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Preliminary Summarised Audited Results for the year ended 30 June 2017
Imperial Holdings Limited
Registration number: 1946/021048/06
Ordinary share code: IPL ISIN: ZAE000067211
Preference share code: IPLP ISIN: ZAE000088076
Preliminary summarised audited results
for the year ended 30 June 2017
Imperial Holdings is a JSE listed South African-based holding company, employing over 49 000 people in 34 mainly African and Eurozone
countries, operating exclusively in the logistics and vehicle sectors, as:
- Imperial Logistics: active in transportation, warehousing and distribution management, providing integrated supply chain and route-to-market
solutions to global and national market leaders, generating 43% and 45% of Group* revenue and operating profit respectively, with 67% of
operating profit generated internationally;
and
- Motus Corporation: operates across the motor vehicle value chain (import, distribution, retail, rental, aftermarket parts, and vehicle-related
financial services) generating 57% and 55% of Group* revenue and operating profit respectively, with 12% of the operating profit
generated internationally.
* Excludes discontinued operations, head office and eliminations.
Our performance
Group financial highlights
Record revenue up 1% to R119,5 billion (43% foreign)
Record operating profit up 2% to R6,5 billion (37% foreign)
HEPS down 10% to 1 390 cents per share
EPS down 14% to 1 339 cents per share
Core EPS down 5% to 1 626 cents per share
Cash generated by operations up to R9,1 billion
Free cash conversion ratio of up 1,6 times (0.9 times in 2016)
Net debt to equity ratio improved from 73% to 71% return on equity 12,7%
Return on invested capital 12,4%
Weighted average cost of capital 9%
Full year dividend down 18% to 650 cents per share
Note: 2016 restated.
Performance and overview of results
Results overview
- Despite deteriorating trading conditions, currency volatility and an ambitious restructuring programme, Imperial achieved all of the strategic,
operational and financial objectives announced at the start of the financial year.
- Total Group revenue and operating profit grew by 1% to R119,5 billion and by 2% to R6,5 billion respectively, supported by the inclusion of
the Palletways acquisition for 12 months and solid results from the Logistics South Africa and Motor-Related Financial Services sub-divisions.
- Revenue and operating profit from continuing operations, excluding Regent, were up 1% to R116,8 billion and 2% to R6,0 billion respectively.
- Excluding current and prior year acquisitions and disposals, total revenue for the Group was flat and operating profit declined by 1%.
- Foreign revenue was unchanged at R49,9 billion (43% of Group* revenue) and foreign operating profit increased 3% to R2,2 billion (37% of
Group* operating profit).
- Non-vehicle revenue increased 6% to R50,7 billion (43% of Group* revenue) and operating profit increased 9% to R2,8 billion (45% of
Group* operating profit).
- The operating margin from continuing operations at 5,2% was slightly up on the prior year (5,1%).
- A full reconciliation from earnings to headline earnings and core earnings is provided in the Group Financial Performance section.
- Net working capital improved to R9,0 billion from R9,8 billion at June 2016 and R11,2 billion
at December 2016.
- Net working capital turn improved from 12,5 to 12,7 times on the prior year.
- Disposals of non-strategic businesses and properties during F 2017 generated proceeds of R3,0 billion. Assets held for sale amounted to R979
million, comprising non-strategic properties.
- Net debt to equity (including preference shares as equity) reduced from 73% to 71% (98% at December 2016).
- A final cash dividend of 330 cents per ordinary share (2016: 425 cents per share) has been declared, bringing F 2017 dividends to 650 cents
per ordinary share (F 2016: 795 cents per share).
* Excludes discontinued operations.
Environment
With a footprint in 34 countries on six continents, Imperial's activities on the African continent produced 67% and 76% respectively of Group*
revenues and operating profits in the financial year, with the remainder generated on other continents, mainly in Europe and the United
Kingdom.
South Africa
With official unemployment rising to 28% and consumer and business confidence deeply depressed by political uncertainty, the economy
declined steadily towards a technical recession in South Africa, where R67,0 billion or 57% of Group* revenue and R3,8 billion or 63% of Group*
operating profit was generated.
Positive emerging market sentiment and a gradual weakening of the US$ resulted in the R/US$ exchange rate strengthening by 11%
during the year, with short-term volatility exacerbated by local factors.
Specific uncontrollable factors that affected our South African business were a reduction in logistics volumes and a 7% decline in national
vehicle sales. The strengthening of the Rand by 11% against the US Dollar and by 9% against the Euro with intermittent short-term volatility
created significant foreign exchange hedging losses.
Rest of Africa
Falling commodity demand, low oil prices and the consequent impact on currencies and private consumption continued to depress the growth
rate in sub-Saharan Africa, where R11,2 billion or 10% of Group* revenue and R792 million or 13% of Group* operating profit was generated in
the 2017 financial year.
Specific factors affecting Imperial in certain African countries during the 2017 financial year were slowing GDP growth rates; rising inflation and
interest costs; lower consumer demand; and currency volatility, specifically the weakening of the Naira official exchange rate during the year
which created foreign exchange losses on monetary items, including working capital and interagroup loan funding. The Naira parallel rate
strengthened materially late in the second half of the 2017 financial year and access to foreign currency has improved.
Eurozone, United Kingdom (UK) and Australia
Our operations in the Eurozone generated R38,7 billion or 33% of Group* revenue and R1,4 billion or 24% of Group* operating profit.
Buoyed by a solid German economy and the results of the French presidential election, consumer confidence in the European Union rose to its
highest level since before the GFC. The snap election in the United Kingdom produced the opposite result to that intended, weakening the
Conservative Party, the Pound and the Prime Minister's hand in negotiating a "hard Brexit".
Specific factors affecting Imperial during the year were 80-year low water levels on the Rhine, and lower demand and pricing pressures in the
steel, energy, commodities and construction sectors. The strengthening Rand depressed the translation value of our foreign operations.
* Excludes discontinued operations.
Against this background, we provide shareholders with current information on the Group's strategy and performance.
Strategic clarity
Groups do not compete only subsidiaries do.
Since late 2014, we have therefore directed our efforts as a holding company to enhancing the sustainable competitive position of our
subsidiaries. This entailed two major initiatives: an aggressive disposal and acquisition programme to agglomerate a portfolio of companies
whose sectoral focus and common operating capabilities would ensure the creation of intragroup value for stakeholders; and simultaneously, the
definition of the value proposition that each client facing company would require to compete and win in its chosen markets.
The first of these initiatives has to date resulted in the disposal of 42 businesses and 52 properties that were under performing, of low return
on effort or strategically incompatible. These disposals generated revenues of R11,2 billion and operating profit of R982 million, and employed
R4,2 billion of capital at the time of sale. The concurrent acquisition programme entailed the investment of R5,4 billion to acquire 15 companies
that generated revenue of R13,7 billion and operating profit of R880 million in their first full year of operation. The second initiative involved
divisional and company leaders more accurately defining their market, product and customer focus, and thereafter configuring those capabilities
necessary to render competitive advantage, growth and returns.
The rationalisation of the portfolio and the clarification of strategy resulted in the assembly and consolidation of Imperial's entire logistics and
vehicle operating companies and assets within two increasingly self-sufficient divisions each under its own board, Chief Executive Officer and
Executive Committee. By year-end, Imperial Logistics (with sub-divisions South Africa, African Regions, and International) and Motus (with
sub-divisions Import and Distribution, Retail and Rental, Aftermarket Parts and Financial Services), were separately established and reported on
as Imperial's only operating entities. Numerous executive management changes were required to accommodate the new structure and the
succession of retiring executives. At year-end, 23 of the 35 most senior executives in the group were new to their roles.
While Imperial Holdings remains the entry point for providers of debt and equity capital and the custodian of strategy, governance and succession these
changes have enhanced management focus, capital allocation, intra-divisional collaboration and the elimination of complexity, duplication and
cost within the divisions. In the short-term these factors will enable increased penetration and performance in the supply chains of both sectors,
through better co-ordinated and competitive value propositions to clients.
Although further portfolio and competitive strategy refinements are inevitable, the efforts of recent years have irrevocably altered the
fundamental trajectory and future of the Imperial group.
Work is in process to determine the viability, and benefit to Imperial shareholders, oflisting Imperial Logistics and Motus separately,
and following due consultation with relevant stakeholders, the board will make anannouncement on this decision on or before the release of
the results to June 2018.
Capital allocation
Despite external challenges and an ambitious restructuring process, Imperial's investment thesis is unchanged. The following provides detail
on progress during the reporting period with each of our five capital allocation objectives:
1. To release capital and sharpen executive focus, by disposing of non-core, strategically misaligned, underperforming or low return
on effort assets.
We disposed of:
- The Regent Group (excluding the retained VAPS business) for R1,8 billion, including the proceeds of R697 million for the non-South African
operations received at the end of January 2017. Payment of the remaining R1,1 billion was received at the end of June 2017;
- Non-strategic properties for which R900 million was received in F 2017. A further 21 properties with a carrying value of
R979 million are held for sale.
- A minority stake in Mix Telematics for R478 million with payment received on 30 August 2016;
- Jurgens and Prestige Safari for R253 million in February 2017;
- 51% of 10 entities in the AMH Group to a related party for R55 million, concluded on 30 August 2016;
- LTS Kenzam for R10 million cash in January 2017;
- A 100% interest in Global Holdings (Botswana) in exchange for a 25% shareholding in PST, an entity that was merged with Global
Holdings; and
- Interests in 6 smaller entities amounting to approximately R11 million.
Although the bulk of identified disposals were concluded, continual analysis of the strategic and financial performance of businesses will
result in refinements to the portfolio of Imperial Logistics and Motus over the medium term.
In addition, as one of South Africa's largest employers and a leading logistics provider across the entire value chain, Imperial is committed to
the racial transformation of the South African economy. Imperial has therefore commenced a transaction process to introduce a direct 30%
Broad-Based Economic Empowerment shareholding (including Black Women)into Imperial Logistics South Africa. This will result in Imperial Logistics
South Africa becoming a 51% Black-Owned Enterprise.
2. We will invest capital in South Africa to maintain the quality of assets and market leadership in our logistics and motor vehicle businesses.
Acquisitions during the period include:
- a 70% stake in Sasfin Premier Logistics for R38 million in July 2016;
- 55% of Itumele Bus Lines for R147 million in November 2016; and
- the remaining 10% minority stake in Midas for R87,5 million.
Net capital expenditure of R1,9 billion was invested in continuing operations during the year.
3. We will invest capital in the African Regions primarily to achieve our 2020 objective for the revenue and profits generated in that region
to equal that of our South African logistics business, and secondarily to expand our vehicle businesses in the region.
- We acquired 70% of Surgipharm Limited in Kenya for a consideration of USD35 million (ZAR470 million) effective 1 July 2017.
- The capital light Imperial Managed Logistics business was expanded in Nigeria and Ghana.
Net capital expenditure of R165 million was invested in continuing operations during the year.
4. We will invest the cash generated from operations and divestments to grow our businesses beyond the continent, but with an emphasis
on logistics.
