HOSKEN PASSENGER LOGISTICS AND RAIL LIMITED - Reviewed Provisional Condensed Consolidated Results For The Year Ended 31 March 2018

Release Date: 23/05/2018 13:00
Code(s): HPR
 
Wrap Text
Reviewed Provisional Condensed Consolidated Results For The Year Ended 31 March 2018

HOSKEN PASSENGER LOGISTICS AND RAIL LIMITED
(Previously Niveus Invest 17 Proprietary Limited)
Incorporated in the Republic of South Africa
Registration number: 2015/250356/06
JSE share code: HPR
ISIN: ZAE000255907
("HPLR" or "the Company")

REVIEWED PROVISIONAL CONDENSED CONSOLIDATED RESULTS
For the year ended 31 March 2018

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
                                                                           Reviewed     Audited   
                                                                               2018     2017(1)   
                                                                              R'000       R'000   
ASSETS                                                                                            
Non-current assets                                                        1 709 120   1 344 793   
Property, plant and equipment                                             1 462 937   1 319 131   
Goodwill                                                                      8 451       8 451   
Intangible assets                                                                78          57   
Investments in associates                                                    18 343      16 757   
Deferred taxation                                                               414         397   
Non-current receivables                                                     218 897           -   
Current assets                                                              630 598     366 857   
Inventories                                                                  15 714      17 381   
Trade and other receivables                                                 305 319      57 410   
Taxation                                                                      1 435       3 669   
Cash and cash equivalents                                                   308 130     288 397   
Total assets                                                              2 339 718   1 711 650   
EQUITY AND LIABILITIES                                                                            
Equity                                                                    1 406 308     829 570   
Equity attributable to equity holders of the parent                       1 373 692     794 416   
Non-controlling interest                                                     32 616      35 154   
Non-current liabilities                                                     557 397     537 070   
Borrowings                                                                  300 887     293 006   
Post-employment medical benefit liability                                    58 928      68 880   
Deferred taxation                                                           197 582     175 184   
Current liabilities                                                         376 013     345 010   
Trade and other payables                                                    102 558      95 058   
Financial liabilities                                                             -       6 290   
Current portion of borrowings                                               149 323     130 670   
Taxation                                                                      4 340         172   
Provisions                                                                  119 792     112 820   
Total equity and liabilities                                              2 339 718   1 711 650   

(1) The 2017 figures of the Company and its subsidiaries ("Group") have been prepared on the common 
    control accounting method, refer to the notes to the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 MARCH 2018
                                                                         Reviewed    Audited(2)   
                                                                             2018       2017(1)   
                                                                            R'000         R'000   
Revenue                                                                 1 808 406     1 682 964   
Other income                                                                4 501         2 939   
Operating expenses                                                    (1 358 793)   (1 239 967)   
EBITDA                                                                    454 114       445 936   
Depreciation and amortisation                                           (112 076)      (99 569)   
Investment income                                                          22 310        15 000   
Share of profits of associates                                              7 283         6 837   
Finance costs                                                            (39 618)      (38 059)   
Profit before taxation                                                    332 013       330 145   
Taxation                                                                 (86 619)      (88 407)   
Profit for the year                                                       245 394       241 738   
Attributable to:                                                                                  
Equity holders of the parent                                              235 947       228 336   
Non-controlling interest                                                    9 447        13 402   
                                                                          245 394       241 738   

(1) The Group's 2017 figures have been prepared on the common control accounting method, refer to 
    the notes to the condensed consolidated financial statements.
(2) The Group's subsidiaries historically presented their respective Statement of Profit or Loss in 
    terms of the "function method". The Group has elected to present the Statement of Profit or Loss 
    on the "nature method" as this presents more relevant disclosure for the Group and more closely 
    represents how management evaluate the results of the Group.

CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
                                                                             Reviewed   Audited   
                                                                                 2018   2017(1)   
                                                                                R'000     R'000   
Profit for the year                                                           245 394   241 738   
Other comprehensive income:                                                                       
Items that may be reclassified subsequently to profit or loss                                     
Cash flow hedging - current year losses                                         (343)   (6 315)   
Cash flow hedging - amount capitalised to property, plant and equipment         6 633        25   
Taxation relating to cash flow hedging                                        (1 761)     1 761   
Items that may not be reclassified subsequently to profit or loss                                 
Actuarial gains/(losses) on defined benefit plans                              16 863   (3 304)   
Taxation relating to actuarial gains/(losses) on defined benefit plans        (4 722)       925   
Total comprehensive income for the year                                       262 064   234 830   
Attributable to:                                                                                  
Equity holders of the parent                                                  252 617   221 428   
Non-controlling interest                                                        9 447    13 402   
                                                                              262 064   234 830   

