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CONTROL INSTRUMENTS GROUP LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 30
JUNE 2004
CONTROL INSTRUMENTS GROUP LIMITED
(INCORPORATED IN SOUTH AFRICA) *
REGISTRATION NO: 1964/003987/06 *
SHARE CODE: CNL * ISIN: ZAE000001665
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004
150% increase in profit before tax
92% increase in profit from operations
67% increase in interim dividend
OVERVIEW
Results for the six months ended 30 June 2004 were good with strong increases in
operating profit of 92% and profit before tax of 150% when compared with results
for the same period in 2003. This was due to sound performances in all areas of
the Group`s business.
The Group`s focus on niche and specialised market segments and on products in
which it owns the Intellectual Property (IP) has enabled it to partially manage
the effects of the strong Rand in its international markets and to benefit from
it in its domestic markets.
Shurlok entered into an agreement with Lear Incorporated to supply Lear designed
products to the BMW Group. Lear is one of the world`s leading suppliers of
specialised OEM (Original Equipment Manufacture) automotive electronics.
Products will be manufactured by Shurlok and supplied through a new company,
Lear Shurlok Electronics (Pty) Limited. Shurlok has a 49% shareholding in this
company and Lear 51%. The intention is to expand the number of products and
customers. Although not expected to have any material effect on Shurlok`s
profits in the short-term, the business will add to Shurlok`s potential and
profitability in the long-term.
Shurlok designs and manufactures a wide range of electronic products for the
local and international OEM automotive industries. It has world-class factories
based in Pietermaritzburg with design and engineering facilities in
Pietermaritzburg and Pretoria. The ongoing capital expenditure is in line with
the Group`s policy of ensuring that it remains competitive and is in a position
to deliver the quality and cost effective products required by its customers.
New premises were acquired for Control Instruments Automotive (CI Auto) in
Linbro Park, Sandton and the move into these premises during December 2003 and
January 2004 was achieved with minimal disruption.
CI Auto is one of Siemens VDO`s six world-wide regional distribution nodes and
is the sole distributor of Siemens VDO aftermarket products in sub-Saharan
Africa. Its product range includes vehicle instrumentation, navigation, car
multimedia and sophisticated car audio systems, tachographs, fleet management
systems and products for special OEM and marine applications.
Control Instruments Bureau Services (CI BS), which complements Control
Instruments Fleet Management (CI FM), was formally launched in the first half of
the year. Based on the Siemens VDO FM platform, this business provides a
professional outsourced fleet management service primarily to customers in the
Southern African market, but also internationally in Europe and North America.
Using the Internet and GPRS mobile telephone technology, vehicles and fleets of
vehicles can be monitored and their productivity managed on behalf of their
operators.
CI FM designs, develops, markets and owns the IP for the Siemens VDO FM onboard
computer platform. The Siemens VDO FM products are used to manage and improve
the efficiency of vehicles and vehicle fleets and are sold worldwide under the
Siemens VDO FM brand name.
The Group continued to purchase shares in the open market during the six months
to June 2004, with 1 986 251 shares being acquired by the Control Instruments
Share Incentive Scheme and a further 492 926 by a subsidiary of the Group. The
Group will continue to purchase shares at prices it deems to be attractive, as
and when the opportunities arise.
RESULTS
Turnover grew by 15.6% to R201.8 million compared with the same period in 2003.
Operating expenses were well contained and profit from operations before
amortisation, depreciation, interest and tax increased by 62.1% to R29.4
million, with profit from operations up 92.1% to R21.1 million. Net profit
before tax increased 150.2% to R18.6 million.
During the same period last year profit after tax was increased as a result of a
deferred tax asset which was raised to comply with Generally Accepted Accounting
Practice (GAAP). In the period under review, R5.5 million has been provided for
taxation payable, resulting in a negative variance of R11.1 million. Despite
this, the Group`s net profit has remained constant at R13.2 million.
The Group`s balance sheet remains strong with net asset value of 124 cents per
share - an increase of 11 cents per share (9.7%) from 31 December 2003 and 19
cents per share (18.1%) from 30 June 2003.
ACCOUNTING POLICIES
In order to better reflect the relationship between the Group and the Control
Instruments Share Incentive Scheme, the Share Incentive Scheme has been
consolidated in the current financial year.
