Unaudited interim results
for the six months ended
31 December 2020


Strategic positioning and progress

Over the past 18 months, we have laid the foundation of our new strategy and are making significant strides in transforming Imperial from a portfolio of regional businesses to an integrated, end-to-end market access and logistics business focusing on Africa. It is our strategic intent to become a ‘One Imperial’ business and serve as the ‘Gateway to Africa’ to our clients, principals and customers – transforming from an asset-heavy, 3PL logistics player to an innovative, asset-right business. The strategic decisions and actions we continue to take are aligned with this ambition.

Accordingly, in H1 F2021 we invested c.R100 million on appropriate and effective systems, processes, resources and structures and will continue to invest significantly over the next three to five years to ensure successful execution of all our key strategic imperatives. This will position the business for sustainable growth, and improve efficiencies and costs over the medium term. The COVID-19 crisis has further amplified the need to position Imperial for growth, efficiency and longevity well beyond the pandemic.

As Imperial continues on this growth journey, IT, digital and data will be positioned at the heart of the business. Significant progress was recorded in strategic digital and IT initiatives, including digital fleet management, enabling our road freight business, and progress with partnerships to enable digital distributorships in our Market Access business. In addition, the Imperial Venture Fund managed in partnership with Newtown Partners continues to exhibit good progress with strategically valuable investments being made into disruptive logistics, supply chain and pharmaceutical supply chain start-ups, with a time-to-value of five to 10 years. The fund now has five actively managed portfolios. More detail is included in the strategy table and in the ‘Acquisitions and partnerships’ section.

We are also focused on developing and retaining top talent, integrating ESG practices and preparing our business for a post-pandemic world. This is to ensure that Imperial will be a resilient, sustainable business that demonstrates its purpose through its actions and initiatives, as well as by focusing on people, profit and the planet. During the period under review, we invested in and finalised an appropriate organisational structure and human capital IT system that will enable the business to operate and succeed as ‘One Imperial’.

Achieving our strategic ambitions will also require us to make significant capital investments in digital and data initiatives, technology and strategic acquisitions over the next five years.

Capital allocation will be prioritised for those areas that most amplify our primary strategic positioning and focus – being Africa, and focusing on five key industries – healthcare, consumer, chemicals, automotive, and industrial and commodities. Over the past 10 years, Imperial’s investment in Africa, outside South Africa, was focused primarily on building its market access capability in the defensive and fast-growing healthcare and consumer industries. During this time, Imperial has developed strong expertise, networks, and knowledge of operating successfully in some of the fastest growing and challenging markets in Africa. Serving as an integrated logistics and market access provider will require us to invest in logistics businesses outside South Africa too, particularly those that will give us access to freight capabilities, including in other key growth industries, to facilitate trade flows into, out of and across key African trade lanes. We are therefore actively exploring potential growth opportunities in both Market Access and Logistics Africa on the continent (outside South Africa).

In addition, we have thoroughly assessed the strategic fit of our international portfolio. We have concluded that Logistics International is non-core to our ‘Gateway to Africa’ strategy and we have therefore decided to explore an appropriate exit plan for this business. The exit plan will relate to the remaining assets in the International portfolio, being contract logistics and freight, including Palletways. Given the current macro-economic uncertainty, this may take time to progress as the objective is to maximise value for shareholders through this process.

How our strategy addresses our challenges

During the past six months, despite the challenges that COVID-19 placed on our day-to-day operations, we continued to make progress on the following:

  • strengthened our positioning as the ‘Gateway to Africa’;
  • simplified and reduced complexity through our ‘One Imperial’ initiatives;
  • assessed, addressed and exited non-core, low return on effort and underperforming businesses;
  • significantly reduced costs;
  • added new contracts;
  • concluded strategic acquisitions;
  • achieved good progress in digital and IT capabilities;
  • defined our path as a transformational organisation rather than a transactional one; and
  • placed significant focus on our people and organisational design, digital and data and ESG as core enablers of our strategy.
Strategic progress  
Achieving sustainable growth with focused capital allocation  
  • Replace disposals with strategically aligned acquisitions
  • Solid organic and acquisitive growth targeted to F2025
  • All acquisitions assessed on following criteria:
    • achieving strategic objective of 'Gateway to Africa'
    • strong organic growth
    • achieve required returns (WACC plus 3%)
    • how Imperial adds value and leverages synergies opportunities
  • Integration, efficiency, cross-selling and upselling opportunities across Market Access and Logistics
  • Capital allocated to group-wide systems, digital and data initiatives, processes and people which are critical to achieving efficiencies and improving margins as part of our 'One Imperial' strategy
  • Contract renewal rate is c.80%, with encouraging pipeline
  • New business revenue of c.R6,2 billion per annum secured in December 2020
  • Material contract with P&G secured in the consumer industry in Nigeria
  • Five new clients onboarded onto our Simplified Solutions in healthcare offering in Market Access
  • Actively exploring potential growth opportunities in both Logistics and Market Access on the continent (outside South Africa)
  • Concluded acquisitions of c.R120 million
Asset intensity  

