R million | % change | December 2020 |
December 2019~ |
|||||
---|---|---|---|---|---|---|---|---|
CONTINUING OPERATIONS | ||||||||
Revenue | 15 | 26,360 | 22,955 | |||||
Net operating expenses | (23,809) | (20,361) | ||||||
Profit from operations before depreciation and recoupments | 2,551 | 2,594 | ||||||
Depreciation, amortisation, impairments and recoupments | (1,350) | (1,131) | ||||||
Operating profit | (18) | 1,201 | 1,463 | |||||
Recoupments net of impairment to properties | 10 | 15 | ||||||
Amortisation and impairment of intangible assets arising on business combinations | (195) | (174) | ||||||
Foreign exchange gains | 263 | 18 | ||||||
Profit before net finance costs | (3) | 1,279 | 1,322 | |||||
Net finance cost | 27 | (395) | (312) | |||||
Profit before share of results of associates and joint ventures | 884 | 1,010 | ||||||
Share of results of associates and joint ventures | 8 | 4 | ||||||
Profit before other non-operating items | (12) | 892 | 1,014 | |||||
Other non-operating items | (435) | (32) | ||||||
Profit before tax | 457 | 982 | ||||||
Income tax expense | (158) | (316) | ||||||
Profit for the period from continuing operations | (55) | 299 | 666 | |||||
DISCONTINUED OPERATIONS | 582 | (166) | ||||||
Net loss from Consumer Packaged Goods (CPG) | (283) | |||||||
Net profit from the European shipping business | 582 | 117 | ||||||
Net profit for the period | 881 | 500 | ||||||
Net profit (loss) attributable to: | ||||||||
Owners of Imperial | 814 | 423 | ||||||
– Continuing operations | 232 | 590 | ||||||
– Discontinued operations | 582 | (167) | ||||||
Non-controlling interests | 67 | 77 | ||||||
– Continuing operations | 67 | 76 | ||||||
– Discontinued operations | 1 | |||||||
~ Represented for the classification of the European shipping business as a discontinued operation. |
Operating profit from continuing operations decreased by 18%, negatively impacted by COVID-19, increased depreciation due to the weaker Rand/Euro exchange rate, associated once-off costs, and investment in people, structure, processes and systems to support future growth and efficiencies.
The R122 million decrease in profit before other non-operating items to R892 million is mainly attributed to:
Other non-operating items comprised mainly of assets of the South American shipping operation that has been classified as a disposal group.
Significant contributors to the higher effective tax rate are the non-taxable items included in other non-operating items.
The gain from discontinued operations includes the profit arising on disposal of the European shipping business of R573 million.
Non-controlling interests' share of income decreased due to a weaker performance in some businesses with minority shareholders.
Core EPS is a measurement of pure trading performance and is calculated as headline earnings less amortisation of intangible assets arising from business combinations, acquisition cost, re-measurement of put option and contingent consideration liabilities. As a reminder, we have re-introduced core EPS as management believes it is a more accurate reflection of Imperial's trading performance. Please see full reconciliation for earnings per share below.
R million | % change | December 2020 |
December 2019~ |
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---|---|---|---|---|---|---|---|---|
Headline earnings reconciliation | ||||||||
Earnings | 814 | 423 | ||||||
– Continuing operations | (61) | 232 | 590 | |||||
– Discontinued operations | 582 | (167) | ||||||
Recoupment from the disposal of property, plant and equipment (IAS 16) | (31) | (41) | ||||||
Loss on disposal of intangible assets (IAS 38) | 3 | |||||||
Impairment of goodwill (IAS 36) | 11 | 6 | ||||||
Impairment reversal of investment in associates and joint ventures (IAS 28) | (2) | |||||||
Loss on disposal of subsidiaries, associates and businesses (IFRS 10 and IAS 28) | 54 | 20 | ||||||
Impairment of businesses held-for-sale | 415 | |||||||
Foreign exchange gain reclassified to profit or loss (IAS 21) | (364) | |||||||
Tax effects of remeasurements | 8 | 10 | ||||||
Non-controlling interests' share of remeasurements | 13 | 7 | ||||||
Net headline earning adjustments for discontinued operations | (573) | (69) | ||||||
Headline earnings | (4) | 345 | 359 | |||||
– Continuing operations | (44) | 336 | 595 | |||||
– Discontinued operations | 9 | (236) | ||||||
Headline earnings per share (cents) | ||||||||
Continuing operations | ||||||||
– Basic | (43) | 180 | 315 | |||||
– Diluted | (43) | 173 | 305 | |||||
Discontinued operations | ||||||||
– Basic | 5 | (125) | ||||||
– Diluted | 5 | (121) | ||||||
Total operations | ||||||||
– Basic | 185 | 190 | ||||||
– Diluted | 178 | 184 | ||||||
Core earnings reconciliation – continuing operations only | ||||||||
Headline earnings | 336 | 595 | ||||||
Amortisation of intangible assets arising on business combinations | 195 | 174 | ||||||
Remeasurement of put option liabilities | (39) | |||||||
