Imperial

Imperial Logistics performed satisfactorily in mixed trading conditions, supported by excellent results from Logistics African Regions, offset by the underperformance in the consumer packaged goods (CPG) and healthcare businesses in Logistics South Africa, and the lower results from the automotive and express palletised distribution businesses in Logistics International.

• Each division remains focused on concluding the rationalisation of their portfolios and improving efficiencies, with an increased drive to significantly remove and reduce costs, which we anticipate will be concluded in H2 F2019 and the benefits of which will be fully realised in the 2020 financial year.
• Imperial Logistics’ renewal rate across its divisions on existing contracts remains in excess of 90%, with an encouraging pipeline of new opportunities supported by an excellent new contract gain rate. New business revenue of approximately R4,0 billion was secured during the past 12 months, the full benefit of which should be realised in the 2020 financial year as contracts were concluded at various times during the period.
• Excluding businesses held for sale, Imperial Logistics recorded growth in revenue of 6% and operating profit remained stable. Revenue* generated outside South Africa increased 10% to R18,8 billion (70% of group revenue) and operating profit* generated outside South Africa increased 5% to R867 million (65% of group operating profit). A full reconciliation from earnings to headline earnings is provided in the group financial performance section.
• Net working capital of R2,6 billion increased from R1,9 billion in June 2018, impacted mainly by higher inventory in Logistics African Regions and an increase in trade and other receivables in Logistics International. We expect working capital to normalise by June 2019.
• Net debt increased by 9% or R509 million when compared to June 2018 but was significantly lower when compared to the prior period – mainly due to the recapitalisation of Imperial Logistics and the disposal of Schirm in F2018.
• Free cash flow from continuing operations increased to R258 million from an outflow of R594 million as the prior period included significantly higher cash outflow arising from working capital movements.
• Motus unbundling: The unbundling of Motus was concluded in November 2018 and Motus is thus presented as a discontinued operation in this set of results for the four months ending 31 October 2018, where stipulated.
  
  The fair value of the distribution of R17 billion exceeded the net carrying value of Motus at 31 October 2018, resulting in the recognition of a fair value gain of R4,2 billion in the statement of profit or loss.

* Excluding businesses held for sale in Imperial Logistics.

Imperial Logistics’ activities on the African continent produced 54% and 70% respectively of revenues and operating profits during the six months to December 2018, with the remainder generated mainly in Europe and the United Kingdom. Trading conditions in the business’ diverse markets remain mixed.

Environment

South Africa

Notwithstanding the South African economy recording marginal growth in the latter part of calendar 2018, high unemployment, higher VAT, fuel price increases and economic uncertainty ahead of the May 2019 national elections collectively contributed to diminished consumer demand and affordability, resulting in most sectors being under increasing pressure.

The ongoing challenging trading conditions have been exacerbated by a prolonged volatile Rand, which depreciated by 6% on average against the US Dollar during the period, largely driven by external factors relating to emerging markets, poor economic data, and policy and political concerns.

The impact of this lacklustre trading environment on Imperial Logistics’ operating profit has been reduced volumes, and ongoing competitive and client pressures, particularly in the consumer and manufacturing businesses. R8,2 billion or 30% of group revenue and R458 million or 35% of group operating profit was generated by the region in the six months to 31 December 2018.

Rest of Africa

Gradual improvement in domestic demand has enhanced economic prospects in certain sub-Saharan African countries. Our primary positioning as a healthcare and CPG route-to-market partner has therefore stood us in good stead in the rest of Africa where R6,3 billion or 24% of group revenue and R465 million or 35% of group operating profit was generated in the six months to 31 December 2018.

Our businesses in Nigeria, Ghana and Mozambique performed well. However, recessionary conditions in Namibia, and general political uncertainty resulted in lower volumes and reduced margins. A slower than expected economic recovery in Kenya depressed consumer demand, which hampered the performance of our business in Kenya.

Eurozone and United Kingdom (UK)

Our international operations generated R12,4 billion or 46% of group revenue and R402 million or 30% of group operating profit in the six months to 31 December 2018.

