Imperial to buy De Canha’s 10% in AMH

Imperial will acquire the indirectly owned 10% shareholding in the AMH Group that is held by Associated Motor Holdings chief executive and Imperial executive director Manny de Canha for R750m.

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Johannesburg - Imperial Holdings will acquire the indirectly owned 10 percent shareholding in the AMH Group that is held by Associated Motor Holdings chief executive and Imperial executive director Manny de Canha for R750 million.

The listed transport and mobility group said yesterday that the acquisition was in anticipation of De Canha’s retirement in January 2018 and in pursuit of operational efficiencies and synergies within its two vehicle divisions.

The AMH Group will become a wholly owned subsidiary of Imperial if the transaction is successfully implemented.

Party transaction

The AMH Group comprises Associated Motor Holdings, Boundless Trade, Associated Motors Australia and Automotive Distributors Africa, which have been reported on in Imperial’s segmental accounts as the vehicle import, distribution and dealerships and motor related financial products and services divisions.

The transaction is classified in terms of JSE listing requirements as a small related party transaction.

Imperial said the purchase consideration would as far as possible be discharged by means of an exchange of Imperial shares in line with the express intent of the group and De Canha that he remain highly invested in the group and a director.

In terms of the proposed transaction, R650m of the purchase consideration will be discharged through the issue of Imperial shares for the South African shares in AMH Group, which relate to Associated Motor Holdings and Boundless Trade, with the R100m balance paid in cash.

The proposed transaction is subject to various conditions precedent, including the approval of Imperial shareholders.

Mark Lamberti, the chief executive of Imperial, said the group’s vehicle businesses, which generated combined revenues of R35.38 billion and operating profits of R1.33bn during the six months to December would from July be reported on as a single entity.

Lamberti stressed Imperial was fully committed to preserving the independence of the original equipment manufacturers (OEMs) and international brands the group acted for as distributors and retailers.

“Any restructuring pursuant to this transaction will in no way infringe on our contractual commitments, compromise our obligations or test the valued relationships with the OEMs and brands that Imperial and its subsidiaries have developed over decades,” he said.

Profit improved

Imperial yesterday reported a 6 percent growth in revenue to R59.8bn in the six months to December from R56.2bn in the previous corresponding period.

Operating profit improved by 7 percent to R3.1bn, with the operating margin maintained at 5.1 percent. Headline earnings a share increased by 6 percent to 801c from 759c.

An interim dividend a share of 370c was declared, which was 6 percent higher than the prior period’s 350c.

Lamberti said Imperial’s performance reflected sound management of controllable factors under testing circumstances and progress with Imperial’s previously stated intent to decouple the group’s performance from the impact of rand weakness on the vehicle import, distribution and dealerships division.

Lamberti said non-vehicle revenue increased 6 percent to R24.8bn to comprise 41 percent of group revenue, while operating profit grew 3 percent to R1.5bn to comprise 54 percent of group operating profit.

Foreign revenue now accounted for 41 percent of group revenue and foreign operating profit for 34 percent of group operating profit.

Lamberti said volume growth throughout the group’s logistics operations was expected to be subdued and national new vehicle sales in South Africa to decline by between 5 percent and 10 percent in response to fragile consumer confidence and rising interest rates.

Single digit revenue growth and unchanged operating profit in continuing operations was anticipated for the year to June 2016, he said.

Shares in Imperial were up 2.66 percent to R130 at the close on the JSE yesterday.

BUSINESS REPORT