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Condensed Consolidated Audited Annual Financial Statements for the year ended 31 May 2013
OneLogix Group Limited
Incorporated in the Republic of South Africa
(Registration number 1998/004519/06)
JSE share code: OLG
ISIN Code: ZAE000026399
('OneLogix' or 'the company' or 'the group')
Condensed Consolidated Audited Annual Financial Statements for the year ended 31 May 2013
Highlights
Revenue up 20% to +R1 billion
Operating profit (excluding profit on sale of assets) up 10%
HEPS from continuing operations up 17%
HEPS up 14%
NAV per share up 10%
Total distribution for the year 9,5 cents per share
Successful transition to JSE Main Board
Condensed Consolidated Statement of Comprehensive Income
Audited Audited
year year
ended ended
31 May 31 May
2013 2012
% R'000 R'000
Continuing operations
Revenue 20 1 040 301 864 097
Operating and administration costs 22 (896 456) (735 849)
Depreciation and amortisation 17 (51 054) (43 801)
(Loss)/profit on disposal of property, plant and equipment >100 (255) 5 973
Operating profit 2 92 536 90 420
Share of profits from associate >100 4 814 -
Finance income (5) 2 423 2 553
Finance costs 35 (15 494) (11 470)
Profit before taxation 3 84 279 81 503
Taxation (6) (22 237) (23 750)
Profit from continuing operations 7 62 042 57 753
Profit from discontinued operations >100 8 762 2 103
Profit for the year 18 70 804 59 856
Other comprehensive income
Movement in foreign currency translation reserve 161 165
Deferred tax increase due to CGT inclusion rate increase - (760)
Total comprehensive income for the year 20 70 965 59 261
Profit attributable to:
- Non-controlling interest (13) 5 316 6 127
- Owners of the parent 22 65 488 53 729
18 70 804 59 856
Other comprehensive income attributable to:
- Non-controlling interest - -
- Owners of the parent 161 (595)
161 (595)
Total comprehensive income attributable to:
- Non-controlling interest (13) 5 316 6 127
- Owners of the parent 24 65 649 53 134
20 70 965 59 261
Total comprehensive income attributable to owners of
the parent arises from:
- Continuing operations 11 56 941 51 501
- Discontinued operations >100 8 708 1 633
24 65 649 53 134
Number of shares in issue ('000):
- Total issued less treasury shares 225 658 225 658
- Weighted 225 658 219 355
- Diluted 231 258 223 715
Basic and headline earnings per share (cents)
Basic earnings per share (cents) 18 29,0 24,5
Continuing operations 5 25,1 23,8
Discontinuing operations >100 3,9 0,7
Diluted basic earnings per share (cents) 18 28,3 24,0
Continuing operations 5 24,5 23,3
Discontinuing operations >100 3,8 0,7
Headline earnings per share (cents) 14 25,1 22,1
Continuing operations 17 25,0 21,4
Discontinuing operations (86) 0,1 0,7
Diluted headline earnings per share (cents) 13 24,5 21,7
Continuing operations 16 24,4 21,0
Discontinuing operations (86) 0,1 0,7
Reconciliation between basic and headline earnings
Basic earnings 22 65 488 53 729
Loss/(profit) on disposal of property, plant and equipment
less taxation and non-controlling interests 22 (5 159)
Insurance proceeds less taxation
and non-controlling interests (438) -
Profit on disposal of discontinued operation less taxation (8 495) -
Headline earnings 16 56 577 48 570
Condensed Consolidated Statement of Cash Flows
Restated
Audited audited
year year
ended ended
31 May 31 May
2013 2012
% R'000 R'000
Net cash generated from operations (18) 97 431 119 074
Continuing operations 97 489 116 140
Discontinuing operations (58) 2 934
Net cash flows from investing activities >100 (88 544) 4 646
Continuing operations (88 482) 5 108
Discontinuing operations (62) (462)