Economic conditions in Europe were largely positive, supported by ongoing economic expansion in the EU. However, certain sectors in which we operate – such as steel – remain under pressure. During the period, our shipping operation experienced the negative impact of the lowest water levels on the River Rhine in Germany in recorded history, however water levels normalised during January 2019. The implementation of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) resulted in significantly lower vehicle production volumes in Logistics International’s automotive business in H1 F2019. Production volumes are recovering in H2 F2019 but are still not at optimal levels. US tariffs could result in reduced exports for our clients in the automotive and steel industries.

In the UK, Brexit has increased economic and political uncertainty, with the potential risk of depressing consumer demand and activity, and consequently affecting the performance of the express palletised distribution business.

Logistics South Africa

	HY1 2019		HY1 2018*	%  change on  HY1 2018	HY2 2018*	%  change on  HY2 2018
Revenue (Rm)	8 153		8 361	(2)	7 753	5
Operating profit (Rm)	457		504	(9)	428	7
Operating margin (%)	5,6		6,0		5,5
Return on invested capital (ROIC) (%)	12,2		13,4
Weighted average cost of capital (%)	10,9		11,1
Targeted ROIC (WACC +3%)	13,9		14,1
Debt/equity ratio (%)	63		67

Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and eliminations.

* Restated due to the reallocation of results related to significant project work from Logistics South Africa to Logistics African Regions.

Imperial Logistics South Africa delivered an unsatisfactory performance in challenging market conditions, reducing revenue by 2% and operating profit by 9%. Results were negatively impacted by depressed volumes and lower consumer demand mainly in the CPG and healthcare businesses, partly offset by good results from the transport and warehousing and supply chain management and consulting businesses. The transport and warehousing, and specialised freight segments also experienced lower volumes during the six months but good cost management, rationalisation and consolidation of operations mitigated this. With the exception of the CPG and healthcare businesses where margins were significantly affected by lower revenues, most other businesses were largely able to sustain their operating margins through rationalising and improving efficiencies and reducing costs significantly.

Net capital expenditure increased to R435 million from R347 million in the prior period and comprised mainly of expanding the fleet to accommodate new contracts, as well as the replacement of transport fleet.

The net debt to equity ratio improved from 67% in the prior period to 63% mainly as a result of the proceeds of R200 million received from Afropulse through the broad-based black economic empowerment (BBBEE) transaction. The ROIC of 12,2 % reduced from 13,4% in the prior period mainly due to lower profits, and is below the target hurdle rate of WACC +3%.

Logistics African Regions

	HY1 2019		HY1 2018*	% change on HY1 2018	HY2 2018*	% change on HY2 2018
Revenue (Rm)	6 339		5 385	18	5 076	25
Operating profit (Rm)	465		401	16	325	43
Operating margin (%)	7,3		7,4		6,4
Return on invested capital (%)	17,8		20,8
Weighted average cost of capital (%)	14,2		8,2
Targeted ROIC (WACC +3%)	17,2		11,2
Debt/equity ratio (%)	40		138

Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and eliminations.

* Restated due to the reallocation of results related to significant project work from Logistics South Africa to Logistics African Regions.

Imperial Logistics African Regions delivered an excellent set of results, increasing revenue and operating profit by 18% and 16% respectively, despite mixed trading conditions. Results were supported by the acquisition of CB Enterprises, a CPG route-to-market business in Namibia which has been included for the full six months, and solid performances from our healthcare businesses in West Africa, where we continue to operate as the leading distributor of pharmaceuticals in Nigeria and Ghana. Our sourcing and procurement business (Imres) also contributed positively, resulting from a strong order book and long-term contract gains despite some margin pressure. Results were also boosted by substantial project work in the donor aid market undertaken during the period. The average weakening of the Rand by 6% against the US Dollar positively enhanced the Rand performance during the period.

Surgipharm continues to grow revenue and operating profit but its performance was hindered by the slow economic recovery in Kenya and increased parallel imports in the region. Ongoing mitigation efforts include the on-boarding of new principals and the expansion of product categories to diversify the product mix in this business.

Our CPG route-to-market business in Mozambique performed well, while the Namibian operations performed satisfactorily in ongoing recessionary conditions.

