| Fri 7 Sep 2001, 0:00 | | Control Instruments - Financial Results And Furthe |
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CONTROL INSTRUMENTS
GROUP LIMITED
Registration number 1964/003987/06
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001
AND FURTHER CAUTIONARY ANNOUNCEMENT
ALPHA code: CNL ISIN code: ZAE000001665
HIGHLIGHTS
* Continued growth in turnover in core operations
* Sale of non-core Data Pro activities for R30 million
* Tight working capital management maintained
COMMENTARY
OVERVIEW
The group's core Electronics operations, Shurlok, CI-FMS and CI-VDO,
continued to record strong turnover growth.
The increase in turnover did not however translate into an increase in the
group's profit as Shurlok, the group's largest subsidiary, was negatively
affected by a world-wide shortage of electronic components which caused
severe dis-ruptions to its business. Despite this Shurlok maintained its
service level to its customers, albeit at considerable cost to itself.
In addition, the benefits of the integration of the Dupec and Conlog acquisi-
tions have not yet worked themselves through Shurlok's system.
CI-FMS and CI-VDO performed well and in line with expectations.
All the group's businesses maintained tight control over their working capi-
tal management despite the difficult trading conditions.
Due to the extremely difficult economic environment in South America,
particularly in Argentina, the group has provided in full against its loans
to operations in that region and this has also negatively affected
profitability.
With effect from 1 April 2001, the group disposed of those parts of its Data
Pro business which did not relate to its core activities for R30 million.
The proceeds from this sale were received in August 2001.
The capital investment program continued with the building of a second
factory for Shurlok in Pietermaritzburg.
RESULTS
Group
Turnover for the six month period increased by 30% to R132.95 million, com-
pared with R102.57 million in the same period in 2000.
Gross profit decreased by 4% to R44.64 million compared with R46.47 million
and consequently the group incurred an operating loss of R1.45 million
compared with an operating profit of R415 000 in the same six months of the
previous year.
Profit on sale of investments was R15.3 million for the period compared with
R13.8 million in the same period in 2000. This was offset by R8.4 million in
exceptional write-offs and interest of R1.3 million.
Net profit before tax for the period was R4 million as opposed to R14
million in the same period in 2000.
The balance sheet remained strong, although there was an increase in short-
term borrowings during the period. This has subsequently been eliminat-ed
with the proceeds of the Data Pro sale. Working capital was reduced, despite
the increase in turnover.
Electronics (Continuing Operations)
Turnover for the six month period in the Electronics' operations increased
by 34% to R122 million. However, gross profit decreased by 4% to R39.6
million as a result of the decrease in Shurlok's gross profit margins and
consequently operating profit decreased from R3.2million to R3 million.
Information Technology (Discontinuing Operations)
The decrease in turnover for the six month period as a result of the
disposal of the major por-tion of the Data Pro business was almost totally
offset by the growth in SAN People's sales. The operating loss in these
businesses is largely attributable to SAN People which is still in its start-
up phase.
PROSPECTS
Prospects for the second six months of the current financial year have been
negatively affected by the strike in the automotive industry during August
2001 and its knock-on effects. As a result of this, as well as the impact of
Shurlok's performance in the first six months and the abnormal write-offs
referred to above, the group's profitability for the year ending 31 December
2001 will be lower than that for the year ended 31 December 2000. The
group's increased focus, its acquisitions and capital invest-ment program
have provided a foundation for future growth and profitability.
FURTHER CAUTIONARY ANNOUNCEMENT
Further to the cautionary announcement dated 17 July 2001, shareholders are
advised to continue to exercise caution when dealing in their Control
Instruments securities on the JSE Securities Exchange SA.
