Wrap Text
Unaudited interim results for the six months ended 31 December 2013
Imperial Holdings Limited
Registration number: 1946/021048/06
Ordinary share code: IPL ISIN: ZAE000067211
Preference share code: IPLP ISIN: ZAE000088076
Look at life in kilometres
Highlights and key data
Revenue 13% higher at R51 357 million
Operating profit improved 8% to R3 166 million
HEPS flat at 831 cents per share
Core EPS up 7% to 937 cents per share
Diluted core EPS up 10% to 915 cents per share
Interim dividend up 5% to 400 cents per share
Return on equity of 21%
Overview of results
Imperial produced a good first half performance in its 2014 financial year. The portfolio of businesses within the
group proved to be resilient and performed according to expectations amid challenging trading conditions in South Africa
and Europe.
Revenue was 13% higher at R51,4 billion and operating profit increased by 8% to R3,2 billion. The annualised return on
average equity of the group was 21% and the balance sheet remains healthy with a net debt to equity ratio (excluding
preference shares) of 62%.
Diluted core EPS was up by 10% to 915 cents per share. HEPS growth is lower than core earnings per share growth mainly
due to the R70 million once-off impact of the charge for amending the conversion profile of the deferred ordinary
shares issued to Ukhamba and the amortisation of intangible assets arising on business combinations.
Operating profit from foreign operations has grown to R712 million, and now comprises 22% of group operating profit,
while foreign turnover of R16,7 billion has increased from 29% to 33% of group turnover. Operating profit derived from
African operations outside of South Africa increased by 31% to R240 million.
In line with our strategy of focusing on our core industries namely, logistics, distribution of products, automotive
retailing and financial services, the group clusters its businesses into three main pillars as follows:
H1 H1
R million 2014 2013 % change
Logistics
Revenue 20 005 15 888 26
Operating profit 1 062 708 50
Operating margin (%) 5,3 4,5
Automotive and Industrial
Revenue 30 897 28 693 8
Operating profit 1 674 1 798 (7)
Operating margin (%) 5,4 6,3
Financial Services
Revenue 2 055 2 165 (5)
Operating profit 543 491 11
Operating margin (%) 26,4 22,7
Performance of the various divisions within each pillar is outlined below:
Logistics
The Logistics pillar produced an excellent first half result with revenue and operating profit growth of 26% and 50%
respectively.
Despite a sluggish South African economy, the Africa Logistics division performed well. The benefits of the
rationalisation which was completed in the second half of the prior financial year, contract gains and recent acquisitions
contributed to the strong performance. The comparative period also includes the negative impact of the transport workers’
strike in South Africa.
The logistics businesses in the rest of Africa, including CIC (involved in the distribution of FMCG products) and
Imperial Health Sciences (providing logistics services to the pharmaceutical and consumer health industries), had an
excellent six months increasing the operating profit from the rest of the African continent by 54%. The minority
interest in MDS contributed to earnings growth.
The International Logistics division performed satisfactorily in an environment where activity levels in some of its
core markets were under pressure and was assisted by the translation effects of a weaker Rand.
Automotive and Industrial
The Automotive and Industrial pillar performed satisfactorily under challenging trading conditions. Revenue in this
pillar was up 8% and operating profit reduced by 7%. This pillar houses the following divisions:
Distribution, Retail and Allied Services - is involved in importation, distribution and retail activities for vehicles
and industrial products, and includes six dealerships in Australia.
Automotive Retail - includes the dealership franchisee activities on behalf of locally based OEMs, Beekman Canopies,
Jurgens Caravans and the 32 truck and van dealerships in the United Kingdom.
Other Segments - includes the other motor vehicle value chain activities being Autoparts and Car Rental. The Tourism
business and NAC (both recently disposed of) were included in this segment until the date of their disposals.
The Distribution, Retail and Allied Services division faced difficult trading conditions and was under pressure during
the period. A significant weakening in the currency, a slowdown in passenger car sales and a more competitive market
impacted on volumes and margins during the period. Revenue was up 3% and operating profit was down 19%.
The Automotive Retail division, which represents products of locally based OEMs and is therefore not involved in the
importation of vehicles, had an excellent six months, with revenue and operating profit up 20% and 26% respectively. This
division benefited from its strong commercial vehicle operations and from Orwell in the UK, which was acquired in the
second half of the prior year.
The Autoparts business, which forms a valuable part of our motor value chain, includes Midas, Alert Engine Parts,
Turbo Exchange and Afintapart. Midas and Alert Engine Parts performed satisfactorily in a competitive and mature market.
Revenue and operating profit were up 9% and 8% respectively.
The Car Rental business continues to face tough trading conditions. Revenue days declined by 5% as a result of a
strategy to improve the overall mix in the business, while revenue per day increased by 4%. Utilisation was slightly down
compared to the prior period and the average fleet size was 3% lower, which assisted the returns achieved by the business.
Auto Pedigree had an excellent six months, as management actions to improve unit sales continue to deliver the desired
results. The panelshop business was negatively influenced by strike action. Revenue and operating profit were up 9% and
8%.
Financial Services
The Financial Services pillar delivered a good result, achieving operating profit growth of 11%.
Due to the exit from certain non-performing classes of business, revenue in the Insurance division reduced by 10%. The
underwriting margin improved from 7,2% to 9,2%. This performance was good considering the tough underwriting conditions
experienced by the industry during the period. Investment income was higher than in the prior period, due to equity
markets being more favourable. The life assurance unit continues to perform well.
Operating profit from other financial services, which is mainly represented by LiquidCapital grew by 7%. Growth was
negatively impacted by more conservative impairment provisions in the vehicle financing joint ventures in line with
expectations and current market conditions.
Group
The group operating margin reduced from 6,5% to 6,2%. This was mainly caused by the reduced margins experienced in the
Automotive and Industrial pillar. The Distribution, Retail and Allied Services division achieved an operating margin of
7,0% against 8,8% in the prior period. This decline was caused by lower volume throughput and the weakening of the Rand
in a softening new car market that is more competitive. The Automotive Retail division improved its margin to 2,9%. The
margin in the Logistics pillar improved strongly from 4,5% to 5,3%. This was primarily due to an excellent performance
in the Africa Logistics division. The comparative period includes the negative impact of the transport workers’ strike
in South Africa. Operating margins in the International Logistics division increased from 4,3% to 4,6% in Euros.
In aggregate, the group’s operating profit grew by 8% and diluted core earnings per share (diluted core EPS) increased
by 10%. In the prior years, the deferred ordinary shares owned by Ukhamba Holdings were included in diluted earnings
per share but excluded from the basic earnings per share computations. The conversion terms of the deferred ordinary
shares are now fixed over the next 12 years with no variations. These shares are therefore now included in the basic earnings
per share computations, but not in the comparative period. As a result, diluted core earnings per share, and not basic
core earnings per share is comparable with the prior period.
Basic and diluted core EPS are calculated by eliminating the after tax effects of the amortisation of intangible
assets arising on business combinations, the charge for amending the conversion profile of the deferred ordinary shares
issued to Ukhamba and the once-off impact of the future obligations of an onerous contract in International Logistics.
Net finance costs increased by 16% to R420 million on higher debt levels. Despite the higher net finance costs,
interest covered by operating profit remains healthy at 7,5 times (2012: 8,1 times).
Income from associates contributed R18 million (2012: R3 million). Mix Telematics, in which Imperial holds a 25%
interest performed well and contributed R13 million. MDS Logistics, a Nigerian logistics business in which the group recently
acquired a 49% shareholding, is performing in line with expectations and contributed R11 million for the period.
The group benefited from a lower effective tax rate of 26,5% compared to 28,3% in the prior period. This was mainly
due to CGT on Regent’s investment portfolios and the sale of the tourism business, which is at a lower rate than normal
tax and a reversal of a prior year over provision of R29 million.
Share of earnings attributable to minorities reduced from R208 million to R197 million. This was mainly due to lower
profits from the Distribution, Retail and Allied Services division, where the most significant minorities participate in
the group’s profits.
The table below summarises the reconciliation from attributable earnings to headline and core earnings:
% December December
R million change 2013 2012
Earnings attributable to Imperial shareholders 10 1 734 1 580
Profit on disposal of assets (73) (28)
Exceptional items (87) 9
Realised gain on disposal of available-for-sale investments (10)
Remeasurement included in associates and JVs 9 12
Tax effects of remeasurements 21 28
Other 1 6
Headline earnings 1 1 605 1 597
Amortisation of intangibles 147 110
Business acquisition costs 8 5
Future obligations under an onerous contract 29
Charge for amending conversion profile of deferred ordinary shares 70
Other adjustments 2
Tax effects (51) (34)
Core Earnings 8 1 810 1 678
Financial position
Total assets increased by 17% to R56 billion (2012: R48 billion) due to acquisitions, translation effects of a weaker
Rand, organic growth and expansion of existing businesses.
Intangible assets rose to R5,7 billion from R4,4 billion mainly as a result of the acquisitions of RTT (now Imperial
Health Sciences), Renault SA, Orwell in the UK, as well as translation effects of a weaker Rand.
Property, plant and equipment increased to R10 billion (2012: R8,5 billion) as we invested in our businesses to
maintain current levels of activity and expanded where necessary, and due to translation effects of a weaker Rand.
Investment in associates increased to R1,2 billion (2012: R902 million) mainly due to the acquisition of 49% of MDS
Logistics, a Nigerian logistics business, providing integrated supply chain and logistics solutions. This increase was
offset by Renault SA, which ceased being an associate with the acquisition of a further 11% equity to make it a subsidiary
of the group.
Net working capital increased by 47% from the prior period due to acquisitions, foreign exchange translation
differences and a more normalised inventory position in the Automotive Retail, and Distribution, Retail and Allied Services
divisions compared to the prior period. Due to supply disruptions experienced by our principals in Korea, our inventory
levels were low at the end of December 2012. We are now adequately stocked in both the Automotive Retail and Distribution,
Retail and Allied Services divisions. As a result, our net working capital turn on a 12-month rolling basis reduced to
12,0 times from 15,7 times in the prior period.
Shareholders’ equity increased due to higher retained income and the weakening of the Rand which resulted in gains on
the foreign currency translation reserve of R419 million accounted for in the statement of comprehensive income.
Net debt to equity (excluding preference shares) at 62% was higher than the prior period (52%). This was mainly due to
acquisitions, expansion of the existing businesses and a higher level of working capital when compared to the prior
period. Translation of our foreign debt due to a weaker Rand also impacted on our debt level at year end. The current net
debt level still leaves significant room for further expansion of the group.
A new seven-year floating rate bond (IPL 8) amounting to R1,5 billion was issued in South Africa during the period to
refinance shorter-term debt. As a result, the maturity profile on our outstanding debt was lengthened and it provides us
with more flexibility and capacity in our shorter term facilities. The group’s liquidity position is strong with R3,2
billion in unutilised facilities (excluding asset-based finance facilities).
