Group chief financial officer's review

In an ever-evolving logistics industry, increasing efficiency and agility are critical to competing effectively. We are organising ourselves more effectively as ‘One Imperial’, with a focus on delivering our strategy and preparing for a post-Covid-19 world.

Group performance against medium-term guidance
			F2020		Medium-term guidance (over three years)
Revenue and operating profit			5% revenue growth 40% decrease in operating profit		Logistics: 2 times GDP growth plus inflation Market Access: Low double-digit growth
Cash conversion continuing capex			72%		Targeted cash conversion of 70% to 75%
Debt capacity			R4 billion to R5 billion (post-European shipping proceeds)		R3 billion to R5 billion
Net debt: EBITDA used for bank covenant calculation (excluding IFRS 16)			2,8 times at 30 June 2020 1,6 times post-European shipping disposal proceeds		<2,5 times
ROIC			4,9% (WACC: 7,6%)		WACC + 3%
Dividend			Interim dividend of 167 cents; no final dividend		Will be reviewed – depending on prevailing market conditions
Net working capital			5,1% of revenue		4% to 5% of revenue

Our strategic focus

In an ever-evolving logistics industry, increasing efficiency and agility is required to compete effectively. In the past few years, Imperial has undertaken significant corporate activity to refine the group's strategic focus and positioning, including the unbundling of Motus and the disposal of non-strategic and underperforming businesses. The transformation of the group from a regional portfolio of businesses to an integrated logistics group, will build on this progress, requiring significant investment in the right organisational structure, processes, systems, people and culture to support longer-term sustainable and profitable growth.

We want the finance function to be a strategic business partner that uses data-backed insights obtained through analysis, harmonised data, industry leading technology and best-in-class processes to assist our stakeholders with their decision making, while maintaining robust control and oversight over our processes.

Our transformational journey will shift the group from:

Current state of				...to a future state of...
	Increased cost to serve				Shared services centre for core common processes to reduce cost to serve across our business
	Lowering enterprise productivity				Best-fit technology and automation to reduce manual effort and improve productivity
	Disparate ways of working				Harmonised processes across core finance functions, promotes consistency, reduces risks and improves compliance
	Limited financial visibility				Transparency and visibility of financial, and operational data drives quicker and improved decision making, faster financial close and improved financial compliance
	Limited business agility				Consolidate solution footprint in cloud to integrate acquisitions and launch new products/services faster enabling growth

Focus areas

The finance function plays a key enabling role in supporting strategic delivery. We have identified three focus areas to deliver additional value – supporting insight-driven decision making powered by right-time data and analytics, driving excellence in our finance operations and service provision, and enhancing financial integrity, risk management and compliance.

From bottom line to front line		Elevate the role of Imperial Finance from its current focus on transactional and backward looking activities and pivot toward forward looking, strategic business decision support.
Brilliant basics as a springboard		Free up capacity through simplified, standardised, harmonised and automated processes. Simplify finance records and consolidate the finance technology landscape to provide a single source of truth.
Eating the elephant one bite at a time		Adopt a phased approach to build and implement our initiative pipeline in an agile manner, unlocking value rapidly throughout the process.

To achieve our objectives, we have planned a multi-step journey that will shift our culture from being inward, financially focused and siloed to being a strategic business partner supporting our businesses and divisions.

Multi-step journey to finance of the future

Short to medium term					Medium term
DESIGN THE FOUNDATION		BUILD THE CORE, PROVE WITH A PILOT			SCALE THE ADOPTION		FINANCE OF THE FUTURE
Simple, standard sustainable		Enable value realisation			Realise the value		Innovation, digitalisation and sustainable growth
Blueprint the foundation Set up shared service centre		Build ‘One Imperial’ Finance Pilot shared service centre in South Africa Standardise for single version of the financial truth			Centralise additional functions Implement advanced analytics and automation Managed application and cloud outsourcing services		Touchless finance FinTech evolution

We are implementing a group-wide finance solution to ensure that the group is equipped with the appropriate foundational systems and processes necessary for strategic execution. This has entailed designing a finance operating model that supports our transformation by setting up centres of excellence and shared services, which will aggregate all central services on a single business support platform for the group.