Remeasurement of contingent consideration liabilities | (7) | |||||||
Business acquisition costs | 16 | 14 | ||||||
Tax effects of remeasurements | (44) | (41) | ||||||
Non-controlling interests' share of remeasurements | (19) | (15) | ||||||
Core earnings | 438 | 727 | ||||||
Core earnings per share | ||||||||
– Basic | (39) | 235 | 384 | |||||
– Diluted | 226 | 372 | ||||||
~ Represented for the classification of the European shipping business as a discontinued operation. |
R million | % change | December 2020 |
June 2020 |
|||||
---|---|---|---|---|---|---|---|---|
Goodwill and intangible assets | (11) | 6 322 | 7 084 | |||||
Investment in associates and joint ventures | 31 | 259 | 198 | |||||
Property, plant and equipment | (10) | 3 004 | 3 326 | |||||
Transport fleet | (36) | 3 308 | 5 186 | |||||
Right-of-use-assets | (16) | 4 576 | 5 422 | |||||
Investments and other financial assets | 69 | 458 | 271 | |||||
Net working capital* | 85 | 1 006 | 544 | |||||
Net assets of disposal groups and discontinued operations | (56) | 1 219 | 2 781 | |||||
Retirement benefit obligations | (9) | (1 012) | (1 109) | |||||
Net debt excluding lease obligations* | (34) | (5 509) | (8 391) | |||||
Lease obligations | (15) | (5 185) | (6 080) | |||||
Other financial liabilities | (24) | (1 073) | (1 415) | |||||
Net income tax (liabilities) assets* | 10 | 499 | 455 | |||||
Total shareholders' equity | 7 872 | 8 272 | ||||||
Total assets | (24) | 32 498 | 42 526 | |||||
Total liabilities | (28) | (24 626) | (34 254) | |||||
Net debt:equity % (excluding lease obligations) | 70,0 | 101,4 | ||||||
Net debt:equity % (including lease obligations) | 135,8 | 174,9 | ||||||
* Refer to glossary of terms. |
The significant variances on the financial position at 31 December 2020 when compared to 30 June 2020 are explained as follows:
The balance sheet movement in net debt, excluding lease obligations of R2 882 million, includes currency movements and other non-cash movements of R225 million that are excluded from the cash flow movement of R2 657 million.
R million | December 2020 |
December 2019 |
||||
---|---|---|---|---|---|---|
Cash flows from operating activities | ||||||
Cash generated by operations before movements in net working capital | 2 587 | 2 682 | ||||
Movements in net working capital | (1 009) | (1 094) | ||||
Cash generated by operations before interest and taxes paid | 1 578 | 1 588 | ||||
Net interest paid | (379) | (422) | ||||
Tax paid | (304) | (261) | ||||
Cash generated by operations | 895 | 905 | ||||
Cash flows from investing activities | ||||||
Net disposal (acquisition) of subsidiaries and businesses | 3 390 | (75) | ||||
Expansion capital expenditure | (238) | (483) | ||||
Net replacement capital expenditure | (63) | (332) | ||||
Net movement in other associates and joint ventures | (69) | 39 | ||||
Net movement in investments, loans and non-current financial instruments | (74) | 14 | ||||
Cash utilised in investing activities | 2 946 | (837) | ||||
Cash flows from financing activities | ||||||
Settlement of interest-rate-swap instruments | (10) | |||||
Repurchase of ordinary shares | (101) | (225) | ||||
Dividends paid | (52) | (282) | ||||
Cash paid on change in non-controlling interests | (118) | (80) | ||||
Payments of lease obligations | (913) | (1 138) | ||||
Cash utilised in financing activities | (1 184) | (1 735) | ||||
Movement in net debt excluding lease obligations | 2 657 | (1 667) | ||||
Free cash flow* | (81) | (565) |
* Refer to glossary of terms.
The following are the significant cash flow items:
Total equity of R7 872 million decreased by R400 million from R8 272 million previously reported on 30 June 2020.
Rm | ||
---|---|---|
Comprehensive loss | (210) | |
Net profit attributable to Imperial shareholders | 814 | |
Net profit attributable to non-controlling interests | 67 | |
Decrease in the foreign currency translation reserve | (1 115) | |
Increase in the hedge accounting reserve | 24 | |
Movement in share based reserve net of transfers to retained earnings | 80 | |
Repurchase of Imperial Logistics shares | (101) | |
Non-controlling interest disposed off, net of acquisitions and shares issued | (47) | |
Net decrease in non-controlling interests through buy-out | (70) | |
Non-controlling share of dividends | (52) | |
Total decrease | (400) |
The group's liquidity position remains strong with R13,7 billion of unutilised banking facilities. A total of 71% of the group debt (including lease obligations) is long term in nature and 65% of the debt (including lease obligations) is at fixed rates.
After considering the strong cash flow generation and balance sheet of the business, and the steady recovery in operations since H2 F2020, an interim cash dividend of 83 cents per ordinary share was declared by the board and will be paid to shareholders in March 2021 (H1 F2020: 167 cps). The dividend will be assessed at each reporting period. The dividend payout ratio will be assessed at each reporting period, subject to prevailing circumstances.