Net cash flows from financing activities (1) (63 592) (64 130)
Continuing operations (63 517) (64 195)
Discontinuing operations (75) 65
Net (decrease)/increase in cash resources (54 705) 59 590
Cash resources at beginning of year 102 494 42 791
Exchange gain on cash resources 110 113
Cash resources at end of year (53) 47 899 102 494
Condensed Consolidated Statement of Financial Position
Audited at Audited at
31 May 31 May
2013 2012
% R'000 R'000
ASSETS
Non-current assets 555 335 368 190
Property, plant and equipment 446 418 327 555
Intangible assets 66 289 31 982
Investment in associate 33 935 -
Loans and receivables 7 219 6 498
Deferred taxation 1 474 2 155
Current assets 219 345 238 406
Inventories 10 090 14 759
Trade and other receivables 148 994 119 210
Taxation 5 512 1 943
Cash resources 54 749 102 494
Total assets 774 680 606 596
EQUITY AND LIABILITIES
Equity 309 456 270 390
Ordinary shareholders' funds 292 272 264 498
Non-controlling interests 17 184 5 892
Liabilities
Non-current liabilities 201 327 149 277
Interest-bearing borrowings 149 722 122 431
Deferred taxation 51 605 26 846
Current liabilities 263 897 186 929
Trade and other payables 156 088 136 211
Interest-bearing borrowings 74 137 50 017
Vendor liability 9 000 -
Non-controlling interest put option 16 206 -
Taxation 1 616 701
Bank overdrafts 6 850 -
Total equity and liabilities 774 680 606 596
Net asset value per share (cents) 10 129,5 117,2
Net tangible asset value per share (cents) (3) 100,1 103,0
Cash resources per share (cents) (46) 24,3 45,4
SEGMENTAL ANALYSIS
Revenue
Specialised Transport 22 936 967 768 424
Retail 5 30 188 28 648
Reportable segments 21 967 155 797 072
Other 9 73 146 67 025
20 1 040 301 864 097
Profit before tax
Specialised Transport 6 99 458 93 422
Retail 13 12 148 10 788
Reportable segments 7 111 606 104 210
Other (10) 4 599 5 138
Corporate items 25 (23 669) (18 928)
2 92 536 90 420
Unallocated:
Share of profits from associate >100 4 814 -
Finance income (5) 2 423 2 553
Finance costs 35 (15 494) (11 470)
3 84 279 81 503
Total assets
Specialised Transport 43 686 539 480 134
Retail 57 26 261 16 723
Reportable segments 43 712 800 496 857
Other (56) 17 146 39 202
Corporate items (94) 3 813 66 439
Investment in associate >100 33 935 -
Unallocated: taxation and deferred taxation 70 6 986 4 098
28 774 680 606 596
Total liabilities
Specialised Transport 30 339 856 261 993
Retail 82 15 857 8 712
Reportable segments 31 355 713 270 705
Other (61) 10 032 25 575
Corporate items 274 46 258 12 379
Unallocated: taxation and deferred taxation 93 53 221 27 547
38 465 224 336 206
The group has authorised capital expenditure
over the next 12 months of R76,4 million.
R54,4 million is already committed.
Commitments
Operating lease commitments
(not exceeding five years) 67 840 26 060
Restatement of cash flows
Net cash flows from investing activities and net cash flows from financing activities for the year ended 31 May 2012 have been restated.
Property, plant and equipment additions previously included acquisitions of assets that were financed by instalment sale agreements and mortgage bonds. In terms of IAS 7, Statement of cash flows, only cash payments for assets acquired should be included and not those financed by way of finance lease or acquired on credit.
Additions financed by way of instalment sale agreements and mortgage bonds have been excluded from the restated net cash flows from investing activities line item.
Accordingly, borrowings raised included the gross amounts of new instalment sales agreements and mortgage bonds entered into during the year and these have been excluded from the restated net cash flow from financing activities line item.
