Imperial unbundling decision by mid-year
LISTED transport and mobility group Imperial Holdings was on track to make an announcement about its decision to possibly unbundle and separately list its logistics and vehicle businesses by the end of June or early July this year.
Mark Lamberti, the group chief executive of Imperial, confirmed this yesterday, adding that internally it was of absolute importance that both these businesses were properly geared because both would need to have a balance sheet that enabled them to grow.
Lamberti believed gearing at 40 percent to 50 percent for both divisions would provide the headroom for both to grow. There were a number of external factors they had to consider before a decision could be taken on the unbundling.
He said the political developments in the last while had been “really positive”, but they could have gone the other way, and the group was waiting for these developments to unfold. The election of Cyril Ramaphosa as president of the country and his comments during the State of the Nation address (Sona) raised their positivity about South Africa.
Lamberti believed that if Ramaphosa delivered on the things he spoke about in the Sona, it would result in a level of regulatory certainty that did not exist before, which would make it easier for businesses to make investment decisions and result in an uptick in consumer and business confidence that would augur well for the country.
Lamberti further believed that South Africa would also avoid a further credit downgrade if Ramaphosa got the announcements right in the next few days about his cabinet and the Budget. “That will be a big deal for our country. This is like 1994 again for me. I was as excited about this when he finally became president as I was standing in the queue to vote in 1994,” he said.
Lamberti said also that he had to be cautious when taking a decision about the possible unbundling about a downgrade or some major correction in the markets while from a practical viewpoint, a company had to list with audited results that were no older than six months.
Imperial yesterday reported an 11 percent growth in group revenue to a record R66.5 billion in the six months to December from R59.7bn. Imperial Logistics generated 41 percent of the group’s revenue and 45 percent of the group’s operating profit and motor vehicle group Motus the balance.
Imperial’s operating profit increased 5 percent to R3.1bn from R3bn, with the operating margin declining to 4.6 percent from 4.9 percent.
Foreign operations contributed 35 percent of the group operating profit, with Imperial Logistics accounting for 62 percent and Motus 13 percent. Headline earnings a share rose 16 percent to 717 cents from 618c. An interim dividend of 323c was declared, which is 1 percent higher than the 320c dividend in the prior period.
Lamberti said the group had produced a satisfactory financial result in testing trading conditions while approaching the advanced stages of one of the most comprehensive organisation renewals by a South African based multinational.
He said the group anticipated solid operating and financial results in the year to June subject to stable currencies in the economies in which it operated and South Africa retaining its investment grade credit rating.
Shares in Imperial dropped 9.87 percent on the JSE yesterday to close at R247.04.