Wrap Text
Imperial Holdings Limited Preliminary Summarised Audited Results for the year ended 30 June 2018
IMPERIAL HOLDINGS LIMITED
Registration number: 1946/021048/06
Ordinary share code: IPL
ISIN: ZAE000067211
Preference share code: IPLP
ISIN: ZAE000088076
("Imperial Holdings" or "company" or "group")
IMPERIAL HOLDINGS LIMITED PRELIMINARY SUMMARISED AUDITED RESULTS
FOR THE YEAR ENDED 30 JUNE 2018
Imperial Holdings is a JSE listed South African holding company, employing over 48 000 people in 33 mainly
African and Eurozone countries, operating exclusively in the logistics and vehicle sectors, as:
- Imperial Logistics: a mainly African and European provider of integrated outsourced value-adding logistics,
supply chain and route-to-market solutions, customised to ensure the relevance and competitiveness of its
clients, generating 40% and 44% of group* revenue and operating profit respectively, with 67% of operating
profit generated outside South Africa; and
- Motus: an integrated motor vehicle group, operating across the value chain (import, distribution, retail,
rental, aftermarket parts and vehicle-related financial services) generating 60% and 56% of group* revenue
and operating profit respectively, with 14% of operating profit generated outside South Africa.
* Excludes head office and eliminations.
At a glance
Imperial Logistics
Overview and key investment highlights
Imperial Logistics is an integrated outsourced logistics service provider with a diversified presence across Africa
and Europe. With its strong regional growth platforms, specialist capabilities customised to serve multinational clients
in attractive industry verticals, and asset-right” business model, Imperial Logistics is expected to deliver sustainable
revenue growth, enhanced profitability and a stable dividend. Improvements in asset mix and cash flow, and plans to
achieve targeted returns on capital in excess of weighted average cost of capital (WACC), will support this expectation.
Ranked in the top 25 global third-party logistics (3PL) providers as published by Armstrong & Associates Inc
(#15 for land-based revenue in 2017), with a presence in 33 countries on five continents and approximately
30 000 employees, Imperial Logistics' key investment highlights include:
- Track record for consistent growth: proven ability to acquire, develop and leverage specialist capabilities to
establish growth platforms in emerging and advanced markets;
- Leading positions in regional markets provide platforms for sustainable growth: market leader in South Africa,
a leader in selected industries (consumer packaged goods (CPG) and pharmaceuticals) in the African Regions and
in certain specialised capabilities in Europe;
- Competitive differentiation centred on agility and customisation: specialised capabilities across the value chain
enable customised and integrated solutions, with service offerings and operating models tailored to client
requirements and market maturity;
- Trusted partner to multinational clients: quality contract portfolio in high-growth and defensive industries, with
partnerships demonstrating reach, capabilities, assets, innovation and legitimacy;
- Vision to unlock benefits of one Imperial Logistics”: strategy focused on sustainable revenue growth, enhanced
returns and improved competitiveness, with initiatives to drive substantial organic growth enabled by
differentiated approach to digitalisation and innovation, and enhanced financial flexibility supporting
selective acquisitive growth;
- "Asset-right" business model underpins financial profile: more optimal asset mix and targeted returns on capital,
support prospects for sustainable revenue growth and enhanced profitability; and
- Strong and committed leadership: highly experienced, long-serving management team and a strong independent board.
Motus
Overview and key investment highlights
Motus is a diversified (non-manufacturing) service provider to the automotive sector with unrivalled scale and scope
in South Africa, and a selected international presence in the United Kingdom and Australia. Motus' unique business model
is fully integrated across the motor value chain - Import and Distribution, Retail and Rental, Motor Related Financial
Services and Aftermarket Parts. This business model provides diversified service offerings, significant annuity earnings
underpin, maximises revenue and income opportunities, and provides returns in excess of WACC, enabling Motus to maintain
sustainable free cash flow and pay an attractive dividend.
Supported by over 18 300 employees and as southern Africa's largest vehicle group, Motus' key investment highlights
include:
- Diversified (non-manufacturing) service provider in the automotive sector with a leading position in South Africa and
selected international presence (UK and Australia);
- Fully integrated business model across the vehicle value chain - Import and Distribution, Retail and Rental, Motor
Related Financial Services and Aftermarket Parts;
- Unrivalled scale in South Africa underpins a differentiated value proposition to original equipment manufacturers
(OEMs), customers and business partners, providing multiple customer touch points supporting resilience and
customer loyalty through the entire vehicle ownership cycle;
- Access to annuity income streams, sustainable free cash flow generation with best-in-class earnings, return on
invested capital exceeding WACC, providing a platform for an attractive dividend yield;
- Defined organic growth trajectory through portfolio optimisation, continuous operational enhancements and innovation,
with a selective acquisition strategy outside South Africa leveraging best-in-class expertise; and
- Highly experienced management team with deep industry knowledge of regional and global markets, and a proven track
record with years of collective experience.
Motus is reported as a discontinued operation in these results for the financial year ended 30 June 2018.
Group financial highlights
- Record annual revenue up 11% to R128,7 billion
- Operating profit up 6% to R6,4 billion
- EPS up 38% to 1 681 cents per share
- HEPS up 27% to 1 570 cents per share
- Free cash (post-maintenance capital expenditure) up 17% to R5,0 billion (2017: R4,3 billion)
- Free cash conversion ratio of 1,6 times in line with 2017
- Net debt to equity ratio (including preference shares as debt) improved significantly to 50% from 74%
in June 2017 and 84% in December 2017
- Return on equity 15,0% (2017: 12,7%)
- Return on invested capital 12,9% (2017: 11,3%)
- Weighted average cost of capital 9,7% (2017: 9,0%)
- Full-year dividend up 9% to 710 cents per share; 45% of HEPS (2017: 650 cents per share)
Note: ROE, ROIC and WACC are calculated on a rolling 12-month basis, excluding Regent. Total EPS and HEPS excluding
Regent in the prior year.
Results overview
- Imperial produced solid results and recorded an improvement in all key financial metrics in the 12 months to
30 June 2018, supported by acquisitions, increased vehicle sales and a good performance from Motus. Imperial
Logistics performed satisfactorily in mixed trading conditions.
