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Unaudited interim results for the six months ended 31 December 2018
IMPERIAL LOGISTICS LIMITED
Registration number: 1946/021048/06
Ordinary share code: IPL
ISIN: ZAE000067211
Unaudited interim results for the six months ended 31 December 2018
Our performance
Imperial Logistics Limited (Imperial Logistics or group) is mainly an African and Eurozone logistics provider of
outsourced integrated value-add logistics, supply chain management and route-to-market solutions - customised to
ensure the relevance and competitiveness of our clients. The group is listed on the JSE in South Africa and employs
approximately 30 000 people in 38 countries. Ranked among the top 25 global logistics providers, Imperial Logistics
has established capabilities in transportation, warehousing, distribution and synchronisation management and
expanding capabilities in international freight management, and operates in specific industry verticals
- consumer packaged goods, specialised manufacturing and mining, chemicals and energy, healthcare, automotive,
machinery and equipment and agriculture.
Group financial highlights
Continuing revenue*
+6%
to R26,6 billion
Continuing operating profit*
R1,3 billion
in line with H1 F2018
Continuing HEPS
+24%
to 300 cents per share
Continuing EPS
+57%
to 295 cents per share
Continuing free cash flow (post-maintenance capital expenditure) increased to
R258 million
from an outflow of R594 million in H1 F2018
Continuing free cash conversion of
44%
(H1 F2018: -126%)
Net debt to equity ratio of
52%
in line with June 2018 and significantly improved from 114% in December 2017
Continuing net debt EBITDA of
1,7x
for the 12-month period
Continuing return on equity
11,7%
(H1 F2018: 10,1%)
Continuing return on invested capital
12,2%
(H1 F2018: 11,7%)
Weighted average cost of capital
9,8%
(H1 F2018: 8,2%)
Interim cash dividend of
135 cents
per share; 45% of HEPS
Note: Return on equity (ROE), return on invested capital (ROIC) and weighted average cost of capital (WACC) are
calculated on a rolling 12-month basis.
* Excluding businesses held for sale in Imperial Logistics.
Results overview
Imperial Logistics performed satisfactorily in mixed trading conditions, supported by excellent results from
Logistics African Regions, offset by the underperformance in the consumer packaged goods (CPG) and healthcare businesses
in Logistics South Africa, and lower results from the automotive and express palletised distribution businesses in
Logistics International.
- Each division remains focused on concluding the rationalisation of their portfolios and improving efficiencies,
with an increased drive to significantly remove and reduce costs, which we anticipate will be concluded in H2 F2019
and the benefits of which will be fully realised in the 2020 financial year.
- Imperial Logistics' renewal rate across its divisions on existing contracts remains in excess of 90%, with an
encouraging pipeline of new opportunities supported by an excellent new contract gain rate. New business revenue of
approximately R4,0 billion was secured during the past 12 months, the full benefit of which should be realised in the
2020 financial year as contracts were concluded at various times during the period.
- Excluding businesses held for sale, Imperial Logistics recorded growth in revenue of 6% and operating profit remained
stable. Revenue* generated outside South Africa increased 10% to R18,8 billion (70% of group revenue) and operating
profit* generated outside South Africa increased 5% to R867 million (65% of group operating profit). A full
reconciliation from earnings to headline earnings is provided in the group financial performance section.
- Net working capital of R2,6 billion increased from R1,9 billion in June 2018, impacted mainly by higher inventory in
Logistics African Regions and an increase in trade and other receivables in Logistics International. We expect
working capital to normalise by June 2019.
- Net debt increased by 9% or R509 million when compared to June 2018 but was significantly lower when compared to the
prior period - mainly due to the recapitalisation of Imperial Logistics and the disposal of Schirm in F2018.
- Free cash flow from continuing operations increased to R258 million from an outflow of R594 million as the prior
period included significantly higher cash outflow arising from working capital movements.
- Motus unbundling: The unbundling of Motus was concluded in November 2018 and Motus is thus presented as a
discontinued operation in this set of results for the four months ending 31 October 2018, where stipulated.
The fair value of the distribution of R17 billion exceeded the net carrying value of Motus at 31 October 2018,
resulting in the recognition of a fair value gain of R4,2 billion in the statement of profit or loss.
* Excluding businesses held for sale in Imperial Logistics.
Operating context
Imperial Logistics' activities on the African continent produced 54% and 70% respectively of revenues and operating
profits during the six months to December 2018, with the remainder generated mainly in Europe and the United Kingdom.
Trading conditions in the business' diverse markets remain mixed.
Environment
South Africa
Notwithstanding the South African economy recording marginal growth in the latter part of calendar 2018, high
unemployment, higher VAT, fuel price increases and economic uncertainty ahead of the May 2019 national elections
collectively contributed to diminished consumer demand and affordability, resulting in most sectors being under
increasing pressure.
The ongoing challenging trading conditions have been exacerbated by a prolonged volatile Rand, which depreciated by 6%
on average against the US Dollar during the period, largely driven by external factors relating to emerging markets,
poor economic data, and policy and political concerns.
The impact of this lacklustre trading environment on Imperial Logistics' operating profit has been reduced volumes,
and ongoing competitive and client pressures, particularly in the consumer and manufacturing businesses. R8,2 billion or
30% of group revenue and R458 million or 35% of group operating profit was generated by the region in the six months to
31 December 2018.
Rest of Africa
Gradual improvement in domestic demand has enhanced economic prospects in certain sub-Saharan African countries. Our
primary positioning as a healthcare and CPG route-to-market partner has therefore stood us in good stead in the rest of
Africa where R6,3 billion or 24% of group revenue and R465 million or 35% of group operating profit was generated in the
six months to 31 December 2018.
Our businesses in Nigeria, Ghana and Mozambique performed well. However, recessionary conditions in Namibia and general
political uncertainty resulted in lower volumes and reduced margins. A slower than expected economic recovery in Kenya
depressed consumer demand, which hampered the performance of our Kenyan business.
Eurozone and United Kingdom (UK)
Our international operations generated R12,4 billion or 46% of group revenue and R402 million or 30% of group
operating profit in the six months to 31 December 2018.
Economic conditions in Europe were largely positive, supported by ongoing economic expansion in the EU. However,
certain sectors in which we operate - such as steel - remain under pressure. During the period, our shipping operation
experienced the negative impact of the lowest water levels on the River Rhine in Germany in recorded history, however
water levels normalised during January 2019. The implementation of the Worldwide Harmonised Light Vehicle Test Procedure
(WLTP) resulted in significantly lower vehicle production volumes in Logistics International's automotive business in
H1 F2019. Production volumes are recovering in H2 F2019 but are still not at optimal levels. US tariffs could result in
reduced exports for our clients in the automotive and steel industries.
In the UK, Brexit has increased economic and political uncertainty, with the potential risk of depressing consumer
demand and activity, and consequently affecting the performance of the express palletised distribution business.
Divisional performance
Logistics South Africa
% %
change on change on
HY1 2019 HY1 2018* HY1 2018 HY2 2018* HY2 2018
Revenue (Rm) 8 153 8 361 (2) 7 753 5
Operating profit (Rm) 457 504 (9) 428 7
Operating margin (%) 5,6 6,0 5,5
Return on invested capital (ROIC) (%) 12,2 13,4
Weighted average cost of capital (%) 10,9 11,1
Targeted ROIC (WACC +3%) 13,9 14,1
Debt/equity ratio (%) 63 67
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and
eliminations.
* Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Imperial Logistics South Africa delivered an unsatisfactory performance in challenging market conditions, reducing
revenue by 2% and operating profit by 9%. Results were negatively impacted by depressed volumes and lower consumer demand
mainly in the CPG and healthcare businesses, partly offset by good results from the transport and warehousing and supply
chain management and consulting businesses. The transport and warehousing, and specialised freight segments also
experienced lower volumes during the six months but good cost management, rationalisation and consolidation of operations
mitigated this. With the exception of the CPG and healthcare businesses where margins were significantly affected by lower
revenues, most other businesses were largely able to sustain their operating margins through rationalising and improving
efficiencies, and reducing costs significantly.
Net capital expenditure increased to R435 million from R347 million in the prior period and comprised mainly of
expanding the fleet to accommodate new contracts, as well as the replacement of transport fleet.
The net debt to equity ratio improved from 67% in the prior period to 63% mainly as a result of the proceeds of R200 million
received from Afropulse through the broad-based black economic empowerment (BBBEE) transaction. The ROIC of 12,2 % reduced
from 13,4% in the prior period mainly due to lower profits and is below the target hurdle rate of WACC +3%.