- We acquired a 95% stake in Palletways for £155,1 million (R3,0 billion) including the purchase of debt at acquisition, effective 5 July 2016.
- Palletways acquired 100% of Topco in Italy for R14 million.
Net capital expenditure of R645 million was invested in continuing operations mainly in Europe and South America.
Acquisitions post year-end include:
- The acquisition of Pentagon Motor Holdings, which operates 21 prime retail dealerships in the UK, was announced on 15 August 2017 for
a cash consideration of £28 million (R493 million). The effective date will be 1 September 2017.
- The acquisition of 75% of Australian based SWT Group Pty Ltd, which operates 16 dealerships, for a cash consideration of AUD24,2 million
(R254 million). The transaction is subject to certain conditions precedent.
5. The development and sustainability of Imperial will be underpinned by investment in human capital and information systems.
- Group wide capital expenditure on human capital development and information systems amounted to R371 million.
Divisional performance
Imperial Logistics
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 25 862 8 24 803 4 50 665 47 912 6
Operating profit (Rm) 1 300 8 1 458 9 2 764 2 543 9
Operating margin (%) 5,0 5,9 5,5 5,3
Return on Invested Capital (%) 11,5 11,8
Weighted average cost of capital (%) 7,1 7,6
Imperial Logistics is active mainly in Africa and Europe, with established capabilities in transportation, warehousing and distribution
management. Our expertise and experience in each of these enable us to provide integrated supply chain and route-to-market solutions to
global and national market leaders. We focus across the value chains of consumer packaged-goods, chemicals, healthcare and automotive as
well as within specialised sectors of mining, manufacturing and agriculture.
Imperial Logistics recorded growth in revenue and operating profit of 6% and 9% respectively, supported by the Palletways acquisition in
Logistics International, a solid performance from Logistics South Africa despite challenging trading conditions, and an excellent performance from
Ecohealth in Nigeria.
Excluding acquisitions and disposals in the current and prior year, revenue and operating profit declined by 3% and 7% respectively. These
declines are partly due to the strengthening of the Rand by 8% on average against the Euro and by 6% against the US dollar during the year.
Net capital expenditure was reduced significantly to R492 million from R1,9 billion in the prior year when investment was incurred on additional
chemical manufacturing capacity in Europe and two additional convoys in South America. The current year capital expenditure was also reduced
by the proceeds from property disposals of R589 million.
Logistics South Africa
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 8 217 10 7 990 14 16 207 14 447 12
Operating profit (Rm) 498 20 455 10 953 828 15
Operating margin (%) 6,1 5,7 5,9 5,7
Above table excludes businesses held for sale.
Logistics South Africa performed strongly, increasing revenue and operating profit by 12% and 15% respectively. The significant contributors to
this were increased volumes in the commodities, fuel and gas operations, and strong performances from Managed Logistics and Resolve.
The acquisition of Itumele Bus Lines included for eight months, contributed positively in line with expectations.
The consumer logistics businesses recorded revenue and operating profit growth supported by a solid performance from Imperial Health
Sciences and an improved performance from Imperial Cold Logistics, which reduced its losses from the prior year.
Logistics African Regions
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 4 874 (9) 4 482 (21) 9 356 11 016 (15)
Operating profit (Rm) 397 1 349 (8) 746 773 (3)
Operating margin (%) 8,1 7,8 8,0 7,0
Above table excludes businesses held for sale.
Logistics African Regions' performance was depressed by slowing economic growth rates and rising inflation and interest rates, which resulted in
lower consumer demand in many of its African markets. Revenue and operating profit declined by 15% and 3% respectively mainly due to the
weakening of the Naira and the Metical by 41% and 37% respectively during the year, the strengthening of the Rand by 6% against the US
dollar during the year, subdued demand from Imres' key markets, and a weak performance from CIC due to lower consumer demand in
Botswana and downsizing of the business in Mozambique. The sub-division's results were supported by an excellent performance from
Ecohealth, Nigeria's leading distributor of pharmaceuticals.
The strategy to become a significant route-to-market partner of multi-national consumer goods and pharmaceutical companies in Southern, East and
West Africa is on track. The sub-division continues to expand in sub-Saharan Africa by leveraging its asset-light managed logistics capabilities
and extending its focus from traditional road transport to include cross-border and international logistics services and warehousing operations.
Logistics International
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 12 168 35 12 052 15 24 220 19 512 24
Operating profit (Rm) 447 16 658 7 1 105 1 000 11
Operating margin (%) 3,7 5,5 4,6 5,1
Revenue (Euro million) 795 32 843 38 1 638 1 298 26
Operating profit (Euro million) 29 12 46 28 75 63 19
Operating margin (%) 4,0 5,0 4,6 5,0
Above table excludes businesses held for sale.
Logistics International's revenue and operating profit in Euros increased 26% and 19% respectively, boosted by the acquisition of Palletways. The
performance in Rand terms was depressed by an 8% stronger average Rand/Euro exchange rate.
The Transport Solutions business experienced lower shipping volumes in South America resulting from a poor corn harvest in Brazil, delayed
soya harvest and lower iron ore volumes. In Germany, bulk-shipping volumes declined due to 80-year low water levels on the River Rhine, and
lower demand and pricing pressures from the steel, energy, commodities and construction industries. Following the commissioning of two
additional push boats with 24 barges in March 2017, the South American operation is now fully operational with seven push boats with 84 barges.
Revenue and operating profit in the Supply Chain Solutions business declined due to lower volumes from key customers in the retail, industrial
and contract manufacturing chemical operations.
Despite the uncertainty of Brexit, the weakening of the Pound and budgeted losses from the start-up operations in Poland, Palletways, included
in these results for the full 12 months, performed strongly during the year and ahead of expectations. The franchise network of Palletways in
the UK continues to expand and gain new business. The expansion of the network in European markets remains on track.
MOTUS
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 34 095 (1) 32 455 (4) 66 540 68 479 (3)
Operating profit (Rm) 1 642 - 1 668 (5) 3 310 3 402 (3)
Operating margin (%) 4,8 5,1 5,0 5,0
Return on Invested Capital (%) 11,8 12,2
Weighted average cost of capital (%) 10,1 10,2
Note: Since the publication of the H1 2017 results there have been adjustments to the sub-divisions of Motus, requiring the
segmental report to be amended and the reported H1 2017 numbers to be restated as above. These changes comprise reallocations of:
appropriate eliminations to Motus out of Group Head Office and eliminations; the transfer of the African distributorship operations from
the Vehicle Retail and Rental sub-division to the Vehicle Import and Distribution sub-division; and the transfer of Beekmans from the
Vehicle Import and Distribution sub-division to Aftermarket Parts sub-division. The above numbers are also adjusted to include the VAPs
business in Financial Services. The restated segment report for December 2015 and December 2016 is available on the company's
website www.imperial.co.za
Motus is a strategically coherent focussed motor vehicle business, covering the full motor value chain from OEM's.
Portfolio and strategy development is being directed firstly at acquiring and rapidly integrating like businesses and assets that can
be enhanced by Motus's capabilities and resources, and secondly at continuing to dispose of or rationalise underperforming businesses,
dealerships and brands.
The formation and structuring of Motus, under one collaborative leadership team, will enhance returns in the medium term by reducing
duplication, complexity, costs and capital employed, unlocking intra-divisional efficiencies and more deeply penetrating the vehicle supply chain,
while maintaining market share in a challenging environment.
Revenue and operating profit for Motus declined by 3% due to a slowing vehicle market and higher cost of inventory in the Vehicle Import and
Distribution sub-division in the first half, partially offset by a strong performance from the Financial Services sub-division. Excluding acquisitions
and disposals in the current and prior year, revenue and operating profit increased by 2% and 3% respectively.
National vehicle sales in South Africa for the financial year contracted by 7% as reported by NAAMSA. Motus' new vehicle sales in South Africa declined 7%
over the same period.
The Motus passenger and light commercial vehicle businesses, including the UK and Australia, retailed 113 074 (2016: 118 787) new
and 70 158 (2016: 69 637) pre-owned vehicles during the year.
The strengthening of the Rand against the Pound (20% on average) and Australian Dollar (3% on average) reduced the Rand denominated
results of the UK and Australian businesses, which increased revenue by 12% and 11% and operating profit by 14% and 22% respectively in
local currencies.
During the year, a foreign exchange loss of R388 million was realised. This relates to the unwinding of uneconomical and excessive forward
cover, mainly in Renault, caused by a volatile Rand exchange rate, excessive ordering in a slowing market and delayed model launches. The
Group's foreign exchange controls and policies were reviewed and remain appropriate, but the Group's oversight of their application was
subsequently strengthened. Imperial's current policy is to cover forward on average up to seven months on a rolling basis, depending on the
brand of vehicle.
Net capital expenditure of R2,2 billion was incurred during the year (2016: R2,1 billion) largely on vehicles for hire.
The Regent transaction was concluded on 26 June 2017 and the consequent acquisition of the VAPS business by the Financial Services
sub-division has enhanced its ability to provide Motus customers with a wide range of innovative products that will engender client satisfaction,
loyalty and annuity income.
Vehicle Import and Distribution
Exclusive South African importer of Hyundai, Kia, Renault, Mitsubishi and five smaller automotive brands, with Nissan distributorships in 6
African countries.
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 9 117 (5) 9 040 3 18 157 18 307 (1)
Operating profit (Rm) 286 (29) 442 (13) 728 913 (20)
Operating margin (%) 3,1 4,9 4,0 5,0
Retail dealerships that were previously part of Vehicle Import, Distribution and Dealerships are now included in the Vehicle Retail and Rental
sub-division.
Revenue and operating profit from this sub-division declined by 1% and 20% respectively, impacted by lower vehicle sales volumes due to
market contraction, lower consumer demand, and an underperformance by Renault. Renault's competitiveness and volumes were depressed by
uncompetitive pricing due to the high cost of inventory caused by expensive and excessive forward cover. This was partially offset by solid
performances from Hyundai and Kia, enhanced by manufacturer assistance, a change in the vehicle mix and price increases.
Due to the decrease in sales through the dealer network and in line with the market, importer unit sales of passenger and light commercial
vehicles per NAAMSA defintion decreased by 7% to 75,518 units from 81,494 units in the prior year. The Motus importer segment market share was
maintained at 14% compared to the prior year.
At the end of June 2017 forward cover on the US Dollar and Euro imports extends up to February 2018 at average rates of R13.75 to the US
Dollar and R14.73 to the Euro.
The African operations performed below expectations, reducing operating profit in challenging trading conditions with weak consumer demand
in most of our operating markets. The capital deployed in these operations is being reduced.
Vehicle Retail and Rental
Representative in South Africa of 22 OEMs through 358 vehicle dealerships (including 94 pre-owned), 245 franchised dealerships & 19
commercial vehicle dealerships, with 113 car rental outlets (Europcar & Tempest) and 3 technical training centres.
