Control Instruments' latest interim results, published yesterday, offer insight into the strength of the fleet and vehicle management systems operation it plans to dispose of.
JSE-listed Control Instruments is to sell the fleet and vehicle management business - CI OmniBridge, OmniBridge Cyprus and Datatrak - to TeliMatrix in return for TeliMatrix shares. TeliMatrix owns vehicle tracking business Matrix.
The plan is for TeliMatrix to list on 12 November, with Control Instruments unbundling 87% of the TeliMatrix shares it receives to shareholders in the ratio of two TeliMatrix shares for every Control Instruments share held. It is to place the remaining TeliMatrix shares and use the proceeds to reduce debt.
The group estimates the value of the transaction to its shareholders at R750 million, or R5.38 per share.
While the group's CEO, Richard Friedman, says Control Instruments' results for the financial half-year to 30 June were "below our expectations" owing to a poor performance from the automotive components and products division, the business to be sold to TeliMatrix put in a strong showing.
The fleet and vehicle management operation increased revenue 48%, from R82.7 million to R122.6 million, with a 116% increase in operating profit, from R14.1 million to R30.4 million.
The business achieved a net profit of R20.48 million, up 145% from the R8.35 million profit of the same six months of last year. Earnings per share of 19.29c compare with a previous 9.29c, while headline earnings of 11.77c compare with 9.6c previously.
Control Instruments said previously that the sale of the operation should unlock some of the underlying value in the business, which the board had felt had not been reflected in the group's share price.
"In addition, it will give shareholders the opportunity to choose for themselves where they would like to be invested - in fleet and vehicle management, in automotive components and products, or both," the group said in a statement earlier this month.
The Control Instruments share, which closed unchanged at R5.70 on the JSE yesterday, was untraded at midmorning today. The share closed at a 12-month high of R7.60 on 23 May, and a 12-month low of R4.50 in October last year.
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