Logistics African Regions
% %
change on change on
HY1 2019 HY1 2018* HY1 2018 HY2 2018* HY2 2018
Revenue (Rm) 6 339 5 385 18 5 076 25
Operating profit (Rm) 465 401 16 325 43
Operating margin (%) 7,3 7,4 6,4
Return on invested capital (%) 17,8 20,8
Weighted average cost of capital (%) 14,2 8,2
Targeted ROIC (WACC +3%) 17,2 11,2
Debt/equity ratio (%) 40 138
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and
eliminations.
* Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Imperial Logistics African Regions delivered an excellent set of results, increasing revenue and operating profit by
18% and 16% respectively, despite mixed trading conditions. Results were supported by the acquisition of CB Enterprises,
a CPG route-to-market business in Namibia which has been included for the full six months, and solid performances from
our healthcare businesses in West Africa, where we continue to operate as the leading distributor of pharmaceuticals in
Nigeria and Ghana. Our sourcing and procurement business (Imres) also contributed positively, resulting from a strong
order book and long-term contract gains despite some margin pressure. Results were also boosted by substantial project
work in the donor aid market undertaken during the period. The average weakening of the Rand by 6% against the US Dollar
positively enhanced the Rand performance during the period.
Surgipharm continues to grow revenue and operating profit but its performance was hindered by the slow economic
recovery in Kenya and increased parallel imports in the region. Ongoing mitigation efforts include the on-boarding of
new principals and the expansion of product categories to diversify the product mix in this business.
Our CPG route-to-market business in Mozambique performed well, while the Namibian operations performed satisfactorily
in ongoing recessionary conditions.
The managed solutions business was negatively impacted by lower chrome volumes, challenging economic conditions in
Zimbabwe and by lower volumes from aid organisations.
Net capital expenditure of R26 million was incurred during the first half. The comparative period's capital
expenditure included by property disposals.
The division was recapitalised during the last quarter of F2018, resulting in a significantly lower net debt to equity
ratio of 40% at the end of December 2018 compared to 138% in the prior period.
ROIC at 17,8% declined from 20,8% mainly due to the normalisation of working capital and higher inventory levels, but
exceeds the target hurdle rate of WACC +3%.
Logistics International
% %
change on change on
HY1 2019 HY1 2018 HY1 2018 HY2 2018 HY2 2018
Revenue (Euro million) 760 733* 4 780 (3)
Operating profit (Euro million) 24,4 27,0 (10) 44,0 (45)
Operating margin (%) 3,2 3,7 5,6
Revenue (Rm) 12 412 11 592* 7 11 608 7
Operating profit (Rm) 402 434 (8) 650 (38)
Operating margin (%) 3,2 3,8 5,6
Return on invested capital (%) 9,8 8,3
Weighted average cost of capital (%) 7,3 5,4
Targeted ROIC (WACC +2%) 9,3 7,4
Debt/equity ratio (%) 59 133
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and
eliminations.
*Restated, refer to note 4.
Logistics International's revenue in Euros increased by 4% while operating profit declined by 10%. Revenue increased
by 7% and operating profit decreased by 8% in Rands, which was 3% weaker on average against the Euro during the period.
Results were hampered by the impact of the implementation of WLTP that resulted in significantly lower vehicle production
volumes in the automotive business in H1 F2019. However, production volumes are recovering in H2 F2019 but are still
not at optimal levels. Excluding the impact of WLTP, operating profit would have improved year on year.
During the period, the performance of the European inland shipping business was negatively impacted by the lowest
water levels on the River Rhine in recorded history, but this impact was largely mitigated through the business increasing
prices and receiving partial compensation from customers for the losses incurred. The Road Liquid business benefited,
however, from increased volumes subsequently shifted from river to road. The retail, steel and industrial segments
delivered unsatisfactory results resulting from lower volumes.
Results for the six months were supported by contract renewals and new business gains in automotive and a good
performance from the international shipping operations in South America.
While the express palletised distribution business (Palletways) continues to contribute positively to revenue growth,
its profitability was depressed by higher costs in the UK due to imbalanced traffic flows and the increased economic
uncertainty (due to Brexit) placing pressure on members. The recruitment of additional members and a revised pricing model
will reduce the pressure on costs and members will be better able to handle the increased volumes and larger network.
Net capital expenditure increased to R240 million from R210 million in H1 F2018 and included the replacement of our
specialised chemical and gas fleet.
The net debt to equity ratio improved significantly from 133% in the prior period to 59% due mainly to the proceeds
from the disposal of Schirm in H2 F2018. The ROIC of 9,8% improved markedly from 8,3% and exceeds the target hurdle rate
of WACC +2% for the region.
Group financial performance
Group profit or loss (extracts)
Rm HY1 2019 HY1 2018 % change
Continuing operations
Revenue 26 637 26 320 1
Net operating expenses (24 760) (24 386) 2
Operating profit 1 325 1 376 (4)
Operating margin 5,0% 5,2%
Amortisation of intangibles arising on business combinations (196) (220)
Recoupments from sale of properties net of impairments 4 (3)
Foreign exchange losses (21) (31)
Other non-operating items (8) (117)
Net finance cost (223) (355) (37)
Share of results of associates and joint ventures 32 28
Profit before tax 913 678 35
Income tax expense (272) (227) 20
Profit from continuing operations 641 451 42
Discontinued operations - Motus 5 240 916 472
Net profit for the period 5 881 1 367 330
Attributable to owners of Imperial Logistics 5 815 1 306
Continuing operations 576 366 57
Discontinued operations 5 239 940
Effective tax rate (%)* 30,9 34,9
ROIC (%)* 12,2 11,7
Actual WACC (%)* 9,8 8,2
Note: WACC for each subdivision of the group is calculated by making appropriate country/regional risk adjustments
for the cost of equity and pricing for the cost of debt depending on jurisdiction. The group WACC calculation is a
weighted average of the respective subdivisional WACCs. See glossary of terms. ROIC is calculated based on taxed
operating profit plus income from associates divided by the 12-month average invested capital (total equity and net
interest-bearing borrowings).
* Calculated on continuing operations.
Operating profit decreased by 4% or R51 million mainly due to businesses sold in the prior year.
The increase in profit before tax of 35% or R235 million resulted from:
- Other non-operating items decreased by R109 million to R8 million. The R109 million in the prior year includes
goodwill impairment of R22 million and loss on disposal of Schirm, Laabs and Transport Holdings Botswana
totalling R93 million.
- Net finance costs decreased by R132 million due to lower average debt levels as a result of the recapitalisation
of Logistics prior to the unbundling of Motus as well as a once-off gain from the redemption of the preference
shares amounting to R63 million which was partially offset by a loss of R14 million on the settlement of the bonds.
The profit from discontinued operations comprises the profit from Motus for the four months to 31 October 2018, as
well as the fair value gain arising from the revaluation of Motus on the date of unbundling.
The effective tax rate decreased from 34,9% to 30,9%, due to the gain arising from the redemption of the preference
shares that is not taxable and certain non-deductible expenses in the prior period not recurring in the current period.
Reconciliation of continuing earnings to continuing headline earnings
Rm HY1 2019 HY1 2018 % change
Continuing earnings attributable to owners of Imperial Logistics 576 366 57
Profit on disposal of assets net of recoupments (19) (14) (36)
Impairment of goodwill 65 22 195
(Profit)/loss on sale of subsidiaries and businesses (64) 93
Tax/NCI effects of headline earnings adjustments 26 2
Continuing headline earnings 584 469 25
Continuing earnings per share
Rm HY1 2019 HY1 2018 % change
Earnings per share (EPS) 295 188 57
Headline earnings per share (HEPS) 300 241 24
Financial position
December June
Rm 2018 2018 % change
Goodwill and intangible assets 8 554 8 575
Property, plant and equipment 3 192 3 042 5
Investment in associates and joint ventures 597 752 (21)
Transport fleet 5 777 5 358 8
Investments and other financial assets 217 206 5
Net working capital 2 564 1 881 36
Net assets held for distribution to owners of Imperial 11 683
Net income tax liabilities (419) (226) 85
Net debt (June 2018 includes preference shares) (6 230) (5 721) 9
Other liabilities (2 360) (2 425) (3)
Total equity 11 892 23 125 (49)
Total assets 34 573 70 503 (51)
Total liabilities (22 681) (47 378) (52)
Property, plant and equipment increased due to the weakening of the Rand and net additions offset by depreciation.
Investment in associates and joint ventures declined mainly due to the disposal of Gruber.
Transport fleet increased mainly due to fleet expansion and replacement in Logistics South Africa and specialised
new fleet acquired in Logistics International, partially offset by depreciation and proceeds.
Net working capital of R2,6 billion increased from R1,9 billion in June 2018, impacted mainly by higher inventory
in Logistics African Regions and an increase in trade and other receivables in Logistics International.