- Excluding businesses held for sale, total revenue and operating profit for the group increased by 13% and 7%
respectively.
- Excluding current and prior period acquisitions and disposals, total revenue and operating profit for the group
increased by 5% and 2% respectively.
- Operating margin declined to 5,0% from 5,2%, resulting from a reduction in sales of luxury vehicle brands in
favour of smaller, lower-margin entry-level vehicles, and the acquisition by Motus of the lower-margin
Pentagon (UK) and SWT (Australia).
- Revenue generated outside South Africa increased 21% to R59,0 billion (45% of group revenue) and operating profit
generated outside South Africa increased 6% to R2,4 billion (37% of group operating profit).
- A full reconciliation from earnings to headline earnings is provided in the group financial performance section.
As reported at the interim results, core earnings is no longer a relevant financial measure and was discontinued
in the 2018 financial year.
- Net working capital of R8,8 billion improved by 2% from R9,0 billion in June 2017. Imperial Logistics working capital
increased by R1,5 billion as debtor and creditor levels normalised to more sustainable levels when compared to F2017.
The acquisitions, mainly Surgipharm, also impacted working capital in F2018. Motus working capital decreased by
R1,7 billion mainly due to a reduction in inventory and improved supplier credit terms. We expect inventory
levels to normalise in H1 F2019.
- Disposals of non-strategic businesses and properties during the 12-month period generated proceeds of R4,2 billion.
Net assets held for sale amounted to R234 million, comprising mainly non-strategic properties in Motus.
- Net debt to equity (including preference shares as debt) improved significantly to 50% from 74% in June 2017 and
84% in December 2017 resulting mainly from cash of R4,2 billion received from the disposal of non-strategic
businesses and properties and a 37% improvement in cash generated from operating activities of R5,7 billion.
- Free cash flow increased by 17% to R5,0 billion from R4,3 billion mainly due to a 37% increase in cash generated
from operating activities of R5,7 billion (2017: R4,2 billion).
- A final cash dividend of 387 cents per ordinary share (2017: 330 cents per share) has been declared.
Environment
Imperial's activities on the African continent produced 64% and 76% respectively of group revenues and operating
profits during the 12 months to June 2018, with the remainder generated mainly in Europe and the United Kingdom.
Trading conditions in Imperial's markets remain mixed.
South Africa
Despite improved sentiment, the economy contracted sharply in the second half of F2018 in South Africa, where R70,0
billion or 55% of group revenue and R4,0 billion or 63% of group operating profit was generated in the 12 months to 30
June 2018. Notwithstanding some monetary easing, high unemployment, low economic growth, tax rate increases and static
household income resulted in consumer affordability remaining under pressure.
The impact of this environment on Imperial Logistics' operating profit, 33% of which is generated in South Africa, has
been depressed volumes and competitive pressures, resulting in contract renewals at lower margins. This business was
also directly impacted by lacklustre consumer spending, high fuel prices and social unrest. The impact on the operating
profit of Motus, approximately 86% of which is generated in South Africa, has been a low-growth trading environment,
where national vehicle unit sales as reported by NAAMSA increased by 2%. The luxury brand segment remains under severe
pressure as consumer affordability constraints and buying down trends continue.
Rest of Africa
The recovery in commodity prices, gradually improving domestic demand and some policy reforms improved economic
prospects in most countries in sub-Saharan Africa, where R12,0 billion or 9% of group revenue and R853 million or
13% of group operating profit was generated in the 12 months to 30 June 2018.
However, the performances of Imperial's businesses in the rest of Africa (predominantly Logistics) were negatively
impacted by subdued growth, recessionary conditions and political instability in certain markets, and the R/USD
exchange rate strengthening by 5% on average during the year. The increasingly competitive and uncertain donor aid
market resulted in lower than expected volumes and reduced margins.
Eurozone, United Kingdom (UK) and Australia
Our international operations generated R46,9 billion or 36% of group revenue and R1,5 billion or 24% of group
operating profit in the 12 months to 30 June 2018.
Economic conditions in Europe were positive. The continuing economic expansion in Europe has resulted in unemployment
in the EU and the Euro area decreasing to below pre-global financial crisis levels. However, certain sectors in which
we operate remain under pressure, eg steel. The US tariffs on Chinese products will likely divert trade flows from China
to Europe, particularly steel, which could push steel prices down further and could result in reduced exports for our
automotive customers. Our German shipping operations were negatively impacted by low water levels on the River Rhine
in the first half of F2018. Hot weather conditions since July 2018 have again resulted in low water levels. Palletways'
performance was hindered by toughening economic conditions in the UK. The new EU emissions regulation stipulating lower
emission thresholds and process for approval, will lead to OEMs reducing vehicle production volumes in H1 F2019,
and negatively impact sales of vehicles manufactured in Europe.
Economic growth and the passenger vehicle market in the UK are being depressed by the uncertainties arising from
Brexit and consumers switching from diesel vehicles to petrol vehicles. Latest forecasts indicate an overall decline in
the UK vehicle market in calendar 2018 with the passenger vehicle market forecast to decline by over 5% and the heavy
commercial vehicles sector by approximately 6%. The Australian vehicle market recorded growth despite being fragmented
and highly competitive, but margins on new vehicles remain under pressure.
Strategy and update on the proposed unbundling
From late 2014, a fundamental transformation was initiated to unlock intrinsic value within the group. Touching every
part of the organisation, the changes sought to retain the entrepreneurial creativity and capital management excellence
that had underpinned the group's past success, while ensuring that the structure, strategies and value propositions of
its divisions were clarified, simplified and focused, for sustainable competitive advantage, growth and returns. This
transformation and development of Imperial was centred around strategic clarity, managerial focus and shareholder insight.
The first was achieved through portfolio rationalisation, the second through organisation structure and the third through
disclosure. The substantial portfolio rationalisation resulted in the group disposing of assets that did not fit the
group and underlying business unit's strategies, or did not generate sufficient returns on capital or executive effort,
and acquiring those that did. Since 2014, as many as 55 businesses and 90 properties were sold that generated revenues
of R14,4 billion, operating profit of R1,1 billion and released capital of R7,0 billion. In total, R5,7 billion was
invested in acquiring 17 strategically aligned high-quality assets that generated revenue of R14,2 billion and operating
profit of R1,0 billion in their first full year of operation, and which are expected to deliver sustainable organic
growth and enhanced returns and cash flows in the future.