New business written by the Financial Services pillar resulted in insurance, investment, maintenance and warranty
contracts growing to R4,1 billion, up 14% from the prior period (2012: R3,6 billion).
Cash flow
Cash generated by operations before capital expenditure on rental assets was 25% lower than the prior period, at R2,1
billion. After financing costs, tax payments and capital expenditure on rental assets, net cash flow from operating
activities decreased to R587 million, down R514 million when compared to the prior period. This was mainly due to a higher
absorption of cash by working capital, as our inventory position in the Distribution, Retail and Allied Services
divisions increased to normalised levels. Capital expenditure on rental assets was lower than in the corresponding period.
Net replacement and expansion capital expenditure excluding car rental vehicles, was 47% higher than the prior period.
The majority of capital expenditure was invested in the Logistics businesses to fund expansion and replacement of the
respective fleets and expansion of facilities.
Under financing activities, a new bond amounting to R1,5 billion was issued and dividends paid increased by 20% to
R1,1 billion.
Business conditions in Imperial’s markets
The new passenger vehicle market faced difficult trading conditions during the period, with the market in South Africa slightly
down year on year for the six months. Inflationary pressures as a result of a weakening currency, the high base, lack of economic
and employment growth all presented headwinds for the new car market. Industrial action in South Africa during the
period also impacted volumes. The used car market improved during the period as a result of new vehicle price inflation. The
medium and heavy commercial vehicle market performed well showing growth of 16% year on year.
Within the Africa Logistics division, trading conditions in the South African market remain challenging. The
manufacturing sectors of the South African economy struggled to gain momentum and many segments of the retail sector experienced
little or no growth. As a result, volumes remained subdued.
The consumer market across many other African countries continued to grow with the emerging middle class, particularly
in those sectors in which our African logistics businesses have chosen to focus, namely FMCG, pharmaceuticals and
general merchandise products.
In Germany, we experienced tough market conditions, especially in December. The steel industry remains depressed and
activity levels across our core markets, including shipping and chemicals were under pressure. We benefited
from German exports into markets outside Europe.
Competitive trading conditions persisted in the car rental market which has seen rental rates remain under pressure.
The autoparts industry remains competitive but stable.
Insurance underwriting conditions in the short-term industry continued to be challenging particularly due to
hailstorms across Gauteng. The termination of certain loss-making books of business, however, contributed positively, resulting
in our underwriting margins improving when compared to the prior period. Equity markets were favourable and investment
returns higher.
Vehicle sales
In South Africa, the group sold 61 010 new vehicles, in line with the prior period and 34 038 used vehicles, an
increase of 4%. The total national new vehicle market was flat year on year for the six-month period to December 2013, according
to NAAMSA.
The Australian and United Kingdom operations sold 5 490 new vehicles, which was in line with the prior period and 2
059 used vehicles, which was 7% lower.
Acquisitions and disposals during the period
Acquisitions:
Renault
Imperial acquired a further 11% shareholding in Renault SA, thereby increasing our shareholding from 49% to 60%.
Ecohealth
During February, Imperial entered into an agreement, in terms of which it will acquire a 53% interest in a company
called Ecohealth Limited, for a cash consideration of USD74 million. The acquisition is funded from Euro debt at a fixed
interest rate of 2,4% p.a. Ecohealth is a leading distributor of pharmaceutical products (Ethical, Generics and Over the
Counter (OTC)) in Nigeria. Based in Lagos, Nigeria, the company also has operations in Ghana and Dubai. The company
partners with leading pharmaceutical companies to distribute, sell and market their products and has long-standing contracts
with multinational pharmaceutical manufacturers.
Ecohealth has an annual turnover of approximately USD180 million. The company has a strong management team and sound
organisational structures appropriate to pharmaceutical distribution. It distributes a significant proportion of the
pharmaceuticals consumed throughout Nigeria, with a meaningful market share of the ethicals (branded products) market. It
has an excellent distribution network supplying pharmaceutical products to 4 200 hospitals, 8 000 pharmacies and 2 000 clinics.
The transaction is in line with Imperial’s growth ambitions into the rest of Africa, i.e. focused on distribution of
consumer goods and pharmaceutical products. It also complements Imperial’s recent acquisitions of 100% of RTT Health
Sciences (now Imperial Health Sciences) and 49% of MDS Logistics both of which have expertise in warehousing and logistics
solutions in the pharmaceutical industry. Ecohealth adds sales and marketing capabilities to Imperial’s service offering
and will enable Imperial to offer an end-to-end capability to our customers in Nigeria’s fast-growing pharmaceutical
sector. In 2012 pharmaceutical expenditure in Nigeria amounted to USD951 million and is forecast to grow at approximately
15% per annum over the next five years.
Through this transaction, Imperial has also secured a specialist management team which strengthens and complements the
group’s existing skills set in the logistics industry in Nigeria.
Subsequent to the transaction the shareholding of Ecohealth will be:
Imperial Holdings 53%
Chanrai Summit Limited (including key management) 32%
IFHA 15% (Private Equity Fund)
The vendor has provided warranties which are customary for a transaction of this nature. The transaction includes put
and call arrangements relating to the transfer of the remaining shares in the company over an extended period to the
Imperial Group.
There are certain customary outstanding conditions precedent which are normal for an acquisition and the transaction
will be effective once these conditions have been fulfilled.
Disposals:
Tourism
The group continues to focus on the strategic fit and returns of its businesses. As a result, the Tourism division,
which had become sub-scale in the context of the group, was sold to Cullinan Holdings Limited. The purchase price was
settled by the issue of 81 818 181 shares in Cullinan Holdings, resulting in Imperial holding a 10% share of the JSE-listed
Cullinan Holdings.
Divisional reports
Logistics
Africa Logistics
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 10 895 8 677 25,6 9 341 16,6
Operating profit 650 400 62,5 520 25,0
Operating margin % 6,0 4,6 5,6
The division had an excellent six months, delivering strong revenue growth and a much improved operating margin. Contract gains, the
benefits of the rationalisation which was completed in the second half of the prior financial year and recent acquisitions
contributed to the strong performance. The comparative period also includes the negative impact of the transport
workers strike in South Africa.
The Transport and Warehousing business, which services the manufacturing, mining, commodities and construction
industries performed well, despite trading in a difficult economic environment. The business benefited from restructuring
initiatives and delivered growth through contract gains and operational efficiencies.
The Bulk Commodity services business performed well. The newly acquired KWS Carriers is performing in line with
expectations. KWS is a managed logistics business focused on the movement of bulk commodities from source to the end-users and
ports utilising mainly dedicated contracted vehicles.
The Specialised Freight business experienced volume pressure and a tough competitive environment especially in
chemicals and food products. Despite this, better margins were achieved due to the benefits of the rationalisation process.
The Consumer Logistics business performed well but the market remains depressed by lackluster volume growth, mainly in
our manufacturing client base. The business realised benefits from the consolidation of retail logistics operations,
including the successful integration of the FMCG businesses acquired from RTT (now Imperial Health Sciences). Significant
new contracts were gained and the business continues to grow market share.
The Cold Chain continues to impact divisional growth and margins negatively as difficult trading conditions persist.
This business is being streamlined.
The Rest of Africa business delivered strong growth during the period. Turnover and operating profit grew by 23% and
54% respectively. The distributorship business continues to perform well as it adds new principles and benefits from the
fast-growing consumer demand in Africa. The rest of Africa component of the new Imperial Health Sciences business saw
excellent volume growth and performed ahead of expectations. MDS Logistics Nigeria, the recently acquired associate, made
a positive contribution to earnings, in line with expectations. The acquisition gives us a full distribution capability
and footprint in the FMCG, pharmaceutical and telecommunications industries in Nigeria. With the Ecohealth acquisition
we will be able to offer an end-to-end capability for our customers in Nigeria’s fast-growing pharmaceutical sector.
Within the Integration Services business, Imperial Air Cargo experienced poor volumes in a challenging environment.
The professional services businesses were consolidated, establishing a strong base for growth. New contract gains will
contribute towards expansion of capabilities.
We incurred gross capital expenditure of R706 million (2012: R579 million), up 22%, which was used to fund expansion
and replacement of fleet and expansion of facilities.
International Logistics
% change
H1 H1 % H2 on H2
€ million 2014 2013 change 2013 2013
Revenue 675 669 0,9 694 (2,7)
Operating profit 31 29 6,9 37 (16,2)
Operating margin % 4,6 4,3 5,3
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 9 110 7 211 26,3 8 363 8,9
Operating profit 412 308 33,8 454 (9,3)
Operating margin % 4,5 4,3 5,4
The International Logistics division performed satisfactorily in an environment where activity levels in some of its
core markets were under pressure. The translation effects of a weaker Rand exchange rate assisted the growth in Rands.
The Shipping division performed satisfactorily despite difficult trading conditions where volumes and freight rates
were under pressure, especially in December. In line with our strategy of cautiously entering new markets, we have secured
a long-term contract to transport iron ore from Brazil to Argentina along the Rio Parana River. The contract commenced
in February 2014, and when fully operational will utilise two convoys of 12 barges each, including some vessels
redeployed from Europe. We have entered this market as a first step to expanding in a region with excellent growth prospects.
Our expertise as the leading inland shipping company in Europe will stand us in good stead.
Lehnkering, which houses all our non-shipping chemical industry logistics activities, including warehousing, road
transport and chemical manufacturing services, performed satisfactorily considering that the first half is a seasonally low
activity period.
Panopa, which provides parts distribution and in-plant logistics services to automotive, machinery and steel
manufacturers, had a challenging first half. Volumes in the steel industry remain under pressure and activity levels in the
automotive and spare parts markets were subdued in a competitive environment.
Neska, the terminal operator, had a difficult six months. Activity levels at terminals, especially in paper and
containers were under pressure. Its performance was also affected by the container terminal in Krefeld, which remains
underutilised.
Gross capital expenditure of R673 million (2012: R150 million) was incurred, which is significantly higher than the
prior year. This is mainly due to the expansion of Lehnkering and the investment in a number of inland and coastal
shipping projects, which included barges acquired from a subcontractor to secure additional business and optimise the use of
the fleet. The weaker Rand exchange rate also contributed to the increase.
Automotive and Industrial
The Automotive and Industrial pillar as described above houses the group’s distribution and retail activities named
Distribution, Retail and Allied Services; the Automotive Retail division; and the Other Segments division. Other Segments
includes Autoparts, Car Rental, Tourism and NAC.