In the short term, we will deploy ‘One Imperial’ finance platform to standardise finance processes across the group and provide opportunity for automation and technology enhancements that leverage artificial intelligence to drive operational efficiencies. These investments will not only free up our people from manual work, allowing them to work more strategically, but will also promote enhanced compliance and support our overall control environment.

As we build forward looking finance functions across the group that provide strategic business decision support, using a streamlined system architecture that provides insights through right-time data, we anticipate better strategic decision making and improved operational efficiency.

Strong financial position

Despite challenges posed by Covid-19, our balance sheet management remains resilient, with sufficient headroom and capacity. The pandemic had a significant impact on our earnings, largely in South Africa and the Eurozone, and our efforts to maintain strict cash flow, working capital and overall balance sheet management have ensured that we have not breached any of our debt covenants and have generated positive cash flows. We proactively engaged with a number of our lessors to negotiate extended lease agreements, and with our debt providers to keep them informed, and manage the ongoing uncertainty created by Covid-19 and the potential impact on our debt covenants.

Our cash and liquidity position remains strong with R13,2 billion of available facilities and cash post the proceeds of the European shipping disposal. Net debt (excluding lease obligations and before the receipt of the European shipping disposal proceeds) of R8,4 billion increased by 47% compared to June 2019 mainly due to investment in capital expenditure, acquisitions and foreign exchange translations at the end of the year when converting foreign debt to Rand.

We have continued to focus on reducing our fixed overheads, these being people, infrastructure and IT systems, and releasing capital in underperforming and non-core businesses. Our international operations have been significantly restructured to reduce the central overhead, and we continue to work on reducing our fixed overhead in South Africa. Imperial announced the sale of the European shipping business on 4 May 2020, while retaining our interest in the South American shipping business (still available for sale). This transaction was concluded on 31 July 2020 and more detail is provided in the financial performance section that follows.

Our ability to optimise our capital allocation to achieve our strategy within our means and risk tolerances, is crucial to delivering growth in the long term. Creating a leaner and more efficient structure and investing to drive a ‘One Imperial’ brand and culture, will enable responsive and responsible capital allocation that is forward looking and aligned with our strategic direction. We will prioritise capital allocation, based on detailed scenario analysis, to fund organic growth and be the ‘Gateway to Africa’, focusing on working capital in our market access solution, as well as investing in technology and data to deepen our digital capabilities.

Outlook

Due to the uncertainty created by Covid-19 and the possibility of reintroduced restrictions, we will remain focused on maintaining our resilience by closely monitoring and managing our balance sheet and cash flows, and reducing our cost base where possible until we have more certainty about the trading environment.

This is a difficult and demanding time for many as the Covid-19 pandemic continues.

Many of our markets are facing increasing uncertainty and volatility, being in various levels of lockdown and restrictions. We therefore anticipate the impact of the Covid-19 pandemic to significantly impact our operations and performance in the short term.

At this stage, for F2021, subject to stable currencies, steady recovery in volumes and revenue on the back of easing Covid-19 restrictions, and a recovery in economies in which we operate from current levels, we expect Imperial’s continuing operations (excluding businesses held for sale) to deliver:

• Revenue growth compared to the prior year.
• Operating profit growth compared to the prior year.
• Growth in continuing HEPS compared to the prior year.
• Good free cash flow generation.

The balance sheet of the business remains sound, with sufficient headroom in terms of capacity and liquidity to facilitate our strategic growth aspirations.

The payment of a dividend will be reassessed at the interim results in February 2021, based on trading conditions for the next six months.

We will find our new normal in a post-Covid-19 world and be agile enough to scale our business accordingly. We will continue to leverage cost efficiencies, with selected capital expenditure while right sizing our businesses where appropriate.