The previously reported and restated line items are shown in the table below:
As
previously
reported Adjustment As restated
R'000 R'000 R'000
2012
Net cash flows from investing activities (91 683) 96 329 4 646
Net cash flows from financing activities 32 199 (96 329) (64 130)
The restatement had no impact on net movement in cash resources, nor the balance thereof at year-end.
Condensed Consolidated Statement of Changes in Equity
Share Share Treasury Retained
capital premium shares income
R'000 R'000 R'000 R'000
At 1 June 2011 - audited 2 021 20 227 (264) 167 153
Dividends declared to non-controlling interests - - - -
Capital distributions and dividends to shareholders - (15 526) - (4 169)
Non-controlling interest acquired - - - -
Conversion of shareholding in BEE consortium 297 41 859 (8 431) -
Share issue expenses - (444) - -
Credit in respect of share-based payment - - - -
General share repurchase (2) (319) - -
Treasury shares disposed - - 264 -
Profit for the year - - - 53 729
Other comprehensive income - - - -
At 31 May 2012 - audited 2 316 45 797 (8 431) 216 713
Dividends declared to non-controlling interests - - - -
Capital distributions and dividends to shareholders - (10 422) - (10 422)
Non-controlling interest acquired - - - -
Transactions with non-controlling interests - - - -
Share-based compensation reserve movement - - - -
Profit for the year - - - 65 488
Other comprehensive income - - - -
At 31 May 2013 - audited 2 316 35 375 (8 431) 271 779
Condensed Consolidated Statement of Changes in Equity
Foreign
Share-based currency
Revaluation Other compensation translation
reserve reserves reserve reserve
R'000 R'000 R'000 R'000
At 1 June 2011 - audited 11 067 52 - (30)
Dividends declared to non-controlling interests - - - -
Capital distributions and dividends to shareholders - - - -
Non-controlling interest acquired - - - -
Conversion of shareholding in BEE consortium 2 951 - 4 395 (8)
Share issue expenses - - - -
Credit in respect of share-based payment - - 1 314 -
General share repurchase - - - -
Treasury shares disposed - 101 - -
Profit for the year - - - -
Other comprehensive income (760) - - 165
At 31 May 2012 - audited 13 258 153 5 709 127
Dividends declared to non-controlling interests - - - -
Capital distributions and dividends to shareholders - - - -
Non-controlling interest acquired - - - -
Transactions with non-controlling interests - - - -
Share-based compensation reserve movement - - 1 577 -
Profit for the year - - - -
Other comprehensive income - - - 161
At 31 May 2013 - audited 13 258 153 7 286 288
Condensed Consolidated Statement of Changes in Equity
Transactions
with non- Non-
controlling controlling
interests interests Total
R'000 R'000 R'000
At 1 June 2011 - audited - 30 046 230 272
Dividends declared to non-controlling interests - (3 265) (3 265)
Capital distributions and dividends to shareholders - - (19 695)
Non-controlling interest acquired (1 501) 1 (1 500)
Conversion of shareholding in BEE consortium (9 643) (27 017) 4 403
Share issue expenses - - (444)
Credit in respect of share-based payment - - 1 314
General share repurchase - - (321)
Treasury shares disposed - - 365
Profit for the year - 6 127 59 856
Other comprehensive income - - (595)
At 31 May 2012 - audited (11 144) 5 892 270 390
Dividends declared to non-controlling interests - (3 789) (3 789)
Capital distributions and dividends to shareholders - - (20 844)
Non-controlling interest acquired - 7 363 7 363
Transactions with non-controlling interests (18 608) 2 402 (16 206)
Share-based compensation reserve movement - - 1 577
Profit for the year - 5 316 70 804
Other comprehensive income - - 161
At 31 May 2013 - audited (29 752) 17 184 309 456
Comments
OneLogix's proven consistency in performance was again reaffirmed by the results achieved for the year ended 31 May 2013 ('the year'). For the first time the group exceeded the R1 billion revenue mark. Continued growth was primarily derived organically and boosted by two acquisitions during the second half of the year.
