| Thu 29 Nov 2007, 16:32 | | CNL - Control Instruments Group - Sale Of Oem Plas |
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CNL
CNL
CNL - Control Instruments Group - Sale Of Oem Plastics Operations
Control Instruments Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1964/003987/06)
Share code: CNL
ISIN code: ZAE000001665
("Control Instruments" or "the Group")
SALE OF OEM PLASTICS OPERATIONS
INTRODUCTION
Control Instruments has reached agreement to sell its original equipment
manufacture ("OEM") automotive plastics operations to Smiths Plastics
(Proprietary) Limited, a subsidiary of Metair Investments Limited.
RATIONALE FOR THE SALE
The operations, namely, Ariston and Specialised Plastics Engineering ("SPE") are
divisions of Control Instruments` subsidiary, Pi Shurlok Engineering
(Proprietary) Limited ("Pi Shurlok"). The disposal is as a result of these
divisions not meeting Control Instruments` minimum operating performance
criteria.
Pi Shurlok is not selling its Sagercy division, which is based in Port Elizabeth
and manufactures plastic products for the automotive aftermarket.
SALIENT TERMS OF THE ACQUISITION
The consideration
The purchase consideration is R19.5 million plus an adjustment for stock,
debtors and creditors. This will represent the tangible net asset value at the
effective date.
The proceeds of the sale will be used for working capital.
Warranties and indemnities
Control Instruments has provided warranties and indemnities normal in
transactions of this nature.
The effective date
It is expected that the sale will be effective from 1 March 2008. This is
dependent on acquiring the necessary Competition Commission approval.
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE SALE
The unaudited pro forma financial effects set out below have been prepared for
illustrative purposes only to assist the shareholders of Control Instruments to
assess the impact of the sale on the earnings per share ("EPS"), headline
earnings per share ("HEPS"), net asset value ("NAV") per share and tangible net
asset value ("TNAV") per share of Control Instruments. The unaudited pro forma
financial effects are based on Control Instruments` unaudited results for the
six months ended 30 June 2007.
These unaudited pro forma financial effects have been disclosed in terms of the
JSE Limited ("JSE") Listings Requirements and because of their nature may not
fairly present Control Instruments` financial position, changes in equity,
results of operations or cash flows. The unaudited pro forma financial effects
are the responsibility of the directors of Control Instruments.
Before (i) After After the Change
Cents TeliMatrix sale (vii) %
(iv) Cents
Cents
EPS 18.4 (ii) 385.6 (v) 351.0 (viii) (0.9)
HEPS (7.0) (ii) (18.8) (v) (14.9) (viii) (20.7)
NAV per share 423 (iii) 352 (vi) 320 (ix) (8.9)
TNAV per share 256 (iii) 184 (vi) 185 (ix) 0.6
Notes:
The "Before" column of the table refers to Control Instruments before the sale
of its fleet management businesses to TeliMatrix Limited ("TeliMatrix") and the
sale of its OEM plastics operations.
The EPS and HEPS, as set out in the "Before" column of the table, are based on
the unaudited income statement of Control Instruments for the six months ended
30 June 2007 and 106 177 000 weighted average number of shares in issue.
The NAV and TNAV per share, as set out in the "Before" column of the table, are
based on the unaudited balance sheet of Control Instruments at 30 June 2007 and
130 434 208 shares in issue.
The "After TeliMatrix" column of the table refers to Control Instruments after
the sale of its fleet management businesses to TeliMatrix and reflects that
Control Instruments received 320 million shares in TeliMatrix (representing 50%
of the share capital of TeliMatrix) in consideration for the sale. Approximately
280 million of these TeliMatrix shares were unbundled to Control Instruments
shareholders and approximately 40 million were sold. The profit on the sale of
the fleet management businesses of R410 million was calculated using the closing
price of the TeliMatrix shares on the day it listed on the JSE Limited, being
R1.80.
The EPS and HEPS, as set out in the "After TeliMatrix" column of the table, are
based on the unaudited income statement of Control Instruments for the six
months ended 30 June 2007 and 106 177 000 weighted average number of shares in
issue; the assumptions that the TeliMatrix shares were received and either
unbundled or sold at the beginning of the six month period; and the cash was
received at the beginning of the six month period.
The NAV and TNAV per share, as set out in the "After TeliMatrix" column of the
table, are based on the unaudited balance sheet of Control Instruments at
30 June 2007 and 130 434 208 shares in issue; the assumptions that the
TeliMatrix shares were received and either unbundled or sold at the end of the
six month period; and the cash was received at the end of the six month period.
The "After the sale" column of the table refers to Control Instruments after the
sale of its fleet management businesses to TeliMatrix and the disposal of the
OEM plastics operations.
The EPS and HEPS, as set out in the "After the sale" column of the table, are
based on the unaudited income statement of Control Instruments for the six
months ended 30 June 2007 and 106 177 000 weighted average number of shares in
issue; the assumptions that the sale of the OEM plastics operations became
effective at the beginning of the six month period; the consideration was
received at the beginning of the six month period; and the cash received was
deposited in an account earning interest of 10.0% nominal annual compounded
quarterly.
The NAV and TNAV per share, as set out in the "After the sale" column of the
table, are based on the unaudited balance sheet of Control Instruments at
30 June 2007 and 130 434 208 shares in issue; the assumptions that the sale of
the OEM plastics operations became effective at the end of the six month period;
and the consideration was received at the end of the six month period.
CONDITION PRECEDENT TO THE SALE
The major condition precedent to the sale is the approval of the Competition
Commission.
CATEGORISATION OF THE ACQUISITION
The acquisition has been categorised as a category 2 transaction in terms of
section 9.5(a) of the JSE Listings Requirements.
Cape Town
29 November 2007
Sponsor:
Investec Bank Limited
Date: 29/11/2007 16:32:39 Produced by the JSE SENS Department.
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