The above-mentioned approach exposed the absence of operational synergies and resulted in the group consolidating its
logistics and automotive operating companies and assets within two large, self-sufficient, multinational companies,
Imperial Logistics (from 1 July 2016) and Motus (from 1 January 2017), each with its own board, chief executive officer,
executive committee and increasingly self-sustaining balance sheets, and with decreasing functional support from the
holding company. Appropriate executive management changes were made to accommodate the new structure and the succession
of retiring executives.
The internal separation necessitated a realignment of the group's governance structure and two strong operating boards
were established. To entrench the independence and focus of Imperial Logistics and Motus further, most of the functions
of the Imperial Holdings head office were systematically devolved to the two divisions. Pursuant to more efficient
capital and funding structures, significant effort ensured that each business unit achieved appropriately geared,
independent and self-sustaining balance sheets as evidenced by these results.
In light of the above, the role of Imperial Holdings as the custodian of governance and the provider of capital to the
divisions is no longer necessary. Consequently, and after due consideration to whether the long-term prospects of
Imperial Logistics and Motus will be enhanced by them being separately listed, the board approved the external separation
of the two divisions through the unbundling of Motus. The proposed unbundling, which is expected to be concluded in
Q4 2018, will enable each of the two divisions to operate in a more focused and efficient manner, allowing each of the
businesses to achieve their respective strategic goals, be separately accountable to debt and equity providers and
unlocking value for shareholders over the long term. The unbundling will also provide shareholders with the opportunity
to participate directly in Imperial Logistics and/or Motus.
In the event of the unbundling of Motus, Imperial Logistics and Motus will not have formal credit ratings. No rating
is required as the funding for both Imperial Logistics and Motus can be satisfied by the banking market with no
requirement to access the bond market. The impact of this is immaterial from a cost of funding perspective. The debt
syndication process and refinancing of existing facilities as a result of the proposed unbundling are in process and
on track. Sufficient commitments including an underwriting for the off-shore facilities have been secured for
Imperial Logistics and Motus to facilitate growth, provide flexibility and maintain strong liquidity at competitive
pricing levels.
The bonds were redeemed by utilising existing banking facilities at market value on 6 August 2018 and an offer to
acquire the preference shares was announced on 13 August 2018. We anticipate the buyback to be implemented during
October 2018. Notwithstanding that preference shareholders are not entitled to participate in the unbundling, the
board is of the opinion that the buyback will be an efficient means for Imperial to simplify its capital structure
and preference shareholders to dispose of the preference shares in an orderly and effective manner.
Acquisitions
In F2018 the group expanded its portfolio outside South Africa in both Imperial Logistics and Motus through the
following strategically aligned acquisitions:
- Imperial Logistics acquired 70% of Surgipharm Limited in Kenya for USD35 million (R485 million), effective
1 July 2017. Surgipharm is strategically aligned to accelerate our industry presence and relationships with pharmaceutical
principals on the African continent and provides an excellent platform for further growth in other East African markets.
This acquisition performed slightly below expectation during the period due to political uncertainty and disruptive
elections in Kenya, but still contributed positively;
- Motus acquired Pentagon Motor Holdings, which operates 38 passenger and light commercial vehicle franchises from 21 prime
retail dealerships in the UK, for £26 million (R479 million), effective 1 September 2017. Pentagon supports Motus'
strategy to deploy capital and its vehicle retail expertise in pursuit of growth beyond South Africa, and it complements
our existing commercial vehicle business in the UK. This acquisition performed satisfactorily despite the UK passenger
market being depressed by the convergence of declining UK passenger vehicle sales, market realignment from diesel
vehicles and Vauxhall changing ownership from General Motors to the French PSA group;
- Motus acquired 75% of Australian-based SWT Group Proprietary Limited, which operates 16 dealerships, for AUD24,2 million
(R261 million), effective 1 October 2017. This acquisition performed in line with expectations during the period and
complements our existing dealership footprint in Australia; and
- Motus acquired 60% of Arco Motor Industry Co Limited, a distributor of motor vehicle engine parts based in Taiwan for
R185 million. The acquisition is in line with our strategy to shorten the supply chain in sourcing products for our
route-to-market network in Africa, thereby eliminating costs and improving efficiency in the supply chain.
Disposals
In F2018 the group disposed of the following non-core, strategically misaligned, underperforming or low return on
effort assets:
- The group's interest in and claims against Schirm GmbH, the contract manufacturing service business of Imperial
Chemical Logistics GmbH, and related property transactions for a total cash price of €134 million (R2,0 billion).
The transaction was concluded on 17 January 2018 and payment was received on 30 January 2018;
- Non-strategic properties for proceeds of R1,7 billion. A further 17 properties with a carrying value of R234 million
are held for sale;
- Transport Holdings in Botswana, which released capital of R200 million;
- Laabs GmbH, a €16 million revenue liquid food transporter specialising in liquid chocolate products and raw materials
in Europe, for €2 million (R32 million) in October 2017; and
- Interests in smaller entities in Imperial Logistics amounting to approximately R55 million.
Divisional performance
Imperial Logistics
Performance
Imperial Logistics recorded growth in revenue and operating profit of 3%. Excluding businesses held for sale (mainly
the disposal of Schirm) revenue and operating profit grew 8% and 5% respectively. These results were supported by a solid
performance from our West African healthcare businesses (mainly Eco Health) and CPG business in Mozambique (CIC); the
disposal and closures of some smaller, strategically misaligned businesses in South Africa and African Regions; the
inclusion of the Surgipharm acquisition for the full 12-month period and excellent results from the automotive and
international shipping segments in Logistics International.