Other financial liabilities decreased by R100 million resulting mainly from the repayment of a non-controllong
interest (NCI) loan in Surgipharm.
Net income tax liabilities increased as a result of the deconsolidation of tax assets of the remaining Imperial
group entities due to the unbundling of Motus.
Movement in total equity for the six months to December 2018
Rm HY1 2019
Opening balance 23 125
Total comprehensive income for the year 6 642
Share-based equity movement 38
Dividends paid (911)
Ordinary dividends distribution in specie on unbundling of Motus (17 036)
Repurchase of 1 442 683 shares at an average price of R67,14 plus transaction costs (97)
Non-controlling interest acquired, net of disposals and shares issued 232
Net decrease in non-controlling interest through buy-outs (101)
Closing balance 11 892
The decrease of R11 233 million in equity was mainly due to the R17 036 million dividend distribution in specie of
Motus, dividends paid to shareholders and non-controlling interests of R911 million, offset by comprehensive income
of R6 642 million and R200 million received from Afropulse in relation to the BBBEE transaction.
Cash flow (including Motus)
Rm HY1 2019 HY1 2018 % change
Cash generated by operations before movements in working capital 3 622 4 231 (14)
Movements in net working capital (excludes currency movements and
net acquisitions) (2 040) (208) 771
Cash generated after working capital movements 1 582 4 023 (55)
Interest and taxes paid (933) (1 320) (29)
Cash generated by operations before capital expenditure on rental assets 649 2 703 (68)
Capital expenditure on rental assets for Motus only (1 172) (1 161) 1
Cash flows from operating activities (523) 1 542 (119)
- Motus cash flows from operating activities (1 286) 1 439
Net acquisitions of subsidiaries and businesses (1 042) (100)
Capital expenditure (non-rental assets) (879) (265) 232
Net movement in associates, loans and non-current financial instruments 156 (516) (130)
Cash flows from investing activities (723) (1 823) (60)
- Motus cash flows from investing activities (164) (1 101)
Dividends paid (including NCI) (911) (781) 17
Cash resources distributed as dividend in specie (1 058) 100
Share scheme hedge and shares repurchased (153) (470) (67)
Change in non-controlling interest (80) (705) (89)
Capital raised from non-controlling interest 200 223 (10)
Cash flows from financing activities before net debt movement (2 002) (1 733) 16
- Motus cash flows from financing activities before net debt movement 995 (575)
Increase in net debt (excludes net acquisitions) (3 248) (2 014) 50
Continuing free cash flow 258 (598)
Continuing free cash flow to headline earnings 0,4 -
The following are the significant cash flow items for continuing operations:
Cash generated by operations before capital expenditure was R763 million (HY1 2018: R85 million).
The cash flow benefited from a 20% lower finance cost of R285 million (H1 F2018: R357 million), due to lower
debt levels and a once-off gain from the redemption of the preference shares. Tax paid increased to R363 million
from R314 million.
Net working capital movements resulted in an outflow of R580 million, impacted mainly by higher inventory in
Logistics African Regions and an increase in trade and other receivables in Logistics International.
Net capital expenditure increased to R700 million from R285 million in H1 F2018 mainly due to higher investment
in fleet expansion and replacement in Logistics South Africa and specialised new fleet acquired in Logistics
International. Furthermore, the prior period benefited from property disposals.
Dividends, including payments to non-controlling interest, amounted to R911 million during the period.
Cash resources distributed as part of the Motus unbundling was R1 058 million.
In total R200 million was raised on the Afropulse BBBEE transaction while R80 million was paid in the buy-out of
non-controlling interest in KWS Carriers and Eco Health.
Proceeds from the sale of our international associate, Gruber, was R226 million.
Other significant cash flow items included the settlement of the preference shares which resulted in a cash
outflow of R378 million.
Free cash flow increased to R258 million inflow from a R598 million outflow in the prior period.
Liquidity
The group's liquidity position is strong with R11,0 billion of unutilised banking facilities, excluding asset backed
finance facilities. 90% of the group debt is long term in nature and 54% of the debt is at fixed rates. The group's
blended cost of debt is 6,1% (pre-tax).
As all listed bonds were redeemed on 6 August 2018, all debt requirements were accommodated in the banking
market. There is therefore no requirement for a formal credit rating at this stage.
Dividend
An interim cash dividend of 135 cents per ordinary share has been declared, in line with our targeted pay-out ratio of
45% of HEPS, subject to prevailing circumstances.
Acquisitions and disposals
There were no material acquisitions or disposals concluded in the period under review.
Strategy and prospects
Progress against strategy
The strategic priorities of each division are underpinned by our vision of becoming an internationally acclaimed tier
one provider of outsourced value-add logistics, supply chain management and route-to-market solutions, with the common
aim of achieving a "One Imperial Logistics" brand, identity and culture.
Furthermore, a core intention of our strategy is to move from a portfolio of distinct regional businesses to
leveraging the capabilities we have in each region to deliver integrated solutions to clients within selected industries,
across our regional platforms and into new markets. We continue to assess the potential for regional expansion and industry
capabilities transfer to other regions and we have appointed industry experts with global expertise and focus, within each
of our key industries, to facilitate this process. Specifically, South Africa and African Regions' capabilities will be
leveraged to expand into new markets, and our specialised capabilities in specific market sectors in Europe will provide
the platform for further international expansion.
Strategic priorities for each division and the progress recorded during the period is outlined below:
Logistics South Africa
The division is well positioned to retain and expand contracts with existing and new clients through customisation,
innovation and service excellence; to leverage BBBEE credentials to maintain market leadership and further accelerate
transformation; exit unviable contracts and operations; and drive organic revenue growth through a combination of asset
light expansion and asset intensive investments that yield the required returns.
Progress against each of these stated priorities is evidenced in multiple deliverables. Most notably, the conclusion
of the BBBEE transaction with the Afropulse Group (Proprietary) Limited (Afropulse), a wholly black women-owned business
to form Imperial Logistics Advance - a 51% black-owned and more than 30% black women-owned enterprise focusing on the
energy, mining and chemicals industries. Afropulse acquired 25% of Imperial Logistics Advance for R200 million.
Despite the challenging trading environment in South Africa, our gain rate on new contracts and renewal rates on
existing contracts remain high, with an encouraging pipeline of new opportunities. We continue to rationalise our operations
and as such, we have exited unprofitable contracts and consolidated some of the cold storage and ambient facilities in
the consumer packaged goods (CPG) business, which will result in reduced inefficiencies and significant cost savings.
Initiatives undertaken in the six-month period to reduce costs, and which are ongoing in the second half, included reducing
the fleet size significantly, exiting certain property leases, consolidating properties and reducing overheads.
Logistics African Regions
The division continues to exploit growth opportunities that complement and expand its existing footprint in healthcare
and CPG. Its strategic priorities are to leverage a unique ability to provide brand owners with access to fragmented
markets through integrated solutions, unrivalled scale and multi-regional distribution; to expand its managed solutions
offerings; and grow its multi-market aggregation offering to become the single strategic partner to multinational clients
in healthcare and CPG.
Contract gains in the CPG and healthcare industries, and the expansion of the managed solutions offering into Kenya and
Mozambique offer tangible evidence of progress against these set strategic initiatives. Continuous progress has been made
on our multi-market aggregation solution over the last few months which has seen us further partner with multinational
clients seeking an expanding footprint into new markets, supply chain efficiencies as well as good governance and compliance.
Logistics International
The division will leverage specialised capabilities to strengthen client relationships in specific market sectors,
underpinned by a differentiated approach to digitalisation and innovation. Likewise, it will seek out opportunities to
expand specialist capabilities into developing markets in Europe and Asia and initiate a strong focus on improved returns
through business and contract rationalisation, capability alignment, reduced asset intensity and overhead reduction. The
business will invest in commercial and sales capabilities to build awareness and relationships to drive sustainable
revenue growth.
Significant savings will be realised through substantial headcount reductions in administrative functions,
improvements in process efficiencies and stronger collaboration in purchasing projects. The benefits of this initiative
will be realised in the next financial year. Multiple, senior appointments including that of a new Chief Executive Officer
(CEO), Chief Commercial Officer and Chief Operating Officer over the past six months, will contribute significantly to the
business bolstering its commercial and sales capabilities in order to drive contract gains and renewal rates, and
subsequently enhancing its specialised capabilities in specific market sectors. The expansion of specific capabilities
through strategic acquisitions and portfolio enhancement, including the potential expansion into international freight
management, are in progress, and the market will be informed as and when any material opportunities are concluded.