Distribution, Retail and Allied Services
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 13 378 13 028 2,7 12 654 5,7
Operating profit 934 1 150 (18,8) 1 078 (13,4)
Operating margin % 7,0 8,8 8,5
The Distribution, Retail and Allied Services division faced difficult trading conditions and was under pressure during
the period. A significant weakening in the currency, a slowdown in vehicle sales and a more competitive market impacted
on volumes and margins during the period.
Excluding the Australian operation, new vehicle registrations as reported to NAAMSA by Associated Motor Holdings
(AMH), Amalgamated Automobile Distributors (AAD), TATA, Mitsubishi and Renault (December 2013 only) were 4% lower, compared
to a flat market. Growth was experienced in used car sales and annuity revenue streams generated from after-sales parts
and service. Revenue from rendering of services was up 14% for the year. The growing vehicle parc of our imported brands
is securing good levels of after-market activity for its dealerships.
Renault became a subsidiary of this division with effect from 1 December 2013.
In Australia, both new and used retail unit sales were significantly down on the prior period. Volumes in Australia
continue to be negatively affected by the initiative to change our mix to retail from car rental vehicle sales.
The Goscor Group had an excellent first half, showing strong operating profit growth compared to the prior period. The
Bobcat business experienced some pressure, in both equipment sales and rental income, while E-Z-GO was in line with the
prior period.
Businesses that augment and are allied to our motor-related activities, which include Car Find, Bid 4 Cars, Graffiti
and Datadot performed in line with expectations.
Automotive Retail
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 13 108 10 926 20,0 11 776 11,3
Operating profit 377 299 26,1 352 7,1
Operating margin % 2,9 2,7 3,0
The division had an excellent first half and produced strong growth in both revenue and operating profit. In South
Africa, passenger car volumes were subdued and performed in line with the market. Industrial action during the period also
impacted on volumes. Passenger car revenue grew on the back of an improved sales mix and new car price inflation.
Commercial vehicle unit sales were strong and achieved 22% volume growth year on year. Used vehicle sales also improved
compared to the prior period.
In the UK, the division continues to perform well and good growth in unit sales was achieved. The recently acquired
Orwell is performing in line with expectations. The translation effects of a weaker Rand exchange rate assisted the growth
in Rand.
After-sales services showed good growth despite the negative effects of the industrial strike action, which impacted
parts supply and delivery. Turnover from our vehicle service operations was 18% up. Parts revenue grew on the back of
price and volume increases. The significant increase in new car sales over the last few years bodes well for the future
after-sales parts and services revenue for the division.
Beekman Canopies performed satisfactorily and achieved strong growth in turnover and unit sales, while margins were
impacted by higher input costs. Jurgens Ci was negatively impacted by industrial action and production halted for three
weeks in September. Jurgens Australia volumes continue to improve, which has a positive effect on production, which is
done in South Africa.
Car Rental
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 1 867 1 706 9,4 1 902 (1,8)
Operating profit 206 191 7,9 214 (3,7)
Operating margin % 11,0 11,2 11,3
Trading conditions in the Car Rental business remain tough. Revenue in the core Car Rental business was flat as
revenue days declined 5% and revenue per day increased by 4%. Revenue days declined mainly as a result of a strategy to
improve the overall mix in business. Utilisation was slightly down on the prior period and the average fleet size was 3%
lower, which assisted the returns achieved by the business.
Retail unit sales at Auto Pedigree were significantly higher and the business improved its performance significantly
from the prior period.
The panel business was affected in the last quarter by strike action. This had a negative impact on the business in
the second quarter, resulting in an unsatisfactory performance for the first half.
Autoparts
% change
H1 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Revenue 2 466 2 264 8,9 2 209 11,6
Operating profit 156 144 8,3 149 4,7
Operating margin % 6,3 6,4 6,7
The Autoparts business, which forms a valuable part of our motor value chain, includes Midas, Alert Engine Parts,
Turbo Exchange and Afintapart. Midas and Alert Engine Parts performed satisfactorily in a competitive and mature market.
Price increases as a result of the weakening in the currency assisted turnover growth.
Turbo Exchange continues to be impacted by pricing pressures as a result of strong competition. The recently acquired
Afintapart SA (Pty) Limited, a commercial vehicle parts distributor, is performing in line with expectations.
Geribran, a 30% held associate in Zimbabwe performed satisfactorily and NGK, a 25% held associate performed well and
showed good growth.
Financial Services
% change
H2 H1 % H2 on H2
R million 2014 2013 change 2013 2013
Insurance
Revenue 1 492 1 659 (10,1) 1 628 (8,4)
Operating profit 306 270 13,3 240 27,5
Adjusted investment income 168 151 11,3 100 68,0
Adjusted underwriting result 138 119 16,0 140 (1,4)
Operating margin % 20,5 16,3 14,7
Net underwriting margin % 9,2 7,2 8,6
Other financial services
Revenue 563 506 11,3 445 26,5
Operating profit 237 221 7,2 214 10,7
Operating margin % 42,1 43,7 48,1
Total financial services
Revenue 2 055 2 165 (5,1) 2 073 (0,9)
Operating profit 543 491 10,6 454 19,6
Operating margin % 26,4 22,7 21,9
Note: The adjusted underwriting result in the above table reflects a reallocation of policyholder investment returns
from investment income to the underwriting result.
The Financial Services pillar performed well and showed good growth at the operating profit level.
Insurance
The insurance underwriting performance was much improved, and despite tough underwriting conditions in the motor
comprehensive and commercial vehicle classes, it was up 16% on the prior period. As part of its strategy to focus on its core
markets and distribution channels, Regent exited certain non-performing classes of business, which had not been
generating adequate returns for some time. These had a significant negative impact on underwriting performance in prior years.
As result, revenue reduced by 10% when compared to the prior period.
Regent’s other significant product lines in the short-term insurance business performed solidly.
Regent Life performed well, with gross written premiums up 11%. Botswana and Lesotho continue to contribute
meaningfully to the division.
Investment returns were higher than the prior period as a result of favourable equity markets.
Other Financial Services
The business performed satisfactorily as growth in operating profit was negatively impacted by more conservative
impairment provisions on vehicle financing joint ventures in line with expectations and current market conditions. The
advances book generated through these joint ventures has however grown encouragingly, as have the funds held under service and
maintenance plans, warranties and roadside assistance. This provides a valuable annuity earnings underpin to our future
profits. Volumes in Imperial Fleet Management continue improving as we gain new contracts.
Skills development and Corporate Social Investment
Ukhamba
Ukhamba Holdings (Pty) Limited, our BEE partner that owns an effective 10,1% shareholding in Imperial, decided to
facilitate the trading of its shares on an Over the Counter Platform (OTC) to allow our employees and beneficiaries in
Ukhamba to monetise their value in Ukhamba. In order to facilitate this, Imperial shareholders agreed to alter the conversion
profile of the deferred ordinary shares to equal predetermined conversions over 12 years. The estimated shareholder
cost of the conversion was R70 million. As a result, 15 575 previously disadvantaged individuals who have been invested in
Ukhamba for approximately nine years are now able to realise value by selling Ukhamba shares, via the OTC platform, to
qualifying 100% black-owned entities or black individuals. Trading started on 15 November 2013.
Building a robust internal skills pipeline
We recognise that skilled people offer the business a powerful competitive advantage, particularly in a global
environment of critical skills shortages, and skills development is therefore a key business driver across Imperial’s many
diverse operations. We continue to invest in artisan and technician training and up skilling management to build a robust
pipeline of talent and skills and in this respect we closely cooperate with the Department of Higher Education in the
national government.
Investing in education
The development of a sustainable skills pipeline in South Africa requires investment in the education of the next
generation.
To assist in achieving this objective, Imperial Holdings together with its empowerment partner Ukhamba, has made a
strategic investment in the upliftment of education facilities and teaching in ten schools in the greater Gauteng area. We
touch the lives of 10 000 previously disadvantaged children via this programme.
Leading corporate citizenship initiatives
Imperial also places strategic emphasis on establishing itself as a leading corporate citizen. A good example of this
is in Imperial Health Sciences, where we uplift the communities we interact with daily, through Unjani Clinic-in-a-Box.
The main aim of the Unjani project is to provide access to affordable primary healthcare in low-income communities.
The IMPERIAL I-Pledge road safety campaign has recorded 165 000 pledges from individuals in South Africa, pledging to
improve their driving behaviour.
We also recognise the clear business case for responsible environmental stewardship,
and continually seek ways to reduce our carbon footprint and consumption of scarce natural resources.
Strategic intentions
Our overarching strategic objective is to drive improving returns on capital, as this is the ultimate generator of
value for our shareholders. To deliver on this objective, the group is continuously seeking capital-efficient growth
opportunities in and adjacent to existing industries and geographies. In this respect the group’s recent entry into the South
American inland shipping market is significant as are the recent acquisitions of logistics and distribution businesses
in the rest of Africa.
Imperial’s deep involvement in virtually all aspects of the automotive value chain provides us with a competitive
advantage in this market, while generating the cash needed to grow our operations in other areas that offer good growth
prospects and which will maximise returns to our shareholders.
Our strategy is therefore centred on generating cash in the automotive business to grow the logistics operations,
while still continually pursuing opportunities to enrich our involvement in the automotive value chain.
Ordinary dividend
An interim dividend of 400 cents per share (2012: 380 cents per share) has been declared.
Prospects
Imperial’s balance sheet remains strong despite significant organic and acquisitive growth, and share buy-backs in the
recent past. As a result, the group is well positioned to take advantage of organic growth and acquisition
opportunities as they arise.
In South Africa, we expect trading conditions in the logistics industry to remain challenging, driven by a sluggish
economy. The division recently underwent a strategic consolidation process, which positions it well to be more competitive
and cost-effective in a tough market. Further benefits from this process will be realised in the second half of the
2014 financial year. The fundamentals of the logistics industry are good and given Imperial’s infrastructure, network and
expertise, it is ideally positioned to capitalise on these growth opportunities and gain more business in South Africa.
Prospects in the rest of Africa are good, and our expansion into the continent will continue to gain momentum,
especially in consumer markets. Our integrated capabilities in logistics, distributorships and marketing, provide the ideal
platform to take advantage of growth opportunities in these markets.
In Imperial Logistics International, activity levels have normalised from the slowdown in December and the business
remains well positioned in attractive niches in the German logistics industry. We have cautiously entered the South
American inland shipping market, which offers the group excellent growth prospects and where our expertise as the leading
inland shipping company in Europe will stand us in good stead.
We will continue to follow our customers who are entering new markets and acquisitions will also be a growth driver.
We anticipate trading conditions in the new motor vehicle market to be tougher. Reduced disposable income, interest
rate increases, a significantly weaker currency and the high base created by strong volume growth over the past four years
all present headwinds affecting margins and growth. While our inventory position has improved, we expect the market to
be more competitive as market conditions become more challenging. As a result of new vehicle price increases, the used
car market should improve further and after-sales parts and service revenues will continue benefiting from the increase
in the installed base of vehicles, especially in the brands we represent exclusively. We also expect to benefit from our
strong position in the commercial vehicle market.