Group financial performance

Summarised consolidated statement of profit or loss

for the year ended 30 June 2020

R million		%  change		2020			2019~
CONTINUING OPERATIONS
Revenue		5		46 380			44 039
Net operating expenses				(42 282)			(39 423)
Profit from operations before depreciation and recoupments		(11)		4 098			4 616
Depreciation, amortisation, impairments and recoupments				(2 639)			(2 203)
Operating profit		(40)		1 459			2 413
Impairment to properties net of recoupments				(194)			(6)
Amortisation and impairment of intangible assets arising on business combinations				(393)			(400)
Foreign exchange gain (loss)				93			(47)
Other non-operating items				52			(1 111)
Profit before net finance costs				1 017			849
Net finance cost		26		(762)			(605)
Profit before share of results of associates and joint ventures				255			244
Share of results of associates and joint ventures				22			39
Profit before tax				277			283
Income tax expense				(159)			(386)
Profit (loss) for the year from continuing operations				118			(103)
DISCONTINUED OPERATIONS				(344)			3 683
Net loss from CPG				(305)			(1 923)
Net loss (profit) from the European shipping business				(39)			214
Net profit from Motus Holdings Limited (Motus)							5 392
Net (loss) profit for the year				(226)			3 580
Net profit (loss) attributable to:
Owners of Imperial				(303)			3 438
– Continuing operations				42			(232)
– Discontinued operations				(345)			3 670
Non-controlling interest				77			142
– Continuing operations				76			129
– Discontinued operations				1			13
~ Restated for adoption of IFRS 16 – Leases and re-presented for the European shipping business as a discontinued operation in terms of IFRS 5 –  Non-current Assets Held For Sale and Discontinued Operations.

Operating profit from continuing operations decreased by 40%, negatively impacted by Covid-19 across all businesses and markets in which we operate.

The R6 million decrease in profit before tax to R277 million is mainly attributed to:

• The decrease in operating profit;
• Impairment to both owned and leased properties classified as right-of-use assets;
• An increase in finance costs mainly due to the once-off gain that arose on the redemption of the preference shares of R63 million in the prior year that resulted in a reduction to finance cost in that period; offset partially by
• A decrease in the amortisation of intangibles arising on business combinations as certain intangible assets were fully amortised in the prior year; and
• R67 million foreign exchange losses on foreign exchange contracts compared to a R47 million loss in the prior year, and a gain of R160 million due to reduction in capital in foreign subsidiaries.

Other non-operating items mainly comprised gains on the remeasurement of the put option liability and contingent consideration liability offset partially by goodwill impairments which arose mainly due to higher discount rates used in valuations, and the net loss on the sale of businesses during the year.

Significant contributors to the higher effective tax rate were deferred tax assets that were not recognised for some loss-making entities.

The loss from discontinued operations comprises CPG and the European shipping business in the current financial year and Motus, the European shipping business and CPG in the prior financial year.

The decrease in non-controlling interests is mainly due to weaker performances across most businesses but mostly impacted by an increase in the share of losses in Pharmed, a decrease in the share of income from Surgipharm and non-controlling share of losses in MDS Logistics.

Pro forma earnings and headline earnings per share

for the year ended 30 June 2020

Cents		%  change		2020			2019~
BASIC EARNING PER SHARE
Earnings (loss) per share		(109)		(161)			1 773
Imperial Logistics		(84)		(161)			(1 008)
Continuing operations				22			(120)
Discontinued operations (CPG)		(84)		(162)			(992)
Discontinued operations (Shipping)				(21)			104
Discontinued operations (Motus)							2 781
Headline earnings (loss) per share^		(84)		105			663
Imperial Logistics		(13)		105			121
Continuing operations		(65)		156			448
Discontinued operations (CPG)		(63)		(161)			(433)
Discontinued operations (Shipping)				110			106
Discontinued operations (Motus)							542
~ Restated for adoption of IFRS 16 – Leases and re-presented for the European shipping business as a discontinued operation in terms of IFRS 5 –  Non-current Assets Held For Sale and Discontinued Operations. ^ 2019 HEPS re-presented for the early adoption of Headline Earnings Circular 1/2019.

Financial position

at 30 June

R million		%  change		2020			2019~
Goodwill and intangible assets		5		7 084			6 719
Investment in associates and joint ventures		(62)		198			520
Property, plant and equipment		26		3 326			2 647
Transport fleet		(2)		5 186			5 309
Right-of-use assets		13		5 422			4 780
Investments and other financial assets		20		271			225
Net working capital		(61)		544			1 389
Net assets of disposal group and discontinued operations		839		2 781			296
Retirement benefit obligation		(17)		(1 109)			(1 343)
Net debt excluding lease obligations		47		(8 391)			(5 697)
Lease obligations		2		(6 080)			(5 969)
Other financial liabilities		32		(1 415)			(1 075)
Net income tax assets		27		455			359
Total shareholders’ equity				8 272			8 160
Total assets		18		42 526			36 060
Total liabilities		23		(34 254)			(27 900)
Net debt:equity % (excluding lease obligations)				101,4			69,8
Net debt:equity % (including lease obligations)				174,9			143,0
~ Restated for the adoption of IFRS 16 – Leases and IFRIC 23 – Uncertainty over Income Tax Treatments.