Investment case
With its strong regional growth platforms, specialist capabilities customised to serve multinational clients in
attractive industries, and "asset-right" business model, Imperial Logistics is expected to deliver sustainable revenue
growth, enhanced profitability and returns and a dividend of approximately 45% of HEPS. Improvements in asset mix and cash
flow, and plans to achieve targeted returns on capital in excess of weighted average cost of capital, will support this
expectation.
Imperial Logistics' key investment highlights include:
- Leading positions in regional markets provide platforms for sustainable growth: market leader in South Africa, a
leader in selected industries (consumer packaged goods and pharmaceuticals) in the African countries in which it
operates, and in certain specialised capabilities in Europe.
- Competitive differentiation centred on agility and customisation: specialised capabilities across the value chain
enable customised and integrated solutions, with service offerings and operating models tailored to client
requirements and market maturity.
- Trusted partner to multinational clients: quality contract portfolio in high-growth and defensive industries, with
partnerships demonstrating reach, capabilities, assets, innovation and legitimacy.
- "Asset-right" business model underpins financial profile: more optimal asset mix and targeted returns on capital,
support prospects for sustainable revenue growth and enhanced profitability and cash generation.
- Vision to unlock benefits of "one Imperial Logistics": strategy focused on sustainable revenue growth, enhanced
returns and improved competitiveness, with initiatives to drive substantial organic growth enabled by a differentiated
approach to digitalisation and innovation, and enhanced financial flexibility supporting selective acquisitive growth.
- Track record for consistent growth: proven ability to acquire, develop and leverage specialist capabilities to
establish growth platforms in emerging and advanced markets.
- Strong and committed leadership: highly experienced, long-serving management team and a strong independent board.
Prospects
Imperial Logistics is well positioned to capitalise on the opportunities in our markets and manage the risks, in order
to deliver on our strategic, financial and operational objectives and targets over the coming years.
The balance sheet of the business remains strong, with sufficient headroom in terms of capacity and liquidity.
At this stage, our expectations for H2 F2019 are as follows:
- Logistics South Africa to deliver performance below that of the prior period due to lower consumer demand impacting
the CPG business, the low-growth economic environment in South Africa and costs associated with the business
rationalisation and restructure.
- Growth from Logistics African Regions which will be supported by new business, notwithstanding political instability
that may arise from the upcoming elections in various countries in the region.
- Logistics International to deliver results that are lower than the prior period impacted mainly by the costs
associated with the business restructure and weaker performances from the express palletised distribution and automotive
businesses.
- HEPS growth to be negatively impacted by:
- Weaker operational performance and costs associated with business rationalisation and restructure.
- The finance cost benefit from the recapitalisation and once-off gain from the redemption of the preference shares
which was realised in H1 F2019, will not reoccur in H2 F2019.
For the financial year to 30 June 2019, subject to stable currencies in the economies in which we operate, we expect
Imperial Logistics, excluding businesses held for sale, to deliver:
- Higher revenue than the prior year.
- Lower operating profit than the prior year.
- HEPS in line with the prior year.
The far-reaching benefits of the portfolio rationalisation and organisational restructure that we undertook more than
four years ago and continue in F2019, new contract gains, potential acquisitions and an increased focus on removing and
reducing complexities and costs significantly in all businesses, will be realised in the 2020 financial year.
Governance matters
Remuneration policy
Shareholders are aware that at the company's annual general meeting on 30 October 2018, 51,84% of the vote cast by
Imperial shareholders were in favour of ordinary resolution number 6 - implementation of remuneration policy, less
than the 75% approval rate. As such the Chairman of the board, the chairman of the remuneration committee and management
have been engaging with material and concerned shareholders to address concerns on the existing remuneration policy. These
concerns are given attention at board level and are being addressed appropriately through certain policy amendments.
Shareholders will be updated once the shareholder engagement process has been concluded.
Executive director changes
As previously announced, Marius Swanepoel retired as CEO of Imperial Logistics on 1 February 2019 and Mohammed Akoojee
succeeded him on the same date. Marius will continue to serve as an executive director until 30 June 2019 and remain in
the employ of Imperial Logistics until 31 December 2019, responsible for special projects and available for strategic
counsel to management.
Appreciation
Imperial Logistics has entered an exciting new era as an independently listed company. Thank you to our 30 000
colleagues working in 38 countries that continue to contribute to this remarkable business. The multifaceted restructuring
that preceded this transition was the culmination of more than four years of planning and hard work and we extend our
particular gratitude to all those that made this complex and ambitious evolution possible.
1 February 2019 marked another milestone for the business, with the retirement of Marius Swanepoel as CEO. We will
have further opportunities to mark his legacy but wish to extend our deep appreciation for his invaluable contribution,
mentorship and gracious leadership.
Finally, we thank our owners and funders for their continued support.
Mohammed Akoojee George de Beer
Chief Executive Officer Chief Financial Officer
28 February 2019
The financial information herein has not been reviewed or reported on by Imperial Logistics' auditors.
Declaration of interim ordinary dividend
for the six months ended 31 December 2018
Notice is hereby given that a gross interim ordinary dividend in the amount of 135,00000 cents per ordinary share has
been declared by the board of Imperial, payable to the holders of the 201 971 450 ordinary shares. The dividend will be
paid out of income reserves.
The ordinary dividend will be subject to a local dividend tax rate of 20%. The net ordinary dividend, to those
shareholders who are not exempt from paying dividend tax, is therefore 108,00000 cents per share.
The company has determined the following salient dates for the payment of the ordinary dividend:
2019
Last day for ordinary shares to trade cum ordinary dividend Monday, 18 March
Ordinary shares commence trading ex-ordinary dividend Tuesday, 19 March
Record date Friday, 22 March
Payment date Monday, 25 March
The company's income tax number is 9825178719.
Share certificates may not be dematerialised/rematerialised between Tuesday, 19 March 2019 and Friday, 22 March 2019,
both days inclusive.
On Monday, 25 March 2019, amounts due in respect of the ordinary dividend will be electronically transferred to the
bank accounts of certificated shareholders that utilise this facility. In respect of those who do not, cheques dated
25 March 2019 will be posted on or about that date. Shareholders who have dematerialised their shares will also have
their accounts, held at their CSDP or broker, credited on Monday, 25 March 2019.
On behalf of the board
Ra Venter
Group Company Secretary
26 February 2019
Condensed consolidated statement of profit or loss
for the six months ended 31 December 2018
Unaudited Unaudited Audited
six months six months financial
ended ended year ended
% December December June
Rm Notes change 2018 2017* 2018
Continuing operations - Imperial Logistics
Revenue 1 26 637 26 320 51 303
Net operating expenses (24 760) (24 386) (47 408)
Profit from operations before depreciation
and recoupments 1 877 1 934 3 895
Depreciation, amortisation, impairments and recoupments (552) (558) (1 082)
Operating profit (4) 1 325 1 376 2 813
Recoupments from sale of properties, net of impairments 4 (3) 22
Amortisation of intangible assets arising on
business combinations (196) (220) (417)
Foreign exchange losses (21) (31) (50)
Other non-operating items 8 (8) (117) (113)
Profit before net finance costs 1 104 1 005 2 255
Net finance cost 9 (37) (223) (355) (649)
Profit before share of results of associates and
joint ventures 881 650 1 606
Share of results of associates and joint ventures 32 28 56
Profit before tax 913 678 1 662
Income tax expense (272) (227) (566)
Profit for the period from continuing operations 42 641 451 1 096
Discontinued operations - Motus
Profit for the period from discontinued operations 5 240 916 2 312
Net profit for the period 5 881 1 367 3 408
Net profit attributable to:
Owners of Imperial 5 815 1 306 3 273
- Continuing operations 576 366 928
- Discontinued operations 5 239 940 2 345
Non-controlling interest 66 61 135
- Continuing operations 65 85 168
- Discontinued operations 1 (24) (33)
Earnings per share (cents)
Continuing operations
- Basic 57 295 188 477
- Diluted 57 287 183 463
Discontinued operations
- Basic 2 687 483 1 204
- Diluted 2 616 470 1 171
Total operations
- Basic 344 2 982 671 1 681
- Diluted 345 2 903 653 1 634
* Represented for discontinued operations (Motus). Restated revenue and net operating expenses of continuing
operations, refer to note 4.
