Cullinan to build up its financial services interests

Michael Tollman. Image: www.financialmail.co.za

Writing in the company's annual report, released last week, CEO Michael Tollman confirmed the company would continue looking for "quality, lower-risk niche finance businesses" to acquire, either as whole businesses or as partnerships.

Cullinan - the owner of wellknown travel brands such as Thompson Tours, Springbok Atlas and Hylton Ross - delved cautiously into financial services in 2012, when it acquired specialist financing business Glacier Enterprises.

Cullinan's financial services hub now focuses on bridging finance, project finance, treasury services and marine finance.

Tollman noted that Glacier Enterprises had again exceeded its targets for the year, with access to finance from the Cullinan Finance division. He said the business was poised for further growth this year.

Cullinan also acquired Chester Finance late last year. Tollman believed Chester would add significant scale and skill sets to the financial services hub.

By 30 September 30 2014, Cullinan's financial services operations had generated R66m in revenue and R13m in profit after tax. This equated to roughly 8% of the company's total turnover and almost 13% of total profit after tax.

The market's enthusiasm for Cullinan's shift into financial services has been difficult to gauge since the company's shares are not widely held by investors.

The annual report shows that almost 97% of Cullinan's issued shares are held by four shareholders - Travel Corporation (57%), and BBH Collins Stewart (20%), as well as Bidvest-controlled BB Investments and Imperial Holdings (roughly 10% each).

Small-cap investment analysts declined to comment on Cullinan as most were not familiar with the company. One source, however, queried whether the tilt at financial services was prompted by a lack of opportunities in its core travel and leisure niche.

"Chasing new growth opportunities in unfamiliar terrain might be viewed as risky. But Cullinan do seem to be testing these new waters carefully. They also seem to have a fairly solid balance and a deep-pocketed large shareholder (Travel Corporation)."