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Control Instruments Group Limited - Audited Annual Results For The Year Ended 31
Release Date: 09/03/2004 12:00:01 Code(s): CNL
CONTROL INSTRUMENTS GROUP LIMITED - AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31
DECEMBER 2003
Control Instruments Group Limited
(Incorporated in South Africa)
Registration No: 1964/003987/06
Share Code: CNL
ISIN: ZAE000001665
Audited annual results for the year ended 31 December 2003
Profit Before Tax Increased 48.3%
Headline Earnings Per Share Increased 110.3%
Total Dividend For The Year Increased 75% TO 3.5 Cents Per Share
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2003
31/12/03 31/12/02
R000 R000
ASSETS
Non-current assets 96 831 72 902
Property, plant and equipment 60 283 41 894
Intangible assets 16 088 13 635
Investment in joint ventures 964 3 341
Available-for-sale investments 3 208 3 208
Non-current receivables 8 850 10 400
Deferred tax 7 438 424
Current assets 80 356 92 561
Inventories 27 962 31 239
Receivables and prepayments 52 171 43 550
South African Revenue Services - 31
Cash and cash equivalents 223 17 741
Total assets 177 187 165 463
EQUITY AND LIABILITIES
Capital and reserves 84 020 77 910
Share capital 4 213 4 424
Share premium 43 591 47 603
Treasury shares (8 097) -
Retained earnings 43 938 25 810
Fair value and other reserves 375 73
Non-current liabilities 25 797 14 610
Non-current borrowings 20 417 12 342
Retirement benefit obligations 1 100 1 500
Deferred tax 4 280 768
Current liabilities 67 370 72 943
Trade and other payables 54 286 59 272
South African Revenue Services - 1 408
Current borrowings 9 744 9 565
Provision for liabilities 3 340 2 698
Total equity and liabilities 177 187 165 463
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003
31/12/03 31/12/02
R000 R000
Cash flows from operating activities
Operating profit before
working capital changes 35 111 27 967
Working capital changes (6 805) 17 170
Cash generated from operations 28 306 45 137
Interest received 33 205
Interest paid (5 011) (4 287)
Dividends paid (1 957) (885)
Tax paid (1 506) (70)
19 865 40 100
Cash flows from investing activities
Purchase of fixed assets (27 227) (16 964)
Proceeds from disposal of fixed assets 47 -
Increase in intangible assets (8 323) (5 132)
Decrease in investments in joint ventures 317 147
Disposal of operations, net of cash (149) (2 851)
Proceeds from disposal of investments
and associates 2 500 6 360
Acquisition of operation, net of cash - (6 000)
Increase in investments
and non-current receivables (294) (2 219)
(33 129) (26 659)
Cash flows from financing activities
Proceeds from non-current borrowings 4 992 3 376
Purchase of treasury shares (8 097) -
Shares cancelled (211) -
Share premium on cancelled shares (4 012) -
Direct cost of share buy-back (188) -
(7 516) 3 376
Net cash (outflow)/inflow for the year (20 780) 16 817
Cash and cash equivalents at the
beginning of the year 17 741 924
Cash and cash equivalents at the
end of the year (3 039) 17 741
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003
Total Continuing Discontinuing
31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02
R000 R000 R000 R000 R000 R000
Revenue 355 970 335 097 355 970 334 259 - 838
Cost of
sales (220 988) (221 119) (220 976) (220 651) (12) (468)
Gross
profit/
(loss) 134 982 113 978 134 994 113 608 (12) 370
Other
operating
income 8 540 8 026 8 534 8 025 6 1
Operating
expenses (108 000) (94 393) (107 417) (91 306) (583) (3 087)
Administrative
expenses (54 649) (50 034) (54 066) (47 818) (583) (2 216)
Marketing
and
selling
expenses (11 949) (11 693) (11 949) (11 693) - -
Other
operating
expenses (41 402) (32 666) (41 402) (31 795) - (871)
Earnings/
(loss)
before
interest,
tax,
depreciation
and
amortisation
35 522 27 611 36 111 30 327 (589) (2 716)
Amortisation
of
goodwill (1 738) (1 773) (1 738) (1 773) - -
Depreciation
and
amortisation
of other
intangible
assets (12 934) (9 622) (12 934) (9 622) - -
Profit/
(loss)
from
operations
20 850 16 216 21 439 18 932 (589) (2 716)
Profit/
(loss)
on
disposal
of
investments
and
operations
70 - 159 - (89) -
Reversal/
(creation)
of
provision
against
investments
and
loans 546 (1 920) 414 (2 020) 132 100
Net
finance
(costs)/
income (4 978) (4 082) (4 987) (3 418) 9 (664)
(Loss)/income
from joint
ventures (2 060) (482) 78 46 (2 138)* (528)
Profit/
(loss)
before
tax 14 428 9 732 17 103 13 540 (2 675) (3 808)
Tax 4 241 (1 890) 4 246 (1 882) (5) (8)
Net
profit/
(loss) 18 669 7 842 21 349 11 658 (2 680) (3 816)
Earnings/
(loss)
per
share
(cents) 23.8 8.9 27.2 13.2 (3.4) (4.3)
Headline
earnings/
(loss)
per share
(cents) 28.6 13.6 29.3 17.5 (0.7) (3.9)
Dividends
per share
(cents) 2.5 1.0 2.5 1.0 - -
* In compliance with GAAP, this amount comprises R1,056,000 amortisation of
goodwill and R1,082,000 impairment of goodwill.
