Johannesburg, 23 February 2021. Imperial today announced its interim results for the six months ended 31 December 2020.
* Excludes the discontinued European shipping business in the current and prior period, and CPG in the prior period.
** Headline earnings are adjusted by items that are not considered to be of a trading nature to arrive at Core EPS. Core EPS is not an IFRS requirement and a reconciliation with EPS and HEPS is included in the interim results booklet available on Imperial's website.
Mohammed Akoojee, Imperial's Group Chief Executive Officer, said, "In extraordinary and challenging trading conditions, exacerbated by the COVID-19 pandemic, Imperial increased revenue from continuing operations, generated strong free cash flow, maintained a strong balance sheet, stringently managed costs and recorded significant progress against its strategy."
A strong recovery in volumes and profitability was recorded in the first half of 2021 compared to the second half of financial year 2020. Imperial concluded acquisitions to the value of R120 million; the disposal of the European Shipping business for proceeds of R3.4 billion; and finalised the sale of Pharmed."
Compared to the first half of fiscal 2020, which was pre-COVID-19, Imperial increased revenue by 15% to R26.36 billion. EBITDA declined by 2% to R2.55 billion and operating profit declined by 18% to R1.2 billion. Total EPS was up by 96% to 437 cents per share. Total headline earnings per share declined by 3% to 185 cents per share and continuing HEPS declined by 43% to 180 cents per share.
"We demonstrated resilience through strong cash flow generation. Cash inflow from continuing operations, excluding CPG, was up to R671 million and our continuing free cash conversion improved to 90%. Our net debt:EBITDA of 1.8x is well within banking covenants of 3.25x. After considering the strong cash flow generation and balance sheet of the business, and the steady recovery in operations, an interim cash dividend of 83 cents per ordinary share was declared to shareholders'", says Akoojee.
During the six months, Imperial's business was negatively impacted by various and extended levels of COVID-19 lockdown restrictions in many of its markets.
Imperial's results were supported by acquisitions, strong contract renewal and gain rates, and excellent cost and balance sheet management. Approximately R200 million annualised costs in Logistics Africa were removed. The benefits of these cost savings will be realised from the 2022 financial year.
Through the pandemic, Imperial has maintained a sound financial position, generating cash, tightly managing costs and implementing strategic imperatives to make the group resilient for the future. Imperial's purpose is 'connecting Africa and the world and improving people's lives with access to quality products and services'. Akoojee noted, "In demonstrating our purpose, during COVID-19, Imperial continued to play a critical role in the supply of essential products and services to its countries and communities of operation - while keeping the wheels turning for our clients and principals so that people can receive medication, food and other essentials. We have set up a task force to ensure that we can participate in the distribution of vaccines where opportunities arise. Imperial is well-positioned to provide logistics and distribution capabilities for COVID-19 vaccines in South Africa and other African countries, and we are participating in the tender process in South Africa."
"Ensuring the safety of our employees and operations has remained a priority. We continue to support our employees to minimise their financial burden during the pandemic."
Akoojee says that over the past 18 months, "We have laid the foundation of our new strategy and are making significant strides in transforming Imperial from a portfolio of regional businesses to an integrated, end-to-end market access and logistics business. It is our strategic intent to become a 'One Imperial' business and serve as the 'Gateway to Africa' for our clients, principals and customers - from an asset-heavy, 3PL logistics player to an innovative, asset-right business."
Imperial has invested c.R100 million in this period on appropriate and effective systems, processes, resources and structures and will continue to invest significantly over the next three to five years to ensure successful execution of all key strategic imperatives. This will position the business for sustainable growth, and improve efficiencies and costs over the medium term. As Imperial continues on this growth journey, IT, digital and data will be positioned at the heart of the business. Says Akoojee, "Achieving our strategic ambitions will require us to make significant capital investments in digital and data initiatives, technology, and strategic acquisitions over the next five years. Capital allocation will be prioritised for those areas that most amplify our primary strategic positioning and focus – Africa, and in our 5 key industries being healthcare, consumer, chemicals, automotive, and industrial and commodities. We are actively exploring potential growth opportunities in our Market Access and Logistics Africa businesses on the African continent (outside South Africa)."
"As part of the strategy process, we thoroughly assessed the strategic fit of our international portfolio. We have concluded that Logistics International is non-core to our 'Gateway to Africa' strategy and we will explore an appropriate exit plan for this business. Given the current macro-economic uncertainty, this may take time to progress as the objective is to maximise value for shareholders through this process."
While some of the COVID-19 restrictions are easing, Imperial anticipates the impact of the pandemic and the ensuing uncertainty to continue to affect its operations and performance in the short-term. "As restrictions ease and COVID-19 vaccines are rolled out, volumes and operating activities are improving - but the business is not yet at pre-COVID-19 levels. Subject to stable currencies - for financial year 2021, we expect to deliver double-digit growth in revenue, operating profit, continuing HEPS and core EPS from operations compared to fiscal 2020. In addition, we expect to continue to deliver strong free cash flow generation. Our balance sheet remains strong and we have sufficient headroom in terms of debt capacity and liquidity to facilitate our strategic growth aspirations," says Akoojee.
He concludes, "As we continue to navigate the impact of COVID-19, our focus remains on delivering the best from current operations by making them lean and efficient, servicing clients profitably, executing flawlessly and growing organically. This while ensuring continuous delivery on our strategic objectives and delivering sustainable value to our key stakeholders."