Summarised audited results
for the 12 months ended 30 June 2021

2021
Imperial is your 'Gateway to Africa'
Imperial is your 'Gateway to Africa'

Group financial performance

Summarised consolidated statement of profit or loss for the year ended 30 June 2021 

R million   % change  2021  2020 
CONTINUING OPERATIONS       
Revenue     13  52 208  46 380 
Net operating expenses        (47 222) (42 282)
Profit from operations before depreciation, impairment and recoupments  22  4 986  4 098 
Depreciation, amortisation, impairments and recoupments        (2 650) (2 639)
Operating profit before the items listed below*     60  2 336  1 459 
Impairment of properties net of recoupments     (118) (194)
Amortisation and impairment of intangible assets arising on business combinations     (404) (393)
Foreign exchange gains        210  93 
Profit before net finance costs     110  2 024  965 
Net finance cost     (3) (742) (762)
Profit before share of results of associates and joint ventures        1 282  203 
Share of results of associates and joint ventures        3  22 
Profit before the remeasurement of financial liabilities and capital items     471  1 285  225 
Remeasurement of financial liabilities and capital items        (477) 52 
Profit before tax        808  277 
Income tax expense        (274) (159)
Profit for the year from continuing operations     353  534  118 
DISCONTINUED OPERATIONS        593  (344)
Net loss from CPG        (305)
Net profit (loss) from the European Shipping business        593  (39)
Net profit (loss) for the year        1 127  (226)
Net profit (loss) attributable to:       
Owners of Imperial        951  (303)
– Continuing operations     358  42 
– Discontinued operations        593  (345)
Non-controlling interests        176  77 
– Continuing operations     176  76 
– Discontinued operations          

* Refer to the glossary of terms for a definition of operating profit.

Revenue and operating profit from continuing operations increased by 13% and 60% respectively as the prior year was negatively impacted by COVID-19 across all businesses.

The R1 060 million increase in profit before remeasurement of financial liabilities and capital items to R1 285 million is mainly attributed to:

  • the increase in operating profit;
  • the decrease in net finance costs due to the reduction in debt, arising from the shipping proceeds;
  • a foreign exchange gain of R364 million due to reduction in capital in foreign subsidiaries, partially offset by foreign exchange losses in the African operations of both Market Access and Logistics Africa that arose due to the significant devaluation of most of the functional currencies;
  • reduction in the impairment to properties net of recoupments due to a significant portfolio of properties being impaired in the prior year; and
  • partially offset by the increase in amortisation of intangibles arising on business combinations as a result of businesses acquired during F2020.

Remeasurement of financial liabilities and capital items comprised of impairments to goodwill in businesses in Market Access, as well as the loss on disposal of the South American shipping business and Pharmed.

The effective tax rate calculated by dividing income tax by profit before tax, excluding share of result of associates and joint venture reduced from 62% in the prior year to 34% in the current year.

Significant contributors to the high effective tax rate in the current year are the non-deductible tax items included in remeasurement of financial liabilities and capital items and deferred tax assets not recognised, offset partially by non-taxable gains such as the foreign exchange gain due to the reduction in capital in foreign subsidiaries.

The gain from discontinued operations is due to the net gain arising on disposal of the European shipping business of R589 million and the reporting result for the business until the date of disposal at the end of July 2020.

Non-controlling interest's share of income increased mainly due to the impact of the new acquisitions last year and the decrease in the loss contribution of Pharmed as a result of its disposal during the year. This increase was partially offset by a decrease in non-controlling interests as a result of buy-outs.

Earnings, headline earnings and core earnings per share

Core EPS is determined as follows: Headline earnings are adjusted by items that are not considered to be of a trading nature to arrive at Core EPS.

