Control Instruments (CI) is in advanced negotiations to inject its IT investments into a new private equity fund to be managed jointly by CI and Cycad Financial Holdings.
"Cycad and its advisers have concluded a full due diligence investigation and a value of approximately R113 million has been placed on the group`s interest in these companies," says CI`s MD, Richard Friedman.
He adds that CI should receive 50% of this value in cash and will continue to hold a significant interest in the companies through a preference shareholding.
The deal, if finalised, would allow the group to focus on its electronics interests, provide cash for future growth and acquisitions and allow it to receive the benefits of the IT interests without detracting from the strong growth of the core electronics interests.
The IT interests will be off balance sheet in future, although CI shareholders will still have an interest through the group`s preference shareholding.
During the six months to 30 June, CI sold its 47.5% interest in Matrix Vehicle Tracking and is in the process of selling shares in Cellpoint.
CI lifted revenue 63% to R102.6 million in the six months to 30 June, compared with R62.9 million ion the same period of 1999. The IT interests accounted for R11.2 million (1999: R5.5 million).
The group posted a R3.97 million (R3.3 million) profit from operations and a 124% increase in after-tax profit to R14 million (R6.2 million). Earnings per share rose 132% to 15.83c (6.81c).
The IT operations recorded an operating loss of R2.8 million (R1.1 million loss). Friedman says the increased loss is as a result of an increase in development and engineering costs at San People, personnel appointments at Datapro and an increase in depreciation arising out of the investments in Datapro`s facilities.
The CI share price was 12c up at 128c by late morning.
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