Transforming Imperial from an asset heavy 3PL logistics player to an innovative asset-right business using data and technology as a differentiator, and achieved through:

  • Investment in digital and data initiatives
  • Asset-right acquisitions
  • Transforming contract logistics and road freight by leveraging our scale and asset base using technology
  • Improve efficiency, reduce costs and optimise investment in assets, thereby reducing our asset intensity
  • Asset-turn ratio improved from 64% in H1 F2020 to 81% in H1 F2021
  • Reduced costs of c.R200 million (annualised) in Logistics Africa
  • Project Blue Fleet is in progress, with the renegotiation of supply agreements for our largest cost items in Logistics Africa (fuel, vehicle and tyres) underway. The full cost and efficiency benefits will be realised over the next 12 months
  • Consolidated road freight businesses in Logistics Africa
  • Reduced total capex by R514 million compared to H1 F2020
  • Partnership with Lori Systems to expand ability to offer spot-based sub-contracted road freight through the digital freight exchange
Simplifying the business from a complex, regional portfolio into an integrated market access and logistics business  
  • Transforming into an integrated logistics business, offering an end-to-end service
  • Providing simplicity, flexibility and visibility to our clients
  • New organisational structure focused on two solutions (market access and logistics)
  • Regional structure will be secondary
  • Organised and now operating Imperial based on the two solutions offered – market access and logistics – and less so on regions
  • Our core functions being people and culture, digital and IT, corporate affairs and investor relations and group finance transitioned to a 'centre-led' model
Commoditised businesses  
  • Exiting non-core, underperforming, low return on effort and investment businesses
  • Investing in new-age businesses
  • Focusing on data and technology – remaining relevant
  • Progress with digital fleet management, enabling our Road Freight business
  • Progress with partnerships to enable digital distributorships in our Market Access business
  • Exited Pharmed
  • Sold European shipping
  • Progressing sale of South American shipping
  • Identified remaining international portfolio as non-core and exploring appropriate exit plan
Investment in digital, data and innovation  
  • Moving away from asset-heavy, traditional 'walls and wheels' logistics, to forward-thinking and innovative solutions
  • Proactive ongoing investment in digital and data initiatives is top of mind and core to our strategy
  • Capital will be allocated to:
    • an innovation fund with significant activity and opportunities identified
    • executing digital and data initiatives to facilitate transformational shift

The Imperial Innovation Fund now has five actively managed portfolio companies:

  • Field Intelligence, a digital pharmaceutical distributor operating in Nigeria and Kenya
  • Shypple, a digital freight forwarder operating between Asia and Europe
  • RedBird, a provider of rapid diagnostic tests to pharmacies in Ghana
  • Lori, a digital road freight exchange operating in East and West Africa that has also partnered with Imperial to launch in SADC during 2021
  • An investment in a cross-border digital logistics service provider serving e-commerce merchants in MENA

Parcel Ninja acquisition will provide specialised warehousing and distribution management in
e-commerce, direct to consumers and to informal markets

Progress made on a business performance insights platform (including establishing a comprehensive data lake, developing a consistent reporting platform and applying advanced data science)

Moving from decentralised to operating as 'One Imperial' – leveraging synergies, expertise, clients etc.  
  • Transitioning the brand positioning to 'One Imperial' through brand migration and architecture process
  • Aligning processes and organisational design to 'One Imperial' – roll-out of a single finance, IT and communications systems
  • Client value proposition centred on selling as 'One Imperial' and leveraging cross-selling and upselling opportunities
  • People proposition is centred around collaboration and being part of a 'One Imperial' business
  • Investing in talent pipeline and leveraging skills/expertise across the group
  • Organisational structures to enable 'One Imperial' strategy finalised
  • Introduced and rolling-out a consistent 'One Imperial' people model and the associated ways of work for all our people practices
  • Progressing plans to introduce a centre-led training initiative regarding digitisation, and driver and controller management
  • Various communication initiatives to promote 'One Imperial'
  • Roll-out of 'One Imperial' brand across businesses is in progress
  • In the foundation phase of the 'One Imperial' Finance project to standardise finance systems and finance shared services centre build
  • Established a co-creation lab for increased collaboration with key principals and clients, to facilitate selling as 'One Imperial'
  • Implementing SAP Success Factors as the single human resources information system and transaction platform
  • c.R100 million invested in 'One Imperial' initiatives in H1 F2021
Creating shared and sustainable value – focusing on ESG  
  • Shifting to a purpose-driven organisation pillar of our strategy
  • Includes investing in and integrating environmental, social and governance imperatives into daily business activities
  • R11,6 million invested in communities through strategic CSI initiatives across regions focusing on healthcare, education, safety and skills development
  • Continue integrating ESG imperatives into strategy and business practices
  • Advancing ESG rating and reporting standards – favourable ratings from key global ratings agencies