| Mon 5 Mar 2012, 8:47 | | CNL - Control Instruments Group Limited - Business update and trading |
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CNL
CNL
CNL - Control Instruments Group Limited - Business update and trading
statement
CONTROL INSTRUMENTS GROUP LIMITED - BUSINESS UPDATE AND TRADING STATEMENT
(Incorporated in the Republic of South Africa)
(Registration number: 1964/003987/06)
Share Code: CNL
ISIN: ZAE000001665
("Control Instruments" or "the Company" or "the Group")
BUSINESS UPDATE AND TRADING STATEMENT
Shareholders were advised in the Group`s SENS announcement dated 4 October
2011 that the Group`s then subsidiary, Pi Shurlok Limited ("Pi Shurlok UK"),
would be placed under administration. At the time it was anticipated that if
the Group`s net investment in Pi Shurlok UK had been fully written off in
the interim results for the six months ended 30 June 2011, it would have
resulted in a reduction of approximately R82 million in profits after
allowing for the realisation of accumulated foreign currency gains and
losses.
The Group is now able to advise shareholders that the net write-off of the
investment in Pi Shurlok UK; the realisation of accumulated foreign currency
gains and losses; and the trading losses in respect of Pi Shurlok UK, amount
to approximately R80 million.
In the SENS announcement dated 14 December 2011, shareholders were further
advised that changes had been made by the Group so as to reduce its exposure
to the OEM (original equipment manufacture) automotive industry. These
changes included the exit from Pi Shurlok UK and significant restructuring
of the OEM electronics manufacturing facility in Pietermaritzburg ("Pi
Shurlok SA"). As a result of these changes, the Group would be primarily
focused on the automotive aftermarket in sub-Saharan Africa through its
Aftermarket Business, CI Automotive. It would also require a smaller head
office.
The exit from Pi Shurlok UK has been completed and the head office is in the
process of being closed. These changes have resulted in once-off costs of
approximately R28 million in the results for the year ended 31 December
2011. The 2011 results have also been negatively affected by the
restructuring of Pi Shurlok SA and trading losses in that business. This
resulted in the de-recognition of the deferred tax asset in Pi Shurlok SA of
approximately R23 million.
While the Group`s decision to exit Pi Shurlok UK and downsize Pi Shurlok SA
has had a significant impact on the results, the Aftermarket Business has
not been affected. On the contrary, exiting Pi Shurlok UK, (i) eliminates
the cash drain it was placing on the Group and indirectly on the Aftermarket
Business; (ii) reduces the Group`s risk profile; and (iii) enables the Group
to focus on its Aftermarket Business and grow this business off the back of
the profitable and solid performance it has delivered over the past three
years.
The Group`s loss per share for the year ended 31 December 2011 is expected
to be between 103.0 and 113.0 cents, compared with earnings per share of 1.6
cents in the previous year and the headline loss per share is expected to be
between 55.0 and 65.0 cents, compared with headline earnings per share of
1.7 cents in the previous year.
The financial information on which this trading statement is based has not
been reviewed or reported on by the Company`s auditors. Control Instruments`
results for the year ended 31 December 2011 will be released on SENS on or
about 16 March 2012.
Cape Town
5 March 2012
Sponsor
Investec Bank Limited
Date: 05/03/2012 08:47:20 Produced by the JSE SENS Department.
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