 July 2015, Mr Craig Venter resigned as an executive director of Altron after 27 years of service
to the Altron group, 18 of which had been as an executive director of Altron.

Shareholders are referred to the SENS announcement published by Altron on 12 November 2015
advising that with effect from 12 November 2015, Mr Ronnie Ntuli had resigned from the board in order
to focus on his executive responsibilities at the Thelo Group (Pty) Limited.

On 29 February 2016, Mr Rob Abraham retired as an executive director and employee of the Altron
group after 18 years of service.

The board wishes to express its gratitude to Messrs Venter, Ntuli and Abraham for their many years of
devoted service and commitment towards the Altron group.

Shareholders are further referred to the SENS announcement published by Altron on 29 April 2016
advising shareholders that the Altron group continued to transition from a family managed business to
an independent management structure. It is envisaged that this transition will be finalised by the end of
the 2016/2017 financial year and shareholders will be kept updated on developments.

Outlook

The Altron group is repositioning itself into a TMT focused business. This process remains the key
initiative for the 2016/2017 financial year as Altron strives to exit from its discontinued operations, which
will enable the Altron group to redirect its energies towards growing the strong TMT business that
resides within the group. Through the process Altron will also concentrate on aligning its corporate

structure and overheads with a significantly smaller, but more profitable group. Altron believes that the
prospects for the core TMT business remain good, despite the challenges of local economic conditions.

With the action taken to date, the drag from the discontinued operations should be significantly less in
the 2016/2017 financial year, though some of it will continue, albeit at much reduced levels, until the
repositioning process is concluded.

Altron's balance sheet reflected more leverage than the board would like at year end, though this has
reduced since year end with the receipt of the first proceeds from the Altech Autopage transaction.
With the expected conclusion of the Aberdare Cables transaction in the coming months, Altron's
gearing ratios will reduce to more acceptable ranges.

Annual General Meeting

Altron's 70th annual general meeting will be held in The Altron Boardroom, 5 Winchester Road,
Parktown, Johannesburg on Monday, 18 July 2016 at 09h30. Further details of the company's annual
general meeting will be contained in Altron's annual statutory report to be posted to shareholders on or
about Wednesday, 1 June 2016.

On behalf of the board

Dr Bill Venter Robert Venter Alex Smith
Non-Executive Chairman Chief Executive Chief Financial Officer

17 May 2016

Board of directors

Independent non-executive:

Mr NJ Adami, Mr GG Gelink, Mr MJ Leeming, Ms SN Mabaso-Koyana, Dr PM Maduna, Ms DNM
Mokhobo, Mr JRD Modise, Mr SN Susman

Non-executive:

Dr WP Venter (Chairman), Mr MC Berzack

Executive:

Mr RE Venter (Chief Executive), Mr AMR Smith*

* British

Secretaries:

Altron Management Services Proprietary Limited - Mr AG Johnston (Group Company Secretary)

Sponsor:

Investec Bank

Date: 18/05/2016 07:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.