Industrial Reporter

TRANSPORT company Imperial says it is not overly concerned by the problems its joint venture partners Nedcor and Genbel Securities (Gensec) are facing, and that the ventures will continue.

Imperial and Nedcor are joint venture partners in the Imperial Bank and Imperial has also tied up a partnership with Gensec in aviation financing.

Both Nedcor and Gensec are facing operational problems as well as adverse trading conditions.

At a presentation of Imperial's half-year results, analysts cited these problems and raised the possibility of Nedcor and Gensec's withdrawal from the ventures. Imperial said that its joint venture with Nedcor in Imperial Bank was focused on the vehicle financing sector in which Nedcor was planning to increase its presence.

This was despite the high cost of Nedcor's R7,5bn takeover of BoE Bank two years ago which adversely affected Imperial Bank. It had been sharing Nedcor's treasury facilities, which placed a R4bn corporate bond to fund the takeover.

The high interest rate for this bond saw Imperial Bank experiencing pressure on its margins when the interest rates declined.

Imperial Bank was also hurt by a rise in bad debt.

In spite of these pressures, Imperial Bank CEO Tak Hiemstra said that he was confident Nedcor would stay on as a partner. Nedcor holds 50,1% of Imperial Bank.

While Imperial Bank grew profit 21% to R114m, this was mostly as result of the good debt collection on the asset book it bought from Saambou.

Imperial's aviation leasing business, which it operates as a joint venture with Gensec, also took strain.

While revenue from its aviation lease financing operation was up to R1,19bn from R980m, its operating profit fell from R183m to R109m.

Ralph Boëttger, chairman of Imperial's transport and logistics division, said that although Gensec, a Sanlam subsidiary, was committed to financing its existing deals in the partnership, it was still evaluating whether it would finance future deals.

Boëttger said that if Gensec decided not to fund any further deals, Imperial would look for other funding partners.

Despite not being happy with the division's results, Boëttger said the group had done well in a sector that was hurt by the strong rand and difficult market.

Imperial's overall results showed revenue rising 6% to R17,4bn and operating profit rising 4% to R1,32bn. Attributable profit was up 3% to R723m.

Imperial CE Bill Lynch was happy with the results despite the moderate rise in earnings.

Lynch said Imperial's balanced portfolio of businesses with the necessary critical mass and its ability to optimise synergies helped it deliver in a tough year.

Andisa Securities analyst Cavan Osborne said the results were slightly ahead of expectations and he was particularly impressed by Imperial's vehicle distribution division, which pushed up revenue 22% to R2,9bn and increased operating profit to R208m from R126m.

The Bottom Line: Page 12

Mar 02 2004 07:33:17:000AM Larry Claasen Business Day 1st Edition