Summarised consolidated statement of profit or loss
for the year ended 30 June
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 of 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 |
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:
Other non-operating items mainly comprised of gains on the re-measurement 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 or profit from discontinued operations comprises CPG and the European shipping business in the current financial year and Motus, the European shipping 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
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 |
Financial position
at 30 June
R million | % change |
2020 Audited |
2019 Audited~ |
||||
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 (liabilities) 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 |
The significant variances on the financial position at 30 June 2020 when compared to 30 June 2019 are explained as follows:
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 loss 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) |
Pro forma cash flow summary to June 2020 including CPG and European shipping in both periods excluding Motus in the comparative period
Cash flow summary to June 2020 including discontinued operations in both periods excluding Motus in the comparative period
R million | 2020 Audited |
2019 Unaudited*^ |
|||
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 | (1 167) | (485) | |||
Free cash flow | 1 043 | 1 437 |
* | For the cash flows including Motus in the prior year please refer to the consolidated statement of cash flows. 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.
The following are the significant cash flow items:
Cash generated by operations before movements in net working capital of R4 536 million decreased by R703 million mainly due to lower operating profit which translated into the lower cash flow.
A decrease in net working capital from 30 June 2019 resulted in a cash inflow of R559 million. The decrease is mainly attributable to excellent capital and cash flow management in F2020. Net working capital at year end was below our guidance of between 4% and 5% of revenue. We expect this to normalise as revenue levels recover.
Net capital expenditure increased to R1 482 million from R1 094 million in F2019 primarily due to higher investment in fleet expansion as a result of the purchase of Lowveld Busses in South Africa, to support new contract gains, fleet replacement in South Africa and investment in specialised new fleet in International.
Interest of R918 million and tax of R367 million were paid during the year. Dividends amounted to R658 million during the year.
Other significant cash outflow items included lease obligation payments of R2 032 million, share buybacks of R225 million and changes to non-controlling interests of R277 million.
The cash flow benefitted from an inflow arising from movements in other associates and joint ventures mainly due to the sale of associates in the South African division during the period.
Free cash flow (post-maintenance capex and including discontinued operations) generation was strong despite a decrease to R1 043 million from R1 437 million in the prior year. Free cash outflow from discontinued operations of R261 million (2019: R507 million) is included. Free cash flow (post-maintenance capex and excluding discontinued operations) decreased to an inflow of R1 304 million from a cash inflow of R1 944 million in F2019. This resulted in a continuing free cash flow to continuing headline earnings ratio of 4,42 times.
Liquidity
The Group’s liquidity position remains strong with R13,2 billion of unutilised banking facilities (post the receipt of the European shipping proceeds). In total, 76% of the group’s 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 pay-out ratio is 45% of continuing HEPS, subject to prevailing circumstances. As the interim dividend 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
Acquisitions concluded post-year-end
DISPOSALS (concluded post-year-end)
DIRECTORATE AND EXECUTIVE MANAGEMENT CHANGES
As previously announced, Ms Bridget Radebe and Mr Dirk Reich were appointed as independent non-executive directors, effective 1 September 2019. Ms Thembisa Skweyiya resigned from the board on 31 December 2019.
In keeping with Imperial’s non-executive director succession planning, Mr Roderick Sparks retired as Lead independent director on 30 October 2019. He remains an independent member of the board and is chairman of the social, ethics and sustainability (SES) committee. Mr Graham Dempster was appointed to succeed Mr Sparks as the Lead independent director on the same date.
Ms Bridget Radebe was appointed to succeed Mr Dempster as chairman of the audit committee from 1 September 2020. Mr Dempster remains a member of the audit committee.
After 26 years of service to Imperial, Mr Nico van der Westhuizen – a member of the Imperial executive committee and CEO of Imperial Logistics South Africa – retired from the group at the end of June 2020. Mr Edwin Hewitt was appointed his successor on 1 March 2020.
In line with changes to our organisational structure, effective July 2020, Mr Johan Truter was appointed CEO: Market Access. As of the same date, Mr Edwin Hewitt was appointed CEO: Logistics Africa (encompassing road freight, contract logistics and LLP in Africa) and Mr Hakan Bicil was appointed CEO: Logistics International (encompassing road freight, contract logistics, air/ocean and LLP outside Africa).
PROSPECTS
This is a difficult and demanding time for us as the Covid-19 pandemic continues to spread. 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. However, a signifi cant recovery was recorded across the business in July and August 2020.
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 to deliver:
The balance sheet of the business is strong and resilient, with sufficient headroom in terms of capacity and liquidity to facilitate our strategic growth aspirations.
The dividend will be reassessed at the interim results in February 2021 based on trading conditions in the next six months.
While we will continue to meet the demands and manage the implications of the pandemic in the short term, we will ensure that significant time and energy is given to delivering against our strategy – to build a resilient and sustainable business with a purpose, well into the future.
Finally, we thank our shareholders and funders for their ongoing support and patience as we continue to navigate the current crisis and execute our urgent strategic deliverables to unlock and deliver value for all our stakeholders.
Mohammed Akoojee | George de Beer |
Group Chief Executive Officer | Group Chief Financial Officer |
25 August 2020