Grand Tellumat Manufacturing
Grand Tellumat Manufacturing (GTM) is a leading South African contract electronics manufacturer. The Company is ISO 9001:2008 certified and offers from “labour only” to full turnkey electronic manufacturing and product integration for all levels of complexity, including design, industrialisation, procurement, manufacturing and after-sales service.
GTM was established on 1 September 2014, following the establishment of the Grand Tellumat Manufacturing (Pty) Ltd joint venture between GPI (51%) and Tellumat (Pty) Ltd (49%).
effective ownership (as at 30 June 2015)
contribution to GPI headline earnings for the period
“GTM is a formidable combination of the engineering skills and manufacturing capabilities of Tellumat and the investment experience of GPI, with substantial potential for diversification and growth.”
GPI directors at grand tellumat Board level
Hassen Adams, Alan Keet
Level 2 (measured as part of GPI consolidated scorecard)
Total employee complement: 104
Historically disadvantaged individuals (HDIs) represent 86% of the total employee complement
Females represent 56% of the total employee complement
Manufacturing capacity, measured in electronic components placement: 400 million per annum
|*||Mr Kotzé left the Company subsequent to financial year-end.|
Key financial performance indicators (R’000s)
|Net profit after tax||(7 345)|
|Total debt excluding shareholder loans||N/A|
|* 10-month performance figures|
Operating context and Performance
GTM markets its products and services to local and foreign companies requiring outsourced manufacturing services across a wide range of sectors, including telecommunications, military, aerospace, utility/metering, security, industrial, gaming and television/display. The local industry is characterised by a small number of blue chip customers driving outsourcing volumes, specifically in the metering and vehicle tracking industries, with a larger number of smaller-volume customers in niche industries. GTM is one of a small number of contract manufacturers and differentiates itself by offering a full turnkey electronic manufacturing solution that spans the entire product life cycle, and having the flexibility to execute on diverse deliverables from prototyping to high-volume contracts.
The Company’s first financial year commenced with a good order book. However, owing to customer delays, the serial production of two major new products (including military transponders and commercial golf club and swing analysis radars) took longer than anticipated. As a result, the business ran at a loss for the first six months of the financial year. Once these products were in serial production, the Company became profitable, but the losses in the first part of the financial year could not be clawed back by year-end and the results therefore reflect a net loss. The order intake for the year was R90 million and, at year-end, the order book is at a healthy R63 million, indicating a pipeline of positive inflows and future earnings growth.
Power supply constraints pose a significant threat to industry in South Africa. While load shedding initially impacted on production, the Company took the strategic decision to invest in a generator capable of running the entire plant, as well as surge protection units. A number of additional challenges have arisen as a result of the postponement of major government projects, including the digital migration project (manufacturing of set-top boxes), localisation of components for PRASA’s rolling stock renewal project, and various Eskom initiatives around metering. It is anticipated that these projects, specifically the digital migration, and localisation of the PRASA rolling stock renewal programme, will mature during the 2016 financial year with possible significant positive impacts for GTM.
In addition thereto, GPI’s initiative to locally assemble and manufacture slot machines for international Original Equipment Manufacturers (OEM) has expanded to include a second customer, Gold Club d.o.o. of Slovenia, following the dissolution of its proposed exclusive joint venture with Germany’s Merkur Gaming, due to certain conditions precedent having not been met. The recent investment in Atlas Gaming Holdings of Australia by GPI and the awarding of the relevant African production of their slot machines to GTM will further strengthen its position as South Africa’s only local slots manufacturer. The business is confident that, with the addition to the agreements reached with Gold Club, Merkur and Atlas, it will be able to conclude additional local slots contract manufacturing agreements during the 2016 financial year.
New strategies for the immediate term to reduce reliance on contract manufacturing customers include diversifying into the development and marketing of own-technology solutions in niche areas and offering local content technology solutions to international companies with their own electronic product intellectual property. GTM has a unique selling point to add value to this customer base in terms of its technical expertise, access and supply relationships in the local market.