Results were partially offset by lower volumes, margin pressures, renewal of contracts at lower margins in South Africa,
the loss of a large public healthcare contract in African Regions, lower operating profit performance from the sourcing
and procurement business (Imres) in African Regions and disappointing performances in the European inland shipping,
retail and industrial businesses. Excluding current and prior year acquisitions and disposals, revenue increased
by 5% and operating profit declined by 1%. Profit before tax improved by 26% as foreign exchange losses mainly in
African Regions were contained to R70 million compared to R216 million in the prior year. Net finance costs reduced
8% due to a significantly improved and strengthened balance sheet, and amortisation of intangibles reduced by 17%
mainly due to the sale of Schirm.
The net debt to equity ratio improved significantly from 122% in the prior year to 50% following the sale of non-core
or underperforming businesses and non-strategic properties, reduced capital expenditure requirements and the
recapitalisation of African Regions. The ROIC of 12,2% compares to 11,5% in the prior year and is above the target
hurdle rate of WACC+3%.
Net capital expenditure increased to R578 million from R492 million in the prior year. Capital expenditure in the
current year comprised mainly replacement of transport fleet in South Africa, reduced by proceeds from asset disposals
of R730 million, including property disposals of R367 million. Property disposals were lower when compared to the prior
period.
Imperial logistics
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 26 511* 5 24 888 3 51 399 49 715* 3
Operating profit (Rm) 1 391 7 1 462 - 2 853 2 764 3
Operating margin (%) 5,2 5,9 5,6 5,6
Return on invested capital (%) 12,2 11,5
Weighted average cost of capital (%) 8,5 7,1
Targeted ROIC (WACC+3%) 11,5 10,1
Debt:equity ratio (%) 50 122
Note: ROIC and WACC are calculated on a rolling 12 month basis. The above table includes businesses held for sale
and eliminations.
* Restated.
Logistics South Africa
Logistics South Africa performed satisfactorily in difficult market conditions, decreasing revenue by 1% and
increasing operating profit by 4%. Excluding businesses held for sale revenue increased by 1% and operating
profit reduced by 1%.
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 8 510 2 7 800 (4) 16 310 16 498 (1)
Operating profit (Rm) 522 13 430 (6) 952 919 4
Operating margin (%) 6,1 5,5 5,8 5,6
Return on invested capital (%) 13,7 12,3
Weighted average cost of capital (%) 11,0 10,6
Targeted ROIC (WACC+3%) 14,0 13,6
Debt:equity ratio (%) 64 40
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table includes businesses held for sale
and eliminations.
Performance was enhanced by a positive contribution from the Itumele Bus Lines acquisition which was included for
12 months, and the disposal and closures of some smaller, strategically misaligned businesses in the current and
prior years. However, the second-half performance was negatively impacted by a further reduction in volumes and
depressed margins. Solid results from the transport and warehousing, and specialised freight businesses contributed
positively to operating profit, which was offset by an underperformance from the CPG businesses, where the ambient
and merchandising segments performed below expectation due to depressed volumes. Challenging market conditions and
a competitive trading environment also resulted in contract renewals at lower margins. The managed solutions
business recorded moderate growth during the year.
ROIC improved to 13,7% from 12,3% mainly due to improved capital management and the sale of strategically
misaligned and underperforming businesses.
The disposal of 30% of Imperial Logistics South Africa to a broad-based black economic empowerment (B-BBEE) partner
is progressing steadily with a selected partner. We expect to announce key terms of a transactionin H1 F2019.
As previously announced, the B-BBEE transaction is not a prerequisite for the potential unbundling of Motus.
Logistics African Regions
Imperial Logistics African Regions performed below expectation with revenue and operating profit increasing by 9% and
3% respectively with a mixed performance across the portfolio. Revenue and operating profit, excluding businesses
held for sale, increased by 19% and 1% respectively.
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 5 551 4 5 272 15 10 823 9 947 9
Operating profit (Rm) 408 4 351 1 759 740 3
Operating margin (%) 7,4 6,7 7,0 7,4
Return on invested capital (%) 17,5 23,8
Weighted average cost of capital (%) 11,1 6,7
Targeted ROIC (WACC+4%) 15,0 10,7
Debt:equity ratio (%) 23 >150
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table includes businesses held for sale
and eliminations.
Results were supported by a good performance from our West African healthcare businesses (mainly Eco Health)
which had record sales during the year. These businesses are leading distributors of pharmaceuticals in Nigeria
and Ghana. The acquisition of Surgipharm contributed positively but performance was depressed by political
uncertainty and disruptive elections in Kenya. The results from the CPG route-to-market business were enhanced
by strong growth in the cross-border trade from South Africa into SADC markets and the disposal of the loss-making
Botswana business (Global Holdings). Certain asset-heavy operations in the transport division were discontinued,
in line with the risk mitigation strategy and the objective to become more asset-right, thereby enhancing returns.
The CPG route-to-market Namibian operations performed satisfactorily in ongoing recessionary conditions. Transport
operations in Namibia are experiencing reduced volumes, exacerbated by the recession, vindicating our strategy to
reduce asset intensity. Our sourcing and procurement business (Imres) delivered an unsatisfactory operating profit
performance compared to the prior year due to increased competition, change in the product mix, uncertainty in aid
and relief markets, and longer lead times in executing orders which resulted in lower margins. However, this business
continues to generate good cash flow and delivers ROIC in line with the targeted hurdle rate. The sub-Saharan
healthcare logistics business was negatively impacted by the loss of a large public healthcare contract.
The average strengthening of the Rand by 5% against the US Dollar also negatively influenced the Rand performance
during the period.
The business was recapitalised during the year resulting in a significantly lower net debt to equity ratio.
ROIC at 17,5% declined from 23,8% mainly due to the underperformance of the sub-Saharan and Kenyan healthcare
logistics businesses and the sourcing and procurement business, an increase in our investment in Eco Health,
from 68% to 87% and normalised working capital.
Logistics International
Logistics International's revenue was flat and operating profit decreased by 1% in Euro, while revenue and
operating profit increased by 4% and 3% respectively in Rand, which weakened by 4% on average against the Euro
during the year. Revenue and operating profit, excluding businesses held for sale (Schirm), increased by 8% and
12% respectively in Rand terms and increased by 4% and 6% respectively in Euro.