Operator of 58 franchised commercial vehicle dealerships in the UK, 18 franchised passenger vehicle dealerships in Australia and 16 Car rental
outlets (Europcar and Tempest) in Southern Africa.
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 28 175 3 27 458 (1) 55 633 55 132 1
Operating profit (Rm) 784 22 694 (11) 1 478 1 426 4
Operating margin (%) 2,8 2,5 2,7 2,6
All retail dealerships that were previously part of Vehicle Import, Distribution and Dealerships are now included in this sub-division.
Notwithstanding subdued vehicle sales volumes and slowing consumer demand, the Vehicle Retail and Rental operations recorded an increase
in revenue and operating profit of 1% and 4% respectively, assisted by price increases and cost containment.
The Motus passenger and light commercial vehicle (LCV) businesses in South Africa experienced a 6% decline in new vehicle sales to 53 381
units compared to 56 543 units in the prior year. Total pre-owned retail unit sales increased by 4% as consumers traded down. Current market
conditions continue to depress vehicle sales, particularly those of luxury vehicle brands. The commercial vehicle markets also experienced a
reduction in new retail unit sales, reducing revenue and operating profit. The General Motors SA rationalisation had no meaningful impact on
our operations.
Revenue and operating profit in the UK Commercial business increased 12% and 13% respectively in Pounds Sterling but the strengthening of
the Rand (20% stronger on average over the period) reduced the Rand denominated results.
Car rental increased its revenue and operating profit by 11% and 10% respectively, and grew market share. Despite a challenging and
competitive operating environment, all sectors, with the exception of government, performed well during the year. The utilization rate of
vehicles was maintained at 72%, but accident costs remain high. In addition to process optimization and automation of the vehicle inspection,
claims and recovery processes, the business has rolled out tracker telematics, with more than 13 000 units already installed.
The Australian operations increased revenue and operating profit by 11% and 22% respectively in AUD off a low base, driven by increased unit
sales specifically in Ford vehicles.
Aftermarket Parts
Distributor, wholesaler and retailer of accessories and parts for older vehicles, through 700 owned and franchised outlets. (Midas (AAAS), Alert
Engine Parts and Turbo Exchange).
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 on 2016
Revenue (Rm) 3 125 7 3 028 4 6 153 5 824 6
Operating profit (Rm) 190 8 216 5 406 382 6
Operating margin (%) 6,1 7,1 6,6 6,6
Revenue and operating profit grew 6%, enhanced by price increases, a change in the sales mix and a good performance from Alert Engine
Parts. AAAS recorded a marginal increase in revenue and operating profit as the business was negatively impacted by the disruption from the
move to a new facility. The Jurgens and Prestige Safari business was sold during the year.
Financial Services
Manager and administrator of Service and Warranty plans for approximately 480 000 vehicles; developer and distributor of innovative vehicle-related
financial products and services through dealer and vehicle finance channels, and a national call centre; fleet management services.
% change % change
HY1 on HY1 HY2 on HY2 % change
2017 2016 2017 2016 2017 2016 2016
Motor Related Financial Services
Revenue (Rm) 965 7 1 071 14 2 036 1 837 11
Operating profit (Rm) 458 19 375 10 833 725 15
Operating margin* (%) 47,5 35,0 40,9 39,5
Insurance (discontinued operations)
Revenue(Rm) 1 526 (1) 1 152 (24) 2 678 3 049 (12)
Operating profit (Rm) 266 17 223 8 489 434 13
Operating margin (%) 17,4 19,3 18,3 14,2
Note: Restated to include the VAPs business in Financial Services.
* The operating margin reflects various business ventures that yield operating profits without any associated revenues.
Despite lower vehicle sales, the Motor Related Financial Services business grew revenue and operating profit by 11% and 15% respectively.
Higher profitability in demo sales and rental income was due to higher business volumes and an increase in sales by vehicle importers to car
rental companies. Profitability of the maintenance funds increased as cost price increases did not materialise. The loan book and returns from
the alliances with financial institutions recorded good growth.
We continue to focus on growing the fleet management business and building synergies within the retail motor divisions to leverage scale for
our customers.
Following the approval of the sale of the Regent Group by the Financial Services Board on 26 June 2017, Imperial retained the VAPS's business,
the profits of which are included in the Motor Related Financial Services sub-division. During the year Regent's underwriting result decreased by
8%, mainly due to the sale of the African operations in January 2017, partially offset by an improved performance in the Life business and
lower loss ratios in the short-term business.
Group financial performance
Group profit and loss (extracts) Restated Restated Restated
Total Continuing Discontinued Total Continuing Discontinued Total Continuing
R million 2017 2017 2017 2016 2016 2016 % Change % Change
Revenue (Rm) 119 517 116 839 2 678 118 849 115 800 3 049 1 1
Operating profit (Rm) 6 538 6 049 489 6 382 5 948 434 2 2
Operating margin (%) 5.5 5.2 18.3 5.4 5.1 14.2
Net finance costs (Rm) (1 680) (1 680) - (1 440) (1 440) - 17 17
Income from associates(Rm) 103 103 - 138 138 - (25) (25)
Forex losses(Rm) (619) (619) - (72) (72)
Profit before tax (Rm) 3 625 3 187 438 4 402 3 984 418 (18) (20)
Tax (Rm) (1 060) (901) (159) (1 221) (1 054) (167) (13) (14)
Net profit after tax (Rm) 2 565 2 286 279 3 181 2 930 251 (19) (22)
Attributable to non-controlling
interests (Rm) 36 87 (51) (184) (128) (56) (119) (168)
Attributable to shareholders
of Imperial (Rm) 2 601 2 373 228 2 997 2 802 195 (13) (15)
Effective tax rate (%) 30,1 29,2 28,6 27,4 -
Return on Invested Capital (%) 12,4 12,8*
Weighted average cost
of capital (%) 9,0 9,5*
The Group WACC calculation is a weighted average of the respective sub divisional WACCs. ROIC is calculated based on taxed operating profit plus income
from associates divided by the 12 month average Invested Capital (Total Equity and Net Interest Bearing Borrowings). See glossary of terms.
* Restated to new calculation method. WACC for each sub division of the Group is calculated by making appropriate country/regional risk
adjustments for the cost of equity and pricing for the cost of debt depending on jurisdiction.
Total Group revenue and operating profit grew by 1% to R119,5 billion and by 2% to R6,5 billion respectively. Excluding acquisitions and
disposals in the current and prior year, revenue remained flat and operating profit declined by 1%.
The Group profit before tax declined by 18% due to:
- Foreign exchange losses of R619 million compared to R72 million in the prior year as a result of:
- The unwinding of uneconomical and excessive forward cover in Motus, mainly Renault, as referred to earlier, previously reported
in the Statement of Comprehensive Income at 31 December 2016; and
- Mark to market valuation of monetary items in Logistics African Regions, mainly due to the devaluation of the Naira (41% devaluation on
average for the period) and Metical (37% devaluation on average for the period). This was largely offset by price increases which led to
higher operating margins in Ecohealth in Nigeria.
- higher finance costs from higher costs of funding and higher average debt levels during the year, which resulted from increased working
capital (on average) during the year and acquisitions. This was exacerbated by delays in the receipt of proceeds from properties and
businesses held for sale;
- income from associates and joint ventures decreased by R35 million on the prior year mainly as a result of the sale of Mix Telematics; and
- loss on sale of subsidiaries amounting to R151 million compared to the prior year profit on sale of subsidiaries of R430 million.
The above factors were offset by:
- the profit on sale of properties (net of impairments) of R212 million (2016: R28 million);
- impairment of goodwill, investment in associates and joint ventures and other assets amounting to R209 million (2016: R367 million); and
- the non-recurring impairment of intangibles amounting to R151 million in 2016.
The effective tax rate for the group is 30,1%, up from 28,6% in the prior year as a result of over provisions reversed in 2016. No additional
deferred tax asset was recognised on the losses incurred in Renault and this was largely offset by the deferred tax asset raised in Imperial Cold
Logistics.
Losses recorded by underperforming subsidiaries, mainly Renault, contributed to a loss recognised by non-controlling shareholders. Furthermore,
the profit share of the non-controlling shareholders reduced compared to the prior year due to the purchase of the non-controlling shareholders'
interest in Associated Motor Holdings and AAAS (Midas), and the sale of the Goscor group in the second half of 2016 which had a 32.5%
non-controlling shareholder.
Reconciliation from Earnings to Headline and Core Earnings:
Restated
R million 2017 2016 % change
Net profit attributable to Imperial shareholders (earnings) 2 601 2 997 (13)
Profit on disposal of assets (320) (98)
Impairments of goodwill and other assets 185 437
Loss (profit) on sale of businesses 151 (431)
Impairment and re-measurement of investment in associates and joint ventures 34 92
Reclassification on loss on disposal of available for sale investment (8)
Tax and non-controlling interests 57 (3)
Headline earnings 2 700 2 994 (10)
Amortisation of intangibles asstes arising on business contributions 521 437
Foreign exchange gain on intergroup monetary items (92)
Re-measurement of contingent consideration, put option liabilities and business
acquisition costs 109 117
Tax and non-controlling interests (171) (139)
Core earnings 3 159 3 317 (5)
Earnings, Headline Earnings and Core Earnings per Share
Restated Restated Contin- Dis-
Group Contin- Dis- Group Restated Dis- Group uing continued
Total uing continued Total Continuing continued Total % % %
Cents 2017 2017 2017 2016 2016 2016 change change change
Basic EPS (cents) 1 339 1 221 118 1 554 1 453 101 (14) (16) 17
Basic HEPS (cents) 1 390 1 240 150 1 552 1 451 101 (10) (14) 48
Basic Core EPS (cents) 1 626 1 480 146 1 720 1 617 103 (5) (8) 42
Financial position
Restated
R million 2017 2016 % change
Goodwill and intangible assets 9 529 7 501 27
Property, plant and equipment 10 371 11 602 (11)
Investment in associates and joint ventures 1 002 993 1
Transport fleet 5 560 5 953 (7)
Vehicles for hire 3 963 3 469 14
Investments and loans 805 404 99
Net working capital 8 956 9 804 (9)
Other assets 1 839 1 871 (2)
Assets held for sale 979 6 287 (84)
Net debt (14 647) (16 075) (9)
Non-redeemable, non-participating preference shares (441) (441) -
Other liabilities (7 655) (8 576) (11)
Liabilities directly associated with assets held for sale (3 017)
Total shareholders' equity 20 261 19 775 2
Total assets 68 853 69 835 (1)
Total liabilities (48 592) (50 060) (3)
Goodwill and intangible assets rose by 27% to R9,5 billion primarily due to the acquisition of Palletways of R3,3 billion and Itumele Bus Lines of
R114 million. This was partly offset by the amortisation of intangible assets of R634 million and Rand strength of R922 million.
Property, plant and equipment decreased by R1,2 billion to R10,4 billion primarily from the disposal of properties and the reclassification of
properties to "held for sale assets" during the year.