Conditions in the Car Rental business are expected to remain competitive. Auto Pedigree should continue benefiting
from the improving used car market.
The Autoparts business is not affected directly by new vehicle sales and despite an increasingly competitive market we
should continue to perform solidly as initiatives to expand its product range and geographic footprint bear fruit.
Regent will focus on improving its underwriting result, which will be supported by the business’ recent exit from
underperforming businesses. Our investment portfolio will continue to be prudently managed and while we cannot predict the
performance of investment markets and our investment returns, we expect that our underwriting performance will improve
for the 2014 financial year.
The growth in the underlying books of business in LiquidCapital will be impacted by slower growth in the new vehicle
market. However, its financial performance will be underpinned by the strong annuity revenue streams that flow from the
installed base of business it has generated in the last few years.
Overall, given current market conditions, it will be difficult to achieve growth in the 2014 financial year as we
expect our vehicle distribution activities to be under continued pressure in the second half of the financial year, while
the remainder of our Automotive value chain together with Financial Services is expected to be robust and our Logistics
pillar is expected to perform well.
Appointment of the CEO
The board recently announced that Mr Mark James Lamberti, BCom, MBA, PPL (Harvard), has been appointed as chief
executive officer of Imperial, succeeding Mr Hubert Brody with effect from 1 March 2014. The appointment was made after
an extensive search during which a number of external and internal candidates were considered.
Mark was appointed managing director of the Makro chain in 1988 and founded Massmart in 1990. He was appointed
executive chairman of Massmart in 1996 and as CEO and deputy chairman in 2003. He relinquished his executive position to become
non-executive chairman in 2007. He is a former director of Wooltru, Primedia, Datatec and Altron. Mark currently also
serves as non-executive chairman of Transaction Capital where he recently stepped down as the CEO after serving in that
position for five years.
Mark will in due course relinquish his appointments on the boards of other listed companies and we are confident that
his experience, exceptional leadership skills and expertise will benefit Imperial and its stakeholders.
Hubert Brody will remain on the board of Imperial as a non-executive director. Hubert joined the group in 2000, was
appointed to the Imperial board in 2006 and as the CEO of the group in June 2007. He has made a significant contribution
to the group and was instrumental in positioning Imperial with a clear strategy, a strong balance sheet as well as an
established and experienced leadership team. The board wishes to express its gratitude to Hubert for his devotion and
commitment during his tenure as CEO.
By order of the board
TS Gcabashe HR Brody OS Arbee
Chairman Chief executive Financial director
Declaration of preference and ordinary dividends for the half year ended 31 December 2013
Ordinary shareholders
Notice is hereby given that a gross interim ordinary dividend in the amount of 400 cents per ordinary share has been
declared payable to holders of ordinary shares. The dividend will be paid out of income reserves.
The ordinary dividend will be subject to a local dividend tax rate of 15%.The STC credits utilised for the oredinary dividend amounted
to R13 020 772,94. The number of ordinary shares in issue at the date of the declaration was 209 956 092 and consequently the STC credits
utilised amounted to 6,20166 cents per share. The net ordinary dividend, to those shareholders who are not exempt from paying dividend tax,
is therefore 340,93025 cents per share.
Preference shareholders
A further notice is hereby given that a gross final preference dividend of 351,58562 cents per preference share has
been declared payable, by the Board of Imperial, to holders of non-redeemable, non-participating preference shares. The
dividend will be paid out of income reserves.
The preference dividend will be subject to a local dividend tax rate of 15%. No STC credits will be utilised for the
preference dividend. The net preference dividend, to those shareholders who are not exempt from paying dividend tax, is
therefore 298,84778 cents per share.
The company has determined the following salient dates for the payment of the preference dividend and ordinary dividend:
2014
Last day for preference shares and ordinary shares respectively to trade cum-preference dividend and cum-ordinary dividend Thursday, 20 March
Preference and ordinary shares commence trading ex-preference dividend and ex-ordinary dividend respectively Monday, 24 March
Record date Friday, 28 March
Payment date Monday, 31 March
The company’s income tax number is 9825178719.
Share certificates may not be dematerialised/rematerialised between Thursday, 20 March 2014 and Friday, 28 March 2014,
both days inclusive.
On Monday, 31 March 2014, amounts due in respect of the preference dividend and 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 31 March 2014 will be posted on or about that date. Shareholders who have dematerialised their
shares will have their accounts, held at their CSDP or Broker, credited on Monday, 31 March 2014.
RA Venter
Group company secretary
26 February 2014
Condensed consolidated statement of profit or loss
Unaudited Restated Restated
Six months Six months Financial year
ended ended ended
31 December 31 December 30 June
% 2013 2012* 2013*
change Rm Rm Rm
Revenue 13 51 357 45 262 92 382
Net operating expenses (47 136) (41 309) (84 222)
Profit from operations before depreciation and recoupments 4 221 3 953 8 160
Depreciation, amortisation, impairments and recoupments (1 055) (1 013) (2 070)
Operating profit 8 3 166 2 940 6 090
Recoupments from sale of properties, net of impairments 39 19 8
Amortisation of intangible assets arising on business combinations (147) (110) (254)
Net cost of meeting obligations under onerous contract (29)
Foreign exchange gains and losses 28 47 103
Fair value gains and losses on foreign exchange derivatives (44) (42) (79)
Charge for amending the conversion profile of the deferred ordinary shares (70)
Remeasurement of contingent considerations 66
Realised gain on disposal of available-for-sale investment 10 10
Business acquisition costs (8) (5) (15)
Exceptional items 87 (9) (178)
Profit before net financing costs and share of result of associates and
joint ventures 6 3 022 2 850 5 751
Net finance costs including fair value gains and losses (420) (362) (744)
Share of result of associates and joint ventures 18 3 86
Profit before tax 5 2 620 2 491 5 093
Income tax expense (689) (703) (1 405)
Net profit for the period 8 1 931 1 788 3 688
Net profit attributable to:
Owners of Imperial 10 1 734 1 580 3 296
Non-controlling interests 197 208 392
1 931 1 788 3 688
Earnings per share (cents)
- Basic 9 898 822 1 720
- Diluted 12 878 787 1 651
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Condensed consolidated statement of comprehensive income
Unaudited Restated Restated
Six months Six months Financial year
ended ended ended
31 December 31 December 30 June
% 2013 2012* 2013*
change Rm Rm Rm
Net profit for the period 8 1 931 1 788 3 688
Other comprehensive income 303 (33) 571
Items that may be reclassified subsequently to profit or loss 277 71 699
Exchange gains arising on translation of foreign operations 419 244 711
Share of associates' and joint ventures’ movement in translation reserve 7 11
Movement in valuation reserve 12 10 10
Reclassification of gain on disposal of available-for-sale investments (10) (10)
Movement in hedge accounting reserve (160) (175) (21)
Share of associates' and joint ventures’ movement in hedge accounting reserve 2 (3)
Income tax relating to items that may be reclassified (3) 5 (2)
Items that will not be reclassified to profit or loss 26 (104) (128)
Remeasurement of defined benefit pension plans 38 (151) (186)
Income tax relating to items that will not be reclassified (12) 47 58
Total comprehensive income for the period 27 2 234 1 755 4 259
Total comprehensive income attributable to:
Owners of Imperial 32 2 037 1 544 3 837
Non-controlling interests 197 211 422
2 234 1 755 4 259
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Earnings per share information
Unaudited Restated Restated
Six months Six months Financial year
ended ended ended
31 December 31 December 30 June
% 2013 2012* 2013*
change Rm Rm Rm
Headline earnings reconciliation
Earnings - basic 10 1 734 1 580 3 296
Saving of finance costs by associate on potential sale of Imperial shares 29 20 43
Earnings - diluted 10 1 763 1 600 3 339
Profit on disposal of property, plant and equipment (IAS 16) (73) (29) (38)
Profit on disposal of intangible assets (IAS 38) (3)
Impairment of property, plant and equipment (IAS 36) 1 24
Impairment of intangible assets (IAS 36) 3
Exceptional items (87) 9 178
Realised gain on disposal of available-for-sale investment (IAS 39) (10) (10)
Remeasurements included in share of result of associates and joint ventures 9 12 (13)
Tax effects of remeasurements 21 28 18
Non-controlling interests share of remeasurements 1 6 3
Headline earnings - diluted 1 1 634 1 617 3 501
Saving of finance costs by associate on potential sale of Imperial shares (29) (20) (43)
Headline earnings - basic 1 1 605 1 597 3 458
Earnings per share (cents)
- Basic 9 898 822 1 720
- Diluted 12 878 787 1 651
Headline earnings per share (cents)
- Basic 831 830 1 805
- Diluted 2 813 795 1 731
Core earnings reconciliation
Headline earnings - basic 1 1 605 1 597 3 458
Saving of finance costs by associate on potential sale of Imperial shares 29 20 43
Headline earnings - diluted 1 1 634 1 617 3 501
Amortisation of intangible assets arising on business combinations 147 110 254
Net cost of meeting obligations under onerous contract 29
Business acquisition costs 8 5 15
Remeasurement of contingent considerations (66)
Headline earnings from discontinued operations (2)
Adjustments included in share of result of associates and joint ventures 2 2 3
Charge for amending the conversion profile of the deferred ordinary shares 70
Tax effects of core earnings adjustments (51) (34) (77)
Non-controlling interests share of core earnings adjustments (1)
Core earnings - diluted 8 1 839 1 698 3 629
Saving of finance costs by associate on potential sale of Imperial shares (29) (20) (43)
Core earnings - basic 8 1 810 1 678 3 586
Core earnings per share (cents)
- Basic 7 937 873 1 872
- Diluted 10 915 835 1 795
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Unaudited Restated Restated
Six months Six months Financial year
ended ended ended
% 31 December 31 December 30 June
change 2013 2012* 2013*
Additional information
Net asset value per share (cents) 16 8 926 7 692 8 324
Dividend per ordinary share (cents) 5 400 380 820
Number of ordinary shares in issue (million)
- total shares 210,0 210,0 208,8
- net of shares repurchased 196,2 196,2 195,1
- weighted average for basic 193,2 192,3 191,6
- weighted average for diluted 200,9 203,4 202,2
Number of other shares (million)
- Deferred ordinary shares to convert into ordinary shares 10,0 13,0 13,0
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Details of net finance cost and exceptional items
Unaudited Unaudited Audited
Six months Six months Financial year