Condensed consolidated statement of comprehensive income
for the six months ended 31 December 2018
Unaudited Unaudited Audited
six months six months financial
ended ended year ended
December December June
Rm 2018 2017 2018
Net profit for the period 5 881 1 367 3 408
Other comprehensive income (loss) 761 (523) 655
Items that may be reclassified subsequently to profit or loss 744 (523) 722
Exchange gains (losses) arising on translation of foreign operations 542 (324) 538
Movement in hedge accounting reserve 179 (319) 301
Income tax relating to items that may be classified to profit or loss 23 120 (117)
Items that may not be reclassified subsequently to profit or loss 17 (67)
Remeasurement of defined benefit obligations (75)
Income tax on remeasurement of defined benefit obligations 17 8
Total comprehensive income for the period 6 642 844 4 063
Total comprehensive income attributable to:
Owners of Imperial 6 559 806 3 899
Non-controlling interest 83 38 164
6 642 844 4 063
Earnings per share information
for the six months ended 31 December 2018
Unaudited Unaudited Audited
six months six months financial
ended ended year ended
December December June
Rm % change 2018 2017* 2018
Headline earnings reconciliation
Earnings - total operations 345 5 815 1 306 3 273
Recoupment for the disposal of property, plant and
equipment (IAS 16) (28) (64) (809)
Loss on disposal of intangible assets (IAS 38) 5
Impairment of property, plant and equipment (IAS 36) 9 27 117
Impairment of intangible assets (IAS 36) 9 15
Impairment of goodwill (IAS 36) 65 22 92
Gain or impairment of investment in associates and joint
ventures (IAS 28) (65) 8
Loss on disposal of subsidiaries and businesses (IFRS 10) 1 18 147
Remeasurements included in share of result of associates (6)
Post-tax gain on discontinuation of Motus (4 187)
Impairment loss on assets of disposal groups 72
Tax effects of remeasurements 26 7 221
Non-controlling interest share of remeasurements 1 (6)
Headline earnings - total operations 17 1 637 1 397 3 057
Headline earnings per share (cents)*
Continuing operations
- Basic 24 300 241 543
- Diluted 24 292 235 527
Discontinued operations^
- Basic 13 539 476 1 027
- Diluted 13 525 463 999
Total operations
- Basic 17 839 717 1 570
- Diluted 17 817 698 1 526
Additional information
Net asset value per share (cents) 5 707 10 179 11 464
Dividend per ordinary share (cents) 135 323 710
Number of ordinary shares in issue (million)
- Total shares 202,0 201,1 202,0
- Net of shares repurchased 199,5 198,0 198,8
- Weighted average for basic 195,0 194,7 194,7
- Weighted average for diluted 200,3 200,2 200,3
Number of other shares (million)
- Deferred ordinary shares to convert to ordinary shares 5,8 6,7 5,8
* Represented for discontinued operations (Motus).
^ As a discontinued operation the results of Motus, in these financial statements, excludes depreciation.
Condensed consolidated statement of financial position
at 31 December 2018
Unaudited Unaudited Audited
31 December 31 December 30 June
Rm Notes 2018 2017 2018
ASSETS
Goodwill and intangible assets 10 8 554 9 172 8 575
Investment in associates and joint ventures 597 1 204 752
Property, plant and equipment 3 192 9 667 3 042
Transport fleet 5 777 5 345 5 358
Deferred tax assets 591 1 736 783
Investments and other financial assets 217 1 213 206
Vehicles for hire 4 489
Inventories 2 464 16 803 2 194
Tax in advance 363 409 364
Trade and other receivables 10 906 14 606 9 774
Cash resources 11 1 912 2 758 2 818
Assets held for distribution to owners of Imperial 36 637
Assets of disposal groups 3 097
Total assets 34 573 70 499 70 503
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 1 030 1 030 1 030
Shares repurchased (523) (547) (560)
Other reserves 928 (1 102) 271
Retained earnings 9 950 20 773 22 050
Attributable to owners of Imperial 11 385 20 154 22 791
Put arrangement over non-controlling interest (531) (521) (566)
Non-controlling interest 1 038 820 900
Total equity 11 892 20 453 23 125
Liabilities
Non-redeemable non-participating preference shares 441 441
Retirement benefit obligation 1 251 1 046 1 216
Interest-bearing borrowings 8 142 19 566 8 098
Maintenance and warranty contracts 2 953
Deferred tax liabilities 1 006 1 155 1 137
Other financial liabilities 1 109 1 275 1 209
Trade, other payables and provisions 10 806 22 525 10 087
Current tax liabilities 367 458 236
Liabilities held for distribution to owners of Imperial 24 954
Liabilities associated with businesses held for sale 627
Total liabilities 22 681 50 046 47 378
Total equity and liabilities 34 573 70 499 70 503
Condensed consolidated statement of changes in equity
for the six months ended 31 December 2018
Share Shares Other Retained
capital and repurchased reserves earnings
premium
Rm
At 30 June 2017 - Audited 1 030 (574) 24 20 262
Total comprehensive income for the period (500) 1 306
Share-based cost charged to profit or loss 89
Share-based equity reserve transferred to
retained earnings on vesting 146 (146)
Shares cancelled and delivered to settle
share-based obligations 140 (140)
Share-based equity reserve hedge cost (74)
Ordinary dividends paid (649)
Repurchase of 533 772 shares at an average price of
R212.49 plus transaction costs (113)
Non-controlling interest acquired, net of disposals
and shares issued
Net decrease in non-controlling interest through buy-outs (647)
Non-controlling interest share of dividends
At 31 December 2017 - Unaudited 1 030 (547) (1 102) 20 773
Total comprehensive income for the period 1 193 1 900
Share-based cost charged to profit or loss 130
Share-based equity reserve transferred to retained earnings
on vesting (11) 11
Shares cancelled and delivered to settle share-based
obligations 30 (30)
Share-based equity reserve hedge cost 42
Ordinary dividends paid (636)
Repurchase of 179 085 shares at an average price of R240,10
plus transaction costs (43)
Non-controlling interest acquired, net of disposals and
shares issued
Net decrease in non-controlling interest through buy-outs 51
Realisation on disposal of subsidiaries (2) 2
Non-controlling interest share of dividends
At 30 June 2018 - Audited 1 030 (560) 271 22 050
Total comprehensive income for the period 727 5 832
Share-based cost charged to profit or loss 91
Share-based equity reserve transferred to retained
earnings on vesting 35 (35)
Shares cancelled and delivered to settle share-based obligations 134 (134)
Share-based equity reserve hedge cost (40)
Transfer of share payment reserve to share-based payment liability (13)
Transfer from statutory reserve to retained earnings 1 (1)
Ordinary dividends paid (767)
Ordinary dividends distribution in specie on unbundling of Motus (17 036)
Repurchase of 1 442 683 shares at an average price of R67,14 plus
transaction costs (97) (97)
Non-controlling interest acquired, net of disposals and shares issued
Net decrease in non-controlling interest through buy-outs (103)
Realisation on disposal of subsidiaries 93 (93)
Non-controlling interest share of dividends
At 31 December 2018 - Unaudited 1 030 (523) 928 9 950
Condensed consolidated statement of changes in equity (continued)
for the six months ended 31 December 2018
Attributable Put
to owners arrangement
of Imperial over
non-controlling Non-controlling Total
Rm interest interest equity
At 30 June 2017 - Audited 20 742 (1 148) 667 20 261
Total comprehensive income for the period 806 38 844
Share-based cost charged to profit or loss 89 89
Share-based equity reserve transferred to
retained earnings on vesting
Shares cancelled and delivered to settle
share-based obligations
Share-based equity reserve hedge cost (74) (1) (75)
Ordinary dividends paid (649) (649)
Repurchase of 533 772 shares at an average price of
R212.49 plus transaction costs (113) (113)
Non-controlling interest acquired, net of disposals
and shares issued 295 295
Net decrease in non-controlling interest through buy-outs (647) 627 (48) (68)
Non-controlling interest share of dividends (131) (131)
At 31 December 2017 - Unaudited 20 154 (521) 820 20 453
Total comprehensive income for the period 3 093 126 3 219
Share-based cost charged to profit or loss 130 130
Share-based equity reserve transferred to retained earnings
on vesting
Shares cancelled and delivered to settle share-based
obligations
Share-based equity reserve hedge cost 42 1 43
Ordinary dividends paid (636) (636)
Repurchase of 179 085 shares at an average price of R240,10
plus transaction costs (43) (43)
Non-controlling interest acquired, net of disposals and
shares issued 55 55
Net decrease in non-controlling interest through buy-outs 51 (45) (40) (34)
Realisation on disposal of subsidiaries
Non-controlling interest share of dividends (62) (62)
At 30 June 2018 - Audited 22 791 (566) 900 23 125
Total comprehensive income for the period 6 559 83 6 642
Share-based cost charged to profit or loss 91 91
Share-based equity reserve transferred to retained
earnings on vesting
Shares cancelled and delivered to settle share-based obligations
Share-based equity reserve hedge cost (40) (40)
Transfer of share payment reserve to share-based payment liability (13) (13)
Transfer from statutory reserve to retained earnings
Ordinary dividends paid (767) (767)
Ordinary dividends distribution in specie on unbundling of Motus (17 036) (17 036)
Repurchase of 1 442 683 shares at an average price of R67,14 plus
transaction costs (97) (97)
Non-controlling interest acquired, net of disposals and shares issued 232 232
Net decrease in non-controlling interest through buy-outs (103) 35 (33) (101)
Realisation on disposal of subsidiaries
Non-controlling interest share of dividends (144) (144)
At 31 December 2018 - Unaudited 11 385 (531) 1 038 11 892
Condensed consolidated statement of cash flows
for the six months ended 31 December 2018
Unaudited Unaudited Audited
six months six months financial
ended ended year ended