On behalf of the Board of Directors
HV Hefer Chairman
R Friedman Group Managing Director
Cape Town 6 September 2001
CONSOLIDATED BALANCE SHEET
As at 30 June 2001
30/06/2001 31/12/2000 30/06/2000
R 000 R 000 R 000
ASSETS
Non-current assets 77,410 92,940 64,696
Property, plant and equipment 29,285 36,085 31,177
Intangible assets 23,415 26,220 14,824
Other non-current assets 24,710 30,635 18,695
Current assets 101,605 76,458 113,600
Inventories 30,399 37,005 34,752
Trade receivables and
Prepayments 41,206 39,453 55,118
Proceeds on sale of investments 30,000 - 20,500
Cash and cash equivalents - - 3,230
Total assets 179,015 169,398 178,296
EQUITY AND LIABILITIES
Capital and reserves 96,308 92,248 92,387
Minority interest 5 24 646
Non-current liabilities 18,692 18,559 27,378
Current liabilities 64,010 58,567 57,885
Trade payables, provisions and
current borrowings 52,157 51,039 57,885
Bank overdraft 11,853 7,528 -
Total equity and liabilities 179,015 169,398 178,296
Net asset value per share (Rand) 1.09 1.04 1.04
CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2001
6 Months 12 Months 6 Months
ended ended ended
30/06/2001 31/12/2000 30/06/2000
Note R 000 R 000 R 000
Turnover 132,950 205,377 102,575
Continuing operations 122,137 180,424 91,387
Discontinuing operations 10,813 24,953 11,188
Cost of sales (88,308) (119,757) (56,103)
Gross profit 44,642 85,620 46,472
Continuing operations 39,611 72,730 41,194
Discontinuing operations 5,031 12,890 5,278
Other operating income 3,557 8,345 2,292
48 199 93 965 48 764
Operating expenses (49,648) (86,975) (48,349)
(Loss)/profit from
operations 1 (1,449) 6,990 415
Continuing operations 3,029 15,790 3,195
Discontinuing operations (4,478) (8,800) (2,780)
Profit on the sale
of investments and
discontinued operations 15,318 13,007 13,790
Exceptional items 2 (8,419) (5,384) -
Net interest (1,309) (2,219) (998)
(Loss)/income from
associates (75) 975 975
Profit before tax 4,066 13,369 14,182
Tax - 984 (179)
Profit after tax 4,066 14,353 14,003
Minority interest - (13) 8
Net profit from ordinary
Activities 4,066 14,340 14,011
EPS (cents) 4.6 16.2 15.8
Headline EPS (cents) 3 (3.2) 6.8 (0.8)
Notes to the income statement
1) (Loss)/profit from
operations(Loss)/profit
from operations as
stated after
taking into account
the following:
Profit on sale of fixed assets - 954 998
Depreciation 4,289 8,830 4,262
2) The exceptional items are
made up as follows:
Write off of foreign loan 6,236 - -
Impairment of
intangible assets 2,183 - -
Restructuring costs - 5,384 -
8,419 5,384 -
3) Reconciliation
of EPS to Headline EPS
EPS (cents) 4.6 16.2 15.8
Profit on sale
of investments and
Discontinued operations (17.4) (14.7) (15.6)
Exceptional items 9.4 6.1 -
Profit on sale
of fixed assets - (1.0) (1.0)
Sundry capital items 0.2 0.2 -
Headline EPS (cents) (3.2) 6.8 (0.8)
CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2001
6 Months 12 Months 6 Months
ended ended ended
30/06/2001 31/12/2000 30/06/2000
R 000 R 000 R 000
CASH FLOWS FROM
OPERATING ACTIVITIES 2,743 (20,046) (21,762)
Operating profit before interest
and working capital changes 4,931 9,482 6,659
Working capital changes (879) (19,515) (19,474)
Interest paid (1,309) (2,218) (998)
Dividends paid - (7,079) (7,079)
Tax paid - (716) (870)
CASH FLOWS FROM
INVESTING ACTIVITIES (7,201) (8,329) (11,323)
Purchase of property, plant,
equipment and intangible assets (8,225) (25,901) (8,862)
Acquisition
of operations, net of cash - (10,978) (8,272)
Proceeds from sale of assets,
investments and operations 1,024 28,438 4,341
Repayment of loans - 112 1,470
CASH FLOWS FROM
FINANCING ACTIVITIES
Increase in long-term borrowings 133 4,367 20,106
Movement in cash and
cash equivalents (4,325) (24,008) (12,979)
Cash and cash equivalents at
beginning of period (7,528) 16,480 16,480
Effects of exchange rate changes - - (271)
Cash and
cash equivalents
at end
of period (11,853) (7,528) 3,230
STATEMENT OF CHANGES IN EQUITY
Share Share Retained
Capital Premium Reserves Earnings Total
R 000 R 000 R 000 R 000 R 000
Balance at 1 January 2000 4,424 47,603 362 22,623 75,012
Currency translation
Differences - - 61 - 61
Goodwill relating to
associate
company sold - - - 3,303 3,303
Net profit - - - 14,011 14,011
Balance at 30 June 2000 4,424 47,603 423 39,937 92,387
Currency translation
Differences - - (569) - (569)
Net profit - - - 329 329
Creation of maintenance
Reserve - - 101 - 101
Transfer to maintenance
Reserve - - 150 (150) -
Balance at 31 Dec 2000 4,424 47,603 105 40,116 92,248
Currency translation
Differences - - (6) - (6)
Net profit - - - 4,066 4,066
Balance at 30 June 2001 4,424 47,603 99 44,182 96,308
Registered Office:
Rutherford Estate Block B, 1 Scott Street, Waverley, Johannesburg 2090
PO Box 2245, Parklands 2121
Share Transfer Secretaries:
Mercantile Registrars Limited, 11 Diagonal Street, Johannesburg 2000
PO Box 1053, Johannesburg 2000
The registered names of the group's subsidiaries referred
to in this announcement are as follows:
CI-FMS A division of Control Instruments (Pty) Limited
CI-VDO A division of Control Instruments (Pty) Limited
Conlog Conlog (Pty) Limited
Data Pro Data Pro Services (Pty) Limited
Dupec Dupec Electronics (Pty) Limited
SAN People SAN People (Pty) Limited
Shurlok Shurlok International (Pty) Limited
Directors
HV Hefer (Chairman)* R Friedman (Managing)
EPH Bieber* SV Bromfield* TE Buzer (British) LH Fine*
RB Forrester RJ Fraenkel JR Hersov* *non-executive
THESE RESULTS, THE GROUP'S PRESENTATION TO ANALYSTS AND LINKS TO THE GROUP'S
SUBSIDIARIES ARE AVAILABLE AT:
www.ci.co.za
REFERENCE 609
PRESS RELEASE
CONTROL INSTRUMENTS - PROFITS DOWN BUT BASE SOLID
Control Instruments recorded reduced profits for the six months ended 30
June 2001 although overall group turnover grew by 30% to R133 million.
Group managing director, Richard Friedman, said the major reason the
increased turnover did not translate into increased profit was because the
group's largest subsidiary, Shurlok, had been affected by the world-wide
shortage of electronic components. Shurlok had decided that it was critical
to maintain its service levels to its customer base and incurred substantial
costs to achieve this.
Shurlok is South Africa's pre-eminent supplier of automotive electronic
products and its business is based on its long-term contracts with major
motor manufacturers. The Shurlok factories in Pietermaritzburg are
benchmarked internationally and house state-of-the-art production
technology.
The growth in turnover was achieved despite the considerable reduction in
the group's Information Technology interests through the sale of the major
portion of Data Pro's business. The sale, effective from 1 April 2001,
netted the group R30 million. The cash was received in August and has
eliminated all short-term debt and ensured that the group has an extremely
strong balance sheet.
The other major factor affecting the group's results was the decision to
provide in full in respect of monies owing to the group by South American
operations based in Argentina and Chile. Friedman said that the group has
done this as a prudent measure given the extremely poor economic
circumstances in these countries and in Argentina in particular. Although
these businesses continue to operate, it is unlikely that they will be in a
position to repay any of their loan amounts in the foreseeable future.
The group's other core electronics businesses, CI-FMS, which designs,
manufactures and exports onboard computers and software used in vehicle
fleet management, and CI-VDO, performed well during the period.
Friedman said Shurlok had recently made good progress in reducing its
component price costs as supply levels had improved significantly. However,
this was going to be offset by the business deferred as a result of the
strike in the automotive industry and its knock-on effects.
Friedman warned that the impact of the strike, Shurlok's disappointing first
six months and the provision in respect of the South American operations
meant that the group will not achieve the same profitability levels in the
current financial year as it did in 2000.
Nevertheless, he is confident that the group's focus on its automotive
electronics and fleet management businesses, the acquisitions of the
automotive businesses of Dupec and Conlog plus the activities of CI-FMS and
CI-VDO have provided the group with a very strong base for the future.
The group has a strong forward order book and an increasing percentage of
export business and long-term contracts. This, coupled with its strong
balance sheet, should result in the group being well placed to take
advantage of an upturn in the South African and international economies.
Control Instruments has shown its confidence in the future by building a
second factory for Shurlok in Pietermaritzburg, upgrading its engineering
facilities and continuing its investment in the development of new products.
ENDS
NOTES TO EDITORS
Control Instruments' core Electronics operations design, manufacture and
supply:
* vehicle electronics for the international automotive industry
* commercial vehicle and fleet management systems and equipment
* specialised automotive instrumentation
CONTACT
Jean Jeffery
Control Instruments Group Limited
Group Communications Manager
021 876 3738
082 334 0875
6 September 2001