The managed solutions business was negatively impacted by lower chrome volumes, challenging economic conditions in Zimbabwe and by lower volumes from aid organisations.

Net capital expenditure of R26 million was incurred during the first half. The comparative period’s capital expenditure included property disposals.

The division was recapitalised during the last quarter of F2018, resulting in a significantly lower net debt to equity ratio of 40% at the end of December 2018 compared to 138% in the prior period.

ROIC at 17,8% declined from 20,8% mainly due to the normalisation of working capital and higher inventory levels, but exceeds the target hurdle rate of WACC +3%.

Logistics International

Rm	HY1 2019		HY1   2018	%  change on  HY1 2018	HY2  2018	%  change on  HY2 2018
Revenue (Euro million)	760		733*	4	780	(3)
Operating profit (Euro million)	24,4		27,0	(10)	44,0	(45)
Operating margin (%)	3,2		3,7		5,6
Revenue (Rm)	12 412		11 592*	7	11 608	7
Operating profit (Rm)	402		434	(8)	650	(38)
Operating margin (%)	3,2		3,8		5,6
Return on invested capital (%)	9,8		8,3
Weighted average cost of capital (%)	7,3		5,4
Targeted ROIC (WACC +2%)	9,3		7,4
Debt/equity ratio (%)	59		133

Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table excludes businesses held for sale and eliminations.

* Restated, refer to note 4.

Logistics International’s revenue in Euros increased by 4% while operating profit declined by 10%. Revenue increased by 7% and operating profit decreased by 8% in Rands, which was 3% weaker on average against the Euro during the period. Results were hampered by the impact of the implementation of WLTP that resulted in significantly lower vehicle production volumes in the automotive business in H1 F2019. However, production volumes are recovering in H2 F2019 but are still not at optimal levels. Excluding the impact of WLTP, operating profit would have improved year on year.

During the period, the performance of the European inland shipping business was negatively impacted by the lowest water levels on the River Rhine in recorded history, but this impact was largely mitigated through the business increasing prices and receiving partial compensation from customers for the losses incurred. The Road Liquid business benefited, however, from increased volumes subsequently shifted from river to road. The retail, steel and industrial segments delivered unsatisfactory results resulting from lower volumes.

Results for the six months were supported by contract renewals and new business gains in automotive and a good performance from the international shipping operations in South America.

While the express palletised distribution business (Palletways) continues to contribute positively to revenue growth, its profitability was depressed by higher costs in the UK due to imbalanced traffic flows and the increased economic uncertainty (due to Brexit) placing pressure on members. The recruitment of additional members and a revised pricing model will reduce the pressure on costs and members will be better able to handle the increased volumes and larger network.

Net capital expenditure increased to R240 million from R210 million in H1 F2018 and included the replacement of our specialised chemical and gas fleet.

The net debt to equity ratio improved significantly from 133% in the prior period to 59% due mainly to the proceeds from the disposal of Schirm in H2 F2018. The ROIC of 9,8% improved markedly from 8,3% and exceeds the target hurdle rate of WACC +2% for the region.

Group profit or loss (extracts)

Rm	HY1 2019		HY1 2018	% change
Continuing operations
Revenue	26 637		26 320	1
Net operating expenses	(24 760)		(24 386)	2
Operating profit	1 325		1 376	(4)
Operating margin	5,0%		5,2%
Amortisation of intangibles arising on business combinations	(196)		(220)
Recoupments from sale of properties net of impairments	4		(3)
Foreign exchange losses	(21)		(31)
Other non-operating items	(8)		(117)
Net finance cost	(223)		(355)	(37)
Share of results of associates and joint ventures	32		28
Profit before tax	913		678	35
Income tax expense	(272)		(227)	20
Profit from continuing operations	641		451	42
Discontinued operations – Motus	5 240		916	472
Net profit for the period	5 881		1 367	330
Attributable to owners of Imperial Logistics	5 815		1 306
Continuing operations	576		366	57
Discontinued operations	5 239		940
Effective tax rate (%)*	30,9		34,9
ROIC (%)*	12,2		11,7
Actual WACC (%)*	9,8		8,2

Note: WACC for each subdivision of the group is calculated by making appropriate country/regional risk adjustments for the cost of equity and pricing for the cost of debt depending on jurisdiction. The group WACC calculation is a weighted average of the respective subdivisional WACCs. See glossary of terms. ROIC is calculated based on taxed operating profit plus income from associates divided by the 12-month average invested capital (total equity and net interest-bearing borrowings).