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (€m) 788* 3 793 (2) 1 581 1 574* -
Operating profit (€m) 28,8 (2) 45,8 - 74,6 75,3 (1)
Operating margin (%) 3,7 5,8 4,7 4,8
Revenue (Rm) 12 450* 7 11 816 2 24 266 23 270* 4
Operating profit (Rm) 461 3 681 3 1 142 1 105 3
Operating margin (%) 3,7 5,8 4,7 4,7
Return on invested capital (%) 9,6 8,2
Weighted average cost of capital (%) 6,3 5,4
Targeted ROIC (WACC+2%) 8,3 7,4
Debt:equity ratio (%) 56 128
Note: ROIC and WACC are calculated on a rolling 12-month basis. The above table includes businesses held for sale
and eliminations.
* Restated.
The significant driver of growth was the automotive contract logistics business, which grew both new and existing
business during the year. Results were also supported by a good performance from the international shipping
operations. The European inland shipping business underperformed due to low water levels on the River Rhine.
The retail, steel and industrial sub-divisions delivered unsatisfactory results resulting from lower volumes.
Palletways performed below expectations due to toughening economic conditions, and continued competitive pressure
in sub-scale operations.
ROIC improved to 9,6% from 8,2% and is above the targeted WACC+2%.
Divisional performance
Motus
Notwithstanding challenging economic and trading conditions, Motus increased revenue and operating profit by 17% and
9% respectively, with all four sub-divisions recording revenue and operating profit growth. This was mainly due to
competitive vehicle pricing and a strong improvement in entry-level and small SUV vehicle sales in South Africa as
consumers are trading down. As a result, luxury brand sales declined by 20% during the year. The acquisitions of
Pentagon in the UK and SWT in Australia contributed positively to revenue, but at lower margins. Excluding current
and prior year acquisitions and disposals, revenue and operating profit increased by 4%. Profit before tax improved
by 64% resulting from a significant reduction in foreign exchange losses being R43 million compared to R425 million
incurred in 2017 mainly relating to the unwinding of excessive and uneconomical forward cover in Renault. The profit
on sale of R617 million relating to a property in Australia and the 13% reduction in finance costs also boosted
performance.
During the period, in South Africa, Motus grew unit vehicle sales by 7% compared to national unit vehicle sales growth
of 2% as reported by NAAMSA. The Motus passenger and commercial vehicle businesses, including the UK and Australia,
retailed 146 455 (2017: 113 074) new and 81 123 (2017: 70 158) pre-owned vehicles during the 12 months.
Property disposals and consistent levels of investment in vehicles for hire resulted in net capital expenditure
declining by 85% from R2,2 billion in June 2017 to R322 million.
While we have provided separate ROIC, WACC and net debt to equity ratios for each sub-division, these ratios should
not be analysed in isolation as the sub-divisions of Motus operate in a uniquely integrated manner, to optimise client
offerings and market penetration with numerous cross-selling initiatives across the Vehicle value chain.
Motus' debt to equity ratio increased marginally to 50% mainly due to acquisitions, partly enhanced by disciplined
working capital management and proceeds received from the disposal of non-strategic properties.
MOTUS
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 39 678 16 37 981 17 77 659 66 540 17
Operating profit (Rm) 1 716 5 1 877 13 3 593 3 310 9
Operating margin (%) 4,3 4,9 4,6 5,0
Return on invested capital (%) 13,0 11,8
Weighted average cost of capital (%) 10,4 10,1
Targeted ROIC (WACC+3%) 13,4 13,1
Debt:equity ratio (%) 50 46
Note: ROIC and WACC are calculated on a rolling 12-month basis.
Vehicle Import and Distribution
Exclusive South African importer of Hyundai, Kia, Renault and Mitsubishi automotive brands with over
80 000 vehicles imported annually; and Nissan distributorships in four African countries.
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 10 043 10 10 085 12 20 128 18 157 11
Operating profit (Rm) 303 6 485 2 788 728 8
Operating margin (%) 3,0 4,8 3,9 4,0
Return on invested capital (%) 12,7 6,4
Weighted average cost of capital (%) 11,3 10,1
Debt:equity ratio (%) 37 109
Note: ROIC and WACC are calculated on a rolling 12-month basis.
Revenue and operating profit from this sub-division increased by 11% and 8% respectively, as sales volumes
increased by 11% (Hyundai up 4%, Kia up 22% and Renault up 22% per NAAMSA) with our vehicle mix aligned to market
demand resulting from pressure on consumer affordability. The Motus importer segment market share increased from
14% in the prior year to 15%.
At the end of July 2018, Hyundai and Kia forward cover on the US Dollar and Euro imports extends to February 2019
at average rates of R12,89 to the US Dollar and R15,61 to the Euro. New trading arrangements with Renault since
October 2017 have rendered forward cover redundant. With the exception of Renault, Motus' current guideline is
to cover a minimum of seven months forward and up to 75% of annual forecast orders, as stipulated by the South
African Reserve Bank.
The African distributorship business improved its performance from the prior period but is still performing
below expectations due to weak consumer demand mainly in the aftermath of political elections in Kenya. The
capital deployed in these operations has been reduced and the viability of these operations is under review.
During the period, ROIC increased to 12,7% from 6,4%, resulting from increased profitability, a significant
reduction in working capital, lower investment in vehicles for hire and the sale of non-strategic properties.
Vehicle Retail and Rental
South Africa: Represents 23 OEMs through 356 vehicle dealerships including 104 pre-owned, 232 passenger
dealerships and 20 commercial vehicle dealerships, with 118 car rental outlets (Europcar and Tempest).
Internationally: Manages and operates 112 franchise outlets from 68 sites comprising 84 commercial vehicles and
28 passenger car franchise outlets in the UK, 30 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
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 32 359 20 30 400 16 62 759 53 362 18
Operating profit (Rm) 814 4 873 26 1 687 1 478 14
Operating margin (%) 2,5 2,9 2,7 2,8
Return on invested capital (%) 9,4 10,7
Weighted average cost of capital (%) 9,9 10,0
Debt:equity ratio (%) 62 46
Note: ROIC and WACC are calculated on a rolling 12-month basis.
