| Thu 16 Mar 2006, 16:29 | | Control Instruments Group Limited - Audited Result |
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CNL
CNL
Control Instruments Group Limited - Audited Results For The Year Ended 31
December 2005
CONTROL INSTRUMENTS GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number. 1964/003987/06)
JSE Share Code: CNL
ISIN: ZAE000001665
("Control Instruments" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
HIGHLIGHTS
Net profit up 13.5% to R22.3 million
Dividend declared for the year up 27.3% to 7.0 cents per share
Net asset value per share up 56.0% from R1.34 to R2.09
Significant acquisitions completed
OVERVIEW
Control Instruments has had an exciting year during which most of its
Strategic objectives have been achieved. The results are in line with advice
given to shareholders at the beginning of 2005 that it would be a year of
consolidation and one in which the focus would be on creating a platform for
future growth. Consequently, Control Instruments goes into 2006 a
substantially larger Group.
ACQUISITIONS AND INVESTMENTS FOR THE FUTURE
During the year under review and subsequent to the year-end, the Group
concluded a number of acquisitions. In addition to the acquisitions, the
Group continued its policy of investing in product development, manufacturing
and engineering facilities and Information Technology (IT)
Acquisitions made during 2005
Transport Lighting and Fleet Products (Pty) Limited and the business of
Autocom were acquired in January 2005 for R9.5 million. These businesses
supply specialised lighting products and steering, suspension and safety
components to the automotive industry.
Dana South Africa (Pty) Limited, a leading distributor of aftermarket
components for the automotive and heavy-duty truck market in South Africa,
was acquired with effect from 1 October 2005 for R115 million.
Acquisitions made subsequent to the year-end
The Group acquired 51% of the shares in Tripmaster Corporation, a fleet
management business based in the United States of America, in January 2006
for US$3.5 million. The purchase agreement includes put and call options in
respect of the remaining shares over a three year period from December 2006
to December 2008.
On 2 March 2006, the Group acquired the automotive Original Equipment
Manufacture (OEM) plastics business of the Sagercy Group for R100 million.
RESULTS
The results comply with International Financial Reporting Standards (IFRS) and,
where applicable, figures have been restated to adhere to these standards.
Revenue grew 3.3% from R382.4 million to R395.1 million. Net profit increased
13.5% to R22.3 million and earnings per share increased 6.3% to 32.0 cents per
share. Profit before tax decreased 14.4% to R27.1 million, major factors being
share options expenses of R3.8 million (in terms of IFRS 2: Share-based
Payment), the implementation of a common IT platform and an increase in
interest, depreciation and amortisation as a result of assets acquired through
organic growth and acquisitions.
Net asset value per share increased 56.0% from R1.34 to R2.09.
The Group"s operations generated R49.5 million in cash before working capital
changes and R31.7 million was invested in property, plant and equipment.
ACCOUNTING POLICIES
Control Instruments Group Limited"s financial statements for the year ended
31 December 2005 are the first set of annual financial statements that comply
with IFRS. The Group has applied IFRS 1: First-time adoption of IFRS in
preparing its financial statements.
The financial statements were prepared in accordance with South African
Statements of Generally Accepted Accounting Principles (SA GAAP) until
31 December 2004. SA GAAP differs in some areas from IFRS. In preparing the
financial statements, management has amended certain accounting, valuation
and consolidation methods applied in the SA GAAP financial statements to
comply with IFRS. The comparative figures in respect of 2004 were restated to
reflect these adjustments.
IFRS - Transitional arrangements
In preparing the financial statements in accordance with IFRS 1, the
Group has applied the mandatory exceptions and certain of the optional
exemptions, as detailed below, from full retrospective application of IFRS.
Designation of financial assets and financial liabilities exemption
The Group reclassified its financial asset `available-for-sale" to `at fair
value through the profit or loss". As a result, the movement
in the fair value will be taken to the income statement and not to reserves.
This had no effect on profit for the current or prior periods.
Fair value as deemed cost exemption
The Group has elected to use fair value as deemed cost to measure certain
items of property, plant and equipment as at 1 January 2004.
Business combinations exemption
The Group has applied the business combinations exemption in IFRS 1. It has
therefore not restated business combinations that took place prior to the
1 January 2004 transition date. In terms of IFRS 3: Business Combinations,
goodwill is no longer amortised but is subject to a mandatory annual
impairment test, regardless of whether there are any indications of
impairment.
Share-based payment transaction exemption
The Group has elected to apply the share-based payment exemption. IFRS 2
requires that a share-based payment expense is recognised
for share options issued to staff after 7 November 2002 and not vested by
1 January 2005. This expense was not recognised under SA GAAP. As it results
in a corresponding increase in a share-based payment reserve, there is no
impact on the Group"s equity.
The Group decided not to apply the cumulative translation differences
exemption. Therefore, previously accumulated currency translation reserves
were not set to zero at 1 January 2004.
