| Tue 4 Dec 2007, 10:08 | | CNL - Control Instruments Group Limited - Update to Shareholders |
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CNL
CNL
CNL - Control Instruments Group Limited - Update to Shareholders
Control Instruments Group Limited - Update to shareholders
(Incorporated in the Republic of South Africa)
(Registration number 1964/003987/06)
Share code: CNL
ISIN code: ZAE000001665
("Control Instruments" or "the Group")
UPDATE TO SHAREHOLDERS
The following is the content of a letter from the non-executive chairman of
Control Instruments to shareholders to update them following the sale of
Control Instruments` fleet management businesses to TeliMatrix Limited
("TeliMatrix").
TeliMatrix
TeliMatrix listed on the JSE on Monday, 12 November 2007 signifying the
conclusion of what we believe is a beneficial transaction for Control
Instruments and its shareholders. Control Instruments shareholders are now
invested in Control Instruments and TeliMatrix. These companies are focused on
very different markets.
The rationale behind the TeliMatrix transaction was to unlock value for
shareholders. As a result of the transaction, shareholders received two
TeliMatrix shares for every one Control Instruments share they held on Friday,
9 November 2007. Thus, if you owned 10 000 Control Instruments shares on 9
November 2007, you would have owned 10 000 Control Instruments shares plus 20
000 TeliMatrix shares when TeliMatrix listed on 12 November 2007.
Although at current prices one Control Instruments share plus two TeliMatrix
shares do not add up to the price of one Control Instruments share before the
listing of TeliMatrix, the underlying businesses have not changed.
Control Instruments
Control Instruments supplies products and services to the automotive industry,
focusing on two main areas:
* Specialised sectors of the global original equipment manufacture ("OEM")
market;
* The automotive aftermarket in sub-Saharan Africa.
The OEM market refers to the supply of products and services directly to the
manufacturers of motor vehicles, such as BMW, Daimler Benz, Ford, GM, Nissan,
Toyota and Volkswagen as well as certain niche companies including AM General,
Aston Martin, Bentley, Lotus and Jaguar.
The aftermarket comprises replacement parts and accessories used in motor
vehicles.
OEM market
The Group`s Pi Shurlok subsidiaries operate in the OEM market.
Pi Shurlok employs more than 100 engineers with extensive experience in
designing electronic products and software for the automotive industry. It is
a leading supplier of emission control technology, which, in the light of
present and future legislation, places the business at the forefront of
international environmental requirements. Other expertise includes engine
management systems, vehicle security and other advanced electronic hardware
and software solutions for the automotive industry.
Pi Shurlok`s head office, European sales and design and development facilities
are based in Cambridge in the United Kingdom. It has additional design and
development facilities in Detroit (USA), Rodgau (Germany) and Pietermaritzburg
(South Africa). Manufacturing facilities are in Pietermartizburg.
The local and international OEM markets have been characterised by a great
deal of (well publicised) turmoil in the past 24 months. As part of meeting
the challenges posed by the OEM markets Pi Shurlok has sold its OEM plastics
operations to Smiths Plastics (Proprietary) Limited. These operations were not
meeting the Group`s minimum performance criteria. (Refer to announcement dated
Thursday, 29 November 2007).
Aftermarket
Group subsidiary, CI Automotive is a major supplier of premium branded parts
and accessories into the sub-Saharan Africa automotive aftermarket. A number
of these brands, in particular Gabriel, Echlin, SiemensVDO and Warn, dominate
their respective market segments. Other leading brands represented by CI
Automotive include Eurocable, ContiTech and Shurlok.
The sub-Saharan Africa vehicle park (the number of vehicles on the road) has
shown dramatic growth over the past five years and this should result in
strong growth for the aftermarket parts and accessories market. To accommodate
this expected growth, CI Automotive recently consolidated all its Johannesburg
operations into a new office and warehouse facility with an eventual capacity
of over 20 000m2.
Directors
On 9 November 2007 we announced a number of changes to our board of directors.
* Richard Bruyns and Terry Buzer resigned to take up positions as chairman
and executive director respectively on the board of TeliMatrix.
* Rod Forrester, managing director of Pi Shurlok retires from the Group at
the end of the year after 37 years of service. Rod was transferred to the
United Kingdom in 2005 to establish an international sales and
engineering organisation for the Group. This resulted in the acquisition
of Pi Technology (now Pi Shurlok) at the end of 2006.
* Stuart Bromfield has been reappointed as an independent, non-executive
director. Stuart resigned in September 2004 to prevent a potential
conflict of interest. This has been resolved and we are delighted to have
him back on the board - his extensive experience in the motor industry is
invaluable.
Pi Shurlok is pivotal to the Group`s international expansion plans. Following
Rod Forrester`s retirement, the board has decided that with effect from
January 2008, Group managing director, Richard Friedman, will be based in
Cambridge, United Kingdom to manage this process.
In conclusion
During the past three years the Group has shown enormous growth, mainly
through acquisitions. In order to enhance shareholder value the majority of
these acquisitions were funded using debt. By the end of this year most of the
Group`s long-term debt will have been repaid.
Throughout this period the Group has managed significant growth and the
integration of acquisitions, and coped with extreme challenges in operating
conditions and, more recently, a strike in the local automotive industry.
Nevertheless it has traded profitably at an EBITDA level. This bodes well for
the future, particularly given the significant reduction in the level of debt.
The Group is well positioned for growth, both internationally in its OEM
business and in Africa in its aftermarket business.
Cape Town
4 December 2007
Sponsor:
Investec Bank Limited
Date: 04/12/2007 10:08:01 Produced by the JSE SENS Department.
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