The significant variances on the financial position at 30 June 2020 when compared to 30 June 2019 are explained as follows:

• The increase in goodwill and intangible assets is mainly due to the new acquisitions and currency movements which were somewhat offset by the reclassification of goodwill to net assets of disposal groups.
• Investments in associates and joint ventures decreased mainly due to the consolidation of MDS Logistics following the acquisition of a majority shareholding during the year.
• Property, plant and equipment increased mainly due to currency movements and the new businesses acquired.
• The increase in right-of-use assets is mainly attributed to currency movements and new leases during the period, offset by the depreciation and impairment charge to the income statement.
• Net assets of disposal groups increased due to the reclassification of assets and liabilities relating to the European shipping business and the Pharmed Group to disposal groups at year-end.
• Retirement benefit obligations decreased by the reclassification of the retirement benefit obligations in the European shipping business to disposal groups at year-end.
• Investments and other financial assets increased mainly due to currency movements offset partially by the delivery of Motus shares to participants of the deferred bonus plan (DBP) scheme that was settled in September 2019.
• The increase in other liabilities is mainly due to an increase in contingent consideration relating to the acquisitions in the African Regions – partially offset by a decrease in the put option liability as a result of minority buyouts in Eco Health and Imres, as well as revaluation of the put option liability and contingent consideration during the year.
• Part of the decrease in net working capital is attributed to the reclassification of net working capital to net assets of disposal groups, net working capital improved from last year mainly due to excellent capital and cash flow management in F2020.
• The movement in net debt excluding lease liabilities is explained in the cash flow summary that follows.
• The increase in the lease liability is mainly due to lease payments during the period offset partially by new leases that were capitalised during the period as well as currency movements.

Movement in total equity for the 12 months to 30 June 2020

Total equity of R8 272 million decreased by R375 million from R8 647 million previously reported on 30 June 2019.

The following table details the changes in equity during the year:

Decrease in equity for the period to June 2020		Rm
IFRS 16 adjustment to opening equity at 1 July 2019~		(487)
Comprehensive income		683
Net profit attributable to Imperial shareholders		(303)
Net profit attributable to non-controlling interests		77
Increase in the foreign currency translation reserve		1 004
Decrease in the hedge accounting reserve		(29)
Revaluation of retirement benefit obligation, net of tax		(66)
Movement in share-based reserve net of transfers to retained earnings		37
Ordinary dividend paid		(530)
Repurchase of Imperial Logistics shares		(225)
Non-controlling interest acquired, net of disposals and shares issued		329
Net decrease in non-controlling interests through buyout		(54)
Non-controlling share of dividends		(128)
Total decrease		(375)
~ Restated for the adoption of IFRS 16 – Leases and IFRIC 23 – Uncertainty over Income Tax Treatments.

Pro forma cash flow summary to June 2020 including CPG and European shipping in both periods excluding Motus in the comparative period

R million		2020			2019^*
Cash flows from operating activities
Cash generated by operations before movements in net working capital		4 536			5 239
Movements in net working capital		559			(21)
Cash generated by operations before interest and taxes paid		5 095			5 218
Net interest paid		(918)			(894)
Tax paid		(367)			(580)
Cash generated by operations		3 810			3 744
Cash flows from investing activities
Net acquisition of subsidiaries and businesses		(276)			(25)
Expansion from capital expenditure		(747)			(471)
Net replacement capital expenditure		(735)			(623)
Net movement in other associates and joint ventures		45			286
Net movement in investments, loans and non-current financial instruments		(59)			(169)
Cash utilised in investing activities		(1 772)			(1 002)
Cash flows from financing activities
Hedge cost premium paid		(2)			(161)
Settlement of interest-rate swap instruments		(11)			(13)
Repurchase of ordinary shares		(225)			(262)
Dividends paid		(658)			(792)
Cash paid on change in non-controlling interests		(277)			(137)
Capital raised from non-controlling interests					200
Settlement of non-redeemable, non-participating preference shares					(378)
Payment of lease obligations		(2 032)			(1 684)
Cash utilised in financing activities		(3 205)			(3 227)
Movement in net debt before currency adjustments		(1 167)			(485)
Free cash flow		1 043			1 437
* For the cash flows including Motus in the prior year, please refer to the AFS online. The cash flows relating to Motus that have been excluded are operating cash outflow of R1 343 million,    investing cash outflow of R231 million and financing cash outflow of R1 498 million. ^ Restated for IFRS 16 – Leases.