                                                             Reviewed 2018     Audited 2017(1) 
                                                           Gross        Net   Gross         Net   
Reconciliation of headline earnings                        R'000      R'000   R'000       R'000   
Earnings attributable to equity holders of the parent               235 947             228 336   
IAS 16 (Profit)/loss on disposal of plant and
equipment                                                  (860)      (619)     797         574   
Headline profit                                                    235 328            228 910   
Earnings per share (cents)                                                                        
Basic                                                                 81.36               78.74   
Diluted                                                               81.36               78.74   
Headline earnings per share (cents)                                                               
Basic                                                                 81.15               78.93   
Diluted                                                               81.15               78.93   
Weighted average number of shares in issue ('000)                                                 
Basic                                                               290 000             290 000   
Diluted                                                             290 000             290 000   
Actual number of shares in issue ('000)                             290 000                   -   

(1) The Group's 2017 figures have been prepared on the common control accounting method, refer to 
    the notes to the condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
                                                                           Reviewed     Audited   
                                                                               2018     2017(1)   
                                                                              R'000       R'000   
Balance at the beginning of the year                                        829 570     714 762   
Shares issued                                                             2 900 000           -   
Share issue costs                                                           (3 538)           -   
Total comprehensive income                                                  262 064     234 830   
Effects of changes in shareholding(1)                                   (1 800 000)           -   
Business combinations                                                             -        (22)   
Dividends                                                                 (781 788)   (120 000)   
Balance at the end of the year                                            1 406 308     829 570   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
                                                                           Reviewed     Audited   
                                                                               2018     2017(1)   
                                                                              R'000       R'000   
Cash flows from operating activities                                      (400 039)     252 588   
Cash generated by operations                                                471 744     463 207   
Investment income                                                             8 930      15 000   
Finance cost                                                               (36 940)    (38 417)   
Changes in working capital                                                    1 791      15 655   
Taxation paid                                                              (63 776)    (82 857)   
Dividends paid                                                            (781 788)   (120 000)   
Cash flows from investing activities                                      (253 026)   (220 013)   
Investment in subsidiary company                                                  -     (9 636)   
Dividends received                                                            5 000       8 900   
Property, plant and equipment                                                                     
- Additions                                                               (259 988)   (223 038)   
- Disposals                                                                   1 962       3 761   
Cash flows from financing activities                                        672 798      13 022   
Ordinary shares issued(2)                                                   649 802           -   
Other liabilities raised                                                    (3 538)           -   
Funding raised                                                              335 228     301 098   
Funding repaid                                                            (308 694)   (288 076)   
Increase in cash and cash equivalents                                        19 733      45 597   
Cash and cash equivalents                                                                         
At the beginning of the year                                                288 397     242 800   
At the end of the year                                                      308 130     288 397   

(1) The Group's 2017 figures have been prepared on the common control accounting method, refer to 
    the notes to the condensed consolidated financial statements.
(2) As part of the restructure of the Group, Ordinary Shares to the value of R1.1 billion where 
    issued to La Concorde Holdings Limited on 1 February 2018 in exchange for cash of R649.8 million 
    and a receivable of R450.2 million ("KWV instalments"). The Company subsequently declared and paid 
    out a dividend of R649.8 million to Shareholders on 1 February 2018, refer to the notes to the 
    condensed consolidated financial statements for further detail on the Group restructure.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PREPARATION AND ACCOUNTING POLICIES

The provisional condensed consolidated financial statements for the year ended 31 March 2018 have been prepared
in accordance with International Financial Reporting Standards ("IFRS"), IAS 34 – Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the South African
Companies Act, No. 71 of 2008 (as amended) and the Listings Requirements of the JSE Limited.

The accounting policies of the Group are consistent with those applied by the Company and its subsidiaries in their
financial statements for the year ended 31 March 2017. The adoption of new standards that are applicable for this
financial year had no impact on the figures presented. Details of the standards adopted will be provided in the
annual financial statements. As required by the Listings Requirements of the JSE Limited, the Group reports
headline earnings in accordance with Circular 2/2015 - Headline Earnings, as issued by the South African Institute
of Chartered Accountants.

These provisional condensed consolidated financial statements were prepared under the supervision of the
Chief Financial Officer, Mr Mark Wilkin CA(SA).

GROUP RESTRUCTURE AND SHARE ISSUE

On 1 February 2018, the Company acquired 100% of the issued share capital of HPL and R Investments Proprietary
Limited, which holds 100% of Golden Arrow Bus Services Proprietary Limited ("GABS") (which in turn, has various
subsidiaries) and 76% of Eljosa Travel and Tours Proprietary Limited, from Hosken Consolidated Investments Limited
("HCI") for a consideration of R1.8 billion, which was settled by the allotment and issue of shares, constituting approximately
62% of the issued share capital of the Company. At year-end, the remaining approximately 38% of the issued share capital
of the Company was held by La Concorde Holdings Limited ("La Concorde"), a subsidiary of Niveus Investments Limited
("Niveus). As holding company of Niveus, HCI remained the controlling shareholder of the Group at year-end with an
effective holding of approximately 73.5%.

On 13 April 2018, La Concorde unbundled its holding of approximately 38% of the issued share capital of the
Company to its shareholders by way of a distribution in specie, pro rata to their respective holdings in La Concorde,
resulting in Niveus thereafter holding approximately 22% of the issued share capital in the Company. On 30 April 2018,
Niveus unbundled its approximate 22% shareholding in the Company to its shareholders by way of a distribution in
specie, pro rata to their respective holdings in Niveus.