AUDIT OPINION
The results for the year have been audited by the Group"s auditors,
PricewaterhouseCoopers Inc. and their unqualified audit report on the
31 December 2005 annual financial statements and the abridged financial
statements contained herein are available for inspection at the Company"s
registered office.
PROSPECTS
The prospects for 2006 onwards are very good. In the absence of any unforeseen
circumstances or a significant slowdown in economic activity, the Group
expects to have strong growth during the year. The longer term prospects are
also very good. A great deal of the Group"s business is in areas where there
are long-term contracts, recurring revenue streams and the supply of products
that are essential to the safe operation of vehicles.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of shareholders of the
Company will be held in the boardroom, Blaauwklip Office Park 2, corner of
Strand and Webersvallei Roads, Stellenbosch on Tuesday, 2 May 2006 at 10h00.
DECLARATION OF DIVIDEND
The board has declared a final dividend of 4.0 cents per share in respect of
the year ended 31 December 2005.
In terms of the requirements of STRATE:
Last day to trade cum dividend Friday 31 March 2006
Shares trade ex dividend Monday 3 April 2006
Record date Friday 7 April 2006
Payment date Monday 10 April 2006
Share certificates may not be dematerialised or rematerialised between Monday
3 April 2006 and Friday, 7 April 2006, both days inclusive.
An interim dividend of 3.0 cents per share was paid on 22 August 2005. The
total dividend declared in respect of the 2005 financial year was therefore
7.0 cents per share (2004: 5.5 cents per share).
On behalf of the board
JPS O"Leary R Friedman
Chairman CEO and Group Managing Director
16 March 2006
CONSOLIDATED BALANCE SHEETS
At 31 December 2005
GROUP
31/12/05 31/12/04
R 000 R 000
ASSETS
Non-current assets 193,179 120,379
Property, plant and equipment 124,831 88,297
Intangible assets 57,727 22,462
Investments in joint ventures 2,765 292
Financial assets 3,208 3,208
Deferred tax assets 4,648 6,120
Current assets 175,792 84,556
Inventories 84,846 32,783
Trade and other receivables 90,702 45,839
South African Revenue Services - 1,183
Cash and bank balances 244 4,751
Total assets 368,971 204,935
EQUITY AND LIABILITIES
Capital and reserves 165,027 86,823
Share capital 4,826 4,213
Share premium 97,886 43,591
Treasury shares (20,692) (22,658)
Fair value and other reserves 7,564 3,953
Retained earnings 75,443 57,724
Non-current liabilities 111,853 42,697
Borrowings 96,065 32,395
Retirement benefit obligations 600 1,100
Deferred tax liabilities 14,356 8,109
Provisions 832 1,093
Current liabilities 92,091 75,415
Trade and other payables 65,707 51,714
South African Revenue Services 213 5,348
Borrowings 24,095 14,311
Provisions 2,076 4,042
Total equity and liabilities 368,971 204,935
Issued number of shares (000) 96,518 84,268
Less: Treasury shares (000) (17,562) (19,268)
Consolidated number of shares in issue 78,956 65,000
Net asset value per share (cents) 209 134
CONSOLIDATED INCOME STATEMENTS
For the year ended 31 December 2005
GROUP
31/12/05 31/12/04
R 000 R 000
Revenue 395,060 382,446
Cost of sales (233,168) (221,301)
Gross profit 161,892 161,145
Other operating income 14,791 12,147
Interest income 845 184
Other operating expenses (43,955) (42,110)
Administrative expenses (83,036) (82,115)
Marketing and selling expenses (18,886) (12,246)
Operating profit 31,651 37,005
Loss from discontinued operations - (57)
Finance costs (7,357) (4,890)
Net profit/(loss) from joint ventures 2,765 (456)
Profit before tax 27,059 31,602
Tax (4,737) (11,939)
Profit for the year 22,322 19,663
Weighted average number of shares in issue (000) 69,687 65,357
Adjustment for share options (000) 5,173 5,229
Weighted average number of shares for diluted
earnings per share(000) 74,860 70,586
Earnings per share (cents)
- basic 32.0 30.1
- diluted 29.8 27.9
- headline earnings 28.3 32.9
Dividends per share (cents) 6.0 4.5
Reconciliation of EPS to Headline EPS (cents)
EPS 32.0 30.1
Profit on disposal of property, plant and equipment (0.1) -
Profit on disposal of joint venture (0.3) -
Creation of provision against loans and investments - 0.3
Negative goodwill on acquisitions (4.4) -
Impairment of development costs and goodwill 1.1 2.5
Headline EPS 28.3 32.9
The Group borrowed R75 000 000 to finance its acquisition of Dana South Africa
(Pty) Limited. The loan is repayable in quarterly installments over a five year
period ending October 2010. The draw down of the loan commenced on 1 October
2005 and the effect on earnings per share and headline earnings per share for
the year ended 31 December 2005 was immaterial.
