Brambles highlights spin-off as a growth story

Brambles chairman Graham Kraehe insists its document-storage division Recall is ‘‘anything but a sinking ship’’, emphasising it will be a ‘‘growth business’’ once it is spun off later this year.

Shareholders will find out later this week the likely quantum of the dividends to be paid by Recall when a scheme booklet outlining its long-term plans and risks is mailed out.

Brambles told shareholders on Tuesday that it intends to retain its own annual dividend at least at 27¢ a share – the total amount it paid last financial year – after it demerges Recall.

However, the board came under fire from the Australian Shareholders Association for the millions of dollars it had spent on trying to sell Recall, only to abort the sales process last year.

After failing to gain the price it wanted from trade buyers of up to $2 billion, Brambles decided in July to spin off Recall as a separately listed company on the Australian sharemarket.

‘‘Our shareholders have been cast adrift on a sinking ship,’’ said a spokeswoman for the shareholders association, who pointed to Recall’s slump in profit last financial year.

But Mr Kraehe said Recall simply did not fit with Brambles’ core business, and the best way to separate the document storage division was to spin it off rather than sell it outright. ‘‘Recall is anything but a sinking ship,’’ he said.

Mr Kraehe said most of Recall’s business was stable and he cited its historic annual growth in revenues and profits of 5 per cent. He emphasised that only a small part of Recall’s business was volatile due to the vagaries of paper prices. ‘‘It will be a growth business. We have been very conscious as a board ... to make sure we don’t put excessive debt into Recall,’’ he told shareholders at Brambles’ annual meeting in Sydney.

Shareholders will vote on the demerger on December 3. Recall is expected to emerge on the ASX with a market value of $1.1 billion to $1.5 billion.