R million   % change  2021  2020 
Headline earnings reconciliation       
Earnings (loss) – total operations  951  (303)
– Continuing operations  752  358  42 
– Discontinued operations     593  (345)
Recoupment from the disposal of property, plant and equipment (IAS 16)    (34) (54)
Loss on disposal of intangible assets (IAS 38)      
Impairment of property, plant and equipment and transport fleet (IAS 36)    86  89 
Impairment of right-of-use assets (IFRS 16)    41  140 
Impairment of intangible assets (IAS 36)    35  121 
Impairment of goodwill (IAS 36)    40  223 
Impairment of investment in associates and joint ventures (IAS 28)    11 
Loss (profit) on disposal of subsidiaries, associates and businesses (IFRS 10), (IAS 28)    520  (17)
Remeasurements included in share of results of associates     (3)
Foreign exchange gain reclassified to profit or loss (IAS 21)    (364) (160)
Tax effects of remeasurements     (77) (89)
Non-controlling interests' share of remeasurements     4  (6)
Net headline earnings adjustments for discontinued operations     (589) 248 
Headline earnings  214  621  198 
– Continuing operations  109  617  295 
– Discontinued operations     4  (97)
Headline earnings per share (cents)      
Continuing operations          
– Basic  113  332  156 
– Diluted  110  317  151 
Discontinued operations          
– Basic     2  (51)
– Diluted     2  (50)
Total operations          
– Basic  218  334  105 
– Diluted  216  319  101 
Core earnings – continuing operations only       
Headline earnings     617  295 
Amortisation of intangible asset arising on business combinations     369  374 
Remeasurement of put option liabilities     (39) (277)
Remeasurement of contingent consideration liabilities     (30) (23)
Business acquisition costs     41  21 
Remeasurements included in share of results of associates and joint ventures     3 
Tax effects of remeasurements     (100) (99)
Non-controlling interests' share of remeasurements     (28) (23)
Core earnings     833  268 
Core earnings per share (cents)      
– Basic  215  448  142 
– Diluted  428  137 

Financial position at 30 June 2021

R million   % change  2021  2020 
Goodwill and intangible assets  (14) 6 121  7 084 
Investment in associates and joint ventures  201  198 
Property, plant and equipment  (12) 2 937  3 326 
Transport fleet  (40) 3 132  5 186 
Right-of-use-assets  (21) 4 297  5 422 
Investments and other financial assets  24  337  271 
Net working capital*  45  787  544 
Net assets of disposal groups and discontinued operations  (100)    2 781 
Retirement benefit obligations  (19) (899) (1 109)
Net debt*  (52) (4 038) (8 391)
Lease obligations  (20) (4 866) (6 080)
Other financial liabilities  (36) (912) (1 415)
Net income tax assets*  45  662  455 
Total equity     7 759  8 272 
Total assets  (29) 30 329  42 526 
Total liabilities  (34) (22 570) (34 254)
Net debt?equity %     52,0  101,4 
Net debt?equity % (including lease obligations)    114,8  174,9 

* Refer to glossary of terms.

The significant variances on the financial position at 30 June 2021 when compared to 30 June 2020 are as follows:

  • The decrease in goodwill and intangible assets is mainly attributed to currency movements, and impairment to goodwill and amortisation of intangible assets arising on business combinations, offset partially by additions to intangible assets.
  • The increase in investment in associates arose mainly due to the acquisition of a 49% shareholding in Pharmafrique (Pty) Ltd (trading as Kiara Health) for approximately R76 million, partially offset by currency adjustments and the disposal of associates in Logistics International.
  • The decrease in property, plant and equipment is mainly attributed to currency movements and to depreciation exceeding net capex.
  • The decrease in transport fleet assets resulted from the disposal of the South American shipping business.
  • The decrease in right-of-use assets is due to depreciation exceeding the recognition of new leases, reclassifications and terminations and currency movements.
  • The increase in investments and other financial assets is mainly due to an increase in investment in Imperial's Venture Fund.
  • The increase in net working capital is mainly attributed to the growth in the business, primarily in Logistics Africa.
  • The decrease in net assets of disposal groups and discontinued operations is due to the European shipping business and Pharmed that were disposed of during the year.
  • The decrease in the retirement benefit obligation balance is mainly due to currency movements, revaluation of the obligation, disposals and payments made to former employees.
  • The movement in net debt is explained in the cash flow summary that follows.
  • Lease obligations decreased as lease payments during the year exceeded new leases recognised coupled with lower translated foreign leases.
  • The decrease in other liabilities is mainly due to currency movements, the settlement of put options as the result of the minority buyouts in Eco Health. Remeasurement of the put option and contingent consideration liabilities, as well as the settlement of loans, hedges and contingent consideration liabilities during the year also contributed to the decrease. The decrease was partially offset by the recognition of a new put option liability arising from the purchase of Parcel Ninja.

The balance sheet movement in net debt of R4 353 million includes currency movements, debt arising on the disposal and acquisition of subsidiaries, and other non-cash movements of R757 million that are excluded from the cash flow movement of R3 596 million.