Following the Niveus and La Concorde unbundlings, HCI still remains the controlling shareholder of the Group and its
effective shareholding remains approximately 73.5%.

The Company successfully listed on the Main Board of the JSE on 24 April 2018.

COMMON CONTROL ACCOUNTING

The restructure of the Group, prior to its listing on the JSE, is a common control transaction as HCI remains the ultimate
controlling shareholder of the Group. As such IFRS 3 does not apply due to common control.

The Group has therefore applied predecessor accounting to its consolidated financial statements with the effect that the
assets and liabilities of the subsidiaries acquired under the Group restructure are recognised under the predecessor
value method and carried at historical carrying values, with no goodwill being recognised and a common control reserve
arising on the Group restructure. This treatment requires that the comparative figures are presented as if the common
control transaction had taken place at the start of the first reporting period presented i.e. 1 April 2016.

OPERATING SEGMENTS

The directors have considered the implications of IFRS 8: Operating segments and are of the opinion that the operations
of the Group constitute one operating segment, being the provision of bus services within South Africa. Resource
allocation and operational management is performed on an aggregate basis. Performance is measured based on profit
or loss before tax as shown in internal management reports that are reviewed by the Chief Operating Decision-Maker,
who is the Group's Chief Executive Officer.

REVIEW OF THE INDEPENDENT AUDITOR

The provisional condensed consolidated financial statements for the year ended 31 March 2018 have been reviewed
by BDO Cape Incorporated, who expressed an unmodified review conclusion. The auditor's report does not necessarily
report on all of the information contained in the 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 issuer's registered office.

COMMENTARY AND RESULTS

The year ending 31 March 2018 will be remembered for its challenging operational conditions. The drought in the
Western Cape, as well as political turmoil, have all affected the region's economy.

Although the Group's revenue showed growth of 7.5% from the prior year, EBITDA only increased by 1.8% and net profit
after tax by 1.5%, and is mainly attributable to the rising fuel and employee costs in the industry. The increase in revenue
was largely due to passenger growth due to the intermittent failure of the Metrorail system in the Cape Metropole. The rise
in operational costs were partially mitigated by management interventions which included personnel savings, unproductive
kilometre cancellations and efficiencies introduced in service and maintenance disciplines.

The rise in the depreciation cost is in line with the increase in the capitalisation of the bus fleet in the current financial
year, which also resulted in the increase in borrowings of R26 million from the prior year. Further capital intensive
projects included the introduction of a company-wide modern electronic ticket system and the construction of a state-of-
the-art training centre by the Group's major subsidiary GABS.

The increase in non-current receivables (short-term portion included in trade and other receivables) is due to the KWV
Instalments (R237.5 million maturing 1 October 2018 and R257.7 million maturing on 1 October 2019) ceded to the
Company as part of the Group's restructuring. For further information on the restructuring shareholders are referred
to the circular published by Niveus on 18 December 2017.

DIVIDEND TO SHAREHOLDERS

The directors have not declared a final dividend for the full year, as dividends of R131.9 million were declared and paid to
shareholders from income reserves in November 2017. In addition, a dividend of R649.8 million was paid out to Shareholders
on 1 February 2018, as part of the restructure and capitalisation of the Group. In future, the Company aims, in line with the
dividend policy disclosed in its pre-listing statement dated 15 March 2018, to declare and pay 50% of its annual profit after
tax as a dividend to shareholders, subject to working capital requirements and capital expenditure required for expansion and
maintenance.

For and on behalf of the board of directors

FE Meyer                                               ML Wilkin
Chief Executive Officer                                Chief Financial Officer

23 May 2018

CORPORATE INFORMATION

Directors

Y Shaik* (Chairman)
TG Govender* (Deputy Chairman)
FE Meyer (Chief Executive Officer)
ML Wilkin (Chief Financial Officer)
L Govender (Lead Independent Director)(#)*
NB Jappie(#)*
KF Mahloma(#)*
*   Non-executive
(#) Independent

All Directors were appointed during the year under review.

Registered Address

103 Bofors Circle
Epping Industria
Cape Town, 7460

Company Secretary

HCI Managerial Services Proprietary Limited
(Registration number: 1996/017874/07)
Suite 801
76 Regent Road
Sea Point
Cape Town, 8005
(PO Box 5251, Cape Town, 8000)

Auditors

BDO Cape Inc.
6th Floor, 123 Hertzog Boulevard
Foreshore
Cape Town, 8001
(PO Box 3883, Cape Town, 8000)

Transfer Secretaries

Computershare Investor Services Proprietary Limited
(Registration number: 2004/003647/07)
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)

Sponsor

PSG Capital Proprietary Limited
(Registration number: 2006/015817/07)
1st Floor, Ou Kollege
35 Kerk Street
Stellenbosch, 7600
(PO Box 7403, Stellenbosch, 7599)

and at

2nd Floor, Building 3
11 Alice Lane
Sandhurst
Sandton, 2196
(PO Box 650957, Benmore, 2010)

Website address
www.hplr.co.za
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