Basis of presentation
The accounting policies and method of measurement and recognition applied in the preparation of the condensed consolidated audited annual financial statements are consistent with those applied in the audited annual financial statements for the previous year ended 31 May 2012.
The condensed consolidated audited annual financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and are presented in terms of the disclosure requirements set out in International Accounting Standards ('IAS') 34, as well the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, the JSE Limited Listings Requirements and the requirements of the Companies Act, 2008. Financial Director Geoff Glass CA(SA) was responsible for preparing the consolidated annual financial statements.
The condensed consolidated annual financial statements have been audited by the company's auditors, PricewaterhouseCoopers Inc. and their unqualified audit opinion, along with the consolidated annual financial statements which were approved by the board of directors on 26 August 2013, are available for inspection at the registered office of OneLogix. The condensed consolidated annual financial statements are available to be viewed on the company's website www.onelogix.com.
Review of operations
The existing businesses within the group performed satisfactorily and once again delivered solid organic growth.
During the year two sizeable acquisitions were concluded. These were the acquisitions in December 2012 of a 60% stake in RSA Tankers Proprietary Limited, trading as United Bulk ('United Bulk'), a leading bulk transporter of liquids - food grade products, hazardous materials and petroleum gas - and 40% of Drive Report Proprietary Limited ('Drive Report'), a driver behaviour management company (announced on 5 December 2012 and 21 December 2012, respectively). Both acquisitions have since been successfully integrated as earnings accretive into the group.
Specialised Transport
Vehicle Delivery Services ('VDS'), now a mature business, continued to defend its market share through recognised exceptional customer service. Despite substantial margin pressure and mindful of future sustainability, the company continued to invest in optimising its people, fleet, IT infrastructure and general facilities. Strong and motivated management continues to focus on improving operational efficiencies and investigating new opportunities given below-inflation cost recovery from customers.
Commercial Vehicle Delivery Services ('CVDS') continued to capture growing market share, also on the back of exceptional customer service. Investment in support infrastructure has positioned the business for future market gains.
The newly invigorated OneLogix Projex ('Projex'), is the result of a successful amalgamation of RFB Logistics Proprietary Limited and the original OneLogix Projex, which occurred during the year. A now significant player in the Durban Harbour freight logistics segment, Projex has the capability to project manage the movement of large shipments of abnormal or general freight within tight deadlines.
The newly acquired United Bulk is a significant competitor in the liquid bulk logistics market. A strong and motivated management team, which shares a common culture with the group, is well poised to further grow market share.
Retail
PostNet, the group's most mature business, continues to deliver reliable high operating margins and regular annuity income. Notwithstanding its maturity, PostNet continues to evaluate new opportunities for growth and diversification.
Other - Logistics Services
The remaining businesses are involved in providing services to the logistics industry. These businesses do not meet the recognition criteria of a separately reportable segment and include:
Atlas Panelbeaters, which has responded well to the remedial actions put in place earlier in the year, to the extent that its performance in the latter half of the year largely exceeded expectations.
QSA, acquired effective 1 June 2012, owns transport-specific accounting software critical to the group's operations. Presently in an investment and development phase, it is a small contributor to group earnings as expected. The split within total intangible assets of R1,4 million has been finalised with R0,3 million relating to goodwill and R1,1 million to other intangible assets.
Group newcomer Drive Report has exceeded expectations. The driver behaviour management company aims to address cost optimisation and road safety, two key factors in the logistics and transport industries. The results for Drive Report have been equity accounted.