The transport fleet decreased by 7% or R393 million as the net investment in trucks and barges of R366 million and net acquisitions of R249
million was reduced by currency adjustments of R334 million resulting from a stronger Rand and depreciation of R674 million.
Vehicles for hire increased by R494 million resulting from vehicle price increases, a higher fleet in the car rental business at year-end and
increased sales to car rental companies by vehicle importers.
Net working capital improved to R9,0 billion from R9,8 billion as a result of an increase in trade payables of R 1,7 billion, partially offset by the
increase in both trade receivables and inventory of R636 million and R236 million respectively. Net working capital turn improved from 12,5 to
12,7 times compared to the prior year.
Investment and loans increased by 99% due to the additional investments for the new cell captive arrangements with Regent for the VAPS
business, and the loans receivable from the sale of Jurgens during the year.
Assets held for sale includes non-strategic properties that have been identified for sale. The sale of Regent, non-strategic properties disposed in
F 2017, Imperial Express, LTS Kenzam and Global Holdings, which were classified as held for sale in 2016, have been concluded.
Total assets decreased by 1% to R68,9 billion due mainly to the disposal of Regent, businesses held for sale, property disposals and currency
adjustments, which were offset by acquisitions.
Despite the R3,0 billion acquisition of Palletways, the net debt to equity ratio (including preference shares as equity) reduced to 71% from 73%
in June 2016 (98% at December 2016) supported by proceeds from the sale of Regent and non-strategic properties, an improvement in working
capital and a reduction in capital expenditure.
The net debt level is within the target gearing range of 60% to 80%. The net debt to total EBITDA ratio of 1,7 times is in line with the prior year.
In addition to attributable profits, shareholders' equity was impacted by:
- the strengthening of the Rand which resulted in a loss in the foreign currency translation reserve of R659 million; and
- an increase in the hedging reserve of R159 million as a result of the favourable forward cover position of Motus relative to the Rand
exchange rate at 30 June 2017
Movement in equity for the 12 months to June 2017
R million 2017
Net profit attributable to Imperial shareholders 2 601
Net profit attributable to non-controlling interests (36)
Decrease in the foreign currency translation reserve (659)
Increase in the hedge accounting reserve 159
Re-measurement of defined benefit obligations 116
Movement in share based reserve (72)
Dividends paid (1 688)
Non-controlling interests:
Palletways (share issue) 147
Midas (NCI buy out) (36)
Imres (NCI buy out) (including re-measurement of put option) (52)
Itumele (new acquisition) 118
Disposal of NCI share in Regent cell captives (122)
Other movements 10
Total change 486
Cash flow Restated
R million 2017 2016 % change
Cash generated by operations before movements in working capital 8 388 8 931 (6)
Movements in net working capital (excludes currency movements & net acquisitions) 688 (788)
Cash generated after working capital movements 9 076 8 143
Interest paid (1 670) (1 461)
Tax paid (1 520) (1 910)
Cash generated by operations before capital expenditure on rental assets 5 886 4 772 23
Capital expenditure on rental assets (1 709) (1 611)
Cash flows from operating activities 4 177 3 161
Net(acquisitions)/disposals of subsidiaries and businesses (1 687) 760
Capital expenditure (non-rental assets) (954) (2 527)
Equities, investments and loans 702 179
Dividends paid (1 688) (1 909)
Other (113) (1 321)
Decrease (Increase) in net debt (excludes currency movements & net acquisitions) 437 (1 657)
Free cash flow 4 296 2 536 69
Free cash flow to headline earnings (times) 1,59 0,85
Cash generated by operations after working capital movements, interest charge and tax payments was R5,9 billion (2016: R4,8 billion), up 23%.
Net working capital decreased due to excellent working capital management in the second half of F 2017.
Capex reduced from R4,1 billion to R2,7 billion, down 36%. Capex in the prior year included the bulk of the contributions towards the chemical
manufacturing plant and the additional convoys in South America. The current year capex was also reduced by the proceeds from the property
disposals of R884 million.
The main contributors to the net outflow of R1,7 billion relating to acquisitions and disposals was the acquisition of Palletways (R1,7 billion
cash) and the disposal of the Regent cash (R1,9 billion outflow), which was offset by R1,8 billion proceeds received from the sale of Regent.
Inflows from equities, investments and loans amounted to R702 million, resulting mainly from the sale of Mix Telematics.
Dividends amounting to R1,7 billion were paid during the year.
In 2016 other significant cash flow items included share buy backs amounting to R558 million, a higher outflow from a change in minorities and
settlement of cross-currency swaps. In Addition capital raised from non-controlling interests increased from R26 million in 2016 to R149 million
resulting in an increase in minorities due to the Palletways acquisition.
Liquidity
The group's liquidity position is strong with R12,4 billion of unutilised banking facilities, excluding asset backed finance facilities. The Group debt
profile is 69% long-term (longer than 12 months) and 55% at variable rates. The group's international scale credit rating by Moody's is Baa3
with a negative outlook and the national scale rating was recently upgraded to Aa1.za.
Dividend
A final cash dividend of 330 cents per ordinary share (2016: 425 cents per share) has been declared, bringing the full year dividend to 650 cents
per ordinary share (F 2016: 795 cents per share). The 18% decline in the dividend exceeds the 10% decline in HEPS as a result of a stepped
reduction in the pay-out ratio (previously based on Core HEPS) towards a targeted 45% of HEPS, subject to circumstances.
Board changes
Given his expanded role as an executive director of the Motus Corporation divisional board, MrPhilip Michaux has elected to step down as an
executive director of Imperial Holdings, effective 21 August 2017.
As previously announced Mr Manny De Canha relinquished his executive responsibilities on 30 June 2017 and will retire on 31 January 2018. He
will continue to serve as a non-executive director on the Imperial Holdings board until 31 October 2017.
Prospects
Against the backdrop of economic recovery in most developed and emerging economies, South Africa's socio-political and economic outlook is
fragile. In the near term, politics will divert party leadership and the government from national priorities, and further sovereign downgrades are
possible. Internationally, geopolitics and central banks could dampen growth and influence capital flows. The impact of this unpredictable
environment on sentiment, economic activity and the volatility of the Rand is unlikely to assist the fortunes of Imperial.
Despite this, we anticipate solid operating and financial results in the year to June 2018, subject to stable currencies in the economies in which
we operate and South Africa retaining its investment grade. We expect:
- The self-sufficiency and effectiveness of both divisions to be further entrenched with balance sheet efficiency and independence a priority.
- Logistics and Motus to grow revenues and operating profit from continuing operations.
- Imperial Holdings'continuing operations to increase revenues and operating profit with a double-digit growth in headline earnings per share,
stronger in the second half.
Appreciation
Our gratitude is due to 49 364 colleagues throughout Imperial whose resilience in dealing with difficult external circumstances has been tested
by the unprecedented rate of internal change. The multifaceted restructuring of Imperial over the past three years was among the most
complex and ambitious in South African business.
A particular thanks to our co-directors, executive committee colleagues and fellow managers at all levels of the organisation. These are not easy
times in which to lead.
Finally, we thank our owners and funders for their support. We will continue to execute on our espoused strategies.
MARK J. LAMBERTI - Chief Executive Officer
MOHAMMED AKOOJEE - Chief Financial Officer
The forecast financial information herein has not been reviewed or reported on by Imperial's auditors.
Declaration of final preference and ordinary dividends
for the year ended 30 June 2017
Preference shareholders
Notice is hereby given that a gross final preference dividend of 431.93836 cents per preference share has been declared by the Board of
Imperial, payable to holders 4 540 041 of non-redeemable, non-participating preference shares. The dividend will be paid out of reserves.
The preference dividend will be subject to a local dividend tax rate of 20%. The net preference dividend, to those shareholders who are not
exempt from paying dividend tax, is therefore 345.55069 cents per share.
Ordinary shareholders
Notice is hereby given that a gross final ordinary dividend in the amount of 330.00000 cents per ordinary share has been declared by
the Board of Imperial, payable to holders of 201 139 981 ordinary shares. The dividend will be paid out of reserves.
The ordinary dividend will be subject to a local dividend tax rate of 20%. The net ordinary dividend, to those shareholders who are not exempt
from paying dividend tax, is therefore 264.00000 cents per share.
The company has determined the following salient dates for the payment of the preference dividend and ordinary dividend:
2017
Last day for preference shares and ordinary shares respectively to trade cum- Tuesday, 19 September
preference dividend and cum ordinary dividend
Preference and ordinary shares commence trading ex-preference dividend and Wednesday, 20 September
ex-ordinary dividend respectively
Record date Friday, 22 September
Payment date Tuesday, 26 September
Share certificates may not be dematerialised/re-materialised between Wednesday, 20 September 2017 and Friday, 22 September 2017, both
days inclusive.
On Tuesday, 26 September 2017, 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 26 September 2017 will
be posted on or about that date. Shareholders who have dematerialised their shares will also have their accounts, held at their CSDP or Broker,
credited on Tuesday, 26 September 2017.
On behalf of the board
RA Venter
Group Company Secretary
21 August 2017
Auditor's report
These summarised consolidated financial statements for the year ended 30 June 2017 have been audited by Deloitte & Touche, who expressed
an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the financial statements from which these summarised
consolidated statements were derived.
A copy of the auditor's report on the summarised consolidated financial statements and of the auditor's report on the consolidated financial
statements are available for inspection at the company's registered office, together with the financial statement identified in the respective
auditor's reports.
The auditor's report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised
that in order to obtain a full understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's report together
with the accompanying financial information from the company's registered office.
Presenting continuing and discontinued operations
For the year ended 30 June 2017
The results of the Regent Insurance businesses, which were disposed on 30 June 2017, are presented in the summarised consolidated statement
of profit or loss as discontinued operations. The following shows the combined result of the continued and discontinued operations after
eliminating inter-group transactions.
Total Continuing Discontinued Total Continuing Discontinued
operations operations operations operations operations operations
% 2017 2017 2017 2016* 2016* 2016*
Change Rm Rm Rm Rm Rm Rm
Revenue 1 119 517 116 839 2 678 118 849 115 800 3 049
Net operating expenses (110 450) (108 261) (2 189) (109 908) (107 293) (2 615)
Profit from operations before depreciation
and recoupments 9 067 8 578 489 8 941 8 507 434
Depreciation, amortisation, impairments
and recoupments (2 529) (2 529) (2 559) (2 559)
Operating profit 2 6 538 6 049 489 6 382 5 948 434
Recoupment's from sale of properties,
net of impairments 212 212 28 28
Amortisation of intangible assets arising
on business combinations (521) (521) (437) (437)
Impairment of intangible assets arising on
business combinations (151) (151)
Foreign exchange losses (619) (619) (72) (72)
Other non-operating items (408) (357) (51) (46) (30) (16)
Profit before net finance costs (9) 5 202 4 764 438 5 704 5 286 418
Net finance costs 17 (1 680) (1 680) (1 440) (1 440)
Profit before share of result of associates
and joint ventures 3 522 3 084 438 4 264 3 846 418
Share of result of associates and joint ventures 103 103 138 138
Profit before tax (18) 3 625 3 187 438 4 402 3 984 418
Income tax expense (1 060) (901) (159) (1 221) (1 054) (167)
Net profit for the year (19) 2 565 2 286 279 3 181 2 930 251
Net profit attributable to:
Owners of Imperial (13) 2 601 2 373 228 2 997 2 802 195
Non-controlling interests (36) (87) 51 184 128 56
2 565 2 286 279 3 181 2 930 251
Earnings per share (cents)
- Basic (14) 1 339 1 221 118 1 554 1 453 101
- Diluted (14) 1 302 1 187 115 1 514 1 416 98
Headline earnings per share (cents)
- Basic (10) 1 390 1 240 150 1 552 1 451 101
- Diluted (11) 1 351 1 205 146 1 512 1 414 98
Core earnings per share (cents)
- Basic (5) 1 626 1 480 146 1 720 1 617 103
- Diluted (6) 1 581 1 439 142 1 675 1 575 100
2017 2016*
The cash flows from discontinued operations were as follows: Rm Rm
Cash flows from operating activities 151 352
Cash flows from investing activities 391 17
Cash flows from financing activities (46) (1)
* Restated. Please refer to note 3.