RECONCILIATION OF EPS TO HEADLINE EPS
Total Continuing Discontinuing
2003 2002 2003 2002 2003 2002
EPS
(cents) 23.8 8.9 27.2 13.2 (3.4) (4.3)
(Profit)/
loss
on sale
of
investments
and
operations
(0.1) - (0.2) - 0.1 -
Creation/
(reversal)
of
provision
against
investments
and
loans - 2.2 0.1 2.3 (0.1) (0.1)
Goodwill
amortised
4.9 2.5 2.2 2.0 2.7 0.5
Headline
EPS
(cents) 28.6 13.6 29.3 17.5 (0.7) (3.9)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003
Share Share Treasury Fair Retained Total
capital premium shares value earnings
and other
reserves
R000 R000 R000 R000 R000 R000
Balance
at
1 January
2002 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 loss
not
recognised
in the
income
statement (97) (97)
Utilisation
of
currency
translation
reserve (97) (97)
Net
profit 7 842 7 842
Dividends
paid (885) (885)
Balance
at
31 December
2002 4 424 47 603 - 73 25 810 77 910
Change in
accounting
policy
- AC 133 (1 604) 1 604 -
Restated
balance
at
31 December
2002 4 424 47 603 - (1 531) 27 414 77 910
Net
profit
not
recognised
in the
income
statement 1 906 1 906
Utilisation
of
currency
translation
reserve (128) (128)
Cash flow
hedges -
net fair
value
gains,
net of
tax 2 034 2 034
Net
profit 18 669 18 669
Shares
bought
back and
cancelled
(211) (4 012) (188) (4 411)
Purchase
of
treasury
shares (8 097) (8 097)
Dividends
paid (1 957) (1 957)
Balance
at
31 December
2003 4 213 43 591 (8 097) 375 43 938 84 020
OVERVIEW
The Group"s operations remain focused on the Original Equipment Manufacture
(OEM) motor industry and the vehicle and fleet management markets worldwide with
increasing emphasis being placed on products in which its subsidiaries own the
Intellectual Property (IP). The Group"s strong growth continued in 2003. The
increase in gross profit and operating margins is attributable to improved
efficiencies and new products with a higher percentage of IP owned by the Group.
RESULTS
Revenue grew 6.2% from R335 million to R356 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased
by 28.7% from R27.6 million to R35.5 million. Profit before tax increased 48.3%
from R9.7 million to R14.4 million while profit after tax increased 138.1% from
R7.8 million to R18.7 million.
Headline earnings per share increased 110.3% from 13.6 cents per share to 28.6
cents per share. The net asset value per share increased 23.9% from 88 cents in
2002 to R1.09 in 2003.
The Group"s operations generated R35 million in cash before working capital
changes. R33 million was invested in capital projects and R12 million was used
to repurchase shares.
During the year the Group received R2.5 million for the sale of the investment
in Striata Communication Solutions (Pty) Limited (formerly the The E-mail
Corporation (Pty) Limited) and R2.1 million being the final tranches of the
purchase price owing in respect of investments in Rhomberg Electronics (Pty)
Limited which were sold in 2002.
ACQUISITION OF SHARES
As part of an ongoing programme to enhance shareholder value, 12,084,318 shares
were purchased during the year. Of these, 7,290,250 shares were acquired by a
subsidiary and 576,192 by the Control Instruments Share Incentive Scheme.
4,217,876 shares were cancelled and delisted from the JSE Securities Exchange
South Africa. The Group will continue to purchase shares in the open market at
times that it deems appropriate.
ACCOUNTING POLICIES
The accounting policies used are in accordance with South African statements of
GAAP. The Group"s accounting policies are consistent with those applied in the
previous financial year except that AC 133 Financial Instruments: Recognition
and Measurement was adopted during the year.
AUDIT OPINION
The Group financial statements for the year ended 31 December 2003 have been
audited by PricewaterhouseCoopers Incorporated. A copy of their unqualified
audit report is available for inspection at the Company"s registered office.
PROSPECTS
The Group expects its operational profit to continue to improve during the 2004
financial year. However no further material taxation benefits will arise in the
financial statements out of assessed losses as in the current year, and the
Group will be subject to normal taxation rates. This will affect the level of
profit after tax.
The Group continues to operate in niche sectors of global markets and is
therefore subject to local and international disruptions that are not under its
control. Nevertheless, the Group is positive about its prospects for 2004. It
has a good balance of exports, imports and local business, a healthy balance
sheet and strong forward order book and is well positioned to take advantage of
growth in the South African OEM automotive industry and in international niche
markets.
DECLARATION OF DIVIDEND
The board has declared a final dividend of 2.0 cents per share in respect of the
year ended 31 December 2003.
In terms of the requirements of STRATE:
Last day to trade cum dividend Friday 26 March 2004
Shares trade ex dividend Monday 29 March 2004
Record date Friday 2 April 2004
Payment date Monday 5 April 2004
Share certificates may not be dematerialised or rematerialised between Monday,
29 March 2004 and Friday, 2 April 2004, both days inclusive.
An interim dividend of 1.5 cents per share was paid on 8 September 2003. The
total dividend declared in respect of the 2003 financial year was therefore 3.5
cents (2002: 2.0 cents).
On behalf of the board
HV Hefer R Friedman
Chairman Group Managing Director
9 March 2004
CONTROL INSTRUMENTS GROUP LIMITED
(INCORPORATED IN SOUTH AFRICA)
REGISTRATION NO: 1964/003987/06
SHARE CODE: CNL
ISIN: ZAE000001665
REGISTERED OFFICE:
THE VINEYARD, GROUND FLOOR, EAST WING, CORNER ADAM TAS AND DEVON VALLEY ROADS,
STELLENBOSCH 7600
DIRECTORS: HV Hefer (Chairman)* ; R Friedman (Managing) ; EPH Bieber* ; SV
Bromfield* ; JPS O"Leary (Irish)* ; TE Buzer (British) ; RB Forrester ; RJ
Fraenkel
*independent, non-executive
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