| Tue 8 Jul 2008, 16:37 | | IPL - Imperial - Trading Statement And Aviation Assets Disposal |
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IPL
IPL
IPL - Imperial - Trading Statement And Aviation Assets Disposal
Imperial Holdings Limited
Registration number: 1946/021048/06
JSE share code: IPL
ISIN: ZAE000067211
("Imperial" or "the group")
TRADING STATEMENT AND AVIATION ASSETS DISPOSAL
TRADING STATEMENT
In compliance with 3.4(b) of the JSE Listings Requirements, shareholders are
advised that for the financial year ended 30 June 2008:
- Headline Earnings per Share ("HEPS") on continuing businesses, is expected
to be between 639 cents and 576 cents which is between 49% and 54% lower
than the previous corresponding period`s HEPS of 1252 cents on continuing
businesses.
The expected HEPS on continuing businesses includes an unusual foreign
exchange gain, an impairment of the loan to the share purchase trust, and
an impairment of the group`s investment in Lereko Mobility, all of which
are of a non-trading nature and resulted in a net reduction of continuing
HEPS of approximately 175 cents.
For purposes of determining HEPS on continuing businesses:
- the Logistics, Car Rental and Tourism, Motor Dealerships,
Distributorships and Insurance divisions have been included; and
- the unbundled Leasing and Capital Equipment Division, the
Aviation Division excluding NAC, the operations of Commercial
Vehicle Holdings, the group`s interest in Tourvest, and the
Multipart UK business have been excluded.
- HEPS (including headline earnings from discontinued operations) is expected
to be between 763 cents and 693 cents which is between 45% and 50% lower
than the previous corresponding period`s HEPS of 1387 cents.
- Earnings per share ("EPS") (including earnings from discontinued
operations) is expected to be a loss of between 368 cents and 515 cents
which is between 125% and 135% lower than the previous corresponding
period`s EPS of 1471 cents.
The forecast financial information in this trading statement has not been
reviewed or reported on by Imperial`s auditors. This update is based on the
available information at the time of publication. Imperial`s financial year end
results are expected to be released on SENS on or about 27 August 2008.
2. PROGRESS WITH STRATEGIC INITIATIVES
The closure of the Commercial Vehicle Holdings business is progressing
satisfactorily and the impairment charge previously reported is considered
adequate. The sale of the major portion of the Aviation division is reported on
below and impairment charges in respect of the division have been increased to
approximately R1.2 billion. The sale of the group`s interest in Tourvest is
expected to be finalised in the next accounting period and the expected profit
on disposal of approximately R500 million will be accounted for in that period.
The transaction was approved by Tourvest shareholders on 7 July 2008 and is
still subject to court sanction and competition authority approval.
3. DISPOSAL OF AVIATION DIVISION
The disposal detailed below is classified as a category 2 transaction in terms
of paragraph 9.15 of the JSE Listings Requirements.
3.1 RATIONALE
As previously announced, it is the group`s intention to exit non-core businesses
and businesses that do not meet the group`s chosen return on capital and debt
profiles. The aviation division had therefore been earmarked for sale and had
been accounted for as a discontinued business for the six months ended 31
December 2007.
Imperial has already successfully concluded the sale of its Irish based
airfreight business, Air Contractors Limited to Petercam, a Belgian financial
services group and Compagnie Maritime Belge NV for Euro22 million with effect
from 15 February 2008.
Agreement has now been reached for the sale of substantially all the remaining
assets of the aviation division as a going concern with effect from 25 November
2007. Particulars of this transaction are given in paragraphs 3.2 and 3.3 below.
The abovementioned disposals exclude the group`s 62% interest in the general
aviation sales and service organization, National Airways Corporation, which, as
previously announced, will not be sold and will in future be reported as part of
our Distributorships division.
After conclusion of this transaction and the sale of six Beechcraft 1900D
aircraft during June 2008 to a third party for an aggregate amount of R117.5
million, the only remaining aviation asset of Imperial which is held for sale
and accounted for as a discontinued operation is its 60% interest in Naturelink
(Pty) Limited.
3.2 PARTICULARS OF THE TRANSACTION
Purchasers
The purchasers are various subsidiaries of Aergo Capital Limited ("Aergo"), an
aircraft leasing company based in Ireland.
Assets sold
The assets sold to Aergo include our 50% interest in Safair Lease Finance (Pty)
Limited, along with the remaining 50% held by Genbel Securities Limited (a
wholly-owned subsidiary of Sanlam Limited), and all but the following remaining
assets of the Imperial Aviation division:
- a fleet of nine Hercules aircraft, which will be leased by Aergo for a
maximum period of five years. Imperial has a right to put the aircraft to
Aergo at regular intervals over the period at pre agreed prices.
- three MD 80 series aircraft and two Boeing 737-200 aircraft. These aircraft
are running out their existing lease contracts and will be disposed of
thereafter.
Other significant terms of the agreements
The transaction is subject to operational, financial and tax warranties
generally customary to a transaction of this nature and an indemnity against
recoupment tax in terms of section 23A of the Income Tax Act. Imperial further
guarantees the due fulfillment of the obligations of its subsidiary companies
insofar as Imperial is not the direct vendor in relation to any part of the
assets sold.
Conditions precedent
The transaction is subject to a number of conditions precedent customary to a
transaction of this nature that have to be fulfilled by no later than 31
December 2008, the most important being the following:
- regulatory approvals;
- approval by certain third party financiers and lease counterparties; and
- conclusion of an agreement in terms of which the sellers would provide
certain specific indemnities.
Consideration
The aggregate consideration for the Imperial aviation assets sold to Aergo is
the sum of US$55.8 million and R509.8 million. US$35 million will be received
on fulfillment of all the conditions precedent ("the completion date"), which is
expected to be during September 2008, and the balance of US$20.8 million will be
received in various amounts between the completion date and 31 October 2012.
The Rand based consideration will be received in various tranches over a five
year period subsequent to the completion date.
The proceeds of the sale will be utilised to reduce short term debt.
3.3 FINANCIAL EFFECTS
The pro forma financial effects of this transaction on Imperial`s headline
earnings per share for the six months ended 31 December 2007 and its net asset
value and tangible net asset value per share at that date are not significant
(being less than 3% in accordance with the definition contained in the JSE
Listings Requirements).
The pro forma effect on Imperial`s earnings per share for this transaction for
the six months ended 31 December 2007 is as follows:
Unaudited Unaudited Change
unadjusted adjusted (%)
before the after the
disposal disposal
(cents) (cents)
EPS (loss) (289.6) (410.8) (42)
Fully (246.3) (376.6) (53)
diluted EPS
(loss)
RA Venter
Company Secretary
Bedfordview
8 July 2008
Sponsor to Imperial
MERRILL LYNCH SOUTH AFRICA (PTY) LIMITED
Date: 08/07/2008 16:37:01 Produced by the JSE SENS Department.
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