* Calculated on continuing operations.

Operating profit decreased by 4% or R51 million mainly due to businesses sold in the prior year.

The increase in profit before tax of 35% or R235 million resulted from:

• Other non-operating items decreased by R109 million to R8 million. The R109 million in the prior year includes goodwill impairment of R22 million and loss on disposal of Schirm, Laabs and Transport Holdings Botswana totalling R93 million.
• Net finance costs decreased by R132 million due to lower average debt levels as a result of the recapitalisation of Logistics prior to the unbundling of Motus as well as a once-off gain from the redemption of the preference shares amounting to R63 million which was partially offset by a loss of R14 million on the settlement of the bonds.

The profit from discontinued operations comprises the profit from Motus for the four months to 31 October 2018, as well as the fair value gain arising from the revaluation of Motus on the date of unbundling.

The effective tax rate decreased from 34,9% to 30,9%, due to the gain arising from the redemption of the preference shares that is not taxable and certain non-deductible expenses in the prior period not recurring in the current period.

Reconciliation of continuing earnings to continuing headline earnings

Rm	HY1 2019		HY1 2018	% change
Continuing earnings attributable to owners of Imperial Logistics	576		366	57
Profit on disposal of assets net of recoupments	(19)		(14)	(36)
Impairment of goodwill	65		22	195
(Profit)/loss on sale of subsidiaries and businesses	(64)		93
Tax/NCI effects of headline earnings adjustments	26		2
Continuing headline earnings	584		469	25

Continuing earnings per share

Rm	HY1 2019		HY1 2018	% change
Earnings per share (EPS)	295		188	57
Headline earnings per share (HEPS)	300		241	24

Financial position

Rm	December 2018		June  2018	% change
Goodwill and intangible assets	8 554		8 575
Property, plant and equipment	3 192		3 042	5
Investment in associates and joint ventures	597		752	(21)
Transport fleet	5 777		5 358	8
Investments and other financial assets	217		206	5
Net working capital	2 564		1 881	36
Net assets held for distribution to owners of Imperial			11 683
Net income tax liabilities	(419)		(226)	85
Net debt (June 2018 includes preference shares)	(6 230)		(5 721)	9
Other liabilities	(2 360)		(2 425)	(3)
Total equity	11 892		23 125	(49)
Total assets	34 573		70 503	(51)
Total liabilities	(22 681)		(47 378)	(52)

Property, plant and equipment increased due to the weakening of the Rand and net additions offset by depreciation.

Investment in associates and joint ventures declined mainly due to the disposal of Gruber.

Transport fleet increased mainly due to fleet expansion and replacement in Logistics South Africa and specialised new fleet acquired in Logistics International, partially offset by depreciation and proceeds.

Net working capital of R2,6 billion increased from R1,9 billion in June 2018, impacted mainly by higher inventory in Logistics African Regions and an increase in trade and other receivables in Logistics International.

Other financial liabilities decreased by R100 million resulting mainly from the repayment of a non-controlling interest loan in Surgipharm.

Net income tax liabilities increased as a result of the deconsolidation of tax assets of the remaining Imperial group entities due to the unbundling of Motus.

Movement in total equity for the six months to December 2018

Rm	HY1 2019
Opening balance	23 125
Total comprehensive income for the year	6 642
Share-based equity movement	38
Dividends paid	(911)
Ordinary dividends distribution in specie on unbundling of Motus	(17 036)
Repurchase of 1 442 683 shares at an average price of R67,14 plus transaction costs	(97)
Non-controlling interest acquired, net of disposals and shares issued	232
Net decrease in non-controlling interest through buy-outs	(101)
Closing balance	11 892

The decrease of R11 233 million in equity was mainly due to the R17 036 million dividend distribution in specie of Motus, dividends paid to shareholders and non-controlling interests of R911 million, offset by comprehensive income of R6 642 million and R200 million received from Afropulse in relation to the BBBEE transaction.