CONTROL INSTRUMENTS GROUP LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2005
Share Share Treasury
capital premium shares
R 000 R 000 R 000
GROUP
Balance at 1 January 2004 4,213 43,591 (18,602)
Net losses not recognised
in the income statement
Release of currency
translation reserve
Utilisation of general reserve
Cash flow hedges, net of tax
Profit for the year
Employee share option scheme:
- Value of services provided
Movement of treasury shares (4,056)
Dividends paid
Balance at 31 December 2004 4,213 43,591 (22,658)
Net losses not recognised in
the income statement:
- Cash flow hedges, net of tax
Profit for the year
Employee share option scheme:
- Value of services provided
Movement of treasury shares 1,966
Shares issued 613 54,295
Dividends paid
Balance at 31 December 2005 4,826 97,886 (20,692)
Fair value
and other Retained
reserves earnings Total
R 000 R 000 R 000
GROUP
Balance at 1 January 2004 5,655 41,848 76,705
Net losses not recognised
in the income statement (2,264) (2,264)
Release of currency
translation reserve 103 103
Utilisation of general reserve (48) (48)
Cash flow hedges, net of tax (2,319) (2,319)
Profit for the year 19,663 19,663
Employee share option scheme:
- Value of services provided 562 562
Movement of treasury shares (872) (4,928)
Dividends paid (2,915) (2,915)
Balance at 31 December 2004 3,953 57,724 86,823
Net losses not recognised in
the income statement:
- Cash flow hedges, net of tax (140) (140)
Profit for the year 22,322 22,322
Employee share option scheme:
- Value of services provided 3,751 3,751
Movement of treasury shares (635) 1,331
Shares issued 54,908
Dividends paid (3,968) (3,968)
Balance at 31 December 2005 7,564 75,443 165,027
CONSOLIDATED CASH FLOW STATEMENTS
For the year ended 31 December 2005
GROUP
31/12/05 31/12/04
R 000 R 000
Cash flows from operating activities
Cash generated from operations 7,203 51,771
Interest received 845 184
Interest paid (7,357) (4,890)
Dividends paid (3,968) (2,915)
Tax paid (7,778) (2,238)
(11,055) 41,912
Cash flows from investing activities
Purchase of property, plant and equipment (31,701) (41,112)
Proceeds from disposal of property, plant and
equipment 2,622 5,850
Increase in intangible assets (13,808) (9,997)
Decrease in investments in joint ventures - 124
Disposal of joint venture, net of cash 512 -
Acquisition of subsidiaries and operations, net of
cash (8,359) -
Decrease in investments and non-current receivables - 142
(50,734) (44,993)
Cash flows from financing activities
(Settlement of)/proceeds from non-current borrowings (407) 16,060
Proceeds on disposal/(purchase) of treasury shares 1,297 (4,928)
Shares issued 54,908 -
55,798 11,132
Net cash (outflow)/inflow for the year (5,991) 8,051
Cash and cash equivalents at the beginning of the year 4,751 (3,300)
Cash and cash equivalents at the end of the year (1,240) 4,751
RECONCILIATIONS BETWEEN IFRS AND SA GAAP
The following reconciliations quantify the effect of the transition to IFRS.
Restated Transition date
31/12/04 01/01/04
R 000 R 000
Equity
As reported under SA GAAP 83,303 75,292
Reclassification of financial asset
"available-for-sale" to "at fair
value through profit or loss" (Retained
earnings) (1,604) (1,604)
Reclassification of "available-for-sale"
to "at fair value through profit or loss"
(Fair value and other reserves) 1,604 1,604
Restatement of accumulated depreciation to
reflect useful lives of property, plant and
equipment and restatement of property, plant
and equipment to fair value 2,497 1,413
Restatement of accumulated amortisation to
reflect no amortisation of goodwill 850 -
Restatement of accumulated amortisation on
intangible assets 173 -
Recognition of share options issued after 7
November 2002 and not
vested at 1 January 2005 (Retained earnings) (4,238) (3,676)
Recognition of share options issued after 7
November 2002 and not vested at 1 January
2005 (Fair value and other reserves) 4,238 3,676
As reported under IFRS 86,823 76,705
31/12/04
Income statement R 000
Profit as reported under SA GAAP 18,118
Restatement of accumulated depreciation to reflect useful lives of
property, plant and equipment (Other income: Profit on property,
plant and equipment) (1,777)
Restatement of accumulated depreciation to reflect useful lives of
property, plant and equipment (Depreciation) 3,326
Share-based payments (562)
Restatement of accumulated amortisation to reflect useful lives of
intangible assets 173
Restatement of accumulated amortisation of goodwill 850
The total effect to income tax reflects the effect of restatement
of the accumulated
depreciation. It also reflects the total effect of measuring
deferred tax in accordance
with IAS 12. (465)
Profit as reported under IFRS 19,663
Date: 16/03/2006 04:29:30 PM Produced by the JSE SENS Department