Summarised consolidated statement of profit or loss
For the year ended 30 june 2017
% 2017 2016*
Notes Change Rm Rm
Continuing operations
Revenue 1 116 839 115 800
Net operating expenses (108 261) (107 293)
Profit from operations before depreciation
and recoupments 8 578 8 507
Depreciation, amortisation, impairments
and recoupments (2 529) (2 559)
Operating profit 2 6 049 5 948
Recoupments from sale of properties,
net of impairments 212 28
Amortisation of intangible assets arising
on business combinations (521) (437)
Impairment of intangible assets arising
on business combinations (151)
Foreign exchange losses (619) (72)
Other non-operating items 7 (357) (30)
Profit before net finance costs (10) 4 764 5 286
Net finance costs 8 17 (1 680) (1 440)
Profit before share of result of associates
and joint ventures 3 084 3 846
Share of result of associates and joint ventures 103 138
Profit before tax (20) 3 187 3 984
Income tax expense (901) (1 054)
Profit for the year from continuing operations (22) 2 286 2 930
Discontinued operations
Profit for the year from discontinued operations 279 251
Net profit for the year (19) 2 565 3 181
Net profit attributable to:
Owners of Imperial 2 601 2 997
- Continuing operations 2 373 2 802
- Discontinued operations 228 195
Non-controlling interests (36) 184
- Continuing operations (87) 128
- Discontinued operations 51 56
2 565 3 181
Earnings per share (cents)
Continuing operations
- Basic (16) 1 221 1 453
- Diluted (16) 1 187 1 416
Discontinued operations
- Basic 17 118 101
- Diluted 17 115 98
Total operations
- Basic (14) 1 339 1 554
- Diluted (14) 1 302 1 514
* Restated. Please refer to note 3.
Summarised consolidated statement of comprehensive income
For the year ended 30 June 2017
2017 2016*
Rm Rm
Net profit for the year 2 565 3 181
Other comprehensive (loss) income (405) 147
Items that may be reclassified subsequently to profit or loss (521) 306
Exchange (losses) gains arising on translation of foreign operations (724) 607
Share of associates' and joint ventures movement in foreign currency
translation reserve 16
Reclassification of gain on disposal of investment in associate (8)
Movement in hedge accounting reserve 244 (374)
Income tax relating to items that may be reclassified to profit or loss (33) 57
Items that will not be reclassified to profit or loss 116 (159)
Remeasurement of defined benefit obligations 199 (228)
Income tax on remeasurement of defined benefit obligations (83) 69
Total comprehensive income for the year 2 160 3 328
Total comprehensive income attributable to:
Owners of Imperial 2 209 3 138
Non-controlling interests (49) 190
2 160 3 328
* Restated. Please refer to note 3.
Earnings per share information
For the year ended 30 June 2017
% 2017 2016*
Change Rm Rm
Headline earnings reconciliation
Earnings** 2 601 2 997
Recoupment for disposal of property, plant and equipment (IAS 16) (323) (97)
(Loss) recoupment for disposal of intangible assets (IAS 38) 3 (1)
Impairment of property, plant and equipment (IAS 36) 32 12
Impairment of intangible assets (IAS 36) 30 167
Impairment of goodwill (IAS 36) 123 258
Impairment of investments in associates and joint ventures (IAS 28) 34 89
Loss (profit) on disposal of subsidiaries and businesses (IFRS 10) 151 (520)
Impairment loss on assets of disposal groups 90
Reclassification of loss on disposal of investment in associate (8)
Remeasurements included in share of result of associates and joint ventures 2
Tax effects of remeasurements 66 60
Non-controlling interests share of remeasurements (9) (63)
Headline earnings** 2 700 2 994
Headline earnings per share (cents)
Continuing operations
- Basic (15) 1 240 1 451
- Diluted (14) 1 205 1 414
Discontinued operations
- Basic 49 150 101
- Diluted 49 146 98
Total operations
- Basic (10) 1 390 1 552
- Diluted (11) 1 351 1 512
Core earnings reconciliation
Headline earnings (10) 2 700 2 994
Amortisation of intangible assets arising on business combinations 521 437
Foreign exchange gain on inter-group monetary item (92)
Business acquisition costs 82 63
Remeasurement of contingent consideration and put option liabilities 37 50
Change in economic assumptions on insurance funds (10) 4
Tax effects of core earnings adjustments (131) (98)
Non-controlling interests share of core earnings adjustments (40) (41)
Core earnings** (6) 3 159 3 317
Core earnings per share (cents)
Continuing operations
- Basic (8) 1 480 1 617
- Diluted (8) 1 439 1 575
Discontinued operations
- Basic 42 146 103
- Diluted 42 142 100
Total operations
- Basic (5) 1 626 1 720
- Diluted (6) 1 581 1 675
Additional information
Net asset value per share (cents) 3 10 550 10 261
Dividend per ordinary share (cents) (18) 650 795
Number of ordinary shares in issue (million)
- total shares 201,1 208,1
- net of shares repurchased 196,6 196,6
- weighted average for basic 194,3 192,9
- weighted average for diluted 199,8 198,0
Number of other shares (million)
- Deferred ordinary shares to convert into ordinary shares 6,7 7,5
* Restated. Please refer to note 3.
** There are no reconciling items between the basic and the diluted earnings values.
Summarised consolidated statement of financial position
at 30 June 2017
2017 2016* 2015*
Note Rm Rm Rm
ASSETS
Goodwill and intangible assets 9 9 529 7 501 7 193
Investment in associates and joint ventures 1 002 993 1 352
Property, plant and equipment 10 371 11 602 11 104
Transport fleet 5 560 5 953 5 610
Deferred tax assets 1 509 1 387 1 108
Investments and other financial assets 805 404 447
Vehicles for hire 3 963 3 469 3 603
Inventories 16 953 16 717 15 465
Tax in advance 330 484 297
Trade and other receivables 13 353 12 717 12 849
Cash resources 4 499 2 321 2 275
Assets of discontinued operations and disposed groups 6 287 4 409
Properties held for sale 979
Total assets 68 853 69 835 65 712
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 1 030 1 030 382
Shares repurchased (574) (1 226) (668)
Other reserves 24 1 003 1 089
Retained earnings 20 262 19 366 18 065
Attributable to owners of Imperial 20 742 20 173 18 868
Put arrangement over non-controlling interests (1 148) (1 307) (1 473)
Non-controlling interests 667 909 1 838
Total equity 20 261 19 775 19 233
Liabilities
Non-redeemable, non-participating preference shares 441 441 441
Retirement benefit obligations 1 229 1 531 1 157
Interest-bearing borrowings 19 146 18 396 16 157
Maintenance and warranty contracts 3 022 3 156 3 191
Deferred tax liabilities 1 115 881 1 193
Other financial liabilities 1 952 2 335 2 019
Trade, other payables and provisions 21 350 19 630 19 142
Current tax liabilities 337 673 561
Liabilities of discontinued operations and disposed groups 3 017 2 618
Total liabilities 48 592 50 060 46 479
Total equity and liabilities 68 853 69 835 65 712
* Restated. Please refer to note 3.
Summarised consolidated statement of cash flows
for the year ended 30 June 2017
% 2017 2016**
Note Change Rm Rm
Cash flows from operating activities
Cash generated by operations before movements in net working capital (6) 8 388 8 931
Movements in net working capital 688 (788)
Cash generated by operations before interest and taxes paid 11 9 076 8 143
Net finance cost paid (1 670) (1 461)
Tax paid (1 520) (1 910)
Cash generated by operations before capital expenditure on rental assets 23 5 886 4 772
Expansion capital expenditure - rental assets (1 118) (772)
Net replacement capital expenditure - rental assets (591) (839)
- Expenditure (3 422) (3 539)
- Proceeds 2 831 2 700
Cash generated by operations after capital expenditure on rental assets 32 4 177 3 161
Cash flows from investing activities
Net cash flow on disposal and acquisition of subsidiaries and businesses (1 687) 760
Expansion capital expenditure - excluding rental assets 45 (1 130)
Net replacement capital expenditure - excluding rental assets (999) (1 397)
Net movement in associates and joint ventures 514 71
Net movement in investments, loans and other financial instruments 188 108
(1 939) (1 588)
Cash flows from financing activities
Hedge cost premium paid (10) (193)
Settlement of cross currency swap instruments (157)
Ordinary shares repurchased* (558)
Dividends paid (1 688) (1 909)
Change in non-controlling interests (252) (439)
Capital raised from non-controlling interests 149 26
Net increase in other interest-bearing borrowings 1 509 2 193
(292) (1 037)
Net increase in cash and cash equivalents 1 946 536
Effects of exchange rate changes on cash resources in foreign currencies (224) 145
Cash and cash equivalents at beginning of year 719 38
Cash and cash equivalents at end of year 10 2 441 719
* The repurchase of the 7 864 456 ordinary shares during the year was an inter-group transaction with no impact on the Group's cash flows.
