Salvesen faces shareholder anger despite split plans

Christian Salvesen, the transport to generator hire group, said yesterday it was on course to complete the demerger of its Aggreko generator hire business by the end of September.

But despite the news, the group, which earlier this year ran into a storm of controversy over the break-up proposals and pounds 150m payout to shareholders whipped up by its former chairman, Sir Gerald Elliot, is likely to face stiff questioning from its Scottish shareholders at a meeting in Edinburgh this morning.

The shares have underperformed since management led by Chris Masters, chief executive, rejected a pounds 1.1bn bid approach from rivals Hays last August.

Unchanged at 236.5p yesterday, the shares are well below the Hays offer, which would have been worth just short of 497p, even after taking account of a 17p special dividend and share consolidation.

Asked whether he was facing difficulties with his shareholders, Mr Masters said yesterday: "None of us is happy with where the share price is", but he said he remained committed to the demerger proposals.

"I am totally convinced that the demergers are exactly the right thing to do, because we have got two strong businesses. I am not a fan of conglomerates, never have been.

"We are also removing uncertainty. I still believe these two businesses will deliver value. I guess we will judge the success of the demerger on how the two businesses trade in the first year."

He was speaking as Salvesen unveiled an 11 per cent rise in pre-tax profits to pounds 85.9m for the year to March on sales up 6.6 per cent at pounds 746m. A final dividend of 5.35p raises the total for the year by 5.8 per cent to 9.15p, payable from earnings per share up from 18.8p to 19.4p.

Although Mr Masters highlighted underlying profits growth above 20 per cent from the Aggreko and Swift industrial logistics operations, analysts remained sceptical about the group's ability to maintain these figures. One said people were waiting for the demerger to pass judgment, but were anyway questioning the sustainability of this performance.

"The senior management of Salvesen does not have much support and the feeling is that, in the past, something has always come up and grabbed them," he said.

The half-way figures were hit by pounds 1m of costs incurred defending the group from the Hays bid and pounds 2.3m in professions fees and other charges as a result of the capital reconstruction and special dividends.