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.
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.
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:
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.
|The following major rates of exchange were used in the translation of the group's foreign operations:|
|SA Rand:US Dollar|
|SA Rand:Pound Sterling|
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:
|6 – 12
|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|
|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|
|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||7|
|Net interest paid||(703)||(744)|
|Fair value loss on interest-rate swap instruments||(39)||(18)|
|Movement in goodwill during the year were as follows:|
|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|
|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|
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|
|Foreign exchange contracts||8|
|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
|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)|
|Carrying value at end of year||515||150||665|
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.
|FINANCIAL INSTRUMENT | KEY ASSUMPTION|
|Put option liabilities | Earnings growth||515||10||(12)|
|Contingent consideration liabilities | Assumed profits (level 3)||150||10||(16)|
|Capital expenditure commitments||257||114|
Refer to Business combinations during the year.
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.