** Restated. Please refer to note 3.
Summarised consolidated statement of changes in equity
For the year ended 30 June 2017
Put
Share arrangement
capital Shares Attributable over non- Non-
and share re- Other Retained to owners controlling controlling Total
premium purchased reserves earnings of imperial interests interests equity
Rm Rm Rm Rm Rm Rm Rm Rm
At 30 June 2015 382 (668) 1 089 18 065 18 868 (1 473) 1 838 19 233
Total comprehensive income for the year 300 2 838 3 138 190 3 328
Net attributable profit for the year 2 997 2 997 184 3 181
Other comprehensive income 300 (159) 141 6 147
Movement in statutory reserves 20 (20)
Share-based cost charged to profit or loss 144 144 4 148
Share-based equity reserve transferred to retained earnings on vesting (55) 55
Share-based equity reserve hedge cost (183) (183) (183)
Ordinary dividend paid (1 572) (1 572) (1 572)
Repurchase of 3 387 507 ordinary shares from the open market at an
average price of R164,78 per share, plus transaction cost (558) (558) (558)
Share of changes in net assets of associates and joint ventures (5) (5) (5)
Realisation on disposal of subsidiaries 59 59 59
Non-controlling interests disposed, net of acquisitions and shares issued (71) (71)
Net decrease in non-controlling interests though buy-outs 648 (366) 282 166 (715) (267)
Non-controlling interests share of dividends (337) (337)
At 30 June 2016 1 030 (1 226) 1 003 19 366 20 173 (1 307) 909 19 775
Total comprehensive income for the year (508) 2 717 2 209 (49) 2 160
Net attributable profit for the year 2 601 2 601 (36) 2 565
Other comprehensive income (508) 116 (392) (13) (405)
Transfer of reserves on disposal of Mix Telematics Limited (108) 108
Movement in statutory reserves 11 (11)
Share-based cost charged to profit or loss 150 150 150
Share-based equity reserve transferred to retained earnings on vesting 102 (102)
Shares cancelled and delivered to settle share based obligations 39 (39)
Share-based equity reserve hedge cost (222) (222) (222)
Ordinary dividend paid (1 461) (1 461) (1 461)
Cancellation of 7 864 456 ordinary shares 613 (613)
Non-controlling interests acquired, net of disposals and shares issued 119 119
Net decrease in non-controlling interests through buy-outs (167) (167) 159 (85) (93)
Realisation on disposal of subsidiaries (198) 258 60 60
Non-controlling interests share of dividends (227) (227)
At 30 June 2017 1 030 (574) 24 20 262 20 742 (1 148) 667 20 261
Notes to the summarised consolidated financial statements
For the year ended 30 June 2017
1. Basis of preparation
The summarised consolidated financial statements have been prepared in accordance with the framework concepts and measurement
requirements of International Financial Reporting Standards (IFRS) 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 summarised consolidated financial statements are an extract of the
full audited consolidated annual financial statements for the year ended 30 June 2017.
These summarised consolidated financial statements and the complete set of consolidated financial statements have been prepared
under the supervision of R Mumford, CA (SA) and were approved by the board of directors on 21 August 2017.
2. Accounting policies
The accounting policies adopted and methods of computation used in the preparation of the summarised consolidated financial
statements are in accordance with IFRS and are consistent with those of the annual financial statements for the year ended
30 June 2016.
3. Restatement of 2016
The Regent Insurance operations have been classified as discontinued operations since 30 June 2015. Protracted negotiations and
regulatory requirements resulted in the sale being concluded on 30 June 2017. The final transaction was amended so that Imperial
retained the Value Added Products (VAPS) businesses in Regent which resulted in lower proceeds, lower net asset value disposed and
lower profits lost due to the disposal.
As a result the 30 June 2016 consolidated financial statements are restated to reflect the revised split between continued and
discontinued operations on the statement of profit and loss and the lower assets and liabilities of discontinued operations on the
statement of financial position. The impact is that the continuing operations profits increase and the discontinued operation profits
decrease. The various assets and liabilities of the businesses retained were reclassified from assets and liabilities of discontinued
operations back to their appropriate categories.
In reviewing the 30 June 2016 VAPS businesses it has been discovered that certain provisions were understated by R40 million which
impacts the continuing operations results. In addition the charge to profit and loss for the non-controlling interests for discontinued
operations was understated by R25 million. The total earnings impact on 2016 is R52 million. These amounts are not material and do
not warrant restatement however as the group is restating 30 June 2016 for the VAPS businesses retained, these restatements have also
been included.
The 2016 statement of cash flows was restated to reclassify the cash inflows for interest-rate swap instruments amounting to R19 million
from investing activities to operating activities and to reclassify the cash outflows for cross-currency swap instruments amounting to
R157 million from investing activities to financing activities.
The effects of the restatement on the prior year consolidated financial statements were as follows. The amounts below are the changes to
the 30 June 2016 financial statements:
2016 2015
STATEMENT OF FINANCIAL POSITION Rm Rm
ASSETS
Investment in associates and joint ventures 7 1
Property, plant and equipment 137 137
Deferred tax assets 11 11
Investments and loans 105 54
Tax in advance 1 2
Trade and other receivables 5
Cash resources 4 4
Assets of discontinued operations (265) (209)
Total assets 5
EQUITY AND LIABILITIES
Retained earnings (52)
Attributable to owners of Imperial (52)
Non-controlling interest 25
Total equity (27)
LIABILITIES
Trade and other payables and provisions 137 95
Current tax liabilities (8)
Liabilities of discontinued operations (97) (95)
Total liabilities 32
Total equity and liabilities 5
VAPS Error Total
restatement restatement restatement
2016 2016 2016
STATEMENT OF PROFIT OR LOSS Rm Rm Rm
Continuing operations
Revenue 62 62
Net operating expenses 33 (40) (7)
Operating profit 95 (40) 55
Share of result of associates and joint ventures 5 5
Profit before tax 100 (40) 60
Income tax expense (13) 8 (5)
Profit for the year from continuing operations 87 (32) 55
Discontinued operations
Profit for the year from discontinued operations (82) (82)
Net profit for the year 5 (32) (27)
Net profit attributable to:
Owners of Imperial 5 (57) (52)
- Continuing operations 87 (32) 55
- Discontinued operations (82) (25) (107)
Non-controlling interest 25 25
- Continuing operations
- Discontinued operations 25 25
VAPS Error Total
restatement restatement restatement
2016 2016 2016
STATEMENT OF COMPREHENSIVE INCOME Rm Rm Rm
Net profit for the year 5 (32) (27)
Total comprehensive income for the year 5 (32) (27)
Total comprehensive income attributable to:
Owners of Imperial 5 (57) (52)
Non-controlling interest 25 25
5 (32) (27)
Error Total
restatement Reclassification restatement
2016 2016 2016
STATEMENT OF CASH FLOWS Rm Rm Rm
Cash flows from operating activities
Decrease in cash generated by operations before movements in working
capital (40) 19 (21)
Increase in movements in net working capital 40 40
Increase in cash from operating activities 19 19
Cash flows from investing activities
Increase in net movement in investment, loans and non-current financial instruments 138 138
Increase in cash from investing activities 138 138
Cash flows from financing activities
Settlement of cross currency swap instruments (157) (157)
Decrease in cash from financing activities (157) (157)
4. Basis of segmentation
In line with the Group's organisational changes as announced on 3rd June 2016 the basis of segmentation for the 2017 financial year has
been revised as follows:
Logistics division reports segmentally on three sub divisions namely:
- Logistics South Africa
- Logistics Africa Regions
- Logistics International
The Vehicles division reports segmentally on four sub divisions namely:
- Vehicle Import and Distribution
- Vehicle Retail and Rental
- Aftermarket Parts
- Motor Related Financial Services
The revision resulted in the restatement of amounts that was previously disclosed on the June 2016 segment reports.
5. New and revised International Financial Reporting Standards in issue but not yet effective
International Financial Reporting Standards that will become applicable to the group in future reporting periods includes IFRS 9 Financial
Instruments (effective 1 January 2018), IFRS 15 Revenue from Contracts with Customers (effective 1 January 2018) and IFRS 16 Leases
(effective 1 January 2019). The details of these standards are outlined in the 30 June 2017 annual financial statements.
The group is in the process of assessing the impact of these standards on its consolidated financial statements.
2017 2016
6. Foreign exchange rates
The following major rates of exchange was used in the translation
of the Group's foreign operations:
SA Rand : Euro
- closing 14,92 16,31
- average 14,81 16,10
SA Rand : US Dollar
- closing 13,06 14,70
- average 13,58 14,51
SA Rand : Pound Sterling
- closing 17,02 19,58
- average 17,23 21,47
SA Rand : Australian Dollar
- closing 10,04 10,95
- average 10,24 10,56
2017 2016
Rm Rm
7. Other non-operating items
Remeasurement of financial instruments not held-for-trading (29) (50)
Charge for remeasurement of put option liabilities (39) (64)
Gain on remeasurement of contingent consideration liabilities 2 14
Reclassification of gain on disposal of investment in associate 8
Capital items (328) 20
Impairment of goodwill (123) (258)
Impairment of investments in associates and joint ventures (34) (89)
(Loss) profit on disposal of subsidiaries and businesses (89) 520
Impairment losses on assets of disposal group (90)
Business acquisition costs (82) (63)
(357) (30)
8. Net finance costs
Net interest paid (1 670) (1 462)
Fair value (losses) gains on interest-rate swap instruments (10) 22
(1 680) (1 440)
2017 2016
Rm Rm
9. Goodwill and intangible assets
Goodwill
Cost 7 679 6 286
Accumulated impairments (985) (862)
6 694 5 424
Carrying value at beginning of year 5 424 5 018
Net acquisition (disposal) of subsidiaries and businesses 2 012 (130)
Impairment charge (123) (258)
Reclassified to assets held for sale (28)
Currency adjustments (619) 822
Carrying value at end of year 6 694 5 424
Intangible assets 2 835 2 077
Goodwill and intangible assets 9 529 7 501
10. Cash and cash equivalents
Cash resources 4 499 2 321
Cash resources included in assets of discontinued operations and of disposal
groups 1 352
Short-term loans and overdrafts (Included in interest-bearing borrowings) (2 058) (2 954)
2 441 711
11. Fair value of financial instruments
11.1 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 a valuation technique where at least one input, which could have a significant
effect on the instrument's valuation, is not based on observable market data.
11.2 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*
30 June 2017 Rm Rm
Listed corporate bonds (included in interest-bearing borrowings) 5 341 5 295
Listed non-redeemable, non-participating preference shares 441 337
* Level 2 of the fair value hierarchy.
The fair values of the remainder of the Group's financial assets and financial liabilities approximate their carrying values.
The following table presents the valuation categories used in determining the fair values of financial instruments carried at fair value.
Total Level 2 Level 3
30 June 2017 Rm Rm Rm
Financial assets carried at fair value
Unlisted investments 648 648
Cross currency and interest-rate swap instruments
(Included in Other financial assets) 6 6
Foreign exchange contracts and other derivative instruments
(Included in Trade and other receivables) 68 68
Financial liabilities carried at fair value
Put option liabilities (Included in Other financial liabilities) 1 553 1 553
Contingent consideration liabilities (Included in Other financial liabilities) 45 45
Swap instruments (Included in Other financial liabilities) 145 145
Foreign exchange contracts and other derivative instruments
(Included in Trade, other payables and provisions) 31 31
There were no reclassifications between fair value hierarchy levels during the year.
Level 3 sensitivity information
The fair values of the level 3 financial instruments were estimated by applying an income approach valuation method including a
present value discount technique. The fair value measurements are based on significant inputs that are not observable in the market.
Key assumptions used in the valuations includes the assumed probability of achieving profit targets, expected future cash flows and
the discount rates applied. The assumed profitabilities and cash flows were based on historical performances but adjusted for
expected growth.