The balance sheet movement in net debt of R2 694 million includes currency movements of R1 327 million and other non-cash movements that are excluded from the cash flow movement of R1 167 million.

Liquidity

The group's liquidity position remains strong with R13,2 billion of unutilised banking facilities, following the receipt of the proceeds from the disposal of the European shipping business. In total, 76% of the group debt is long term in nature and 57% of the debt is at fixed rates.

Dividend

An interim cash dividend of 167 cents per ordinary share was declared in the first half and paid to shareholders in March 2020. Our targeted payout ratio is 45% of continuing HEPS, subject to prevailing circumstances. As the interim dividend (paid from prior year reserves) was more than continuing HEPS for the full financial year to 30 June 2020 – and exceeding the targeted payout ratio – a final dividend was not declared. Therefore, the total cash dividend for F2020 is 167 cents per share (F2019: 244 cents per share).

Acquisitions

• Geka Pharma (Namibia)
  Imperial concluded the acquisition of a 65% stake in Geka Pharma, a distributor of pharmaceutical, medical, surgical and allied products in Namibia for c.R80 million which includes a contingent consideration of R31 million. Geka Pharma has been supplying pharmaceuticals to the healthcare industry in Namibia for more than 45 years. As previously communicated, this transaction is in line with Imperial's strategy to expand into healthcare in Namibia – leveraging its consumer footprint. The acquisition was effective 1 January 2020.
  
• MDS Logistics (Nigeria)
  Imperial's acquisition of a further 8% equity stake in MDS Logistics, Nigeria's leading provider of integrated supply chain solutions, was concluded in January 2020. This transaction included Imperial transferring some existing profitable contracts to MDS Logistics, and paying a further USD2,4 million in cash. This takes our shareholding in the business from 49% to 57%. MDS Logistics provides a unique bouquet of logistics solutions through 48 distribution centres and 53 offsite inventory management centres covering over 30 states and a catchment area of over 400 cities and villages. Securing majority control in MDS Logistics will drive integration with Imperial's operations in Nigeria – facilitating the implementation of our value-added logistics offering through an end-to-end solution including transport, warehousing, distribution and market access, and as such leveraging our capabilities in this market.
  
• Far East Mercantile (Ghana)
  Effective 1 January 2020, Imperial acquired a 51% interest in Far East Mercantile Ghana (ACP Holdings based in Mauritius) for approximately c.USD20,3 million, which includes a contingent consideration of approximately USD9,5 million. The trading operations are based in Ghana and is well established as an importer and distributor of FMCG. With eight branches across Ghana, the business represents over 30 global brands in various consumer food, beverages and personal care categories. This acquisition is in line with Imperial's strategy to accelerate its growth in Africa, with a strategic focus on the consumer goods and healthcare sectors. Imperial will leverage synergies in the business' expansive Ghanaian network and market access solutions to enhance its capabilities, primarily in healthcare and consumer, in the region. The business currently has direct coverage of over 22 000 retail and wholesale outlets in Ghana and is an integral part of Imperial's strategy to increase its presence in the burgeoning West African consumer markets.
  
• Axis Group International
  Effective end December 2019, Imperial acquired a 60% shareholding in Axis Group International which specialises in sourcing and procurement in Asian markets, for a total purchase consideration of USD12 million, which includes a contingent consideration of USD7,3 million. This is a strategically aligned transaction as it will facilitate trade between Imperial's present client base and companies based in China and other Asian markets through the group sourcing and purchasing of products in these markets – and providing market access to companies wanting to trade in these particular regions.
  
• Imperial Sasfin Logistics minority buyout
  Imperial acquired the remaining minority shares within the entity previously known as Imperial Sasfin Logistics for R12 million. The change in ownership through this transaction was required to facilitate one of Imperial's strategic objectives to be an international logistics provider managing clients' international freight requirements on a door-to-door basis. The business has been renamed Imperial Clearing and Forwarding.
  