Apart from this change in accounting policy, the results for the six months
ended 30 June 2004 have been prepared on a basis consistent with the accounting
policies set out in the last Annual Financial Statements and in accordance with
South African Statements of GAAP.
GENERAL
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. The threatened strike in the South African automotive industry could
have a negative effect on the second half if not resolved timeously.
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that the board has declared an interim dividend of 2.5
cents per share in respect of the six months ended 30 June 2004. In terms of the
requirements of STRATE:
Last day to trade cum dividend Friday, 20 August 2004
Shares trade ex dividend Monday, 23 August 2004
Record date Friday, 27 August 2004
Payment date Monday, 30 August 2004
Share certificates may not be dematerialised or rematerialised between Monday,
23 August 2004 and Friday, 27 August 2004, both days inclusive.
On behalf of the Board of Directors
HV Hefer R Friedman
Chairman Managing Director
3 August 2004
CONSOLIDATED INCOME STATEMENT
6 Months 6 Months 12 Months
ended ended ended
30/06/04 30/06/03 Variance 31/12/03
Notes R 000 R 000 % R 000
Revenue (continuing
operations only) 201 818 174 540 15.6 355 970
Cost of sales (116 980) (112 642) (220 988)
Gross profit 84 838 61 898 37.1 134 982
Continuing operations 84 838 61 898 134 994
Discontinuing operations - - (12)
Other operating income 5 289 6 721 8 540
90 127 68 619 143 522
Operating expenses (60 742) (50 496) (20.3) 108 040)
Continuing operations 60 742) (50 096) (107 457)
Discontinuing operation - (400) (583)
Profit from operations
before amortisation,
depreciation, interest
and tax 29 385 18 123 62.1 35 482
Continuing operations 29 385 18 517 58.7 36 071
Discontinuing operations - (394) (589)
Amortisation of goodwill (425) (869) (1 738)
Depreciation and
amortisation of other
intangible assets (7 848) (6 262) (12 934)
Profit from operations 21 112 10 992 92.1 20 810
Reversal/(creation) of
provision against
investments and loans 66 (683) 49
Profit on disposal of
investments and
operations - 59 70
Net interest (2 049) (2 494) (5 042)
Loss from joint
ventures 1 (500) (528) (2 060)
Profit before tax 18 629 7 446 150.2 13 827
Tax (5 454) 5 674 4 241
Net profit 13 175 13 120 0.4 18 068
Weighted average
number of shares in
issue (000) 66 087 68 437 67 938
Adjustment for share
options (000) 6 213 1 841 2 711
Weighted average number
of ordinary shares
for diluted earnings
per share (000) 72 300 0 278 70 649
EPS (cents) 19.94 19.17 4.0 26.59
Headline earnings
(R 000) 13 834 15 041 (8.0) 21 814
Headline EPS (cents) 2 20.93 21.98 (4.8) 32.11
Diluted EPS (cents) 18.22 18.67 (2.4) 25.57
Dividend per share
(cents) 3 2.00 1.00 2.50
NOTES TO THE INCOME STATEMENT
1 Loss from joint ventures
Share of profits in
Authority On Line - - 78
Amortisation of
goodwill in Aquapay (167) (528) (1 056)
Impairment loss of
goodwill in Aquapay (333) - (1 082)
(500) (528) (2 060)
2 Reconciliation, EPS
to headline EPS (cents)
EPS 19.94 19.17 26.59
(Reversal)/creation of
provision against
investments and loans (0.10) 1.00 (0.07)
Profit on disposal of
investments and
operations - (0.23) (0.10)
Profit on disposal of
fixed assets (0.30) - (0.02)
Goodwill amortised and
impaired 1.39 2.04 5.71
Headline EPS 20.93 21.98 32.11
3 Dividend per share
(cents)
Final
2.0 cents in respect
of 2003 financial year,
paid
5 April 2004
(2002: 1.0 cent,
paid 4 April 2003) 1 685 863 863
Interim
1.5 cents in respect
of 2003 financial year,
paid 8 Sept 2003
(2002: 1.0 cent, paid
9 Sept 2002) - - 1 294
Total dividend 1 685 863 2 157
Dividends attributable
to treasury shares (321) (106) (465)
1 364 757 1 692
CONSOLIDATED BALANCE SHEET
30/06/04 30/06/03 31/12/03
R 000 R 000 R 000
ASSETS
Non-current assets 96 752 75 503 88 373
