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Control Instruments Group Limited - Results For The Year Ended 31 December 2002
Control Instruments Group Limited
(Registration Number 1964/003987/06)
SHARE CODE: CNL
ISIN CODE: ZAE000001665
Balance Sheet
at 31 December 2002
31/12/02 1/12/01
R000 R000
ASSETS
Non-current assets 72 902 67 207
Property, plant and equipment 41 894 31 891
Intangible assets 13 635 13 157
Investment in joint ventures 3 341 804
Other investments and non-current receivables 13 608 21 339
Deferred tax 424 16
Current assets 92 561 70 360
Inventories 31 239 25 436
Receivables and prepayments 43 550 43 823
South African Revenue Services 31 177
Cash and cash equivalents 17 741 924
Total assets 165 463 137 567
EQUITY AND LIABILITIES
Capital and reserves 77 910 71 050
Share capital 4 424 4 424
Share premium 47 603 47 603
Retained earnings 25 810 18 853
Reserves 73 170
Non-current liabilities 14 610 13 216
Long-term borrowings 12 342 11 622
Retirement benefit obligations 1 500 1 500
Deferred tax 768 94
Current liabilities 72 943 53 301
Trade and other payables 59 272 44 316
South African Revenue Services 1 408 0
Current borrowings 9 565 5 337
Provision for liabilities and charges 2 698 3 648
Total equity and liabilities 165 463 137 567
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2002
31/12/02 31/12/01
R000 R000
Cash flows from operating activities
Operating profit before working capital changes 27 967 6 882
Working capital changes 17 170 7 975
Cash generated from operations 45 137 14 857
Interest received 205 184
Interest paid (4 287) (3 138)
Dividends paid (885) 0
Tax paid (70) (125)
Maintenance reserve utilised 0 (251)
40 100 11 527
Cash flows from investing activities
Fixed assets purchased (16 964) (12 041)
Proceeds from disposal of fixed assets 0 447
Increase in intangible assets (5 132) (2 369)
Decrease/(increase) in investment
in joint ventures 147 (804)
Acquisition of distribution rights 0 (5 250)
Disposal of operations, net of cash (2 851) 27 925
Proceeds from disposal of investments
and associates 6 360 879
Acquisition of operation, net of cash (6 000) 0
(Increase)/decrease in investments and
non-current receivables (2 219) (6 759)
(26 659) 2 028
Cash flows from financing activities
Proceeds from / (settlement of)
long term borrowings 3 376 (5 103)
Net cash inflow for the year 16 817 8 452
Cash and cash equivalents at the
beginning of the year 924 (7 528)
Cash and cash equivalents at the end
of the year 17 741 924
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2002
Share Share Retained Total
Capital Premium Reserves earnings Total
R000 R 000 R000 R 000 R 000
Balance at
1 January 2001 4 424 47 603 105 28 545 80 677
As previously reported 4 424 47 603 105 29 269 81 401
Change in accounting
policy (724) (724)
Net profits/(losses)
not recognised in the
income statement:
Currency translation
reserve arising during
the year 316 316
Joint venture
previously not equity
accounted (4) (4)
Utilisation of
maintenance reserve (251) (251)
Net loss (9 688) (9 688)
Balance at
31 December 2001 4 424 47 603 170 18 853 71 050
As previously reported 4 424 47 603 170 19 861 72 058
Change in accounting
policy (1 008) (1 008)
Net profits/(losses)
not recognised in the
income statement:
Utilisation of
currency translation
reserve (97) (97)
Net profit 7 842 7 842
Dividend paid (885) (885)
Balance at
31 December 2002 4 424 47 603 73 25 810 77 910
Reconciliation of EPS to Headline EPS and Adjusted headline earnings
31 December 2002
Income Statement
for the year ended 31 December 2002
Continuing Discontinuing
31/12/02 31/12/01 31/12/02 31/12/01
R000 R000 R000 R 000
Revenue 334 256 243 005 841 16 7420
Cost of sales (220 651) (160 805) (468) (8 256)
Gross profit 113 605 82 200 373 8 486
Other operating income 8 023 13 848 3 1 107
121 628 96 048 376 9 593
