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Control Instruments Group Limited - Abridged interim results for the six months
ended 30 June 2005 and renewal of cautionary announcement
CONTROL INSTRUMENTS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1964/003987/06)
Share code: CNL
ISIN: ZAE000001665
(`Control Instruments` or `the company`)
ABRIDGED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 AND RENEWAL OF
CAUTIONARY ANNOUNCEMENT
COMMENTARY
OVERVIEW
Results for the six months ended 30 June 2005 are in line with expectations. Net
profit increased 4.6% compared with the same period in 2004 and is 156.6% higher
than the six months ended 31 December 2004.
The rate of growth in profitability was affected by the timing of vehicle model
phase-outs and phase-ins. Expenses increased as part of the Group`s programme to
lay a strong foundation for the high levels of growth expected from 2006
onwards. This is as indicated to shareholders in the Group`s results for the
year ended 31 December 2004.
The development of new products in which the Group owns the Intellectual
Property (IP) is fundamental to the Group`s strategic plan and the increase in
sales of these products is reflected in the results for the period under review.
Despite a reduction in revenue of 12.8% to R176 million compared with the same
period in 2004, the higher margins attributable to these products resulted in
the overall gross profit of R84 million remaining the same as the comparable
period in 2004.
In addition to increased expenditure on new product development, expenses were
incurred in the establishment of a European based sales and engineering office
in the UK, senior management changes and the investigation of potential
acquisitions.
The collapse of MG Rover in the United Kingdom also affected the results.
Provisions were in place to cover the risk, however ongoing business has been
lost.
The business of Autocom, acquired in January 2005, will be fully integrated into
the Group`s existing operations early in the second half of this year.
The Group`s balance sheet remains strong. Cash on hand decreased due to the
acquisition of Autocom, further investments in fixed assets and product
development costs. Working capital management remained good and net asset value
per share increased 18 cents from 31 December 2004 to 152 cents per share.
ACCOUNTING POLICIES - BASIS OF PRESENTATION
The financial statements have been prepared in terms of International Financial
Reporting Standards (IFRS) expected to be applicable at 31 December 2005. These
are subject to ongoing review and may change.
The annual financial statements published for the year ended 31 December 2004
were prepared in accordance with South African Statements of Generally Accepted
Accounting Policies (SA GAAP), which differs in some areas from IFRS. Therefore
in preparing these interim financial statements certain reclassifications and
share-based payment valuations were applied to comply with IFRS. The comparative
figures in respect of 2004 have been restated to reflect these adjustments.
PROSPECTS
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.
Prospects for the second half of the year should result in continued growth when
compared with 2004, albeit at a lower rate than in previous years. Prospects for
2006 onwards remain very good and the Group is continuing to aim for
significantly enhanced growth and cash flow generation from 2006.
The Group continues to look for acquisitions to complement its African
distribution and offshore operations. It is currently in advanced stages of
negotiations to complete a significant acquisition in line with this strategy.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement dated 30 June 2005 and
the statement above that negotiations are in advanced stages to complete a
significant acquisition. If successfully concluded, this may have a material
effect on the price of Control Instruments` securities on the JSE Limited and
shareholders are accordingly advised to continue exercising caution when dealing
in the company`s securities until a further announcement is made.
DECLARATION OF INTERIM DIVIDEND
Notice is hereby given that the board has declared an interim dividend of 3.00
cents per share in respect of the six months ended 30 June 2005.
In terms of the requirements of STRATE:
Last day to trade cum dividend Friday, 12 August 2005
Shares trade ex dividend Monday, 15 August 2005
Record date Friday, 19 August 2005
Payment date Monday, 22 August 2005
Share certificates may not be dematerialised or rematerialised between Monday,
15 August 2005 and Friday, 19 August 2005, both days inclusive.
On behalf of the Board of Directors
JPS O`Leary Chairman R Friedman Managing Director 20 July 2005
CONSOLIDATED INCOME STATEMENTS
6 months 6 months Variance Year
ended ended ended
30/06/05 30/06/04 31/12/04
Unaudited Unaudited Unaudited
R 000 R 000 % R 000
Revenue 175 959 201 818 (12.8) 382 446
Gross profit 84 107 84 838 (0.9) 171 553
Operating profit 18 508 22 119 (16.3) 36 772
Profit before tax 15 792 19 556 (19.2) 31 369
Net profit 14 473 13 834 4.6 19 475
EPS (cents) 22.00 20.93 5.1 29.80
Headline EPS (cents) 22.22 21.29 4.4 32.57
Diluted EPS (cents) 20.27 19.13 6.0 27.43
Dividend per share (cents) 3.00 2.00 4.50
Reconciliation of EPS to Headline EPS (cents)
EPS 22.00 20.93 29.80
(Reversal)/creation of
provision against
investment and loans - (0.10) 0.21
Loss/(profit) on disposal
of property, plant
and equipment 0.22 (0.30) 0.02
Development cost impaired - - 1.77
Goodwill impaired - 0.76 0.77
Headline EPS 22.22 21.29 32.57
CONSOLIDATED BALANCE SHEETS
30/06/05 30/06/04 31/12/04
Unaudited Unaudited Unaudited
R 000 R 000 R 000
ASSETS
Non-current assets 131 688 99 071 120 677
Current assets 102 133 98 126 84 306
Total assets 233 821 197 197 204 983
EQUITY AND LIABILITIES
Capital and reserves 101 540 80 988 86 916
Non-current liabilities 37 387 29 327 42 652
Current liabilities 94 894 86 882 75 415
Total equity and liabilities 233 821 197 197 204 983
Net asset value per share (cents) 152 127 134
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months Year
ended ended ended
30/06/05 30/06/04 31/12/04
Unaudited Unaudited Unaudited
R 000 R 000 R 000
Cash flows from operating activities 8 689 23 014 41 912
Cash flows from investing activities (19 528) (17 031) (44 993)
Cash flows from financing activities (3 304) (5 336) 11 132
Net cash (outflow)/inflow
for the period (14 143) 647 8 051
Cash and cash equivalents at the
beginning of the period 4 751 (3 300) (3 300)
Cash and cash equivalents at the
end of the period (9 392) (2 653) 4 751
STATEMENTS OF CHANGES IN EQUITY
Share capital Fair value
Share premium and other Retained
Treasury shares reserves earnings Total
Unaudited Unaudited Unaudited Unaudited
R 000 R 000 R 000 R 000
Balance at
1 January 2004 29 202 1 979 45 524 76 705
Balance at
30 June 2004 24 015 (259) 57 232 80 988
Balance at
31 December 2004 25 146 558 61 212 86 916
Balance at
30 June 2005 26 979 1 446 73 115 101 540
REGISTERED OFFICE
9 Electron Street, Linbro Business Park, Sandton 2196
DIRECTORS
JPS O`Leary (Chairman)*+ - R Friedman (Managing) - EPH Bieber* - TE Buzer - RB
Forrester - RJ Fraenkel - HV Hefer*
*Independent, non-executive +Irish
Detailed results are available on the website and will be posted to
shareholders.
www.ci.co.za
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