• Air/Ocean freight business in Turkey
  Imperial entered into a partnership with Turkish freight forwarder M Ekspres (known as MEX) in June 2020, creating a new multi-modal freight management business housed within Imperial's freight management capability – specialising in traffic to, from and transiting Turkey. The business is based in Istanbul and provides air and ocean import and export forwarding services to existing clients of both Imperial and MEX, as well as new customers. In addition, it plans to leverage the fast-growing range of global destinations served from Istanbul's new airport, as a gateway for traffic to the African continent. This is aligned to Imperial's strategy to serve as a 'Gateway to Africa' and facilitating trade flows into and out of the continent.

Acquisitions concluded post-year-end

• Market access healthcare manufacturing in South Africa
  Effective August 2020, Imperial acquired a 49% shareholding in Pharmafrique Proprietary Limited (trading as Kiara Health) for c.R76 million. Kiara Health is a pharmaceutical manufacturing and healthcare services company based in Johannesburg which serves as the local manufacturing partner for a global leader in generic and biosimilar medicines. This acquisition is in line with Imperial's strategy to backward integrate into contract manufacturing as part of its market access service to multinationals on the continent. Access to this capability will create a pipeline of opportunities for our market access and logistics services in the healthcare industry in South Africa.

Disposals (concluded post-year-end)

• European shipping operations
  Effective 31 July 2020, Imperial disposed of its interest in our European shipping business to the Cologne-based Häfen und Güterverkehr Köln AG (HGK). The aggregate purchase price of €171 million (approximately R3,4 billion) was settled by HGK in full and in cash on the date of implementation. The shipping business is non-core to Imperial's strategic imperative – which is to grow our African footprint and reach, and position the group as the 'Gateway to Africa' in the medium to long term.
  
  The proceeds from this sale have been used to pay down existing debt in the short term and will be invested in new growth areas in line with our strategy in due course.
  
  The South American shipping business will continue to operate on a standalone basis and remains available for sale.
  
• Pharmed
  Imperial has entered into an agreement for the sale of our Pharmed business in South Africa to the Arrie Nel Pharmacy Group. Focused on independent healthcare professionals, Pharmed is our South African pharmaceutical wholesaler – providing prescription and homeopathic medicine, surgical, dental and veterinary products to independent pharmacies, corporate pharmacies, private hospitals and dispensing doctors.
  
  The South African wholesaler landscape has become increasingly competitive and it has become clear that a retail network and significant scale – and the associated investment – are essential if such a business is to survive and thrive. Pharmed, with its high-cost base and limited scale, has accordingly become increasingly uncompetitive and continues to underperform.
  
  Despite numerous management efforts and initiatives undertaken over the past months to return the business to profitability, it is evident that the business would be better placed to grow in the hands of an owner such as Arrie Nel – where the closer alignment of strategic focus and capital allocation capabilities will enable the required growth investments. We anticipate this deal to be concluded in the first quarter of the 2021 financial year, subject to Competition Commission approval.
  
  It is important to note that the disposal of Pharmed does not represent our exit from the healthcare industry in South Africa but merely the exit from non-core wholesale activities. The high growth and resilient healthcare industry remains key to our 'Gateway to Africa' strategy and we remain committed to the many multinational principals and clients we serve across the African continent. We will continue to serve such principals and clients through our logistics business – and through the ongoing expansion of our healthcare market access business in South Africa.