Cash flow (including Motus)

Rm	HY1 2019		HY1 2018	% change
Cash generated by operations before movements in working capital	3 622		4 231	(14)
Movements in net working capital (excludes currency movements and net acquisitions)	(2 040)		(208)	771
Cash generated after working capital movements	1 582		4 023	(55)
Interest and taxes paid	(933)		(1 320)	(29)
Cash generated by operations before capital expenditure on rental assets	649		2 703	(68)
Capital expenditure on rental assets	(1 172)		(1 161)	1
Cash flows from operating activities	(523)		1 542	(119)
– Motus cash flows from operating activities	(1 286)		1 439
Net acquisitions of subsidiaries and businesses			(1 042)	(100)
Capital expenditure (non-rental assets)	(879)		(265)	232
Net movement in associates, loans and non-current financial instruments	156		(516)	(130)
Cash flows from investing activities	(723)		(1 823)	(60)
– Motus cash flows from investing activities	(164)		(1 101)
Dividends paid (including NCI)	(911)		(781)	17
Cash resources distributed as dividend in specie	(1 058)			100
Share scheme hedge and shares repurchased	(153)		(470)	(67)
Change in non-controlling interest	(80)		(705)	(89)
Capital raised from non-controlling interest	200		223	(10)
Cash flows from financing activities before net debt movement	(2 002)		(1 733)	16
– Motus cash flows from financing activities before net debt movement	995		(575)
Increase in net debt (excludes net acquisitions)	(3 248)		(2 014)	50
Continuing free cash flow	258		(598)
Continuing free cash flow to headline earnings	0,4		–

The following are the significant cash flow items for continuing operations:

Cash generated by operations before capital expenditure was R763 million (HY1 2018: R85 million).

The cash flow benefited from a 20% lower finance cost of R285 million (H1 F2018: R357 million), due to lower debt levels and a once-off gain from the redemption of the preference shares. Tax paid increased to R363 million from R314 million.

Net working capital movements resulted in an outflow of R580 million, impacted mainly by higher inventory in Logistics African Regions and an increase in trade and other receivables in Logistics International.

Net capital expenditure increased to R700 million from R285 million in H1 F2018 mainly due to higher investment in fleet expansion and replacement in Logistics South Africa and specialised new fleet acquired in Logistics International. Furthermore, the prior period benefited from property disposals.

Dividends, including payments to non-controlling interest, amounted to R911 million during the period.

Cash resources distributed as part of the Motus unbundling was R1 058 million.

In total R200 million was raised on the Afropulse BBBEE transaction while R80 million was paid in the buy-out of non-controlling interest in KWS Carriers and Eco Health.

Proceeds from the sale of our international associate, Gruber, was R226 million.

Other significant cash flow items included the settlement of the preference shares which resulted in a cash outflow of R378 million.

Free cash flow increased to R258 million inflow from a R598 million outflow in the prior period.

Liquidity

The group’s liquidity position is strong with R11,0 billion of unutilised banking facilities, excluding asset backed finance facilities. 90% of the group debt is long term in nature and 54% of the debt is at fixed rates. The group’s blended cost of debt is 6,1% (pre-tax).

As all listed bonds were redeemed on 6 August 2018, all debt requirements were accommodated in the banking market. There is therefore no requirement for a formal credit rating at this stage.

Dividend

An interim cash dividend of 135 cents per ordinary share has been declared, in line with our targeted pay-out ratio of 45% of HEPS, subject to prevailing circumstances.

Acquisitions and disposals

There were no material acquisitions or disposals concluded in the period under review.

Progress against strategy

The strategic priorities of each division are underpinned by our vision of becoming an internationally acclaimed tier one provider of outsourced value-add logistics, supply chain management and route-to-market solutions, with the common aim of achieving a “One Imperial Logistics” brand, identity and culture.