Operating expenses (91 117) (76 536) (3 276) (20 228)
Administrative expenses (47 629) (36 862) (2 405) (11 594)
Marketing and selling
expenses (11 693) (12 008) 0 (6 487)
Other operating
expenses (31 795) (27 666) (871) (2 147)
Earnings/(loss) before
interest, tax,
depreciation and
amortisation (EBITDA) 30 511 19 512 (2 900) (10 635)
Depreciation and
amortisation of other
intangible assets (9 618) (9 802) (4) (791)
Amortisation of
goodwill (1 773) (930) 0 (155)
Profit/(loss) from
operations 19 120 8 780 (2 904) (11 581)
(Loss)/profit on sale
of investments and
operations 0 (51) 0 4 275
Restructuring costs 0 (1 253) 0 0
Impairment of goodwill 0 (3 200) 0 0
(Creation)/reversal of
provisions against
investments and loans (2 020) (2 177) 100 0
Net interest (2 513) (2 081) (1 569) (872)
Income/(loss) from
joint ventures 46 (81) (528) 0
Profit/(loss) before
tax 14 633 (63) (4 901) (8 178)
Tax (1 882) (1 408) (8) (39)
Net profit/(loss) from
ordinary activities 12 751 (1 471) (4 909) (8 217)
Earnings/(loss)
per share (cents) 14.4 (1.7) (5.5) (9.3)
Headline earnings/
(loss) per share
(cents) 18.7 7.0 (5.0) (13.9)
Dividend per share
(cents) 1.0 0.0 0.0 0.0
Income Statement
for the year ended 31 December 2002
Total
31/12/02 31/12/01
R000 R000
Revenue 335 097 259 747
Cost of sales (221 119) (169 061)
Gross profit 113 978 90 686
Other operating income 8 026 14 955
122 004 105 641
Operating expenses (94 393) (96 764)
Administrative expenses (50 034) (48 456)
Marketing and selling expenses (11 693) (18 495)
Other operating expenses (32 666) (29 813)
Earnings/(loss) before interest, tax,
depreciation and amortisation (EBITDA) 27 611 8 877
Depreciation and amortisation of other
intangible assets (9 622) (10 593)
Amortisation of goodwill (1 773) (1 085)
Profit/(loss) from operations 16 216 (2 801)
(Loss)/profit on sale of investments and
operations 0 4 224
Restructuring costs 0 (1 253)
Impairment of goodwill 0 (3 200)
(Creation)/reversal of provisions against
investments and loans (1 920) (2 177)
Net interest (4 082) (2 953)
Income/(loss) from joint ventures (482) (81)
Profit/(loss) before tax 9 732 (8 241)
Tax (1 890) (1 447)
Net profit/(loss) from ordinary activities 7 842 (9 688)
Earnings/(loss) per share (cents) 8.9 (10.9)
Headline earnings/(loss) per share (cents) 13.6 (7.0)
Dividend per share (cents) 1.0 0.0
Continuing Discontinuing Total
2002 2001 2002 2001 2002 2001
EPS (cents) 14.4 (1.7) (5.5) (9.3) 8.9 (10.9)
Loss/(profit) on sale of
investments & operations 0.0 0.1 0.0 (4.8) 0.0 (4.8)
Restructuring costs 0.0 1.4 0.0 0.0 0.0 1.4
Impairment of goodwill 0.0 3.6 0.0 0.0 0.0 3.6
(Reversal)/creation of
provision against
investments and loans 2.3 2.5 (0.1) 0.0 2.2 2.5
Loss/(profit) on disposal
of fixed assets (0.0) 0.0 0.0 0.0 0.0 0.0
Goodwill amortised 2.0 1.1 0.6 0.2 2.6 1.2
Headline EPS (cents) 18.7 7.0 (5.0) (13.9) 13.6 (7.0)
COMMENTARY
HIGHLIGHTS
Sales Increased 28.8% to R335 million
EBITDA Increased 211% to R27.6 million
Operating profit Increased to R16.2 million
Headline earnings Increased to 13.6 cents per share
Final dividend declared
OVERVIEW
The Group supplies electronic hardware and software products to the
international motor industry and the commercial vehicle fleet management
markets. It focuses on niche market segments which offer it substantial
opportunities due to:
- The Group"s ability to design and produce world-class products at competitive
prices and in relatively small production runs;
- The increased integration of electronic hardware and software solutions in
vehicle and fleet management applications;
- The increased use of electronic systems in all motor vehicles;
- Many of the world"s motor manufacturers increasing their purchases of vehicles
and components from their South African plants and suppliers; and
- South Africa"s successful Motor Industry Development Program (MIDP).