December December June
Rm Note 2018 2017 2018
Cash flows from operating activities
Cash generated by operations before movements in net working capital 3 622 4 231 8 721
Movements in net working capital (2 040) (208) 811
Cash generated by operations before interest and taxes paid 1 582 4 023 9 532
Net finance cost (528) (753) (1 386)
Tax paid (405) (567) (1 336)
Cash generated by operations before capital expenditure on rental assets 649 2 703 6 810
Capital expenditure - rental assets (1 172) (1 161) (1 079)
(523) 1 542 5 731
Cash flows from investing activities
Acquisition of subsidiaries and businesses (1 042) (1 211)
Disposal of subsidiaries and businesses 2 070
Expansion capital expenditure - excluding rental assets (260) 394 1 248
Net replacement capital expenditure - excluding rental assets (619) (659) (1 008)
Net movement in other associates and joint ventures 252 (204)
Net movement in investments, loans and other financial instruments (96) (312) (209)
(723) (1 823) 890
Cash flows from financing activities
Hedge cost premium paid (62) (357) (362)
Settlement of cross-currency swap instruments (200) (152)
Repurchase of ordinary shares (91) (113) (113)
Dividends paid (911) (781) (1 478)
Cash resources distributed as part of dividend in specie (1 058)
Purchase of non-controlling interests (80) (705) (684)
Capital raised from non-controlling interests 200 223 223
Settlement of non-redeemable, non-participating preference shares (378)
Net increase (decrease) in interest-bearing borrowings 1 202 570 (4 382)
(1 178) (1 363) (6 948)
Net decrease in cash resources (2 424) (1 644) (327)
Effects of exchange rate changes on cash resources in a foreign currency 35 (31) 129
Cash resources at beginning of period 4 301 4 499 4 499
Cash resources at end of period 11 1 912 2 824 4 301
Note: The distribution in specie of the group's interest in Motus Holdings Limited was a non-cash dividend to
shareholders. The above statement of cash flows includes cash flows of both continuing and discontinued operations. Refer to
note 12 for disclosures of the cash flows of the discontinued operations (Motus).
Notes to the condensed consolidated financial statements
for the six months ended 31 December 2018
1. Basis of preparation
The condensed consolidated financial statements have been prepared in accordance with the framework concepts
and recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its
Interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective for the
group at 31 December 2018 and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and financial reporting pronouncements as issued by the Financial Reporting Standards Council. The results are
presented in accordance with IAS 34 - Interim Financial Reporting and comply with the Listings Requirements of the
Johannesburg Stock Exchange Limited and the Companies Act of South Africa, 2008. These condensed consolidated
financial statements do not include all the information required for full annual financial statements and should
be read in conjunction with the consolidated annual financial statements as at and for the year ended 30 June 2018.
These condensed consolidated financial statements have been prepared under the supervision of WS Buckton, CA(SA)
and were approved by the board of directors on 26 February 2019.
2. Accounting policies
The accounting policies adopted and methods of computation used in the preparation of the condensed consolidated
financial statements are in accordance with IFRS and are consistent with those of the annual financial statements
for the year ended 30 June 2018, with the exception of the new and revised IFRS as noted in note 3.
3. IFRS standards that became effective during the period
IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers became effective to the group during
the reporting period. The adoption of these standards had no material impact on the amounts previously reported
hence no restatement of comparative information is required.
The group's revised policy regarding financial instruments and revenue are summarised below:
IFRS 9 - Financial Instruments
The group's financial assets that are held to collect contractual cash flows on specified dates are measured at
amortised cost. These include trade and other longer-term loan receivables and cash resources.
Interest-bearing borrowings, trade and other payables and other longer-term payables are measured at amortised
cost. The put option liabilities and contingent consideration liabilities, included in other financial
liabilities on the statement of financial position, are fair valued through profit or loss.
Derivative financial instruments are fair valued through profit or loss unless hedge accounting is applied in
which case they are fair valued through other comprehensive income.
Shares repurchased are measured at cost.
The above measurements are consistent to those applied in prior periods.
The group recognises a loss allowance for lifetime expected credit losses on financial assets in a way that
reflects an unbiased probable weighted amount, the time value of money and supportable information about
past events, current and future economic conditions.
IFRS 15 - Revenue from Contracts with Customers
The group recognises revenue from contracts with customers as it satisfies a performance obligation by delivering
the promised goods or services to the customer. The amount of revenue recognised is the transaction price allocated
to that performance obligation that at least compensates the group for the performance completed and to which it
is entitled to. Performance obligations regarding the group's revenue from supply chain management and value-add
logistics are satisfied overtime whereas revenue from route-to-market are recognised at a point in time.
A significant portion of the group's revenue is derived from contracts with customers in which the transfer of
control coincides with the fulfilment of performance obligations.
Route-to-market includes the sale of fast moving consumer goods and pharmaceutical products. Supply chain
management include supply chain management solution and synchronisation management whereas value-add logistics
consists of transportation, distribution and warehousing management as well as value added logistics solutions.
2018 2017
The group's revenue by service capability for the period can be summarised as follows: Rm Rm
Route-to-market 5 534 4 772
Supply chain management 3 060 3 628
Value-add logistics 18 043 17 920
26 637 26 320
4. Restatement of comparative information as result of error
Revenue for continuing operations for December 2017 has been restated. In 2017 inter-company revenue of R522 million
was incorrectly included in external revenue and as a consequence was not eliminated from the consolidated revenue.
This error originated from the International Logistics segment. The restatement had no impact on profits, cash flows
or the financial position, it only affected revenue and net operating expenses as detailed below:
Statement of profit or loss - Rm 2017
Revenue (decrease) (522)
Net operating expenses (decrease) 522
Profit from operations before depreciation and recoupments (no impact)
5. Significant transactions during the period
On 22 November 2018 Imperial distributed its interest in Motus Holdings Limited to its ordinary shareholders
by way of a distribution in specie such that each ordinary shareholder received one Motus share for every one
ordinary share held in Imperial. The distribution resulted in the deconsolidation of Motus.
The fair value of the distribution of R17 058 million was determined with reference to the unadjusted listed
price of Motus on 22 November 2018. As the distribution value exceeded the consolidated net asset value of Motus
a post-tax fair value gain of R4 187 million was recognised in profit or loss. The fair value gain is net of the
cost to distribute and together with the trading results of Motus is presented as a discontinued operation in
the condensed consolidated statement of profit or loss.
6. New and revised international financial reporting standards in issue but not yet effective
IFRS 16 - Leases
In terms of lessee accounting IFRS 16 - Leases introduces a single model and requires a lessee to recognise
assets and liabilities for all leases with a term longer than 12 months.
A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased
asset and a lease liability representing its obligation to make lease payments. Depreciation is recognised
on the right-of-use asset and interest on the lease liability.
The group's latest assessment determined that the right-of-use asset and lease liability to be recognised on
adoption of the standard will approximate R5 087 million and R5 533 million respectively. These amounts have
been revised from the initial assessment at the end of June 2018 primarily as a result of certain leases
being cancelled.
The provisional impact on the 30 June 2018 financial statements before taking tax and non-controlling interest
into consideration is summarised below. A completeness and accuracy review of the impact of IFRS 16 is ongoing.
Profit or loss - Rm Logistics Logistics Logistics
South African Inter-
Imperial Africa Regions national
Operating lease expense 1 038 342 71 625
Depreciation (867) (275) (48) (544)
Operating profit 171 67 23 81
Interest expense (307) (158) (37) (112)
Profit before tax (136) (91) (14) (31)
Financial position - Rm
Right-of-use assets 5 087 1 765 299 3 023
Total assets 5 087 1 765 299 3 023
Total equity (446) (239) (32) (175)
Lease obligations 5 533 2 004 331 3 198
Total equity and liabilities 5 087 1 765 299 3 023
In terms of lessor accounting IFRS 16 substantially carries forward the requirements in IAS 17 and
accordingly a lessor continues to account for its leases as operating leases or finance leases.