Furthermore, a core intention of our strategy is to move from a portfolio of distinct regional businesses to leveraging the capabilities we have in each region to deliver integrated solutions to clients within selected industries, across our regional platforms and into new markets. We continue to assess the potential for regional expansion and industry capabilities transfer to other regions and we have appointed industry experts with global expertise and focus, within each of our key industries, to facilitate this process. Specifically, Logistics South Africa and Logistics African Regions’ capabilities will be leveraged to expand into new markets in Africa, and our specialised capabilities in specific market sectors in Europe will provide the platform for further international expansion.

Strategic priorities for each division and the progress recorded during the period is outlined below:

Logistics South Africa

The division is well positioned to retain and expand contracts with existing and new clients through customisation, innovation and service excellence; to leverage BBBEE credentials to maintain market leadership and further accelerate transformation; exit unviable contracts and operations; and drive organic revenue growth through a combination of asset light expansion and asset intensive investments that yield the required returns.

Progress against each of these stated priorities is evidenced in multiple deliverables. Most notably, the conclusion of the BBBEE transaction with the Afropulse Group (Proprietary) Limited (Afropulse), a wholly black women-owned business to form Imperial Logistics Advance – a 51% black-owned and more than 30% black women-owned enterprise focusing on the energy, mining and chemicals industries. Afropulse acquired 25% of Imperial Logistics Advance for R200 million.

Despite the challenging trading environment in South Africa, our gain rate on new contracts and renewal rates on existing contracts remain high, with an encouraging pipeline of new opportunities. We continue to rationalise our operations and as such, we have exited unprofitable contracts and consolidated some of the cold storage and ambient facilities in the consumer packaged goods (CPG) business, which will result in reduced inefficiencies and significant cost savings. Initiatives undertaken in the six-month period to reduce costs, and which are ongoing in the second half, included reducing the fleet size significantly, exiting certain property leases, consolidating properties and reducing overheads.

Logistics African Regions

The division continues to exploit growth opportunities that complement and expand its existing footprint in healthcare and CPG. Its strategic priorities are to leverage a unique ability to provide brand owners with access to fragmented markets through integrated solutions, unrivalled scale and multi-regional distribution; to expand its managed solutions offerings; and grow its multi-market aggregation offering to become the single strategic partner to multinational clients in healthcare and CPG.

Contract gains in the CPG and healthcare industries, and the expansion of the managed solutions offering into Kenya and Mozambique offer tangible evidence of progress against these set strategic initiatives. Continuous progress has been made on our multi-market aggregation solution over the last few months which has seen us further partner with multinational clients seeking an expanding footprint into new markets, supply chain efficiencies as well as good governance and compliance.

Logistics International

The division will leverage specialised capabilities to strengthen client relationships in specific market sectors, underpinned by a differentiated approach to digitalisation and innovation. Likewise, it will seek out opportunities to expand specialist capabilities into developing markets in Europe and Asia and initiate a strong focus on improved returns through business and contract rationalisation, capability alignment, reduced asset intensity and overhead reduction. The business will invest in commercial and sales capabilities to build awareness and relationships to drive sustainable revenue growth.

Significant savings will be realised through substantial headcount reductions in administrative functions, improvements in process efficiencies and stronger collaboration in purchasing projects. The benefits of this initiative will be realised in the next financial year. Multiple, senior appointments including that of a new Chief Executive Officer (CEO), Chief Commercial Officer and Chief Operating Officer over the past six months, will contribute significantly to the business bolstering its commercial and sales capabilities in order to drive contract gains and renewal rates, and subsequently enhancing its specialised capabilities in specific market sectors. The expansion of specific capabilities through strategic acquisitions and portfolio enhancement, including the potential expansion into international freight management, are in progress, and the market will be informed as and when any material opportunities are concluded.

Prospects

Imperial Logistics is well positioned to capitalise on the opportunities in our markets and manage the risks, in order to deliver on our strategic, financial and operational objectives and targets over the coming years.

The balance sheet of the business remains strong, with sufficient headroom in terms of capacity and liquidity.