Significant acquisitions
As announced on 5 December 2012, OneLogix has acquired 60% of United Bulk with effect from 1 February 2013, for R55 million (see above) of which R28,2 million relates to the investment and R26,8 million relates to an acquired shareholder loan. Intangible assets of R18,7 million and goodwill of R17,4 million have been recognised on the final allocation of the purchase price. As part of the acquisition a put option has been granted over the shares of the non-controlling interest whereby the group may be required to purchase their shares at fair value. A put option liability of R16,2 million has been recognised. United Bulk's contribution to group revenue and profit since acquisition was R65,1 million and R2,8 million respectively. Had United Bulk been consolidated from 1 June 2012, the consolidated statement of comprehensive income would reflect an increase in revenue of R121,4 million and an increase in profit of R5,5 million.
On 21 December 2012, the group announced its acquisition of 40% of Drive Report for R20 million. A contingent payment of R9 million will become payable should Drive Report be successful in a pending tender. The split between total intangible assets of R21,6 million, between goodwill and other intangible assets, is still to be finalised. Drive Report's contribution to the group's profits for the year was R4,8 million.
Both sellers remain firmly vested, with shareholding interests of 40% and 60%, respectively.
These acquisitions complement the existing specialised logistics operations of the group, are essentially non-cyclical, and operate across a broad spectrum of the logistics market. The acquisitions represent the systematic progression of the group's acquisition strategy to further reduce dependence on the auto-logistics component (VDS and CVDS) of the business.
Discontinued operations
With effect from 1 October 2012, OneLogix disposed of its 80% stake in Magscene to CTP Limited for R10 million. Proceeds net of cash balances disposed of and the profit on disposal amounted to R8,5 million.
The sale signifies the group's final exit from its non-core media-related logistics businesses. OneLogix is now positioned to focus on the larger, core businesses within the group. This will include pursuing strategic acquisitions, specifically of entrepreneurial businesses to which OneLogix can provide a proven management platform in order to expand and realise potential.
Financial results
Group revenue exceeded R1 billion for the first time, increasing 20% from R864,1 million to R1 040,3 million. The majority of the growth is due to organic growth in existing businesses, with the new acquisitions contributing to revenue in the second half of the year (see above). Due to the timing of the fulfilment of conditions precedent, United Bulk's results were only included from February 2013.
Continuing operations' operating profit, excluding profit on sale of assets, increased by 10% from R84,4 million to R92,8 million. A profit of R6 million was recognised in the prior year relating to the disposal of a group property in KwaZulu-Natal.
Operating margins remain under pressure due to above-inflation increases in major input costs, such as labour and fuel prices (which are recovered from the customer base but only down the line). PostNet however provides somewhat of a buffer in this regard with consistently high operating margins. Initiatives are in place to manage cost creep in line with top-line growth. Operating margins, excluding profit on sale of assets, declined from 9,8% in 2012 to 8,9%.
The equity-accounted associate, Drive Report, contributed R4,8 million to earnings since inclusion in December 2012.
Net finance costs increased by 47% to R13,1 million from R8,9 million as a result of increased asset-based financing requirements and the foregoing of interest received on excess funds that have been invested in acquisitions. Nonetheless interest cover of 7,1 times allows the group scope to access further borrowings to fund further growth prospects.
Headline earnings per share ('HEPS') rose 14% from 22,1 cents to 25,1 cents on the back of strong performances from the Specialised Transport and Retail segments. This was offset to an extent by a reduction in contribution to earnings from the other logistics services businesses. HEPS from continuing operations rose 17% from 21,4 cents to 25 cents.
Earnings per share ('EPS') grew 18% from 24,5 cents to 29 cents, boosted by the profit realised on the disposal of Magscene.
Diluted HEPS and EPS are marginally lower than their respective undiluted measures due to the dilutive effect of the shares held by the employee BEE Trust as treasury shares.
Operating cash flows remained robust at R97,4 million (2012: R119,1 million). Although down on the prior year given increased working capital requirements and an increased dividend, the group has strict working capital structures in place which ensure optimal cash flow management.
