Summarised audited results
for the 12 months ended 30 June 2021

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

Notes to the summarised consolidated financial statements for the year ended 30 June 2021

1. BASIS OF PREPARATION

The provisional summarised consolidated financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements 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 30 June 2021 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, and also, at a minimum contain the information required by 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 summarised 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 2021.

These summarised consolidated financial statements have been prepared under the supervision of WS Buckton, CA (SA) and were approved by the board of directors on 7 September 2021.

2. ACCOUNTING POLICIES

The accounting policies adopted and methods of computation used in the preparation of the summarised consolidated financial statements are in accordance with IFRS and are consistent with those of the annual financial statements for the year ended 30 June 2020.

3. BASIS OF SEGMENTATION

In line with the group's strategy, effective 1 July 2020, management of the group has been reorganised from a regional focus to the solutions we offer, with the following major reporting segments:

  • Logistics Africa
    • Freight
    • Contract Logistics
  • Logistics International
    • Freight
    • Contract Logistics
  • Market Access

The reorganisation resulted in the representation of the segment reports, as some entities moved across segments and across capabilities. In addition, the trading results of the South American shipping business has been moved from Logistics International to businesses held for sale.

4. FOREIGN EXCHANGE RATES

  2021 2020
The following major rates of exchange were used in the translation of the group's foreign operations:
SA Rand:Euro
– closing 16,93 19,51
– average 18,35 17,32
SA Rand:US Dollar
– closing 14,27 17,37
– average 15,40 15,67
SA Rand:Pound Sterling
– closing 19,72 21,46
– average 20,70 19,74

 

5. COVENANT COMPLIANCE, CASH AND LIQUIDITY

The group has externally imposed capital requirements in terms of debt covenants on bank facilities. The covenant, which is calculated on a basis pre IFRS 16 Leases, requires the group to maintain a net debt to EBITDA ratio of below 3,25:1.

At 30 June 2021 the group's net indebtedness for borrowed monies for covenant calculation purposes was R4 056 million and the net indebtedness to EBITDA ratio was 1,3 times. The covenant ratio when calculated on a comparative basis was 2,8 times at 30 June 2020. The improvement in the ratio was a direct consequence of the decrease in net debt which was R8 391 million at 30 June 2020 compared to R4 038 million at 30 June 2021. The receipt of the proceeds from the sale of the Shipping Businesses in Europe and South America and the implementation of strict capital management measures during the year resulted in the improvement in the net debt to EBITDA ratio.

At 30 June 2021, the group held cash resources of R1 235 million and had undrawn credit facilities of R14 413 million.

The following table summarises the maturity profile of the group's financial liabilities at 30 June 2021 based on undiscounted contractual cash flows with the focus on the short-term:

R million Carrying
value
< 6
months
6 – 12
months
> 12
months
Financial liability
Interest-bearing borrowings 5 273 741 1 671 2 861
Lease obligations 4 866 626 832 3 408
Non-current derivative liabilities 19 19
Put option liabilities 515 18 497
Contingent consideration liabilities 150 131 19
Other financial liabilities 228 228
Trade payables 8 997 4 432 4 565
20 048 5 948 7 087 7 013

 

6. REMEASUREMENT OF FINANCIAL LIABILITIES AND CAPITAL ITEMS

R million  2021  2020 
Remeasurement of financial instruments not held-for-trading  69   300  
Remeasurement of put option liabilities  39   277  
Gain on remeasurement of contingent consideration liabilities  30   23  
Capital items  (546) (248)
Impairment of goodwill  (40) (223)
Loss on disposal of subsidiaries, businesses and associates  (520) (23)
Impairment reversal (impairment) of equity investments  1  (26)
Profit on disposal of associates and joint ventures  40 
Impairment of investments in associates and joint ventures  (11) (2)
Business acquisition costs  (41) (21)
Net gain on termination of leases  65 
(477) 52 

 

7. NET FINANCE COST

R million  2021  2020 
Net interest paid  (703) (744)
Fair value loss on interest-rate swap instruments  (39) (18)
(742) (762)

 

8. GOODWILL AND INTANGIBLE ASSETS

R million   2021  2020 
Movement in goodwill during the year were as follows: 
Goodwill 
Cost  7 265  7 814 
Accumulated impairment  (2 752) (2 712)
4 513  5 102 
Carrying value at beginning of year  5 102  4 910 
Net acquisition and disposal of businesses  67  477 
Impairment charge  (40) (223)
Currency adjustments  (616) 1 057 
Reclassified to assets of discontinued operations  (1 119)
Carrying value at end of year  4 513  5 102 
Intangible assets  1 608  1 982 
Goodwill and intangible assets  6 121  7 084 

 

9. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value hierarchy

The group's financial instruments carried at fair value are classified in two categories defined as follows:

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.

R million Level 2 Level 3
Financial assets
Unlisted investments 155
Foreign exchange contracts 8
Financial liabilities
Interest-rate swap derivatives 19
Contingent consideration liabilities (arising on business combinations) 150
Foreign exchange contracts 11

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.

The following table shows a reconciliation of the opening and closing carrying values of the put option liability (at present value) and the contingent consideration liability (at level 3 fair value) at 30 June 2021.

R million  Put options  liabilities  Contingent 
consideration 
liabilities 
Total 
Carrying value at beginning of the year  646  336  982 
Arising on business combinations  66  12  78 
Remeasurements through profit or loss  (39) (30) (69)
Settlements  (48) (120) (168)
Currency adjustments  (110) (48) (158)
Carrying value at end of year  515  150  665 

Sensitivity information

The carrying values of the put option liabilities and the contingent consideration liabilities were estimated by applying an income approach valuation method including a present value discount technique. The 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 probability was based on historical performances but adjusted for expected growth.

R million  Carrying
value
Increase
in carrying
value
Decrease in
carrying
value 
FINANCIAL INSTRUMENT | KEY ASSUMPTION
Put option liabilities | Earnings growth 515 10 (12)
Contingent consideration liabilities | Assumed profits (level 3) 150 10 (16)

 

10. CONTINGENCIES AND COMMITMENTS

R million   2021 2020
Capital expenditure commitments 257 114
Contingent liabilities 256 786

 

11. BUSINESS COMBINATIONS

12. EVENTS AFTER THE REPORTING PERIOD

The following events have occurred after the reporting period:

– Deep Catch acquisition

– J&J Group acquisition

– B-BBEE transaction

– DP World offer

Further details on the above are provided on Strategy and Acquisitions and partnerships in the report.