At this stage, our expectations for H2 F2019 are as follows:

• Logistics South Africa to deliver performance below that of the prior period due to lower consumer demand impacting the CPG business, the low-growth economic environment in South Africa and costs associated with the business rationalisation and restructure.
• Growth from Logistics African Regions which will be supported by new business, notwithstanding political instability that may arise from the upcoming elections in various countries in the region.
• Logistics International to deliver results that are lower than the prior period impacted mainly by the costs associated with the business restructure and weaker performances from the express palletised distribution and automotive businesses
• HEPS growth to be negatively impacted by:
  • Weaker operational performance and costs associated with business rationalisation and restructure.
  • The finance cost benefit from the recapitalisation and once-off gain from the redemption of the preference shares which was realised in H1 F2019, will not reoccur in H2 F2019.

For the financial year to 30 June 2019, subject to stable currencies in the economies in which we operate, we expect Imperial Logistics, excluding businesses held for sale, to deliver:

• Higher revenue than the prior year.
• Lower operating profit than the prior year
• HEPS in line with the prior year.

The far-reaching benefits of the portfolio rationalisation and organisational restructure that we undertook more than four years ago and continue in F2019, new contract gains, potential acquisitions and an increased focus on removing and reducing complexities and costs significantly in all businesses, will be realised in the 2020 financial year.

Remuneration policy

Shareholders are aware that at the company’s annual general meeting on 30 October 2018, 51,84% of the vote cast by Imperial shareholders were in favour of ordinary resolution number 6 – implementation of remuneration policy, less than the 75% approval rate. As such the Chairman of the board, the chairman of the remuneration committee and management have been engaging with material and concerned shareholders to address concerns on the existing remuneration policy. These concerns are given attention at board level and are being addressed appropriately through certain policy amendments. Shareholders will be updated once the shareholder engagement process has been concluded.

Executive director changes

As previously announced, Marius Swanepoel retired as CEO of Imperial Logistics on 1 February 2019 and Mohammed Akoojee succeeded him on the same date. Marius will continue to serve as an executive director until 30 June 2019 and remain in the employ of Imperial Logistics until 31 December 2019, responsible for special projects and available for strategic counsel to management.

Appreciation

Imperial Logistics has entered an exciting new era as an independently listed company. Thank you to our 30 000 colleagues working in 38 countries that continue to contribute to this remarkable business. The multifaceted restructuring that preceded this transition was the culmination of more than four years of planning and hard work and we extend our particular gratitude to all those that made this complex and ambitious evolution possible.

1 February 2019 marked another milestone for the business, with the retirement of Marius Swanepoel as CEO. We will have further opportunities to mark his legacy but wish to extend our deep appreciation for his invaluable contribution, mentorship and gracious leadership.

.

Finally, we thank our owners and funders for their continued support.

The financial information herein has not been reviewed or reported on by Imperial Logistics’ auditors.

28 February 2019

Notice is hereby given that a gross interim ordinary dividend in the amount of 135,00000 cents per ordinary share has been declared by the board of Imperial, payable to the holders of the 201 971 450 ordinary shares. The dividend will be paid out of income reserves.

The ordinary dividend will be subject to a local dividend tax rate of 20%. The net ordinary dividend, to those shareholders who are not exempt from paying dividend tax, is therefore 108,00000 cents per share.

The company has determined the following salient dates for the payment of the ordinary dividend:

	2019
Last day for ordinary shares to trade cum ordinary dividend	Monday, 18 March
Ordinary shares commence trading ex-ordinary dividend	Tuesday, 19 March
Record date	Friday, 22 March
Payment date	Monday, 25 March

The company’s income tax number is 9825178719.

Share certificates may not be dematerialised/rematerialised between Tuesday, 19 March 2019 and Friday, 22 March 2019, both days inclusive.

On Monday, 25 March 2019, amounts due in respect of the ordinary dividend will be electronically transferred to the bank accounts of certificated shareholders that utilise this facility. In respect of those who do not, cheques dated 25 March 2019 will be posted on or about that date. Shareholders who have dematerialised their shares will also have their accounts, held at their CSDP or broker, credited on Monday, 25 March 2019.

On behalf of the board

RA Venter
Group Company Secretary

26 February 2019