ended ended ended
31 December 31 December 30 June
2013 2012 2013
Rm Rm Rm
Net finance cost
Net interest paid (420) (362) (744)
Foreign exchange loss on monetary items (122) (254)
Fair value gain on interest-rate swap instruments 122 254
(420) (362) (744)
Exceptional items
Impairment of goodwill (139)
Net profit (loss) on disposal and rationalisation of investments in associates
and joint ventures 1 (7)
Net profit (loss) on disposal and rationalisation of subsidiaries and businesses 86 (9) (32)
87 (9) (178)
Condensed consolidated statement of financial position
Unaudited Restated Restated
31 December 31 December 30 June
2013 2012* 2013*
Rm Rm Rm
ASSETS
Goodwill and intangible assets 5 727 4 420 5 206
Investment in associates and joint ventures 1 235 902 1 317
Property, plant and equipment 10 023 8 545 9 257
Transport fleet 5 273 4 399 4 626
Vehicles for hire 2 670 2 688 2 465
Deferred tax assets 1 341 1 103 1 094
Investments and loans 3 679 3 236 3 218
Non-current financial assets 230 254 227
Inventories 12 506 8 851 11 492
Tax in advance 340 295 439
Trade and other receivables 11 692 10 202 10 437
Cash resources 1 693 2 590 1 844
Assets classified as held for sale 630 94
Total assets 56 409 48 115 51 716
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 382 333 382
Shares repurchased (220) (227) (220)
Other reserves 1 395 426 1 023
Retained earnings 15 956 14 559 15 056
Attributable to owners of Imperial 17 513 15 091 16 241
Non-controlling interests 1 326 1 251 1 295
Total equity 18 839 16 342 17 536
Liabilities
Non-redeemable, non-participating preference shares 441 441 441
Retirement benefit obligations 1 098 864 1 014
Interest-bearing borrowings 13 298 11 088 10 568
Insurance, investment, maintenance and warranty contracts 4 130 3 633 3 970
Deferred tax liabilities 1 577 1 266 1 498
Non-current financial liabilities 468 274 419
Trade and other payables and provisions 15 975 13 467 15 771
Current tax liabilities 583 543 453
Liabilities directly associated with assets classified as held for sale 197 46
Total liabilities 37 570 31 773 34 180
Total equity and liabilities 56 409 48 115 51 716
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Condensed consolidated statement of cash flows
Unaudited Restated Audited
Six months Six months Financial year
ended ended ended
31 December 31 December 30 June
2013 2012* 2013
Rm Rm Rm
Cash flows from operating activities
Cash generated by operations before movements in net working capital 4 328 4 285 8 795
Movements in net working capital (2 244) (1 489) (1 604)
Cash generated by operations before capital expenditure on rental assets 2 084 2 796 7 191
Expansion capital expenditure - rental assets (251) (439) (332)
Net replacement capital expenditure - rental assets (301) (296) (584)
- Expenditure (1 100) (1 188) (2 330)
- Proceeds 799 892 1 746
Cash generated by operations 1 532 2 061 6 275
Net finance costs paid (420) (362) (744)
Tax paid (525) (598) (1 394)
587 1 101 4 137
Cash flows from investing activities
Net acquisitions and disposals of subsidiaries and businesses 148 38 (539)
Expansion capital expenditure - excluding rental assets (1 015) (597) (1 350)
Net replacement capital expenditure - excluding rental assets (647) (531) (811)
Net movement in associates and joint ventures (75) (25) (321)
Net movement in investments, loans and non-current financial instruments (129) (854) (771)
(1 718) (1 969) (3 792)
Cash flows from financing activities~
Hedge cost premium paid (112) (8) (117)
Ordinary shares repurchased and cancelled (481) (742)
Dividends paid (1 050) (877) (1 755)
Change in non-controlling interests (89) 5 (9)
Capital raised from non-controlling interests 91 28
Repayment of Eurobond (2 690)
Proceeds on the issue of corporate bonds 1 500 750
Net increase in other interest-bearing borrowings 450 89 672
790 (1 272) (3 863)
Net decrease in cash and cash equivalents (341) (2 140) (3 518)
Effects of exchange rate changes on cash resources in a foreign currency 54 93 209
Cash and cash equivalents at beginning of period (480) 2 829 2 829
Cash and cash equivalents at end of period (767) 782 (480)
* Amounts restated, refer to note 5.
- There has been no cash flow for the shares issued (refer statement of changes in equity) relating to the share scheme settlements
in prior periods.
Condensed consolidated statement of changes in equity
Share
capital
and share Shares re- Other Retained
premium purchased reserves earnings
Rm Rm Rm Rm
Balance at 30 June 2012 - Audited 22 (220) 503 14 361
Adjustment resulting from the adoption of (40)
amendments to IAS 19 Employee Benefits
Total comprehensive income for the period 67 1 477
Movement in statutory reserves 3 (3)
Share-based equity reserve charged to profit or loss 57
Share-based equity reserve transferred to retained earnings on vesting 19 (19)
Share-based equity reserve hedging cost reversal 7
Ordinary dividends paid (743)
Repurchase and cancellation of 2 631 559 ordinary shares from open market (474)
Issue of 1 620 884 ordinary shares in settlement of share incentive scheme obligations 311 (229)
39 000 ordinary shares acquired by subsidiary (7)
Non-controlling interests disposed, net of acquisitions
Net increase in non-controlling interests (1)
Non-controlling interests share of dividends
Balance at 31 December 2012 - Restated* 333 (227) 426 14 559
Total comprehensive income for the period 599 1 694
39 000 ordinary shares acquired by subsidiary reversed 7
Movements in statutory reserves 18 (18)
Repurchase and cancellation of 1 371 515 ordinary shares from open market (268)
240 966 ordinary shares issued in settlement of share incentive scheme obligations 49 (42)
Share-based equity reserve charged to profit or loss 56
Share-based equity reserve transferred to retained earnings on vesting 177 (177)
Share-based equity reserve hedging cost utilisation (200)
Ordinary dividends paid (735)
Realisation on disposal of subsidiary (1) 1
Non-controlling interests disposed, net of acquisitions and shares issued
Net decrease in non-controlling interests (10)
Non-controlling interests share of dividends
Balance at 30 June 2013 - Restated* 382 (220) 1 023 15 056
Total comprehensive income for the period 277 1 760
Movements in statutory reserves 4 (4)
Share-based equity reserve charged to profit or loss 61
Share-based equity reserve hedging cost reversal 13
Charge for amending the conversion profile of the deferred ordinary shares 70
Ordinary dividends paid (854)
Realisation on disposal of subsidiaries 2 (2)
Non-controlling interests disposed, net of acquisitions and shares issued
Net decrease in non-controlling interests (55)
Non-controlling interests share of dividends
Balance at 31 December 2013 - Unaudited 382 (220) 1 395 15 956
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Condensed consolidated statement of changes in equity (continued)
Attribu-
table to Non-
owners of controlling Total
Imperial interests equity
Rm Rm Rm
Balance at 30 June 2012 - Audited 14 666 1 223 15 889
Adjustment resulting from the adoption of (40) (2) (42)
amendments to IAS 19 Employee Benefits
Total comprehensive income for the period 1 544 211 1 755
Movement in statutory reserves
Share-based equity reserve charged to profit or loss 57 3 60
Share-based equity reserve transferred to retained earnings on vesting
Share-based equity reserve hedging cost reversal 7 7
Ordinary dividends paid (743) (743)
Repurchase and cancellation of 2 631 559 ordinary shares from open market (474) (474)
Issue of 1 620 884 ordinary shares in settlement of share incentive scheme obligations 82 (11) 71
39 000 ordinary shares acquired by subsidiary (7) (7)
Non-controlling interests disposed, net of acquisitions (45) (45)
Net increase in non-controlling interests (1) 6 5
Non-controlling interests share of dividends (134) (134)
Balance at 31 December 2012 - Restated* 15 091 1 251 16 342
Total comprehensive income for the period 2 293 211 2 504
39 000 ordinary shares acquired by subsidiary reversed 7 7
Movements in statutory reserves
Repurchase and cancellation of 1 371 515 ordinary shares from open market (268) (268)
240 966 ordinary shares issued in settlement of share incentive scheme obligations 7 (3) 4
Share-based equity reserve charged to profit or loss 56 56
Share-based equity reserve transferred to retained earnings on vesting
Share-based equity reserve hedging cost utilisation (200) 2 (198)
Ordinary dividends paid (735) (735)
Realisation on disposal of subsidiary
Non-controlling interests disposed, net of acquisitions and shares issued (19) (19)
Net decrease in non-controlling interests (10) (4) (14)
Non-controlling interests share of dividends (143) (143)
Balance at 30 June 2013 - Restated* 16 241 1 295 17 536
Total comprehensive income for the period 2 037 197 2 234
Movements in statutory reserves
Share-based equity reserve charged to profit or loss 61 2 63
Share-based equity reserve hedging cost reversal 13 (5) 8
Charge for amending the conversion profile of the deferred ordinary shares 70 70
Ordinary dividends paid (854) (854)
Realisation on disposal of subsidiaries
Non-controlling interests disposed, net of acquisitions and shares issued 25 25
Net decrease in non-controlling interests (55) 8 (47)
Non-controlling interests share of dividends (196) (196)
Balance at 31 December 2013 - Unaudited 17 513 1 326 18 839
* Amounts restated as a result of the application of amendments to IAS 19 Employee Benefits, refer to note 3. The original 30 June 2013
amounts were audited, the 31 December 2012 amounts and the restatements have not been audited.
Notes to the condensed consolidated financial statements
1. Basis of preparation
The condensed consolidated financial statements have been prepared in accordance with the recognition and measurement criteria 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 31 December 2013 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. The results are
presented in accordance with 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 condensed consolidated financial statements do not include all
the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements
as at and for the year ended 30 June 2013.
These condensed consolidated financial statements have been prepared under the supervision of R Mumford, CA(SA) and were approved
by the board of directors on 25 February 2014.
2. Accounting policies
The accounting policies adopted and methods of computation used in the preparation of the condensed consolidated financial statements
are in accordance with IFRS and are consistent with those of the annual financial statements for the year ended 30 June 2013 except
where the group has adopted new or revised accounting standards.
3. Changes in accounting policies
The group has adopted all the new, revised or amended accounting pronouncements as issued by the IASB which became effective to the
group on 1 July 2013, including some of the more significant changes as listed below:
IFRS 10 Consolidated Financial Statements
The objective of IFRS 10 is to provide the framework on when an entity is controlled and must be consolidated.
IFRS 11 Joint Arrangements
Where joint arrangements exist the investor is required to assess whether the joint arrangement is a joint operation or a joint venture
based on the legal structure of the investee and the investor’s right to and obligations for the underlying assets and liabilities of
the investee. IFRS 11 requires equity accounting for joint ventures and eliminates the proportionate consolidation option of accounting.
