Unaudited interim results
for the six months ended
31 December 2020

Divisional performance


Logistics Africa encompasses logistics activities throughout the African continent, ie road freight, contract logistics and LLP in Africa. Logistics will continue to play an integral role in achieving our 'Gateway to Africa' and 'One Imperial' strategy – leveraging and expanding freight, contract logistics and supply chain support, and leveraging cross-selling and upselling opportunities with our market access business.

Operating context

Prevailing weak economic conditions, high unemployment and low activity levels were exacerbated by the extended impact of COVID-19 lockdown restrictions that continue to impact volumes and margins across many of our industries.

During the period under review, we invested in additional capacity for consumer goods (FMCG) and healthcare clients as the pandemic drove heightened demand and consumption of related products.

The adjusted level 3 lockdown restrictions that were reinstated in December 2020 in South Africa significantly impacted alcohol and fuel volumes, as well as the tourism industry.

With the ban on alcohol sales now lifted, close to 100% of this business is currently in operation. We anticipate normal trading to return in the short to medium term subject to there being no further lockdown restrictions.

Operating performance (continuing operations)

Logistics Africa segment results                         
change on 
change on 
Revenue (Rm) 8 077  8 261    (2)     7 306    11   
EBITDA (Rm) 982  1 058    (7)     653    50   
Operating profit (Rm) 473  627    (25)     130    >100   
Operating margin (%) 5,9  7,6    1,8       
Return on invested capital (%) 6,4  11,8           
Weighted average cost of capital (%) 7,9  8,9           
Net debt (Rm) 4 136  4 358    (5)            
IFRS 16 lease obligations included above  1 638  1 656    (1)    
Net debt excluding IFRS16 lease obligations  2 498  2 702    (8)    
Net working capital  11  550    (98)            
Note: Continuing operations (CPG was classified as discontinued operations in the prior period).
  HY1    HY2 
F2021  F2020   
Revenue (Rm) 5 752  5 310      4 595    25   
EBITDA (Rm) 710  712    456    56   
Operating profit (Rm) 358  464    (23)   157    >100%   
Operating margin (%) 6,2  8,7        3,4   
Contract Logistics       
Revenue (Rm) 2 325  2 951    (21)   2 711    (14)  
EBITDA (Rm) 272  346    (21)   197    38   
Operating profit (Rm) 115  163    (29)   (27)   >100%   
Operating margin (%) 4,9  5,5        (1,0)  
Note: Continuing operations (CPG was classified as discontinued operations in the prior period).

In a difficult, low-growth and increasingly competitive trading environment – exacerbated by the impacts of COVID-19 – Logistics Africa's revenue and operating profit declined by 2% and 25% respectively. Results were hampered by lower volumes due to the impact of extended COVID-19 lockdown restrictions, excessive border times and two phases of bans on alcohol and tobacco sales in South Africa during the period, the second of which was only lifted on 1 February 2021. This was partially offset by higher throughput in the healthcare businesses in South Africa and Kenya, and increased volumes in the food, chemicals and dedicated contracts road freight businesses. Results were further supported by new contract revenue of approximately R1,9 billion on a rolling 12-month basis to the end of December 2020. The contract renewal rate on existing contracts is c.70%, with an encouraging pipeline of new opportunities.

The lockdown restrictions resulted in a decline in volumes across most sectors – particularly in alcohol, tobacco and fuel. The healthcare businesses in South Africa also negatively impacted results due to lower margins in a competitive environment. As a result, operating margins for Logisitics Africa decreased to 5,9% from H1 F2020, also impacted by a competitive market and rate pressure on contract renewals. However, operating profit and margins recovered significantly when compared to H2 F2020 as lockdown restrictions continue to ease and sectors recover.

Logisitics Africa will also benefit from further cost reductions of c.R200 million (annualised) which will maintain our competitive positioning in a shrinking and competitive market.

Net capex from continuing operations (excluding IFRS 16) of R51 million was incurred during the period mainly due to investment in additional capacity for new contract gains. The results from implementing more effective and efficient fleet management technology and disciplines across Logistics Africa contributed to the year-on-year decline in capex.

ROIC declined from 11,8% to 6,4% and is below our hurdle rate of WACC +3% due to lower profitability in H2 2020 over a COVID-19-impacted rolling 12 months.