George de Beer

Group chief financial officer

Five-year review

	Financial  definitions		2020~ Rm			2019~ Rm		2018* Rm		2017^ Rm		2016^ Rm
PROFIT OR LOSS
Revenue			46 380			44 039		48 565		118 567		118 849
Operating profit			1 459			2 413		2 868		6 538		6 382
Net financing costs			(762)			(605)		(569)		(1 680)		(1 440)
Share of result of associates and joint ventures			22			39		56		103		138
Income tax expense			(159)			(386)		(620)		(1 060)		(1 221)
Tax rate (%)			62,2			158,3		35,6		30,1		28,6
Net profit attributable to non-controlling interests			76			129		168		(36)		184
Headline earnings			295			870		1 139		2 700		2 994
CASH FLOWS
Cash generated by operations (before capital expenditure on rental assets, net financing costs and tax paid)			5 095			5 332		3 336		9 076		8 143
Cash flow from investing activities (including capital expenditure on rental assets)			(1 772)			(1 233)		960		(3 648)		(3 199)
Net debt (raised) repaid			(1 167)			(3 557)		1 472		437		(1 657)
Payment of lease obligations			2 032			1 684		–		–		–
Free cash flow	1		1 043			1 437		1 420		4 296		2 536
FINANCIAL POSITION
Total assets			42 526			36 060		75 841		68 853		69 835
Operating assets	2		31 880			32 443		35 028		61 025		58 783
Operating liabilities	3		11 944			12 510		11 484		26 000		24 777
Net working capital	4		544			1 389		1 827		8 956		9 804
Net interest-bearing debt	5		8 391			5 697		5 198		15 088		15 279
Lease obligations			6 080			5 969		5 850
Imperial owners' interest			7 320			7 774		22 321		20 742		20 173
Non-controlling interest			1 218			913		886		667		909
Contingent liabilities			786			489		958		649		770
RATIOS
Efficiency
Revenue to average net operating assets (times)	6		2,3			2,0		2,7		3,4		3,5
Revenue relating to sales of goods to average inventory (times)	7		5,0			4,8		4,2		4,0		4,4
Revenue to average net working capital (times)			48,0			27,4		25,8		12,6		12,5
Profitability
Operating profit to average net operating assets (%)	8		7,3			11,1		15,9		18,9		19,0
Operating profit to average gross operating assets (%)			4,5			7,2		9,7		10,9		11,0
Operating margin (%)	9		3,1			5,5		5,9		5,5		5,4
Return on average shareholders' interest (%)	10		0,6			(1,5)		9,1		12,7		15,4
Return on invested capital (%)	11		4,9			7,6		12,4		12,4		12,8
Weighted average cost of capital (%)	12		7,6			8,5		8,5		9,0		9,5
Solvency
Interest cover by operating profit (times)			1,9			4,0		5,0		3,9		4,4
Net interest-bearing debt to EBITDA (times)			2,0			1,2		1,5		1,7		1,7
Total equity to total assets (%)			19,5			22,6		33,8		29,4		28,4
Net interest-bearing debt as a percentage of total equity (%)			101,4			69,8		50,0		74,5		77,2
Liquidity
Free cash flow to net profit for the year (times)			8,84			(13,95)		1,20		1,67		0,80
Free cash flow to headline earnings (times)	13		3,54			1,65		1,25		1,59		0,85
Unutilised facilities			10 620			11 786		13 911		12 450		10 046

~ * ^

As per the numbers reported in the Imperial Logistics Limited audited annual financial statements for the year ended 30 June 2020 with the exception of the 2019 free cash flow that excludes Motus. As previously reported except for the financial position that has been restated for the adoption of IFRS 16 – Leases and IFRIC 23 – Uncertainty over Income Tax Treatments. As previously reported.

	Financial  definitions		2020~ Rm			2019~ Rm		2018* Rm		2017^ Rm		2016^ Rm
INVESTING IN THE FUTURE
Cost of new acquisitions			933			22		537		1 796		352
Net capital expenditure			1 482			1 273		507		2 663		4 138
Capital commitments			114			212		216		1 448		1 309
STATISTICS
Number of transport fleet vehicles (owned)			5 068			6 520		7 596		7 288		7 238
Number of employees			25 232			27 463		29 944		49 364		51 256
Employee costs			10 517			9 749		10 351		16 623		16 528
Wealth created per employee			587			530		587		511		498
Total taxes and levies paid	14		347			564		779		1 510		1 661
SHARE PERFORMANCE
Basic headline earnings per share (cents) continuing operations			156			448		585		1 390		1 552
Dividends per share (cents)			167			244		710		650		795
Earnings yield (%)	15		4,0			8,7		8,0		8,6		10,4
Price earnings ratio (times)	16		25,2			11,5		12,5		11,6		9,6
Net asset value per share (cents)	17		3 783			3 960		11 464		10 550		10 261
Market prices (cents)
– closing			3 933			5 143		19 589		16 100		14 948
Total market capitalisation at closing prices	18		7 948			10 350		39 564		32 384		31 118
Value of shares traded			12 674			30 675		45 495		34 198		37 985
Value traded as a percentage of average capitalisation (%)			139			123		126		108		111
EXCHANGE RATES
Euro to Rand
– average			17,32			16,18		15,34		14,81		16,10
– closing			19,51			16,06		16,01		14,92		16,31
US Dollar to Rand
– average			15,67			14,18		12,86		13,58		14,51
– closing			17,37			14,10		13,71		13,06		14,70
British Pound to Rand
– average			19,74			18,35		17,31		17,23		21,47
– closing			21,46			17,95		18,10		17,02		19,58
Nigerian Naira to Rand
– average			0,04			0,04		0,04		0,04		0,05
– closing			0,04			0,04		0,04		0,04		0,07
Botswana Pula to Rand
– average			1,40			1,33		1,29		1,29		1,34
– closing			1,47			1,33		1,32		1,26		1,35