IFRS 12 Disclosure of Interest in Other Entities
IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements, associates and
unconsolidated entities. In general, the disclosure requirements in IFRS 12 are more extensive.
IFRS 13 Fair Value Measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a single definition of fair value and a basis for fair value
measurement and disclosure requirements for use across all accounting standards.
IAS 19 Employee Benefits
The amendments to IAS 19 require all actuarial gains and losses to be recognised immediately in other comprehensive income so that
the pension asset or liability reflects the full value of the plan deficit or surplus.
The new, revised or amended standards were adopted in accordance with their transitional provisions with the adoption of amendments
to IAS 19 resulting in the only restatement of the comparative amounts as follows:
Effect on Effect on
December June
2012 2013
Rm Rm
Financial position
Assets
Deferred tax assets - increase 69 80
Total assets 69 80
Capital and reserves
Other reserves - movement through other comprehensive income - reduction (7) (9)
Retained income - opening balance as at 30 June 2012 - reduction (40) (40)
Retained income - movement through comprehensive income - reduction in prior periods (102) (123)
Attributable to owners of Imperial (149) (172)
Non-controlling interests - reduction (3) (5)
Total equity - reduction (152) (177)
Liabilities
Retirement benefit obligations - increase 221 257
Total liabilities - increase 221 257
Total equity and liabilities - increase 69 80
Profit or loss
Net operating expenses - reduction 1 3
Income tax expense - increase (1)
Net profit for the period - increase 1 2
Earnings per share, headline earnings per share and core earnings per share
- basic - increase (cents) 1 1
- diluted - increase (cents) 1 1
Comprehensive income
Net profit for the period 1 2
Other comprehensive income (111) (137)
Items that may be reclassified subsequently to profit or loss (7) (9)
- Exchange gains arising on translation of foreign entities - reduction (7) (9)
Items that will not be reclassified to profit or loss (104) (128)
- Additional actuarial losses on defined benefit plans (151) (186)
- Income tax relating to items that will not be reclassified to profit or loss 47 58
Total comprehensive income for the period - reduction (110) (135)
Total comprehensive income attributable to:
Owners of Imperial (109) (132)
Non-controlling interests (1) (3)
(110) (135)
Circular 3/2013 Headline Earnings
The group also adopted Circular 3/2013 Headline Earnings as issued by the South African Institute of Chartered Accountants (SAICA). The
adoption of the new Circular was applied retrospectively and had no impact on the way the group calculates its headline earnings per share
for the comparative periods.
4. New and revised International Financial Reporting Standards in issue but not yet effective
The following standards will become applicable to the group in future reporting periods:
IFRS 9 Financial Instruments (amended) - This standard introduced new requirements for the classification and measurement of financial
assets and financial liabilities and for derecognition.
IAS 16 Property, Plant and Equipment (amended) - The amendments clarify that spare parts, stand-by equipment and servicing equipment
should be classified as property, plant and equipment when they meet the definition of property, plant and equipment in IAS 16 and as
inventory otherwise.
IAS 32 Financial Instruments: Presentation (amended) - The amendment clarifies how income tax relating to distributions to holders of
an equity instrument and how transaction costs of an equity transaction should be accounted for in accordance with IAS 12 Income Taxes.
IAS 36 Impairment of Assets (amended) - This amendment requires additional disclosures about recoverable amount where the recoverable
amount is calculated with reference to fair value less cost to sell.
IAS 39 Financial Instruments: Recognition and Measurement (amended) - The amendment allows hedge accounting to continue in a situation
where a derivative, designated as a hedging instrument, is novated to effect clearing with a central counterparty as a result of laws
and regulations.
IFRIC 21 Levies - This interpretation applies to all government-related levies that are accounted for in accordance with IAS 37
Provisions and clarifies the timing of charging levies to profit or loss.
The group is in the process of assessing the impact of the standard on its results, financial position and cash flows.
5. Restatement of the consolidated statement of cash flows
Cash flow from financing activities
The cash flows from financing activities for the six months ended 31 December 2012 have been restated to exclude the movement in bank
overdrafts and call borrowings from movements in interest-bearing borrowings. The impact of the restatement is as follows:
December
2012
Rm
Increase in interest-bearing borrowings
Net increase in interest-bearing borrowings - as originally presented 1 190
Movements in bank overdrafts and call borrowings (1 101)
Net increase in interest-bearing borrowings - restated 89
6. Representation of the segment report
At 30 June 2013, the executive committee, being the chief decision-making body, changed the basis in which the various businesses within
the group are being reported as a result of the changes to the executive management of the group. This has been aligned into three main
pillars with seven reporting segments being allocated to these pillars.
The principal services and products of each of these segments are as follows:
Logistics
This pillar comprises:
Africa
This segment comprises logistics businesses within South Africa and Rest of Africa, which was previously reported as part of Logistics.
These businesses provide complete logistics solutions including transportation, warehousing, container handling and related value-added
services within Africa.
International
This segment comprises the European logistics businesses, which was previously reported as part of Logistics. These businesses provide
complete logistics solutions including transportation, warehousing, inland waterway shipping, container handling, manufacturing for
principals and packaging of materials and related value-added services within Europe.
Automotive and Industrial
This pillar comprises of:
Distribution, Retail and Allied Services
This segment comprises of the distribution, retail and allied services businesses, which was previously reported as part of Distributorships.
These businesses import and distribute a range of passenger, commercial vehicles, industrial equipment and motorcycles and include vehicle
dealerships in South Africa and Australia.
Automotive Retail
This segment comprises the automotive businesses, which is now being reported under the pillar Automotive and Industrial. These businesses
consist of a large network of motor vehicle and commercial vehicle dealerships in South Africa representing most of the major original
equipment manufacturers (OEMs) and commercial vehicle dealerships in the United Kingdom. It also manufactures and sells caravans and canopies.
Other Segments
This segment comprises the businesses of Autoparts, Car Rental, Tourism and NAC. Autoparts and NAC were reported under Distributorships in
2012 and Car Rental and Tourism were previously shown as a segment on its own. The Car Rental business consists of vehicle rental operations
spanning the domestic corporate sector, domestic and international leisure sectors with extensive support services. This segment also includes
the sale of pre-owned vehicles. The Autoparts business is involved in wholesaling and distributing vehicle parts and accessories. NAC was sold
during the 2013 financial year and Tourism during the current reporting period.
Financial Services
This pillar comprises:
Insurance
This segment was previously reported under the Financial Services segment in 2012. The insurance operations are focused on a range of short,
medium and long-term insurance and assurance products that are predominantly associated with the automotive market and include cell captive
arrangements.
Other Financial Services
This segment was previously reported under the Financial Services segment in 2012. These businesses comprise the sale of warranty and
maintenance products associated with the automotive market, income from joint ventures on the sale of financial services and commission
factoring operations.
In line with the changes to the segment report effective 30 June 2013, the December 2012 segment report has been restated as follows:
Revenue Operating Profit before Operating Operating
2012 profit tax and assets liabilities
Rm 2012 exceptional 2012 2012
Rm items Rm Rm
2012
Rm
Segmental information
Logistics
Total as originally reported for Logistics in 2012 15 888 707 393 18 200 6 891
- IAS 19 restatements (International Logistics) 1 1 221
Total as restated 15 888 708 394 18 200 7 112
Now disclosed separately as Africa Logistics 8 677 400 255 9 809 3 705
Now disclosed separately as International Logistics 7 211 308 139 8 391 3 407
15 888 708 394 18 200 7 112
Automotive and Industrial
As reported originally in Distributorships in 2012 15 843 1 316 1 245 11 346 3 709
Autoparts and NAC reclassified to other segments (2 815) (166) (173) (1 576) (604)
Total now remaining in Distribution, Retail and Allied Services 13 028 1 150 1 072 9 770 3 105
Other Segments
Autoparts and NAC reclassified from Distributorships 2 815 166 173 1 576 604
Car Rental and Tourism reclassified in total 1 924 183 129 3 185 539
Total now disclosed in Other Segments 4 739 349 302 4 761 1 143
Financial Services
Now disclosed separately as Insurance 1 659 270 265 4 404 2 442
Now disclosed separately as Other Financial Services 506 221 237 1 476 2 571
Total as originally reported as Financial Services in 2012 2 165 491 502 5 880 5 013
December December June
2013 2012 2013
7. Foreign exchange rates
The following major rates of exchange were used in the translation of the group’s foreign operations:
SA Rand:Euro
- closing 14,45 11,21 13,04
- average 13,50 10,79 11,43
SA Rand:US Dollar
- closing 10,49 8,50 10,01
- average 10,06 8,47 8,84
Rm* Rm Rm
8. Goodwill
Cost 5 185 4 113 4 747
Accumulated impairments 821 682 821
4 364 3 431 3 926
Net book value at beginning of period 3 926 3 238 3 238
Acquisition of subsidiaries and businesses 171 40 331
Impairment charge (139)
Currency adjustment 267 153 496
Net book value at end of period~ 4 364 3 431 3 926
~The book values are included in the goodwill and intangible assets.
*Amounts are provisional as the initial accounting for the business combinations are incomplete.
9. Fair value of financial instruments
Fair values of financial assets and liabilities carried at amortised cost
The following table sets out instances where the carrying amount of financial liabilities, as recognised on the statement of financial
position, differ from their fair values:
Carrying Fair
value value
Rm Rm
December 2013
Listed corporate bonds (included in interest-bearing borrowings) 5 855 5 897
Listed non-redeemable, non-participating preference shares 441 363
The fair values of the remainder of the group’s financial assets and liabilities approximate their carrying values.
Fair value hierarchy
The group’s financial instruments carried at fair value are classified in three categories defined as follows:
Level 1 financial instruments are those that are valued using unadjusted quoted prices in active markets for identical financial instruments.
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 valuation techniques where at least one input, which could have a significant effect on the instrument’s
valuation, is not based on observable market data.
The following table presents the valuation categories used in determining the fair values of financial instruments carried at fair value:
Total Level 1 Level 2 Level 3
Rm Rm Rm Rm
December 2013
Financial assets carried at fair value
Investments held for trading (included in investments and loans)* 3 278 2 500 778
Available-for-sale investments (included in investments and loans) 180 180
Foreign exchange contracts (FECs) (included in trade and other receivables) 118 118
Financial liabilities carried at fair value
Contingent consideration liabilities (included in non-current financial liabilities) 209 88 121
Foreign exchange contracts (FECs) (included in trade and other receivables) 1 1
Swap instruments (included in non-current financial liabilities) 223 223
* The fair value gains on investments held for trading amounted to R130 million, of which R40 million was realised, and is included in “Net
operating expenses” in profit or loss.
Investments classified as level 1 are valued by quoted market prices in active markets consisted of listed equity securities. Investments
classified as level 2 use valuation techniques based on observable inputs which are mainly comprised of short-term deposits and over-the-counter
(OTC) derivative instruments.
