As the custodian of strategy, capital, succession and governance, Imperial Holdings has sought to retain entrepreneurial creativity and capital management excellence within its two major businesses, and to clarify, simplify and focus their structures, strategies and value propositions for sustainable competitive advantage, growth and returns.

The final steps taken in the last financial year to ensure clearly positioned, self-sufficiently resourced, well governed independent businesses, and our expectations for the coming year, are set out below.

  STRATEGIC CLARITY AND FINAL SEPARATION     SELF-SUFFICIENT CAPITAL STRUCTURES
 
  • The optimisation of Imperial Logistics and Motus business and asset portfolios continued in the year.
    • R1,4 billion of strategically-aligned acquisitions were made, which grew their portfolios outside South Africa.
    • R3,8 billion of non-core, strategically misaligned, underperforming or low return on effort assets were sold.
  • Internal restructuring to reduce complexity, duplication, costs and capital employed continued within each business.
  • Obtaining regulatory and shareholder approvals for the unbundling and listing of Motus are in progress.
    
  • Ensuring that the balance sheet of each division is self-sustaining, with an appropriate gearing level to enable each to fund its own growth and strategic aspirations while continuing to pay a stable dividend.
    • Imperial Logistics and Motus have achieved appropriate, self-sufficient capital structures, each with net debt:equity ratio of 50% at 30 June 2018.
  • Negotiations with funders to secure appropriate debt facilities for each division.
    • The debt syndication process and refinancing of existing facilities are in process and on track.
    • Sufficient commitments including an underwriting for the off-shore facilities have been secured for Imperial Logistics and Motus to facilitate growth, provide flexibility and maintain strong liquidity at competitive pricing levels.
  • The bonds were redeemed by utilising existing banking facilities at market value on 6 August 2018.
    • No new bonds will be issued as all debt requirements will be arranged in the banking market and as such, in the event of the unbundling, Imperial Logistics and Motus will not have formal credit ratings.
  EXEMPLARY GOVERNANCE INSTILLED     RATIONALE FOR UNBUNDLING
 
  • Two well-constituted, independent divisional boards largely established.
  • Experienced, long-serving management teams with depth in both businesses.
  • High standards of accountability, transparency and integrity in running the business, and reporting to shareholders and other stakeholders instilled in each subsidiary.
  • King IV principles and practices, and appropriate enterprise risk management framework, embedded in both subsidiaries.
    
  • No operational synergies exist between Imperial Logistics and Motus.
  • Imperial Logistics and Motus operate independently in markets and geographies that are vastly different.
  • Both businesses have different strategic focuses and priorities.
  • With self-sustaining balance sheets achieved in each division, the group’s balance sheet is no longer necessary.
  • On 21 June 2018 the Imperial board resolved to proceed with the steps required to implement the unbundling of Motus, which will be underpinned by the following:
    • Strategic focus and independence
    • Improved operational efficiency mainly through the reduction in complexity and costs over time
    • Focused capital and funding structures which will provide respective management teams with direct access and accountability to the equity and debt capital markets, each with the appropriate capital structure to support their strategies on a long-term sustainable basis, and the ability to raise funding independently
    • Enhanced investor understanding and insight of each business and its sub-divisions
  • The proposed unbundling will provide shareholders with the opportunity to participate directly in Imperial Logistics and/or Motus.