~ * ^

As per the numbers reported in the Imperial Logistics Limited audited annual financial statements for the year ended 30 June 2020 with the exception of the 2019 free cash flow that excludes Motus. As previously reported except for the financial position that has been restated for the adoption of IFRS 16 – Leases and IFRIC 23 – Uncertainty over Income Tax Treatments. As previously reported.

Definitions

1.	Free cash flow – calculated by deducting replacement capital expenditure and lease payments from the cash flow from operating activities.
2.	Operating assets – total assets less loans receivable, tax assets and assets of disposal group.
3.	Operating liabilities – total liabilities less interest-bearing borrowings, tax liabilities and put option liabilities.
4.	Net working capital – inventories plus trade, other receivables and contract assets less trade and other payables and provisions.
5.	Net interest-bearing debt – interest-bearing borrowings, less cash resources.
6.	Revenue to average net operating assets (times) – revenue divided by average net operating assets.
7.	Revenue relating to sales of goods to average inventory (times) – revenue relating to sales of goods divided by average inventory.
8.	Operating profit to average net operating assets (%) – operating profit divided by average net operating assets.
9.	Operating margin (%) – operating profit divided by revenue.
10.	Return on average ordinary shareholders' interest (%) – net profit attributable to owners of Imperial divided by average shareholders' interest (calculated by using the opening and closing balances) attributable to shareholders.
11.	Return on invested capital (%) – 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 we operate. Invested capital is a 12-month average of shareholders' equity plus non-controlling interests, plus net interest-bearing debt (interest-bearing borrowings long term and short term minus non-financial services cash and cash equivalents), plus lease obligations.
12.	Weighted average cost of capital (%) – calculated by multiplying the cost of each capital component by its proportional weight and then summing, therefore: ACC = (after tax cost of debt % multiplied by average debt weighting) + (cost of equity multiplied by average equity weighting).
13.	Free cash flow to headline earnings ratio – free cash flow divided by headline earnings.
14.	Total taxes and levies paid – made up of South African normal taxation, foreign taxation, rates and taxes, skills development and unemployment insurance fund levies.
15.	Earnings yield (%) – the headline earnings per share divided by the closing price per share.
16.	Price earnings ratio (times) – the closing price of a share divided by the headline earnings per share.
17.	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).
18.	Total market capitalisation at closing prices (Rm) – total ordinary shares in issue before treasury shares multiplied by the closing price per share.

Value-added statement – continuing operations

for the year ended 30 June 2020

		2020  Rm		%		2019* Rm	%
Revenue		46 380				44 039
Paid to suppliers for materials and services		(31 577)				(29 496)
Total wealth created		14 803				14 543
WEALTH DISTRIBUTION
Salaries, wages and other benefits (note 1)		10 517		71		9 749	67
Providers of capital		1 292		9		1 635	11
– Providers of debt		762		5		605	4
– Providers of equity		530		4		1 030	7
Government (note 2)		347		2		564	4
Reinvested in the group to maintain and develop operations		2 647		18		2 595	18
– Depreciation, amortisation, net of impairments and recoupments		2 639				2 203
– Future expansion		8				392
		14 615		100		14 365	100

Notes

			2020   Rm		2019 Rm
1.	Salaries, wages and other benefits
	Salaries, wages, overtime, commissions, bonuses and allowances		9 440		8 813
	Employer contributions		1 077		936
			10 517		9 749
2.	Central and local governments
	Income tax		134		347
	Withholding and secondary tax on companies		25		39
	Rates and taxes		104		77
	Skills Development Levy		34		36
	Unemployment Insurance Fund		50		65
			347		564
* Restated for IFRS 16 – Leases and for the European shipping business discontinued operations.