Transfers between 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 level 1 and level 2 fair value measurements. A short-term fixed deposit which was previously classified
as level 3 has been reclassified to level 2, which is considered a more appropriate classification.
Movements in level 3 financial instruments measured at fair value
The following table shows a reconciliation of the opening and closing balances of level 3 financial instruments carried at fair value during the period:
Opening Purchases/ Acquisitions/ Transfer to Currency Closing
balance settlements disposals level 2 adjustments balance
Rm Rm Rm Rm Rm Rm
December 2013
Financial assets carried at fair value
Fair valued through profit or loss
Investments held for trading 115 (36) (88) 9
Fair valued through other comprehensive income
Available-for-sale investments 14 (15) 1
129 (51) (88) 10
Financial liabilities carried at fair value
Fair valued through profit or loss
Contingent consideration liabilities 214 1 (19) (88) 13 121
214 1 (19) (88) 13 121
Level 3 sensitivity information
The fair value of the contingent consideration liabilities of R121 million was estimated by applying the income approach. The fair value measurement
is based on significant inputs that are not observable in the market. Key assumptions include the discount rates applied and the assumed probability
of achieving profit targets.
If the profit targets were to have a short fall of 10%, the fair value of the liabilities would decrease by R23 million. Exceeding the profit targets
will not result in an increase in the liabilities.
Since 30 June 2013, neither the amount recognised for the contingent considerations nor the outcomes or the assumptions used to develop the estimates
have changed materially.
December December June
2013 2012 2013
Rm Rm Rm
10. Cash and cash equivalents
Cash resources 1 693 2 590 1 844
Cash resources included in assets classified as held for sale 9 4
Short-term loans and overdrafts (included in interest-bearing borrowings) (2 460) (1 817) (2 328)
(767) 782 (480)
11. Commitments and contingencies
Capital commitments 1 239 483 935
Contingent liabilities 309 208 294
12. Acquisitions during the period
The group acquired an additional 11% shareholding in Renault South Africa (Pty) Limited (Renault SA) for R65 million, thereby increasing its
shareholding from 49% to 60%. The remeasurement of our previously held equity interest in Renault SA had no impact on profit or loss and other
comprehensive income. For further details please refer to the business combination section.
13. Disposals during the period
The group successfully completed its disposal of the Tourism division to Cullinan Holdings Limited (Cullinan) during the period. The purchase
price was settled in 81 818 181 ordinary shares in Cullinan, representing a 10% shareholding.
14. Events after the reporting period
Dividend declaration
Shareholders are advised that a preference and an ordinary dividend has been declared by the board of Imperial on 25 February 2014. For more
details please refer to the dividend declaration.
Business combinations
Interest Purchase
acquired consideration
Subsidiaries and businesses acquired Nature of business Operational segment Date acquired (%) Rm
Renault South Africa (Pty) Limited* Vehicle distributor Distribution, Retail
and Allied Services December 2013 60 65
Individually immaterial acquisitions 34
Purchase consideration transferred 99
*Previously a 49% associate.
Renault Individually
South Africa immaterial
Fair value of assets acquired and liabilities assumed (Pty) Limited acquisitions Total
at date of acquisition: Rm Rm Rm
Assets
Goodwill and intangible assets 108 8 116
Property, plant and equipment 2 5 7
Deferred tax asset 148 148
Inventories 570 13 583
Trade and other receivables 231 3 234
Cash resources 273 1 274
1 332 30 1 362
Liabilities
Deferred tax liabilities 3 3
Interest-bearing borrowings 452 3 455
Trade and other payables and provisions 1 040 1 040
1 492 6 1 498
Acquirees’ carrying amount at acquisition (160) 24 (136)
Non-controlling interests 64 64
Net assets acquired (96) 24 (72)
Purchase consideration transferred 65 34 99
Excess of purchase price over net assets acquired 161 10 171
As the initial accounting for the business combinations were incomplete and based on provisional figures, depreciation and amortisation of assets
were calculated on their pre-acquisition carrying values before any purchase price allocations. Similarly, no disclosure regarding non-recurring
fair value measurements are made.
Reason for the acquisitions
Renault was acquired to obtain control of the business and to diversify our distribution portfolio. The other businesses were acquired to complement
and expand our distribution and parts businesses within South Africa.
Acquisition costs
Acquisition costs for acquisitions concluded during the period amounted to R2 million and have been recognised as an expense in profit or loss within
business acquisition costs.
Impact of the acquisitions on the results of the group
From the dates of acquisition the businesses acquired during the reporting period contributed revenue of R281 million and a net profit of R1 million.
Had all the acquisitions been consolidated from 1 July 2013, they would have contributed additional revenue of R1 259 million and additional net profit
of R20 million, and would have increased the group’s revenue and net profit to R52 616 million and R1 951 million respectively. The additional net profit
of R20 million has been reduced by funding costs of R2 million calculated on the cash considerations paid on acquisition.
Other details
Trade and other receivables acquired had gross contractual amounts of R245 million of which R11 million was doubtful. None of the goodwill is expected
to be deductible for tax purposes. Non-controlling interests have been calculated based on their proportionate share in net assets.
Segment financial position#
LOGISTICS
Group Group Africa International
2013 2012 2013 2012 2013 2012
at 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Assets
Goodwill and intangible assets 5 727 4 420 1 228 905 3 417 2 808
Investments, associates and joint ventures 4 476 3 605 367 57 150 93
Property, plant and equipment 10 023 8 545 1 516 1 323 2 273 1 821
Transport fleet 5 273 4 399 3 405 3 344 1 907 1 101
Vehicles for hire 2 670 2 688
Non-current financial assets 230 254
Inventories 12 506 8 851 386 319 215 176
Trade and other receivables 11 692 10 202 4 514 3 861 3 012 2 392
Cash resources in financial services businesses 592 806
Operating assets 53 189 43 770 11 416 9 809 10 974 8 391
Deferred tax assets 1 341 1 103
Loans to associates and other investments 438 533
Tax in advance 340 295
Cash resources 1 101 1 784
Assets classified as held for sale 630
Total assets per statement of financial position 56 409 48 115
Liabilities
Retirement benefit obligations 1 098 864 1 098 864
Insurance, investment, maintenance and warranty contracts 4 130 3 633
Trade and other payables and provisions 15 975 13 467 4 058 3 647 3 024 2 523
Non-current financial liabilities 468 274 199 58 24 20
Operating liabilities 21 671 18 238 4 257 3 705 4 146 3 407
Non-redeemable, non-participating preference shares 441 441
Interest-bearing borrowings 13 298 11 088
Deferred tax liabilities 1 577 1 266
Current tax liabilities 583 543
Liabilities directly associated with assets classified as
held for sale 197
Total liabilities per statement of financial position 37 570 31 773
Geographic segmentation
Operating assets 53 189 43 770 11 416 9 809 10 974 8 391
- South Africa 35 150 30 055 8 798 7 783
- Rest of Africa 3 908 3 264 2 617 2 026
- Rest of world 14 131 10 451 1 10 974 8 391
Operating liabilities 21 671 18 238 4 257 3 705 4 146 3 407
- South Africa 14 607 12 730 3 504 3 080
- Rest of Africa 1 550 1 287 753 625
- Rest of world 5 514 4 221 4 146 3 407
Interest-bearing borrowings 13 298 11 088 3 999 3 304 4 486 3 573
- South Africa 7 604 4 500 3 038 2 794
- Rest of Africa 1 191 746 961 510
- Rest of world 4 503 5 842 4 486 3 573
Gross capital expenditure 3 373 3 022 706 579 673 150
- South Africa 2 323 2 741 577 528
- Rest of Africa 169 82 129 51
- Rest of world 881 199 673 150
Gross capital expenditure 3 373 3 022 706 579 673 150
Less: Proceeds on disposal (1 159) (1 159) (252) (169) (30) (21)
Net capital expenditure 2 214 1 863 454 410 643 129
* Other Segments includes Car Rental and Autoparts. The comparatives include Tourism.
# The segment information has been restated, refer to note 6.
Segment financial position#(continued)
AUTOMOTIVE AND INDUSTRIAL
Distribution, Retail Other
and Allied Services Automotive Retail Segments*
2013 2012 2013 2012 2013 2012
at 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Assets
Goodwill and intangible assets 432 165 253 156 364 362
Investments, associates and joint ventures 50 127 52 16 55 51
Property, plant and equipment 3 079 2 506 2 248 2 009 568 570
Transport fleet
Vehicles for hire 663 474 1 997 2 059
Non-current financial assets
Inventories 7 284 4 802 3 246 2 419 1 036 882
Trade and other receivables 1 661 1 696 1 345 994 822 837
Cash resources in financial services businesses
Operating assets 13 169 9 770 7 144 5 594 4 842 4 761
Deferred tax assets
Loans to associates and other investments
Tax in advance
Cash resources
Assets classified as held for sale
Total assets per statement of financial position
Liabilities
Retirement benefit obligations
Insurance, investment, maintenance and warranty contracts 87 83
Trade and other payables and provisions 4 134 3 018 2 950 1 972 1 032 1 114
Non-current financial liabilities 10 4 36 29
Operating liabilities 4 231 3 105 2 950 1 972 1 068 1 143
Non-redeemable, non-participating preference shares
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Liabilities directly associated with assets classified as
held for sale
Total liabilities per statement of financial position
Geographic segmentation
Operating assets 13 169 9 770 7 144 5 594 4 842 4 761
- South Africa 11 788 8 557 5 588 4 783 4 770 4 704
- Rest of Africa 174 166 3 6 72 57
- Rest of world 1 207 1 047 1 553 805
Operating liabilities 4 231 3 105 2 950 1 972 1 068 1 143
- South Africa 4 024 2 909 1 965 1 516 1 051 1 127
- Rest of Africa 75 49 1 5 17 16
- Rest of world 132 147 984 451
Interest-bearing borrowings 4 162 2 579 1 903 1 602 1 565 1 702
- South Africa 3 617 1 760 1 639 1 414 1 519 1 651
- Rest of Africa 178 185 6 46 51
- Rest of world 367 634 258 188
Gross capital expenditure 609 410 247 390 1 102 925
- South Africa 414 382 236 352 1 063 910
- Rest of Africa 16 39 15
- Rest of world 195 12 11 38
Gross capital expenditure 609 410 247 390 1 102 925
Less: Proceeds on disposal (138) (68) (42) (40) (561) (347)
Net capital expenditure 471 342 205 350 541 578
* Other Segments includes Car Rental and Autoparts. The comparatives include Tourism.