The Vehicle Retail and Rental operations recorded a strong performance, increasing revenue and operating profit
by 18% and 14% respectively, supported by an increase in overall vehicle sales volumes, despite subdued trading
conditions in South Africa and challenging trading conditions in the UK. New and pre-owned retail sales volumes
increased by 33% and 15% respectively, assisted by the inclusion of the UK (Pentagon) and Australian (SWT)
acquisitions which enhanced revenue but reduced margins. In South Africa, margins were enhanced by a realignment
of the importer dealership operating model to unlock value.
The Motus passenger and light commercial vehicle businesses in South Africa experienced a 2% increase in new
vehicle sales units from 51 374 in 2017 to 52 180. Dealerships of the importer brands performed well due to an
increase in sales volumes in Hyundai, Kia and Renault. Higher sales of entry-level hatch vehicles and small
SUVs were recorded compared to lower sales volumes in the luxury brands segment. Reassessment of the dealership
footprint resulted in closure of nine underperforming dealerships during the year. Total pre-owned retail unit
sales declined marginally as consumer preference shifted to new entry-level vehicles instead. The commercial
vehicle business in South Africa recorded a 3% increase in new retail unit sales, increasing revenue and
operating profit. The parts and aftersales segments continue to perform well. As evidenced in the improved
operating margin in SA, the benefits of rationalisation of the dealer network, elimination of cost and
complexity post the consolidation of the motor businesses under one management are starting to show benefits.
Revenue and operating profit of the UK operations increased by 70% and 25% respectively, supported by the
Pentagon acquisition, which improved its performance in the second half. Despite this, the newly acquired
passenger segment of our business performed below expectation and remains under pressure due to Brexit-related
consumer concerns, a reduction in sales of diesel vehicles and Vauxhall changing ownership from General Motors
to the French PSA group. The latter resulted in substantially reduced OEM assistance, which improved in the
second half as PSA implemented its new trading policies. The UK commercial operations performed to expectation
and grew revenue and operating profit by 5% and 1% respectively.
The Australian vehicle market recorded growth in the reporting period but margins on new vehicles remain under
pressure. The Australian operations increased revenue by 26% but operating profit decreased as margins in the
Ford franchise normalised from a high base in the prior year. This was partially offset by the inclusion of
the SWT acquisition which is performing in line with expectations.
Car rental increased its revenue and operating profit by 11% and 15% respectively due to increased vehicle
rental volumes from the inbound and leisure segments, and higher post-rental vehicle sales through Auto
Pedigree. The vehicle rental utilisation was maintained at 71%, while accident costs were lower than the
prior year.
ROIC reduced to 9,4% from 10,7% due to increased working capital and the acquisitions of Pentagon and SWT
auto dealer groups.
Aftermarket Parts
Distributor, wholesaler and retailer of accessories and parts for older vehicles, through 35 owned branches,
43 owned retail stores and a network of 720 franchised outlets (Midas (AAAS), Alert Engine Parts and
Turbo Exchange).
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 3 354 7 3 278 8 6 632 6 153 8
Operating profit (Rm) 205 8 242 12 447 406 10
Operating margin (%) 6,1 7,4 6,7 6,6
Return on invested capital (%) 18,3 20,7
Weighted average cost of capital (%) 11,2 10,8
Debt:equity ratio (%) 91 53
Note: ROIC and WACC are calculated on a rolling 12-month basis.
Revenue and operating profit grew by 8% and 10% respectively, supported by tighter cost control and good
performances from Alert Engine Parts and Beekmans. However, performance was negatively impacted by market
contraction, increased pricing pressure and consumers trading down. The acquisition of 60% of Arco
contributed positively to the performance in the second half.
ROIC decreased to 18,3% from 20,7% due to increased working capital and an investment in a warehouse
facility which was included in invested capital.
Motor Related Financial Services
Manages and administers service, maintenance and warranty plans. Develops and sells value-added products
and services (VAPS) with over 730 000 clients through owned and independent dealers, call centres and
online. Provides fleet management services, differentiation and innovation and a valuable touch point
with our customers across our dealer network.
% change % change
HY1 on HY1 HY2 on HY2 % change
2018 2017 2018 2017 2018 2017 on 2017
Revenue (Rm) 1 083 12 1 083 1 2 166 2 036 6
Operating profit (Rm) 465 2 424 13 889 833 7
Operating margin* (%) 42,9 39,2 41,0 40,9
Return on invested capital (%) 69,5 65,7
Weighted average cost of capital (%) 13,6 13,8
Debt:equity ratio (%) (136)** (116)
Note: ROIC and WACC are calculated on a rolling 12-month basis. Includes the VAPS business for all
reporting periods.
* The operating margin reflects various business ventures that yield operating profits without any associated
revenues.
** Includes net cash of R1 426 million.
Motor Related Financial Services grew revenue and operating profit by 6% and 7% respectively, supported by
higher profitability in demo vehicle sales and maintenance funds, and positive growth in the newly branded
M-Sure VAPS operations. Increased sales of monthly versus longer-term service and maintenance plans impacted
the growth of maintenance and warranty contracts on the balance sheet. Arising from the Regent transaction,
the prior year includes once-off income of R46 million included in the VAPS business, which is not included
in the current year.
We continue to focus on growing the fleet management business, building synergies within the retail motor
sub-divisions and improving the sales penetration of our products into other channels.
ROIC increased from 65,7% to 69,5% due to higher profitability during the rolling 12-month period.
Group financial performance
Group profit and loss (extracts)
Total Continuing Discontinued Total Continuing Discontinued Total Continuing
2018 2018 2018 2017 2017 2017 % change % change
Revenue (Rm) 128 683 51 303 77 380 115 889* 49 635* 66 254 11 3
Operating profit (Rm) 6 406 2 813 3 593 6 049 2 739 3 310 6 3
Operating margin (%) 5,0 5,2
Net finance costs (Rm) (1 386) (649) (737) (1 680) (831) (849) (18) (22)
Income from associates (Rm) 90 56 34 103 61 42 (13) (8)
Forex losses (Rm) (93) (50) (43) (619) (194) (425) (85) (74)
Profit on sale of property 639 22 617 212 181 31 201 (88)
Amortisation of intangibles (432) (417) (15) (521) (505) (16) (17) (17)
Other non-operating items (358) (113) (245) (357) (257) (100) (56)
Profit before tax (Rm) 4 866 1 662 3 204 3 187 1 194 1 993 53 39
Tax (Rm) (1 458) (566) (892) (901) (228) (673) 62 148
Net profit after tax (Rm) 3 408 1 096 2 312 2 286 966 1 320 49 13
Net profit for the year
- Regent 279 279
Attributable to
non-controlling interests (Rm) (135) (168) 33 36 (164) 200 (>100) 2
Attributable to shareholders
of Imperial (Rm) 3 273 928 2 345 2 601 802 1 799 26 16
Effective tax rate (%) 30,5 29,2
Return on invested
capital** (%) 12,9 12,2 13,0 11,3 11,5 11,8
Weighted average
cost of capital** (%) 9,7 8,5 10,4 9,0 7,1 10,1
* Restated
**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. The group WACC calculation is a weighted
average of the respective sub-divisional WACCs. See glossary of terms. 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).