The following table shows how the fair value of the level 3 financial instruments as at 30 June2017 would change if the significant
assumptions were to be replaced by a reasonable possible alternative.
Increase Decrease
Carrying in carrying in carrying
Financial Valuation Key value value value
instruments technique assumption Rm Rm Rm
Preset value of
Unlisted investments (asset) Income approach expected cash flows 648 72 (76)
Put option liabilities Income approach Earnings growth 1 553 8 (14)
Contingent consideration liabilities Income approach Assumed profits 45 (8)
2017 2016
Rm Rm
12. Contingencies and commitments
Capital commitments 1 448 1 309
Contingent liabilities 649 770
13. Acquisition and disposal of businesses during the year
Acquisitions
Please refer below for acquisitions during the year.
Disposals
Please refer to Capital Allocation above for disposals during the year.
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 21 August 2017.
For more details please refer to the dividend declaration.
Acquisitions
Surgipharm Limited
Logistics African Regions acquired 70% of Surgipharm Limited for a consideration of R470 million (USD 35 million). Surgipharm, which
is headquartered in Nairobi, markets and distributes pharmaceutical, medical, surgical and allied supplies in Kenya, with an annual
turnover of approximately R964 million (USD 73 million). The transaction was effective 1 July 2017.
Pentagon Motor Holdings
Motus acquired on 14 August 2017 100% of Pentagon Motor Holdings Limited (Pentagon), for a cash consideration of R493 million
(£28 million). Headquartered in Derbyshire, Pentagon operates 20 prime retail dealerships in Derbyshire, Nottinghamshire,
Lincolnshire, Yorkshire and greater Manchester. For the year ending 31 December 2016 Pentagon had a turnover of R8,715 million
(£495 million). Pentagon was established in 1991 and has grown steadily from its initial Vauxhall franchise base to represent
numerous leading car and van manufacturers including Peugeot, Seat, Mazda, Kia, Renault, Fiat, Alfa Romeo, Nissan, Mitsubishi
and Jeep.
SWT Group Proprietary Limited
Motus entered into an agreement to acquire 75% of SWT, an Australian based group which operates 16 dealerships, for a cash consideration of
R254 million (AUD 24.2 million). The transaction is subject to certain conditions precedent.
As the initial accounting for the above acquisitions were not complete at the time that the financial statements were autorised for
issue no further disclosures are provided.
Business combinations during the year
Purchase
Interest consideration
Businesses Nature Operating Date acquired transfered
acquired of business segment acquired (%) Rm
Palletways Express delivery solutions Logistics International July 2016 95,2 1 683
Group Limited* for small consignments of
palletised freight across Europe
Itumele Bus Lines Consumer bus operations Logistics South Africa November 2016 55 147
Proprietary Limited in the Free State province
of South Africa
Individually immaterial
acquisition 56
Fair value of previously held
interest (90)
1 796
* The total purchase consideration of R3,0 billion disclosed in the June 2016 report included preference shares and subordinated loans acquired
amounting to R1,317 million, thereby arriving at the purchase consideration of R1,683 million above.
Fair value of assets acquired and liabilities assumed at date of acquisition:
Individually
Itumele immaterial
Palletways Bus Lines acquisitions Total
Rm Rm Rm Rm
Assets
Intangible assets (excluding goodwill) 1 360 112 17 1 489
Property, plant and equipment 32 17 30 79
Transport fleet 269 269
Investments, associates and joint ventures and other financial assets 12 56 68
Deferred tax assets 3 3
Inventories 3 14 31 48
Trade and other receivables 617 54 73 744
Cash resources 141 82 3 226
2 153 560 213 2 926
Liabilities
Retirement benefit obligations 9 9
Deferred tax liabilities 264 70 5 339
Interest-bearing borrowings 1 350 141 126 1 617
Other financial liabilities 2 94 96
Trade and other payables and provisions 773 84 73 930
Current tax liabilities 17 1 18
2 413 298 298 3 009
Acquirees' carrying amount at acquisition (260) 262 (85) (83)
Non-controlling interests (8) (118) (7) (133)
Net assets acquired (268) 144 (92) (216)
Purchase consideration transferred 1 683 147 (34) 1 796
Cash paid 1 683 142 25 1 850
Fair value of previously held interest (90) (90)
Contingent consideration 5 31 36
Excess of purchase price over net assets acquired 1 951 3 58 2 012
Reasons for the acquisitions
The Group acquired a 95.2% shareholding in Palletways. This acquisition is in line with Imperial's strategic intent to expand its presence beyond
South Africa through the acquisition of asset light logistics businesses that benefit from Imperial's existing footprint and capabilities. Palletways
provides an express delivery solution for small consignments of palletised freight through more than 400 depots and 14 hubs, which collects
and distribute 38 000 daily or 8 million pallets annually across 20 European countries where it currently handles one in every 4 pallets handled
by palletised freight networks.
The acquisition of a 55% shareholding in Itumele Bus Lines, is in line with the Group's strategy to diversify into other related industries and
allows entry into the commuter bus service market. Itumele's primary business is providing public transport services on behalf of the provincial
government to commuters in and around Bloemfontein. Founded in 1975, the operation comprises a fleet of 253 commuter busses and 32
luxury coaches. Itumele transports approximately 50 000 passengers daily and its busses travel approximately 17 million kilometres a year.
The other businesses were acquired to complement and expand our transport and business solutions through the acquisition of a depot in
Europe and an import and export solutions business in South Africa.
Details of contingent consideration
The contingent consideration requires the Group to pay the vendors an additional total amount of R36 million over three years if the entities'
net profit after tax exceeds certain profit targets.
Acquisition costs
Acquisition costs for business acquisitions concluded during the year amounted to R27 million and have been recognised as an expense in profit
or loss in the 'Other non-operating items' line.
Impact of the acquisition on the results of the group
From the dates of acquisition the businesses acquired during the year contributed revenue of R6 233 million, operating profit of R396 million
and after tax profit of R170 million. The after tax profit of R170 million includes the after tax impact of the funding cost of R70 million
calculated on the cash consideration paid on acquisitions and the amortisation of intangible assets arising out of the business combinations
of R177 million.
Had all the acquisitions been consolidated from 1 July 2016, they would have contributed revenue of R6 446 million, operating profit of
R404 million and after tax profit of R162 million. The Group's continuing revenue for the year would have been R117 052 million, operating
profit would have been R6 057 million and after tax profit R2 278 million.
Separate identifiable intangible assets
As at the acquisition date the fair value of the separate identifiable intangible assets was R1 489 million. This fair value, which is classified as
level 3 in the fair value hierarchy, was determined using the Multi-period Excess Earnings Method (MEEM) valuation technique for contract
based intangible assets and the Relief-form-royalty method for the trademark.
The significant unobservable valuation inputs were as follows:
Itumele
Palletways Bus Lines
% %
Trademark
- Discount rates 9,1
- Royalty rate 1,0
Contract based intangible assets
- Weighted average discount rates 6.7 - 7.3 17,5
- Terminal growth rates 1.0 5,4
The assumptions used in arriving at projected cash flows were based on past experience and adjusted for any expected changes.
Other details
Trade and other receivables had gross contractual amounts of R790 million of which R46 million was doubtful. Non-controlling interests have
been calculated based on their proportionate share in the acquiree's net assets. None of the goodwill is deductible for tax purposes.
Segmental information
IMPERIAL LOGISTICS MOTUS
IMPERIAL Logistics Logistics Logistics IMPERIAL Vehicle Import Vehicle Retail After Market Motor Related TOTAL Head Office
Financial position HOLDINGS South Africa African Regions International LOGISTICS and Distribution and Rental Parts Financial Services Eliminations VEHICLES and eliminations Insurance
R million 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Assets
Intangible assets 9 529 7 501 924 1 030 2 210 2 496 5 540 3 004 8 674 6 530 110 133 355 422 364 366 9 8 9 846 930 9 41
Property plant and equipment 10 371 11 602 1 434 1 825 356 693 2 278 2 245 4 068 4 763 511 837 5 279 5 668 413 207 11 10 (1) 1 6 213 6 723 90 116
Transport fleet 5 560 5 953 2 528 2 344 306 371 2 763 3 278 5 597 5 993 (37) (40)
Vehicles for hire 3 963 3 469 1 991 1 534 1 959 1 723 1 915 1 071 (1 902) (859) 3 963 3 469
Investments in associates 686 694 17 22 298 320 137 167 452 509 21 (37) 17 32 119 111 61 62 8 9 226 177 8 8
Investments 403 113 23 5 5 5 28 10 4 4 27 317 190 321 221 54 (118)
Inventories 16 953 16 717 324 251 1 157 1 247 249 314 1 730 1 812 5 445 5 145 8 350 8 457 1 121 1 111 397 436 (90) (219) 15 223 14 930 (25)
Trade and other receivables 13 353 12 717 3 907 3 562 1 356 1 432 3 830 3 618 9 093 8 612 1 977 1 645 2 295 2 274 592 608 682 934 (1 270) (1 293) 4 276 4 168 (16) (63)
Cash resources 207 17 207 17 207 17
Operating assets 61 025 58 783 9 157 9 039 5 683 6 559 14 802 12 631 29 642 28 229 10 059 9 261 18 255 18 603 2 609 2 403 3 599 2 720 (3 247) (2 352) 31 275 30 635 108 (81)
- South Africa 34 669 32 796 9 157 9 039 9 157 9 039 9 439 8 637 13 198 12 946 2 588 2 388 3 599 2 720 (3 298) (2 763) 25 526 23 928 (15) (171)
- Rest of Africa 6 464 7 329 5 683 6 559 5 683 6 559 620 624 139 103 21 15 1 28 781 770
- International 19 892 18 658 14 802 12 631 14 802 12 631 4 918 5 554 50 383 4 968 5 937 123 90
Liabilities