# The segment information has been restated, refer to note 6.
Segment financial position# (continued)
FINANCIAL SERVICES
Other Head Office and
Insurance Financial Services Eliminations
2013 2012 2013 2012 2013 2012
at 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Assets
Goodwill and intangible assets 12 16 3 14 18 (6)
Investments, associates and joint ventures 3 145 2 968 497 259 160 34
Property, plant and equipment 141 137 7 4 191 175
Transport fleet (39) (46)
Vehicles for hire 347 602 (337) (447)
Non-current financial assets 230 254
Inventories 353 330 (14) (77)
Trade and other receivables 229 223 419 267 (310) (68)
Cash resources in financial services businesses 577 806 15
Operating assets 4 334 4 404 1 641 1 476 (331) (435)
Deferred tax assets
Loans to associates and other investments
Tax in advance
Cash resources
Assets classified as held for sale
Total assets per statement of financial position
Liabilities
Retirement benefit obligations
Insurance, investment, maintenance and warranty contracts 1 355 1 187 2 688 2 363
Trade and other payables and provisions 1 128 1 255 450 208 (801) (270)
Non-current financial liabilities 199 163
Operating liabilities 2 483 2 442 3 138 2 571 (602) (107)
Non-redeemable, non-participating preference shares
Interest-bearing borrowings
Deferred tax liabilities
Current tax liabilities
Liabilities directly associated with assets classified as
held for sale
Total liabilities per statement of financial position
Geographic segmentation
Operating assets 4 334 4 404 1 641 1 476 (331) (435)
- South Africa 3 292 3 395 1 641 1 476 (727) (643)
- Rest of Africa 1 042 1 009
- Rest of world 396 208
Operating liabilities 2 483 2 442 3 138 2 571 (602) (107)
- South Africa 1 779 1 849 3 138 2 571 (854) (322)
- Rest of Africa 704 593 (1)
- Rest of world 252 216
Interest-bearing borrowings 152 207 (2 097) (1 549) (872) (330)
- South Africa 152 207 (2 097) (1 549) (264) (1 777)
- Rest of Africa
- Rest of world (608) 1 447
Gross capital expenditure 36 12 321 501 (321) 55
- South Africa 35 11 321 501 (323) 57
- Rest of Africa 1 1 (1)
- Rest of world 2 (1)
Gross capital expenditure 36 12 321 501 (321) 55
Less: Proceeds on disposal (9) (249) (512) 122 (2)
Net capital expenditure 27 12 72 (11) (199) 53
* Other Segments includes Car Rental and Autoparts. The comparatives include Tourism.
# The segment information has been restated, refer to note 6.
Segment profit or loss#
LOGISTICS
Group Group Africa International
2013 2012 2013 2012 2013 2012
for the six months ended 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Revenue
- Sale of goods 28 714 26 193 2 182 1 930
- Rendering of services 21 200 17 479 8 625 6 698 9 082 7 146
- Gross premiums received 1 405 1 528
- Other 38 62 28 61
51 357 45 262 10 807 8 628 9 110 7 207
Inter-segment revenue 88 49 4
51 357 45 262 10 895 8 677 9 110 7 211
Operating expenses including cost of sales (47 385) (41 534) (9 915) (7 956) (8 439) (6 685)
Investment income 119 89
Fair value gains on investments 130 136
Depreciation, amortisation and impairments (1 089) (1 023) (342) (323) (279) (230)
Recoupments (excluding properties) 34 10 12 2 20 12
Operating profit 3 166 2 940 650 400 412 308
Recoupments from sale of properties, net of impairments 39 19 36 2
Amortisation of intangible assets arising on business combinations (147) (110) (45) (11) (93) (96)
Net cost of meeting obligations under onerous contract (29) (29)
Foreign exchange gains and (losses) 28 47 (1) (3) (5) (3)
Fair value gains and (losses) on foreign exchange derivatives (44) (42)
Charge for amending the conversion profile of the deferred
ordinary shares (70)
Realised gain on disposal of available-for-sale investment 10 10
Business acquisition costs (8) (5) (5) (5)
Profit before net finance cost, exceptional items and share of
result of associates and joint ventures 2 935 2 859 635 383 285 219
Net finance cost including fair value gains and losses (420) (362) (160) (132) (86) (84)
Share of result of associates and joint ventures 18 3 15 4 5 4
Profit before tax and exceptional items 2 533 2 500 490 255 204 139
Exceptional items 87 (9)
Profit before tax 2 620 2 491
Geographic segmentation
Revenue 51 357 45 262 10 895 8 677 9 110 7 211
- South Africa 34 638 32 142 8 067 6 388
- Rest of Africa 3 374 2 788 2 820 2 289
- Rest of world 13 345 10 332 8 9 110 7 211
Operating profit 3 166 2 940 650 400 412 308
- South Africa 2 454 2 400 500 300
- Rest of Africa 240 183 154 100
- Rest of world 472 357 (4) 412 308
Net finance cost including fair value gains and losses 420 362 160 132 86 84
- South Africa 286 234 131 115
- Rest of Africa 34 26 29 17
- Rest of world 100 102 86 84
* Other Segments includes Car Rental, Autoparts and Tourism. The comparatives include NAC.
# The segment information has been restated, refer to note 6.
Segment profit or loss# (continued)
AUTOMOTIVE AND INDUSTRIAL
Distribution, Retail Other
and Allied Services Automotive Retail Segments*
2013 2012 2013 2012 2013 2012
for the six months ended 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Revenue
- Sale of goods 11 603 11 405 11 700 9 689 3 238 3 181
- Rendering of services 1 089 958 1 073 908 1 070 1 500
- Gross premiums received
- Other 1 7
12 693 12 363 12 773 10 597 4 315 4 681
Inter-segment revenue 685 665 335 329 96 58
13 378 13 028 13 108 10 926 4 411 4 739
Operating expenses including cost of sales (12 326) (11 787) (12 684) (10 574) (3 788) (4 121)
Investment income 1 1
Fair value gains on investments
Depreciation, amortisation and impairments (118) (87) (49) (52) (261) (270)
Recoupments (excluding properties) (4) 1 (1) 1
Operating profit 934 1 150 377 299 363 349
Recoupments from sale of properties, net of impairments 1 17
Amortisation of intangible assets arising on business
combinations (3) (7) (2)
Net cost of meeting obligations under onerous contract
Foreign exchange gains and (losses) (2) 6 (1) 4
Fair value gains and (losses) on foreign exchange derivatives (1) (1) (1) 2
Charge for amending the conversion profile of the deferred ordinary shares
Realised gain on disposal of available-for-sale investment
Business acquisition costs (2) (1)
Profit before net finance cost, exceptional items and share of result
of associates and joint ventures 930 1 152 370 299 358 372
Net finance cost including fair value gains and losses (152) (83) (75) (62) (59) (79)
Share of result of associates and joint ventures 2 3 1 9 9
Profit before tax and exceptional items 780 1 072 296 237 308 302
Exceptional items
Profit before tax
Geographic segmentation
Revenue 13 378 13 028 13 108 10 926 4 411 4 739
- South Africa 11 736 11 187 10 326 9 497 4 356 4 679
- Rest of Africa 187 157 9 4 55 57
- Rest of world 1 455 1 684 2 773 1 425 3
Operating profit 934 1 150 377 299 363 349
- South Africa 922 1 125 326 275 344 343
- Rest of Africa 1 1 (2) 19 6
- Rest of world 11 24 53 24
Net finance cost including fair value gains and losses 152 83 75 62 59 79
- South Africa 142 63 69 59 56 76
- Rest of Africa 2 6 3 3
- Rest of world 8 14 6 3
* Other Segments includes Car Rental, Autoparts and Tourism. The comparatives include NAC.
# The segment information has been restated, refer to note 6.
Segment profit or loss# (continued)
FINANCIAL SERVICES
Other Head Office and
Insurance Financial Services Eliminations
2013 2012 2013 2012 2013 2012
for the six months ended 31 December Rm Rm Rm Rm Rm Rm
Business segmentation
Revenue
- Sale of goods (9) (12)
- Rendering of services 51 48 204 205 6 16
- Gross premiums received 1 405 1 528
- Other 2 1
1 458 1 577 204 205 (3) 4
Inter-segment revenue 34 82 359 301 (1 597) (1 488)
1 492 1 659 563 506 (1 600) (1 484)
Operating expenses including cost of sales (1 393) (1 584) (400) (298) 1 560 1 471
Investment income 93 76 105 65 (80) (53)
Fair value gains on investments 130 136
Depreciation, amortisation and impairments (16) (17) (31) (52) 7 8
Recoupments (excluding properties) 1
Operating profit 306 270 237 221 (113) (57)
Recoupments from sale of properties, net of impairments 7 (5)
Amortisation of intangible assets arising on business
combinations
Net cost of meeting obligations under onerous contract
Foreign exchange gains and (losses) 37 43
Fair value gains and (losses) on foreign exchange derivatives (42) (43)
Charge for amending the conversion profile of the deferred ordinary shares (70)
Realised gain on disposal of available-for-sale investment
Business acquisition costs
Profit before net finance cost, exceptional items and share of result
of associates and joint ventures 313 270 237 221 (193) (57)
Net finance cost including fair value gains and losses (8) (5) 120 83
Share of result of associates and joint ventures (3) 16 16 (27) (33)
Profit before tax and exceptional items 302 265 253 237 (100) (7)
Exceptional items
Profit before tax
Geographic segmentation
Revenue 1 492 1 659 563 506 (1 600) (1 484)
- South Africa 1 190 1 379 563 506 (1 600) (1 494)
- Rest of Africa 302 280 1 1
- Rest of world (1) 9
Operating profit 306 270 237 221 (113) (57)
- South Africa 238 194 237 221 (113) (58)
- Rest of Africa 68 76
- Rest of world 1
Net finance cost including fair value gains and losses 8 5 (120) (83)
- South Africa 8 5 (120) (84)
- Rest of Africa
- Rest of world 1
* Other Segments includes Car Rental, Autoparts and Tourism. The comparatives include NAC.
# The segment information has been restated, refer to note 6.
Non-executive directors: TS Gcabashe (chairman), T Dingaan, S Engelbrecht, RL Hiemstra, P Langeni, MJ Leeming, MV
Moosa, RJA Sparks, A Tugendhaft (deputy chairman), Y Waja
Executive directors: HR Brody (chief executive), M Akoojee, OS Arbee, MP de Canha, GW Riemann (German), JJ Strydom, M
Swanepoel
Other executive committee members: BJ Francis, PB Michaux
Company secretary: RA Venter
Business address and registered office: Imperial Place, Jeppe Quondam, 79 Boeing Road East, Bedfordview, 2007
Share transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001
Sponsor: Merrill Lynch SA (Pty) Limited, 138 West Street, Sandown Sandton, 2196
The results announcement is available on the Imperial Holdings website: www.imperial.co.za
Date: 26/02/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