The group invested R86,9 million on continuing operational infrastructure as follows: R61 million for fleet, R15,8 million for property developments, R4,6 million for IT infrastructure and R5,5 million for other assets. Net proceeds of R8,5 million were received on the disposal of tangible assets. Investment in acquisitions totalling R79,2 million was offset by the net proceeds of R8,5 million received on the disposal of the group's interest in Magscene.
New interest-bearing borrowings of R69,4 million were raised during the year but offset by the repayment of R61,7 million. Capital distribution number 6 and interim dividend number 2, totalling R20,8 million, were paid during the year. Cash resources at the reporting date were R47,9 million.
Dividend
Shareholders are advised that a final gross dividend, number 3, of 5 cents per share was declared on Monday, 26 August 2013 in respect of the year ended 31 May 2013.
The dividend will be paid from the income reserves of the company. The South African dividends tax rate is 15%. The net dividend payable to shareholders who are subject to dividends tax is 4,25 cents per share, while the dividend payable to those shareholders who are exempt from payment of dividends tax is 5 cents per share. The income tax reference number of the company is 9361229710.
At the declaration date, the issued share capital was 231 595 235 ordinary shares of no par value (with no STC reserves available for utilisation).
The salient dates in respect of the dividend are as follows:
2013
Last day to trade cum dividend on Friday, 27 September
Shares will trade ex dividend from Monday, 30 September
Record date Friday, 4 October
Payment date Monday, 7 October
Shareholders may not dematerialise or rematerialise their share certificates between Monday, 30 September 2013 and Friday, 4 October 2013, both dates inclusive.
The final dividend amounting to R11,6 million has not been recognised as a liability in the results for the year. It will be recognised in shareholders' equity for the year ending 31 May 2014.
OneLogix will continue to assess the payment of interim and final dividends in light of the board's ongoing review of earnings, and after providing for long-term growth and cash/debt resources, the amount of reserves available using a going-concern assessment and taking into account the covenants of facility providers.
Transfer to the Main Board of the JSE
As announced on SENS on 10 June 2013, OneLogix successfully transferred from the AltX to the JSE Main Board on 18 June 2013, and with effect from 23 September 2013 the company will be listed on the Transportation Services sector of the Main Board of the JSE.
Changes to the board
On 23 February 2013, Joe Modibane, an independent non-executive director of the company and member of the Audit and Risk Committee passed away. Andrew Brooking was appointed as a temporary member of the Audit and Risk Committee in his place until a suitable replacement is appointed. In addition Lesego Senello was appointed as a member and chairperson of the Remuneration and Nomination Committee.
Prospects
The proven mix of the group's businesses has been further strengthened by the recent acquisitions. In addition each company in the group is individually well positioned to take advantage of growth opportunities in its respective market despite the challenging trading conditions which are expected to prevail in the medium term. OneLogix remains strongly cash generative and will continue to source appropriate earnings-enhancing acquisitions in line with its business model.
People
We remain appreciative that our quality management and employees continue to perform at the highest levels of excellence. We are confident that the group's enabling culture facilitates this by continually encouraging and empowering our people to realise their full potential.
We further thank our business partners, customers, suppliers, business advisors and shareholders for their ongoing invaluable support.
By order of the board
Ian Lourens
CEO
Geoff Glass
FD
26 August 2013
Directors
SM Pityana (Chairman)*, AB Ally* (Alternate: DA Hirschowitz), NJ Bester, AC Brooking*, GM Glass (FD), AJ Grant*#, IK Lourens (CEO), CV McCulloch (COO), LJ Sennelo*#
* Non-executive # Independent
Registered office
46 Tulbagh Road, Pomona, Kempton Park (Postnet Suite 10, Private Bag X27, Kempton Park, 1620)
Company Secretary
Probity Business Services (Pty) Ltd, Third Floor, The Mall Offices, 11 Cradock Avenue, Rosebank, 2196
Transfer secretaries
Computershare Investor Services (Pty) Ltd, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Sponsor
JavaCapital
Date: 26/08/2013 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
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