The Control Instruments Group loss of R147.8 million for the year to 31 December 2011 largely reflects the consequences of the decisive action taken in placing Pi Shurlok in the United Kingdom under administration.
“The poor financial performance of Pi Shurlok in South Africa had a negative effect on the results of the continuing operations. This should be viewed against the backdrop of the decision to exit Pi Shurlok in the UK,” says Sean Rogers, CEO of Control Instruments Group.
“The impact of exiting our international OEM operations is reflected in the results for the year ended 31 December 2011. While the losses are significant, they are mainly accounting losses that relate to the write-off of investments made over a number of years. Most importantly, exiting the international OEM operations has stopped the drain on the Group’s cash resources as well as the distraction of senior management’s time,” he said.
For the year to December 2011 revenue increased 3.7 percent to R833.9 million from R804.2 million the previous year. Gross profit increased 2.8 percent to R208.5 million compared with a restated R202.8 million.
Group cash resources at the end of the financial year increased to R57.6 million compared to R41.7 million at the end of 2010. “The Group has now returned to its South African roots and is predominantly focused on supplying products into the automotive aftermarkets in South Africa and sub-Saharan Africa. The timing for this renewed focus is good as the South African economy is showing signs of growth, compared with European markets,” said Mr Rogers.
“Additionally, it is increasingly apparent that South Africa is becoming a springboard into sub-Saharan Africa as international companies ‘come to Africa’ to take advantage of the growth that is being experienced on the continent.”
Mr Rogers said CI Automotive, the Group’s automotive aftermarket business, has a solid foundation in South Africa. “This will provide a base from which to expand into the growth opportunities in the sub-Saharan African automotive aftermarket. Sub-Saharan Africa has an ageing car pool, a growing market for second life vehicles and immature aftermarket distribution channels, all of which make it an area of good growth for automotive aftermarket products,” he said.
“We are satisfied that the restructuring of our local OEM business, Pi Shurlok in SA, will enable it to build off its new base with minimal risk to the Group, provided there are no material fall-offs in the forecasted volumes.”
“The Group has emerged from the substantial restructuring leaner and more focused and with renewed vigour and energy. Management now has more time to concentrate on the remaining businesses and particularly on developing the aftermarket business,” said Rogers.