December December June
2018 2017 2018
7. Foreign exchange rates
The following major rates of exchange were used in
the translation of the groups foreign operations:
SA Rand:Euro
- Closing 16,46 14,77 16,01
- Average 16,33 15,79 15,34
SA Rand:US Dollar
- Closing 14,39 12,31 13,71
- Average 14,17 13,43 12,86
SA Rand:Pound Sterling
- Closing 18,42 16,64 18,10
- Average 18,35 17,69 17,31
December December June
2018 2017 2018
Rm Rm Rm
8. Other non-operating items
Remeasurement of financial instruments not held-for-trading 6 73
Remeasurement of put option liabilities (25) 42
Gain on remeasurement of contingent consideration liabilities 31 31
Capital items (8) (123) (186)
Impairment of goodwill (65) (22) (26)
Profit/(loss) on disposal of subsidiaries, businesses and associates 64 (93) (149)
Business acquisition costs (7) (8) (11)
(8) (117) (113)
9. Net finance cost
Net interest paid (222) (354) (644)
Fair value losses on interest rate swap instruments (1) (1) (5)
(223) (355) (649)
10.Goodwill and intangible assets
Goodwill
Cost 7 489 7 597 7 298
Accumulated impairment (1 142) (1 007) (1 077)
6 347 6 590 6 221
Carrying value at beginning of period 6 221 6 694 6 694
Net acquisition and disposal of businesses 3 723 213
Impairment charge (65) (22) (92)
Currency adjustments 188 (198) 359
Reclassified to assets of disposal groups (607)
Reclassified to assets held for distribution to owners of
Imperial (Motus) (953)
Carrying value at end of period 6 347 6 590 6 221
Intangible assets 2 207 2 582 2 354
Goodwill and intangible assets 8 554 9 172 8 575
11.Cash resources
Cash resources - as disclosed on the statement of financial position 1 912 2 758 2 818
Cash resources - included in assets of disposal groups 66
Cash resources - included in assets held for distribution to
owners of Imperial 1 483
1 912 2 824 4 301
12.Discontinued cash flow
The cash flows of the discontinued operations for the four-month period
ended 31 October 2018 were as follows after elimination of intergroup
cash flows:
Cash flows from operating activities (1 286) 1 627 4 312
Cash flows from investing activities (164) (1 101) (61)
Cash flows from financing activities (63) (575) (3 623)
13.Fair value of financial instruments
Fair value hierarchy
The group's financial instruments carried at fair value are classified in three categories defined as follows:
Level 1 financial instruments are those that are valued using unadjusted quoted prices in active markets for
identical financial instruments.
Level 2 financial instruments are those valued using techniques based primarily on observable market data.
Instruments in this category are valued using quoted prices for similar instruments or identical
instruments in markets which are not considered to be active; or valuation techniques where all the
inputs that have a significant effect on the valuation are directly or indirectly based on observable
market data.
Level 3 financial instruments are those valued using techniques that incorporate information other than
observable market data. Instruments in this category have been valued using a valuation technique
where at least one input, which could have a significant effect on the instrument's valuation, is not
based on observable market data.
Fair value of financial assets and financial liabilities carried at amortised cost
The fair values of the group's financial assets and financial liabilities approximate their carrying values.
The following table presents the valuation categories used in determining the fair values of financial instruments
carried at fair value.
Rm Level 1 Level 2 Level 3
Financial assets
Investments 23
Interest rate swap instruments and foreign exchange contracts 5
Financial liabilities
Put option liabilities 1 026
Contingent consideration liabilities 43
Cross-currency and interest rate swap instruments 17
Foreign exchange contracts 12
Transfers between fair value hierarchy levels
The group recognises transfers between levels of the fair value hierarchy as at the end of the reporting
period during which the change has occurred. There were no transfers between the fair value hierarchies
during the period.
Movement in level 3 financial instruments measured at fair value
The following table shows a reconciliation of the opening and closing carrying values of level 3 financial
instruments carried at fair value.
Put option Contingent
Rm liabilities consideration Total
Carrying value at beginning of the period 1 015 14 1 029
Arising on buy-out of non-controlling interest 36 36
Settlements (35) (7) (42)
Currency adjustments 46 46
Carrying value at end of period 1 026 43 1 069
Level 3 sensitivity information
The fair values of the level 3 financial instruments were estimated by applying an income approach valuation
method including a present value discount technique. The fair value measurements are based on significant
inputs that are not observable in the market. Key assumptions used in the valuations includes the assumed
probability of achieving profit targets, expected future cash flows and the discount rates applied. The
assumed profitabilities were based on historical performances but adjusted for expected growth.
Carrying Increase Decrease
value in carrying in carrying
Rm value value
Financial instruments | Key assumptions
Put option liabilities | Earnings growth 1 026 19 (19)
Contingent consideration liabilities | Assumed profits 43 (4)
December December June
Rm 2018 2017 2018
14.Contingencies and commitments
Capital commitments 80 807 216
Contingent liabilities 421 510 415
15.Business combinations during the period
There were no material acquisition of businesses during the reporting period or before the financial
statements were authorised for issue.
16.Events after the reporting period
Except for the dividend declaration there were no material events after the reporting period.
Segmental information
for the six months ended 31 December 2018
Profit or loss
Imperial Logistics Logistics
Logistics South Africa African Regions
Rm 2018 2017 2018 2017** 2018 2017**
Revenue 26 637 26 320 8 153 8 361 6 339 5 385
- South Africa 7 886 8 198 8 153 8 361
- Rest of Africa 6 339 5 672 6 339 5 385
- International 12 412 12 450
Operating profit 1 325 1 376 457 504 465 401
- South Africa 458 502 457 504
- Rest of Africa 465 420 465 401
- International 402 454
Depreciation, amortisation,
impairments and recoupments (744) (781) (268) (272) (135) (149)
- South Africa (266) (279) (268) (272)
- Rest of Africa (135) (162) (135) (149)
- International (343) (340)
Net finance cost (223) (355) (142) (142) (78) (118)
- South Africa (60) (113) (142) (142)
- Rest of Africa (78) (118) (78) (118)
- International (85) (124)
Pre-tax profits* 914 793 300 380 290 115
- South Africa 389 419 300 380
- Rest of Africa 290 136 290 115
- International 235 238
Additional segment information
Analysis of revenue by type
- Sale of goods 6 812 4 960 1 581 540 5 227 4 412
- Rendering of services 19 825 21 360 6 546 7 768 1 049 939
External revenue 26 637 26 320 8 127 8 308 6 276 5 351
Inter-group revenue 26 53 63 34
26 637 26 320 8 153 8 361 6 339 5 385
Analysis of depreciation, amortisation,
impairments and recoupments (744) (781) (268) (272) (135) (149)
Depreciation and amortisation (567) (575) (266) (275) (45) (36)
Recoupments and impairments 19 14 20 28 (1) (17)
Amortisation of intangible assets
arising from business combinations (196) (220) (22) (25) (89) (96)
Share of results of associates 32 28 3 3 15 6
(included in pre-tax profits)
Operating margin (%) 5,0 5,2 5,6 6,0 7,3 7,4
* Refer to glossary of terms below.
** Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Segmental information (continued)
for the six months ended 31 December 2018
Profit or loss
Logistics Businesses Head office and
International held for sale eliminations
Rm 2018 2017 2018 2017 2018 2017
Revenue 12 412 11 592 1 227 (267) (245)
- South Africa 82 (267) (245)
- Rest of Africa 287
- International 12 412 11 592 858
Operating profit 402 434 49 1 (12)
- South Africa 3 1 (5)
- Rest of Africa 19
- International 402 434 27 (7)
Depreciation, amortisation,
impairments and recoupments (343) (329) (26) 2 (5)
- South Africa (2) 2 (5)
- Rest of Africa (13)
- International (343) (329) (11)
Net finance cost (85) (118) (13) 82 36
- South Africa (3) 82 32
- Rest of Africa
- International (85) (118) (10) 4
Pre-tax profits* 235 230 28 89 40
- South Africa (4) 89 43
- Rest of Africa 21
- International 235 230 11 (3)
Additional segment information
Analysis of revenue by type
- Sale of goods 1 4 7
- Rendering of services 12 410 11 592 1 191 (180) (130)
External revenue 12 410 11 592 1 192 (176) (123)
Inter-group revenue 2 35 (91) (122)
12 412 11 592 1 227 (267) (245)
Analysis of depreciation, amortisation,
impairments and recoupments (343) (329) (24) 2 (7)
Depreciation and amortisation (251) (251) (15) (5) 2
Recoupments and impairments (7) 12 7 (9)
Amortisation of intangible assets
arising from business combinations (85) (90) (9)
Share of results of associates 14 16 3
(included in pre-tax profits)
Operating margin (%) 3,2 3,7
* Refer to glossary of terms below.
** Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Financial position at 31 December
Imperial Logistics Logistics Logistics
Logistics South Africa African Regions International
31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June
Rm 2018 2017 2018 2018 2017** 2018** 2018 2017** 2018** 2018 2017 2018
Assets
Goodwill and intangible assets 8 554 9 172 8 575 824 811 860 2 647 2 431 2 601 5 064 4 735 5 105
Property, plant and equipment 3 192 9 667 3 042 1 336 1 350 1 333 363 346 387 1 406 1 342 1 433
Transport fleet 5 777 5 345 5 358 2 695 2 601 2 475 153 198 156 2 929 2 580 2 760
Vehicles for hire 4 489
Investments in associates (excluding
loans advanced to associates) 491 915 510 73 9 70 319 294 296 133 146 176
Investments 59 867 30 29 24 29 5 5 5
Inventories 2 464 16 803 2 194 365 356 417 1 896 1 423 1 623 203 111 154
Trade and other receivables 10 906 14 606 9 774 4 501 4 154 4 026 2 275 1 819 2 047 4 129 3 594 3 744
Cash resources 70
Operating assets* 31 443 61 934 29 483 9 823 9 305 9 210 7 653 6 511 7 110 13 869 12 513 13 377
- South Africa 9 921 34 270 8 996 9 823 9 305 9 210
- Rest of Africa 7 653 7 210 7 110 7 653 6 511 7 110
- International 13 869 20 454 13 377 13 869 12 513 13 377
Liabilities
Retirement benefit obligations 1 251 1 046 1 216 1 251 1 046 1 216
Maintenance and warranty contracts 2 953
Trade and other payables and provisions 10 806 22 525 10 087 4 104 3 725 3 650 2 607 2 238 2 464 3 824 3 395 3 680
Other financial liabilities 83 341 194 58 29 24 14 171 157 8 2
Operating liabilities* 12 140 26 865 11 497 4 162 3 754 3 674 2 621 2 409 2 621 5 083 4 441 4 898
- South Africa 4 436 15 000 3 978 4 162 3 754 3 674
- Rest of Africa 2 621 2 656 2 621 2 621 2 409 2 621
- International 5 083 9 209 4 898 5 083 4 441 4 898
Net working capital* 2 564 8 884 1 881 762 785 793 1 564 1 004 1 206 508 310 218
- South Africa 492 5 963 457 762 785 793
- Rest of Africa 1 564 1 183 1 206 1 564 1 004 1 206
- International 508 1 738 218 508 310 218
Net debt 6 230 17 249 5 721 2 058 2 280 2 241 1 161 1 896 635 3 307 5 670 3 117
- South Africa 1 762 7 961 1 969 2 058 2 280 2 241
- Rest of Africa 1 161 2 097 635 1 161 1 896 635
- International 3 307 7 191 3 117 3 307 5 670 3 117
Net capital expenditure* (2 051) (1 426) (839) (435) (347) (397) (26) 237 216 (240) (210) (373)
- South Africa (1 785) (1 288) (1 213) (435) (347) (397)
- Rest of Africa (26) 174 161 (26) 237 216
- International (240) (312) 213 (240) (210) (373)
* Refer to glossary of terms below.
** Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Financial position at 31 December
Total Head office and
Eliminations Logistics eliminations Motus
31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June
Rm 2018 2017 2018 2018 2017 2018 2018 2017 2018 2018 2017 2018
Assets
Goodwill and intangible assets 20 4 21 8 555 7 981 8 587 (1) 9 (12) 1 182
Property, plant and equipment 86 61 54 3 191 3 099 3 207 1 (84) (165) 6 652
Transport fleet 5 777 5 379 5 391 (34) (33)
Vehicles for hire 4 489
Investments in associates (excluding
loans advanced to associates) (40) (39) 485 449 503 6 28 7 438
Investments (1) 34 28 34 25 (6) (4) 845
Inventories 2 464 1 890 2 194 14 913
Trade and other receivables 60 (11) 10 905 9 627 9 806 1 40 (32) 4 939
Cash resources 70
Operating assets* 66 124 25 31 411 28 453 29 722 32 (47) (239) 33 528
- South Africa 66 124 25 9 889 9 429 9 235 32 (177) (239) 25 018
- Rest of Africa 7 653 6 511 7 110 699
- International 13 869 12 513 13 377 130 7 811
Liabilities
Retirement benefit obligations 1 251 1 046 1 216
Maintenance and warranty contracts 90 2 863
Trade and other payables and provisions 137 161 142 10 672 9 519 9 936 134 283 151 12 723
Other financial liabilities 6 (1) 86 200 182 (3) 24 12 117
Operating liabilities* 143 161 141 12 009 10 765 11 334 131 397 163 15 703
- South Africa 143 161 141 4 305 3 915 3 815 131 362 163 10 723
- Rest of Africa 2 621 2 409 2 621 1 246
- International 5 083 4 441 4 898 34 4 734
Net working capital* (137) (101) (153) 2 697 1 998 2 064 (133) (243) (183) 7 129
- South Africa (137) (101) (153) 625 684 640 (133) (322) (183) 5 601
- Rest of Africa 1 564 1 004 1 206 (1) 180
- International 508 310 218 80 1 348
Net debt (135) 95 (195) 6 391 9 941 5 798 (161) 30 (77) 7 278
- South Africa (135) 95 (195) 1 923 2 375 2 046 (161) 147 (77) 5 439
- Rest of Africa 1 161 1 896 635 201
- International 3 307 5 670 3 117 (117) 1 638
Net capital expenditure* (31) (4) (24) (732) (324) (578) 32 39 61 (1 351) (1 141) (322)
- South Africa (31) (4) (24) (466) (351) (421) 32 39 61 (1 351) (976) (853)
- Rest of Africa (26) 237 216 (63) (55)
- International (240) (210) (373) (102) 586
* Refer to glossary of terms below.
** Restated due to the reallocation of results related to significant project work from Logistics South Africa to
Logistics African Regions.
Glossary of terms
Net asset value per share - equity attributable to owners of Imperial divided by total ordinary shares in
issue net of shares repurchased (the deferred ordinary shares only participate
to the extent of their par value of 0,04 cents).
Net debt - is the aggregate of interest-bearing borrowings, non-redeemable, non-participating
preference shares less cash resources.
Net capital expenditure - is the aggregate of the expansion and replacement capital expenditure of rental
assets and non-rental assets net of proceeds on sale.
Net working capital - is inventories plus trade and other receivables less trade and other payables
and provisions.
Operating assets - total assets less loans receivable, tax assets, assets of discontinued operations,
assets of disposal group and in the prior year cash resources in respect of
non-financial services segments.
Operating liabilities - total liabilities less interest-bearing borrowings, tax liabilities, put option
liabilities, liabilities of discontinued operations and liabilities of disposal groups.
Operating margin (%) - operating profit divided by revenue.
Pre-tax profit - calculated as profit before tax, impairment of goodwill and profit or loss on sale of
investment in subsidiaries, associates and joint ventures and other businesses.
Return on invested capital (%) - this is the return divided by invested capital.
- return is calculated by reducing the operating profit by a blended tax rate, which is
an average of the actual tax rates applicable in the various jurisdictions in which
Imperial operates, increased by the share of result of associates and joint ventures.
- invested capital is a 12-month average of - total equity plus non-redeemable,
non-participating preference shares plus interest-bearing borrowings less cash resources
in non-financial services businesses.
Weighted average cost of - calculated by multiplying the cost of each capital component by its proportional weight,
capital (WACC) (%) therefore: WACC = (after tax cost of debt % multiplied by average debt weighting) +
(cost of equity multiplied by average equity weighting). The cost of equity is blended
recognising the cost of equity in the different jurisdictions in which Imperial operates
Corporate information
Imperial Logistics Limited
Registration number: 1946/021048/06
Ordinary share code: IPL
ISIN: ZAE000067211
Directors
P Langeni# (Chairman), M Akoojee (Chief Executive Officer), RJA Sparks# (lead independent director), P Cooper#,
GW Dempster#, T Skweyiya#, M Swanepoel, JG de Beer (Chief Financial Officer)
# Independent non-executive
Company Secretary
RA Venter
Investor Relations and Communications Executive
E Mansingh
Business address and registered office
Imperial Logistics Limited
Jeppe Quondam
79 Boeing Road East
Bedfordview, 2007
Share transfer secretaries
Computershare Investor Services (Proprietary) Limited
1st Floor, Rosebank Towers
15 Biermann Avenue, Rosebank, 2196
Sponsor
Merrill Lynch SA (Proprietary) Limited
The Place, 1 Sandton Drive
Sandton, 2196
The results announcement is available on the Imperial Logistics website: www.imperiallogistics.com/inv-interims.php
www.imperiallogistics.com
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