No ‘new dawn’ benefit yet, but Imperial hails changes

SA’s political “new dawn” is yet to translate into improved trading conditions for listed industrial group Imperial Holdings, says chair Suresh Kana.

Kana said a disappointing first- and second-quarter GDP performance, which resulted in SA slipping into recession, was evidence of heightened pressure on consumers.

The low economic growth has a bearing on the industrial giant because of its exposure to the domestic market. As at June 30, 55% (R70bn) of Imperial Holdings’ revenue and 63% (R4bn) of operating profit was generated in SA.

Commenting in the company’s latest annual report, Kana said the company was “cautiously optimistic” about the political “new dawn” but welcomed the new administration’s efforts to attract investment and resolve inconsistent policy positions. “We greet the new administration’s decisive actions to root out corruption in the public and the private sectors alike with some relief. Along with rational and consistent policy positions and implementation, a credible stance on corruption is critical to attracting the local and foreign direct investment needed to support government’s objectives for growth, job creation and poverty alleviation,” Kana said.

He said the company, which is in the final stages of its transition from a holding company into two independent, self-sufficient businesses, was concerned about SA’s increasing public debt burden and persistently high unemployment.

Imperial acting CEO and CFO Mohammed Akoojee said the proposed unbundling of the group — which listed on the JSE in 1987 with a market capitalisation of R35m — into separate logistics and automotive entities had proceeded with no major pushback by its major local and international shareholders.

“Obtaining the requisite regulatory approvals, including the JSE, SA Reserve Bank and Takeover Review Panel, are in progress and are expected to be obtained by the end of October 2018,” Akoojee said.

According to Imperial Holdings, the two businesses — Imperial Logistics and Motus — had self-sufficient capital structures, paving the way for their separate listing on the JSE.

In the year ended June 30, the two companies’ net-debt-to-equity ratio, which measures the company’s debt relative to the total value of its stock, was 50%.

Motus Holdings — which has been established through the consolidation of Imperial’s entire vehicle import, distribution, retail, financial services, rentals and parts businesses — has a presence in SA, UK and Australia. It is the exclusive importer of Hyundai, Kia, Renault and Mitsubishi vehicles into SA. It imports more than 80,000 vehicles annually.