Excluding acquisitions and disposals in both the current and prior period, revenue and operating profit for the group
increased by 5% and 2% respectively.
Total profit before tax increased by 53% or R1 679 million and was impacted by the following:
- The increase in group operating profit of R357 million;
- Net finance costs decreased by R294 million due to lower average debt levels;
- Foreign exchange losses decreased by R526 million to R93 million. Foreign exchange losses in Imperial Logistics
(mainly in African Regions due to the strong Rand) were contained to R50 million against R194 million in the prior
period. In Motus, losses of R43 million compared to a loss of R425 million, due to the unwinding of uneconomical
and excessive cover in the prior year;
- Profit on sale of properties amounted to R639 million resulting in an increase of R427 million from the prior year.
The sale of the property in Australia, which was the largest property sale during the year, contributed R616 million;
- Amortisation of intangibles arising from business combinations decreased by R89 million due to certain intangible
assets being fully amortised in F2017, and the sale of Schirm; and
- Other non-operating items were in line with the prior period at R358 million and mainly comprise the following:
- A positive remeasurement of contingent liabilities of R31 million;
- A positive remeasurement on the put option liability resulting in a gain of R42 million;
- Business acquisition costs of R18 million;
- Loss on sale of subsidiaries, mainly Schirm, of R149 million;
- Impairment on the sale of Jurgens of R173 million; and
- Goodwill impairments of R75 million.
In total, R173 million relating to the sale of Jurgens is a once-off item that negatively impacted HEPS performance
in F2018. Excluding the impact of Jurgens, HEPS excluding Regent is up 33%.
The effective tax rate for the group at 30,5% is higher than 29,2% in 2017, mainly due to non-deductibility of
losses on the sale of businesses in the current period.
Non-controlling interest increased compared to the comparative year due to improved results from Renault and
Eco Health. Recent acquisitions of Surgipharm, Itumele Bus Lines and SWT also contributed to the increase.
The prior year includes losses relating to the minorities arising in Renault and TATA.
Reconciliation from earnings to headline earnings
June June %
R million 2018 2017 change
Net profit attributable to Imperial shareholders (earnings) 3 273 2 601 26
Profit on disposal of assets/investments (804) (320)
Impairments of goodwill and other assets 226 219
Loss on sale of subsidiaries and businesses 147 151
Tax effects of headline earnings adjustments 221 66
Other (6) (17)
Headline earnings 3 057 2 700 13
The table reflects the total group operations including Motus, and Regent in F2017.
Earnings and headline earnings per share
June June %
R million 2018 2017 change
Total EPS 1 681 1 339 26
Continuing EPS (Logistics) 477 412 16
Motus EPS 1 204 809 49
EPS excluding Regent 1 681 1 221 38
Regent EPS 118
Total HEPS 1 570 1 390 13
Continuing HEPS (Logistics) 543 379 43
Motus basic HEPS 1 027 861 19
HEPS excluding Regent 1 570 1 240 27
Regent HEPS 150
The table reflects the total group operations.
Financial position (extracts)
June June %
R million 2018 2017 change
Goodwill and intangible assets 9 805 9 529 3
Property, plant and equipment 9 829 10 371 (5)
Investment in associates and joint ventures 1 100 1 002 10
Transport fleet 5 358 5 560 (4)
Vehicles for hire 3 924 3 963 (1)
Investments and other financial assets 859 805 7
Net working capital 8 761 8 956 (2)
Deferred tax asset 405 394 3
Current tax liability (219) (7)
Properties held for sale 234 979
Net debt (11 125) (14 647) (24)
Non-redeemable, non-participating preference shares (441) (441)
Other liabilities (5 365) (6 203) (16)
Total shareholders' equity 23 125 20 261
Total assets 70 503 68 853
Total liabilities (47 378) (48 592)
Above table includes Motus and Logistics for F2017 and F2018.
The most significant factors impacting the financial position at 30 June 2018 were:
- The Rand weakening by 5% to the US Dollar and 7% to the Euro. This resulted in the overall balance sheet
increasing with a net R538 million increase in the foreign currency translation reserve attributable to
shareholders;
- The disposals of Schirm and Transport Holdings resulted in operating assets of R2 598 million and operating
liabilities of R627 million being disposed of;
- Assets held for sale decreased by R745 million due to the disposal of properties; and
- The acquisitions of Surgipharm (R485 million), Pentagon (R479 million), SWT (R261 million) and Arco (R185 million)
during the year, and purchasing a further 19% in Eco Health (R581 million). The acquisitions added a further
R157 million of on balance sheet net debt at acquisition.
Goodwill and intangible assets increased by 3% to R9,8 billion mainly due to the following:
- Acquisitions of R1,1 billion, mainly Pentagon (R189 million), SWT (R213 million) and Surgipharm (R341 million)
to goodwill and in total, R243 million to intangible assets;
- The weakening of the Rand resulted in a R480 million increase;
- Disposals resulted in a R754 million decrease to goodwill and intangible assets; and
- Amortisation decreased intangible assets by R560 million.
Property, plant and equipment (PPE) decreased by 5% to R9,8 billion mainly affected by the following:
- PPE related to the disposal of Schirm GmbH and Transport Holdings Botswana, both amounting to R1,0 billion;
- R413 million increase due to the purchase of Surgipharm, Pentagon and SWT;
- Currency adjustments resulted in an increase of R172 million; and
- Impairments of R115 million.