Cash flow summary to 30 June 2021 including discontinued operations in both years

R million   2021  2020 
Cash flows from operating activities    
Cash generated by operations before movements in net working capital  4 908  4 536 
Movements in net working capital  (1 046) 559 
Cash generated by operations before interest and taxes paid  3 862  5 095 
Net interest paid  (707) (918)
Tax paid  (519) (367)
Cash generated by operations  2 636  3 810 
Cash flows from investing activities       
Net disposal (acquisition) of subsidiaries and businesses  4 195  (276)
Expansion capital expenditure  (554) (747)
Net replacement capital expenditure  (179) (735)
Net movement in other associates and joint ventures  (69) 45 
Net movement in investments, loans and non-current financial instruments  (80) (59)
Cash generated from (utilised in) investing activities  3 313  (1 772)
Cash flows from financing activities       
Hedge cost premium paid  (4) (2)
Settlement of interest-rate-swap instruments  (46) (11)
Repurchase of ordinary shares  (101) (225)
Dividends paid  (279) (658)
Change in non-controlling interests  (122) (277)
Payment of lease obligations  (1 801) (2 032)
Cash utilised in financing activities  (2 353) (3 205)
Movement in net debt  3 596  (1 167)
Free cash flow  656  1 043 

The following are the significant cash flow items:

  • Cash generated by operations before movements in net working capital of R4 908 million increased by R372 million mainly due to the increase in operating profit.
  • The increase in working capital arose from the growth in the overall business, average working capital as a percentage of revenue is at 2,82% at 30 June 2021 and considered to be comfortably below the acceptable range of 4 to 5% of revenue.
  • Net interest of R707 million and tax of R519 million was paid during the year.
  • The cash inflow arising from the net disposal of subsidiaries includes R3 440 million that was received on the disposal of the European shipping business and R1 305 million from the South American shipping proceeds.
  • Net capital expenditure decreased to R733 million mainly due to enhanced efforts across businesses to tighten capital expenditure during COVID-19 and more effective fleet management in Logistics Africa.
  • The cash outflow arising from movements in other associates and joint ventures arose mainly due to the acquisition of a 49% shareholding in Pharmafrique (Pty) Ltd (trading as Kiara Health) for approximately R76 million.
  • Dividends net of dividends on treasury shares amounting to R157 million were paid to shareholders during the year.
  • Dividends amounting to R122 million were paid to non-controlling shareholders during the year.
  • Other significant cash outflow items included lease obligations payments of R1 801 million, share buybacks of R101 million and cash paid on change in non-controlling interests of R122 million.
  • Free cash inflow (post maintenance capex and including discontinued operations) was R656 million compared to an inflow of R1 043 million in the prior year. Free cash flow (post maintenance capex, repayment of lease obligations excluding discontinued operations and CPG) amounted to an inflow of R900 million in the year ending June 2021 from an inflow of R1 304 million in the year ending June 2020. This resulted in a continuing free cash flow excluding CPG to continuing headline earnings ratio of 1,46 times and a continuing free cash conversion ratio of 86%, which improved significantly from 72% in F2020.

Movement in total equity for the 12 months to 30 June 2021

Total equity of R7 759 million decreased by R513 million from R8 272 million previously reported on 30 June 2020.

Changes in equity for the year ended 30 June 2021

R million   2021 
Comprehensive loss  (41)
Net profit attributable to Imperial shareholders  951 
Net profit attributable to non-controlling interests  176 
Decrease in the foreign currency translation reserve  (1 262)
Increase in the hedge accounting reserve  60 
Revaluation of retirement benefit obligation, net of taxation  34 
Movement in share based reserve net of transfers to retained earnings  36 
Repurchase of Imperial Logistics shares  (101)
Ordinary dividend  (157)
New put arrangements over non-controlling interests  (66)
Non-controlling interests acquired in business combinations, net of disposals  12 
Net decrease in non-controlling interests through buy-outs  (74)
Non-controlling interests share of dividends  (122)
Total decrease  (513)

Liquidity

The group's liquidity position remains strong with R14,4 billion of unutilised banking facilities, and 54% of the group debt (excluding leases) is long-term in nature and 36% of the debt is at fixed rates.

Dividend

An interim cash dividend of 83 cents per ordinary share, which is 19% of continuing Core EPS for the year, was paid to shareholders in March 2021. As disclosed in the circular relating to the DP World Transaction, no final dividend is declared. As such the total F2021 dividend was 83 cents per ordinary share (F2020: 167 cps).