Retirement benefit obligations 1 229 1 531 1 229 1 531 1 229 1 531
Maintenance and warranty contracts 3 022 3 156 2 915 3 040 107 102 3 022 3 142 14
Trade and other payables and provisions 21 350 19 630 4 352 3 578 1 922 2 013 3 945 3 372 10 219 8 963 5 212 4 282 6 936 7 111 987 940 747 598 (2 979) (2 182) 10 903 10 749 228 (82)
Other financial liabilities 399 460 33 31 76 88 1 109 120 102 67 11 5 51 10 (9) 118 119 172 221
Operating liabilities 26 000 24 777 4 385 3 609 1 998 2 101 5 174 4 904 11 557 10 614 5 314 4 349 6 947 7 111 992 991 3 662 3 648 (2 872) (2 089) 14 043 14 010 400 153
- South Africa 15 773 14 459 4 385 3 609 4 385 3 609 5 105 4 098 4 132 4 136 989 988 3 662 3 648 (2 872) (2 089) 11 016 10 781 372 69
- Rest of Africa 2 223 2 366 1 998 2 101 1 998 2 101 209 251 13 11 3 3 225 265
- International 8 004 7 952 5 174 4 904 5 174 4 904 2 802 2 964 2 802 2 964 28 84
Net working capital 8 956 9 804 (121) 235 591 666 134 560 604 1 461 2 210 2 508 3 709 3 620 726 779 332 772 1 619 670 8 596 8 349 (244) (6)
- South Africa 6 961 7 213 (121) 235 (121) 235 1 916 2 216 2 871 2 630 716 769 332 772 1 618 687 7 453 7 075 (369) (96)
- Rest of Africa 916 838 591 666 591 666 294 292 18 13 10 10 1 (143) 323 171
- International 1 079 1 753 134 560 134 560 820 977 126 820 1 103 125 90
Net debt 15 088 16 516 1 306 2 610 2 473 2 639 5 516 3 955 9 295 9 204 2 895 1 913 3 678 5 490 555 352 (1 450) (1 237) 101 (368) 5 779 6 150 14 1 162
- South Africa 7 182 9 911 1 306 2 610 1 306 2 610 2 658 1 806 3 239 4 748 536 337 (1 450) (1 237) 76 (396) 5 059 5 258 817 2 043
- Rest of Africa 2 781 2 821 2 473 2 639 2 473 2 639 237 107 52 49 19 15 11 308 182
- International 5 125 3 784 5 516 3 955 5 516 3 955 387 693 25 17 412 710 (803) (881)
Net capital expenditure (2 663) (4 138) 155 (534) (93) (346) (554) (1 027) (492) (1 907) (1 227) (905) (1 112) (1 120) (263) (42) (596) (228) 1 025 169 (2 173) (2 126) (45) (7) 47 (98)
- South Africa (1 853) (2 624) 155 (534) 155 (534) (1 212) (878) (967) (1 011) (262) (40) (596) (228) 1 025 169 (2 012) (1 988) (44) (6) 48 (96)
- Rest of Africa (165) (416) (93) (346) (93) (346) (15) (27) (55) (39) (1) (2) (71) (68) (1) (2)
- International (645) (1 098) (554) (1 027) (554) (1 027) (90) (70) (90) (70) (1) (1)
IMPERIAL LOGISITICS MOTUS
IMPERIAL Logistics Logistics Logistics Business TOTAL Vehicle Import Vehicle Retail After Market Motor Related Businesses TOTAL Head Office
PROFIT or LOSS HOLDINGS South Africa African Regions International held for sale LOGISTICS and Distribution and Rental Parts Financial Services held for sale Eliminations VEHICLES and eliminations
R million 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Revenue 116 839 115 800 16 207 14 447 9 356 11 016 24 220 19 512 882 2 937 50 665 47 912 18 157 18 307 55 633 55 132 6 153 5 824 2 036 1 837 427 2 945 (15 866) (15 566) 66 540 68 479 (366) (591)
- South Africa 66 972 66 072 16 207 14 447 291 819 16 498 15 266 17 116 16 857 41 121 39 741 6 120 5 808 2 036 1 837 315 2 722 (15 866) (15 567) 50 842 51 398 (368) (592)
- Rest of Africa 11 171 13 432 9 356 11 016 591 837 9 947 11 853 1 041 1 450 150 112 33 16 1 1 224 1 579
- International 38 696 36 296 24 220 19 512 1 281 24 220 20 793 14 362 15 279 112 223 14 474 15 502 2 1
Operating profit 6 049 5 948 953 828 746 773 1 105 1 000 (40) (58) 2 764 2 543 728 913 1 478 1 426 406 382 833 725 (2) 102 (133) (146) 3 310 3 402 (25) 3
- South Africa 3 809 3 779 953 828 (34) (78) 919 750 730 886 1 067 1 056 409 386 833 725 (3) 105 (133) (146) 2 903 3 012 (13) 17
- Rest of Africa 792 843 746 773 (6) 7 740 780 (2) 27 57 40 (3) (4) 52 63
- International 1 448 1 326 1 105 1 000 13 1 105 1 013 354 330 1 (3) 355 327 (12) (14)
Depreciation, amortisation, impairments
and recoupments (2 838) (3 119) (394) (590) (257) (295) (777) (738) (6) (56) (1 434) (1 679) (622) (653) (721) (686) (41) (39) (183) (150) (157) 177 231 (1 390) (1 454) (14) 14
- South Africa (1 694) (1 924) (394) (590) (3) (14) (397) (604) (606) (645) (635) (575) (40) (39) (183) (150) (156) 177 232 (1 287) (1 333) (10) 13
- Rest of Africa (302) (327) (257) (295) (3) (3) (260) (298) (16) (8) (25) (21) (1) (42) (29)
- International (842) (868) (777) (738) (39) (777) (777) (61) (90) (1) (1) (61) (92) (4) 1
Interest expense (1 680) (1 440) (307) (300) (222) (214) (220) (197) (19) (29) (768) (740) (499) (267) (356) (464) (69) (48) (10) 5 (11) (61) 96 143 (849) (692) (63) (8)
- South Africa (1 140) (913) (307) (300) (12) (14) (319) (314) (483) (259) (276) (381) (69) (48) (10) 5 (10) (59) 97 144 (751) (598) (70) (1)
- Rest of Africa (256) (236) (222) (214) (7) (5) (229) (219) (16) (8) (11) (8) (1) (27) (17)
- International (284) (291) (220) (197) (10) (220) (207) (69) (75) (1) (2) (1) (71) (77) 7 (7)
Pre-tax profit 3 434 3 901 773 524 113 368 593 576 (59) (106) 1 420 1 362 (178) 417 1 127 948 364 369 828 774 (16) 10 (35) 6 2 090 2 524 (77) 15
- South Africa 2 448 2 723 773 524 (47) (100) 726 424 (145) 411 809 682 345 373 828 774 (13) 6 (35) 7 1 789 2 253 (68) 46
- Rest of Africa 133 386 113 368 (12) (15) 101 353 (33) 6 46 32 19 (4) (1) 32 33
- International 853 792 593 576 9 593 585 272 234 (3) 4 269 238 (9) (31)
Additional segment information
Analysis of revenue by type
- Sale of goods 67 587 70 228 872 628 7 106 8 251 772 1 186 8 750 10 065 6 274 6 457 46 317 46 248 6 055 5 796 371 2 156 (181) (496) 58 836 60 161 1 2
- Rendering of services 49 252 45 572 15 335 13 801 2 133 2 676 24 220 19 512 110 1 751 41 798 37 740 186 236 6 372 6 228 2 1 823 677 50 656 (15) (5) 7 418 7 793 36 39
External Revenue 116 839 115 800 16 207 14 429 9 239 10 927 24 220 19 512 882 2 937 50 548 47 805 6 460 6 693 52 689 52 476 6 057 5 797 823 677 421 2 812 (196) (501) 66 254 67 954 37 41
Inter-group revenue 18 117 89 117 107 11 697 11 614 2 944 2 656 96 27 1 213 1 160 6 133 (15 670) (15 065) 286 525 (403) (632)
116 839 115 800 16 207 14 447 9 356 11 016 24 220 19 512 882 2 937 50 665 47 912 18 157 18 307 55 633 55 132 6 153 5 824 2 036 1 837 427 2 945 (15 866) (15 566) 66 540 68 479 (366) (591)
Analysis of depreciation, amortisation,
impairments and recoupments (2 838) (3 119) (394) (590) (257) (295) (777) (738) (6) (56) (1 434) (1 679) (622) (653) (721) (686) (41) (39) (183) (150) (157) 177 231 (1 390) (1 454) (14) 14
Depreciation and amortisation (2 575) (2 601) (561) (582) (101) (118) (548) (580) (6) (56) (1 216) (1 336) (637) (540) (690) (662) (37) (34) (184) (144) (117) 177 232 (1 371) (1 265) 12 1
Recoupments and impairments 258 70 211 24 10 11 66 35 287 70 15 2 (20) (5) 1 1 (6) 5 (1) (3) (5) (26) 4
Amortisation and impairment of intangible
assets arising on business combinations (521) (588) (44) (32) (166) (188) (295) (193) (505) (413) (115) (11) (19) (5) (5) (45) (16) (184) 9
Associate income included in pre- tax profits 103 138 5 3 19 30 28 25 52 58 (6) (25) 3 4 39 42 5 49 2 1 3 42 75 9 5
Operating margin % 5,2 5,1 5,9 5,7 8,0 7,0 4,6 5,1 5,5 5,3 4,0 5,0 2,7 2,6 6,6 6,6 40,9 39,5 5,0 5,0
Glossary of terms
Net asset value per share equity attributable to owners of Imperial divided by total ordinary shares in issue net of shares
repurchased (the deferred ordinary shares only participate to the extent of their par value of
0,04 cents).
Net debt is the aggregate of interest-bearing borrowings, non-redeemable, non-participating preference
shares less cash resources.
Net capital expenditure is the aggregate of the expansion and replacement capital expenditure of rental assets and
non-rental assets.
Net working capital is inventories plus trade and other receivables less trade and other payables and provisions.
Operating assets total assets less loans receivable, tax assets, assets of discontinued operations, assets of disposal
group and cash resources in respect of non-financial services segments.
Operating liabilities total liabilities less interest-bearing borrowings, tax liabilities, put option liabilities, liabilities of
discontinued operations and liabilities of disposal groups.
Operating margin (%) operating profit divided by revenue.
Pre-tax profit calculated as profit before tax, impairment of goodwill and profit or loss on sale of investment
in subsidiaries, associates and joint ventures and other businesses.
Return on invested capital (%) this is the return divided by invested capital.
return is calculated by reducing the operating profit by a blended tax rate, which is an average
of the actual tax rates applicable in the various jurisdictions in which Imperial operates, increased
by the share of result of associates and joint ventures.
Invested capital is a 12-month average of - total equity plus non-redeemable, non participating
preference shares plus interest-bearing borrowings less interest bearing long-term receivables
less cash resources in non-financial services businesses.
Weighted average cost calculated by multiplying the cost of each capital component by its proportional weight,
of capital (WACC) (%) therefore: WACC = (after tax cost of debt % multiplied by average debt weighting) + (cost of
equity multiplied by average equity weighting). The cost of equity is blended recognising the
cost of equity in the different jurisdictions in which Imperial operates. This is different from the
prior year where a South African cost of equity was used.
Directors
SP Kana# (Chairman), A Tugendhaft##, (Deputy Chairman), RJA Sparks# (Lead Independent Director), MJ Lamberti (Chief Executive), M Akoojee
(Chief Financial Officer), OS Arbee, MP de Canha, P Cooper#, G Dempster#, T Dingaan#, RM Kgosana#, P Langeni#, MV Moosa##, M Swanepoel,
Y Waja#
# Independent non-executive ## Non-executive
Company Secretary
RA Venter
Group Investor Relations Manager
E Mansingh
Business address and registered office
Imperial Place, Jeppe Quondam, 79 Boeing Road East, Bedfordview, 2007
Share transfer secretaries
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001
Sponsor
Merrill Lynch SA (Pty) Limited, The Place, 1 Sandton Drive, Sandton, 2196
The results announcement is available on the Imperial website: www.imperial.co.za
Date: 22/08/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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