Property, plant and equipment 67 826 49 804 60 283
Intangible assets 17 374 13 323 16 088
Investment in joint ventures and
associates 3 572 5 049 4 172
Non-current receivables 392 436 392
Deferred tax 7 588 6 891 7 438
Current assets 98 126 84 024 80 368
Inventories 34 327 36 084 27 962
Receivables and prepayments 63 627 44 532 52 171
South African Revenue Services - 16 -
Cash and cash equivalents 172 3 392 235
Total assets 194 878 159 527 168 741
EQUITY AND LIABILITIES
Capital and reserves 79 542 71 260 75 286
Non-current liabilities 28 454 18 805 25 797
Current liabilities 86 882 69 462 67 658
Trade and other payables, provisions
and current borrowings 80 323 68 626 64 123
South African Revenue Services 3 734 836 -
Bank overdraft 2 825 - 3 535
Total equity and liabilities 194 878 159 527 168 741
Net asset value per share (cents) 124 105 113
CONSOLIDATED CASH FLOW STATEMENT
6 Months 6 Months 12 Months
ended ended ended
30/06/04 30/06/03 31/12/03
R 000 R 000 R 000
Cash flows from operating activities
Operating profit before working
capital changes 29 185 18 670 35 071
Working capital changes (1 580) (11 383) (6 788)
Cash generated from operations 27 605 7 287 28 283
Interest received 14 22 33
Interest paid (2 063) (2 516) (5 075)
Dividends paid (1 364) (757) (1 692)
Tax paid (1 178) (1 350) (1 506)
23 014 2 686 20 043
Cash flows from investing activities
Purchase of fixed assets (13 241) (12 081) (27 227)
Proceeds from disposal of fixed
assets - - 47
Increase in intangible assets (3 890) (2 648) (8 323)
Decrease in investments in joint
ventures 100 170 317
Proceeds from disposal of
investments - 2 500 2 500
Disposal of operations, net of cash - - (149)
Increase in non-current receivables - - (294)
(17 031) (12 059) (33 129)
Cash flow from financing activities
(Settlement of)/proceeds from
non-current borrowings (402) 6 253 4 992
Purchase of treasury shares (4 934) (8 557) (8 087)
Shares cancelled - (2 223) (4 411)
(5 336) (4 527) (7 506)
Net cash inflow/(outflow) for period 647 (13 900) (20 592)
Cash and cash equivalents at
beginning of period (3 300) 17 292 17 292
Cash and cash equivalents at
end of period 2 653) 3 392 (3 300)
STATEMENT OF CHANGES IN EQUITY
Share
capital
Share Fair
premium value
Treasury and other Retained
shares reserves earnings Total
R 000 R 000 R 000 R 000
Balance at 1 January 2003 41 552 73 28 169 69 794
As previously reported 52 027 73 25 810 77 910
Change in accounting policy (10 475) 2 359 (8 116)
Net losses not recognised
in income statement:
Utilisation of currency
translation reserve (115) (115)
Net profit 13 120 13 120
Shares bought back and
cancelled (2 223) (2 223)
Purchase of treasury shares (8 559) (8 559)
Dividends paid (757) (757)
Balance at 30 June 2003 30 770 (42) 40 532 71 260
As previously reported 41 412 (42) 38 216 9 586
Change in accounting policy (10 642) 2 316 (8 326)
Net (losses)/profits not
recognised in income
statement:
Utilisation of currency
translation reserve (13) (13)
Cash flow hedges: net fair
value gains, net of tax 2 034 2 034
Net profit 4 948 4 948
Shares bought back and
cancelled (2 000) (188) (2 188)
Sold treasury shares 179 179
Dividends paid (934) (934)
Balance at 31 December 2003 28 949 1 979 44 358 75 286
As previously reported 39 707 375 43 938 84 020
Change in accounting policy (10 758) 1 604 420 (8 734)
Net losses not recognised
in income statement:
Utilisation of currency
translation reserve (66) (66)
Cash flow hedges: net fair
value losses, net of tax (2 555) (2 555)
Net profit 13 175 13 175
Purchase of treasury shares (4 934) (4 934)
Dividends paid (1 364) (1 364)
Balance at 30 June 2004 24 015 (642) 56 169 79 542
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
www.ci.co.za
Date: 03/08/2004 09:30:15 AM Produced by the JSE SENS Department
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