Abil shareholders stop incentives
|Published
File photo: Reuters File photo: Reuters
Johannesburg - The African Bank Investments Limited (Abil) share price slumped to levels not seen for over five years yesterday, as shareholders continued to consider the implications of the worse-than-expected trading update released by management earlier this week.
At yesterday’s annual general meeting (AGM), shareholders, who have watched their investment slide from a high of R31.70 a share in mid-February last year, vented their frustrations by blocking the implementation of a new share incentive scheme for key executives.
Shares in Abil fell 7.46 percent to close at R9.80 yesterday.
Two resolutions relating to incentives schemes were not passed, as they only secured 72 percent of votes in favour. In terms of the JSE requirements, these resolutions need the approval of at least 75 percent of shareholders with voting rights.
In a statement issued yesterday Abil said: “Shareholders saw the new scheme as a significant improvement on the existing long-term incentive scheme.”
Abil’s board of directors have been advised of the concerns of some of the shareholders, which relate to the financial targets that must be met to benefit from the incentive scheme.
“The company will further engage with such shareholders to address these issues with the intention that revised resolutions, if appropriate, would be tabled at a special general meeting to be called subsequent to the release of the company’s interim results.”
Earlier in the week, Abil issued a trading update, which revealed a worse-than-expected outlook for the company in the six months to March. The trading update noted that at the group’s banking unit there was “likely to be a significant reduction in profitability for the first half of [the 2014 financial year] compared to the restated first half earnings of R604 million in [the previous financial year]”.
The profitability of the retail unit, Ellerine, is also expected to be considerably lower for the first half of this financial year. Earlier this week group chief executive Leon Kirkinis told Reuters that Abil still planned to sell off its furniture retail unit, but was keen to retain the financial services portion of the business, as well as the distribution footprint.
“We do intend to pursue a strategic transaction with Ellerines and it remains on our agenda. However, we have to ensure Ellerines is built and strengthened to effect such a transaction.”
Analysts said yesterday that Abil’s furniture and banking units would suffer from previous lax credit granting standards until well into the second half of this year, compounded by weak economic conditions. - Business Report