As a result the Group enjoyed strong growth during 2002.
RESULTS
Sales grew by 28.8% from R260 million to R335 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
by 211% from R8.9 million to R27.6 million and profit before tax (PBT) improved
from a loss of R8.2 million in 2001 to a profit of R9.7 million for the year.
Operating profit increased from a loss of R2.8 million to a profit of R16.2
million.
Profit after tax for the year was R7.8 million compared with a loss of R9.7
million in 2001.
Headline earnings per share (HEPS) improved from a loss of 7.0 cents per share
to a profit of 13.6 cents per share. Included in this figure are unrealised
foreign exchange losses which reduced headline earnings by 5.0 cents per share
from 18.6 cents per share.
The Group"s operations generated R40 million in cash of which R27 million was
invested in capital projects and business investments.
ACQUISITION OF SHARES
During the year, the Control Instruments Group Share Incentive Scheme acquired
3,119,739 shares in the open market, using funds advanced to it by the Group.
In addition, the Group reached agreement on 9 December 2002 regarding the
disposal by the Hersov Family Trust of 12,050,159 shares. Of these, 1,832,283
were placed with directors of the Group and other third parties, 8,000,000 were
acquired by a subsidiary of the Group and will be held as treasury stock and the
balance of 2,217,876 have, subsequent to the year-end, been cancelled and
delisted from the JSE Securities Exchange South Africa. These transactions were
ratified by shareholders at a general meeting on 6 January 2003.
ACCOUNTING POLICIES
The accounting policies used are in accordance with South African statements of
Generally Accepted Accounting Practice. During the year the Group changed its
accounting policy regarding the Group"s interest in jointly controlled entities.
The new accounting policy states that the Group"s interest in jointly controlled
entities will be accounted for on the equity method and not by proportionate
consolidation. The Group also changed its accounting policy with respect to the
treatment of land and buildings. In order to conform with the accounting
standards AC 123 (Property, plant and equipment) and AC 135 (Investment
property), land and buildings are no longer treated as investment properties and
are now depreciated over a period of 50 years.
Apart from these changes in accounting policies, the Group"s accounting policies
are consistent with those applied in the previous financial year.
AUDIT OPINION
The Group financial statements for the year ended 31 December 2002 have been
audited by PricewaterhouseCoopers. A copy of their unqualified audit report is
available for inspection at the company"s registered offices.
PROSPECTS
The Group is positive about its prospects for 2003 and is well positioned for
the year ahead. However, it operates in niche sectors of global markets and is
therefore subject to local and international political and economic disruptions.
In addition, because of the timing of vehicle model changes by the automotive
manufacturers and other factors over which the Group has no influence, including
the exchange rate, limited profit growth is expected in the first half of 2003.
Nevertheless, current projects and order forecasts from customers indicate that
the second half of 2003 should produce strong results and consequently overall
growth for the year.
The Group is expanding its facilities and investing in the people and equipment
necessary to enable it to handle this anticipated growth in 2003 and in 2004. As
a result, the board has adopted a prudent and conservative dividend policy to
ensure that the Group is able to fund this growth.
DIVIDEND
The board has declared a final dividend of one cent per share for the year ended
31 December 2002.
In terms of the requirements of STRATE the last day to trade cum dividend will
be Friday, 28 March 2003. The shares will commence trading ex dividend from
Monday, 31 March 2003 and the record date will be Friday, 4 April 2003. The
dividend will be paid on Monday, 7 April 2003. Share certificates may not be
dematerialised or rematerialised between Monday, 31 March 2003 and Friday, 4
April 2003, both days inclusive.
An interim dividend of one cent per share was paid on 9 September 2002.
On behalf of the board
HV Hefer R Friedman
Chairman Group Managing Director
11 March 2003
REGISTERED OFFICE
The Vineyard
Ground Floor
East Wing
Cnr Adam Tas and Devon Valley Roads
Stellenbosch 7600
REGISTRATION NUMBER
1964/003987/06
ISIN CODE
ZAE000001665
SHARE CODE
CNL
www.ci.co.za
DIRECTORS
Hefer (Chairman)*
R Friedman (Managing)
EPH Bieber*
SV Bromfield*
JPS O"Leary (Irish)*
TE Buzer (British)
RB Forrester
RJ Fraenkel
* non-executive
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