Transport fleet decreased by 4% or R202 million mainly due to the net disposal of assets through the disposal of
Schirm and Transport Holdings Botswana amounting to R144 million, in addition, the value of disposals and
depreciation are higher than the capital expenditure.
Vehicles for hire were in line with the prior year as less was invested in vehicles for hire by the Vehicle, Import
and Distribution sub-division.
Net working capital of R8,8 billion improved by 2% from R9,0 billion in June 2017. Logistics working capital
increased by R1,5 billion as debtor and creditor levels normalised to more sustainable levels when compared to F2017.
The acquisitions, mainly Surgipharm, also impacted working capital in F2018. Motus' working capital decreased by
R1,7 billion mainly due to a reduction in inventory and improved supplier credit terms. We expect inventory levels
to normalise in H1 F2019.
Movement in equity for the 12 months to June 2018
R million 2018
Net profit attributable to Imperial shareholders 3 273
Net profit attributable to non-controlling interests 135
Increase in the foreign currency translation reserve 538
Increase in the hedge accounting reserve 184
Remeasurement of defined benefit obligations net of tax (67)
Movement in share-based reserve net of transfers to retained earnings 17
Dividends paid (1 285)
Non-controlling interests (buy out) (102)
Non-controlling interest acquired, net of disposals and shares issued 350
Non-controlling share of dividends (193)
Shares repurchased net of shares used to settle share-based equity schemes 14
Total change 2 864
Cash flow
June June %
R million 2018 2017 change
Cash generated by operations before movements in
working capital 8 721 8 388 4
Movements in net working capital (excludes currency
movements and net acquisitions) 811 688
Cash generated after working capital movements 9 532 9 076
Interest paid (1 386) (1 670)
Tax paid (1 336) (1 520)
Cash generated by operations before capital
expenditure on rental assets 6 810 5 886 16
Capital expenditure on rental assets (1 079) (1 709)
Cash flows from operating activities 5 731 4 177 37
Net disposal (acquisitions) of subsidiaries and businesses 859 (1 687)
Capital expenditure (non-rental assets) 240 (954)
Net movement in associates, investment, loans and non-current
financial instruments (209) 326
Cash flows from investing activities 890 (1 939)
Dividends paid (1 478) (1 688)
Hedging of share scheme (362) (10)
Change in non-controlling interest (684) (252)
Capital raised from non-controlling interest 223 149
Repurchase of ordinary shares (113)
Net movement in cross-currency swaps (152)
Cash flows from financing activities (2 566) (1 801)
Decrease in net debt (excludes currency movements
and net acquisitions) 4 055 437
Free cash flow 5 016 4 296 17
Free cash flow to headline earnings (times) 1,6 1,6
Cash generated by operations after working capital movements, interest and tax payments was R6,8 billion
(2017: R5,9 billion), up 16%.
Net working capital movements resulted in an inflow of R811 million, mainly due to a reduction in inventory and
improved supplier credit terms in Motus. We expect inventory levels to normalise in H1 F2019.
Net capital expenditure reduced significantly to R839 million from R2,7 billion in 2017 mainly due to the benefit of
property disposals of R1,7 billion. In addition, there was a reduction in capital expenditure in vehicles for hire in
Motus. Capital expenditure in the prior year included the bulk of the contributions towards the chemical manufacturing
plant and the additional convoys in South America.
The main contributors to the net inflow of R859 million relating to acquisitions and disposals was proceeds received
on the disposal of Schirm (R2,0 billion), which was partially offset by the acquisitions of Pentagon (R479 million),
Surgipharm (R382 million), SWT (R238 million) and Arco (R65 million) during the year.
Dividends amounting to R1,5 billion were paid during the year.
Other significant cash flow items included share buybacks amounting to R113 million, buyout of minorities of
R684 million (mainly Eco Health) and settlement of cross-currency swaps of R152 million. Capital raised from
non-controlling interests of R223 million relates to Renault. The costs associated with the hedging of share
schemes also increased to R362 million.
Liquidity
The group's liquidity position is strong with R13,9 billion of unutilised banking facilities, excluding asset-backed
finance facilities. 80% of the group debt is long term in nature and 52% of the debt is at fixed rates. The group's
blended cost of debt is c.4,8% after tax.
In March 2018, Imperial's Baa3 global scale ratings outlook was changed to stable by Moody's after being placed under
review for downgrade on 29 November 2017 in line with the sovereign rating. The group's international and national
scale credit ratings by Moody's are Baa3 and Aa1.za.
Dividend
A final cash dividend of 387 cents per ordinary share (2017: 330 cents per share) has been declared, bringing the
F2018 dividend to 710 cents per ordinary share (F2017: 650 cents per share). The dividend is in line with our targeted
payout ratio of 45% of HEPS, subject to prevailing circumstances.
Board changes
Messrs Raboijane (Moses) Kgosana and Younaid Waja resigned as independent non-executive directors of the Imperial
board and from the various sub-committees and subsidiaries on which they served on 8 September 2017 and 13 October 2017
respectively. The board thanks Messrs Kgosana and Waja for their contribution to the group and wishes them well.
Former group Chief Executive Officer (CEO) Mr Mark Lamberti resigned with effect from 30 April 2018. Mr Lamberti has
served Imperial with distinction since March 2014, leading a multifaceted portfolio, organisation and management
restructuring, a key objective of which was to accelerate executive development and transformation to align
Imperial’s employee and leadership profile with the economically active demographics of South Africa. The board
thanks Mr Lamberti for his excellent leadership and commitment to the group, and wishes him well.
Mr Osman Arbee was appointed group CEO with effect from 1 May 2018, in addition to his position as CEO of Motus.
As previously announced, Mr Arbee is currently on medical leave and is expected to return to work in January 2019
to continue in his role as CEO of Motus. During his recovery period, he will be available to management to advise
on strategic matters. In the interim, the proposed unbundling of Motus remains on track and the management structures
of both Imperial Holdings and Motus, and the current Motus finance structure, are sufficient to provide appropriate
support during Mr Arbee's absence. Mr Ockert Janse van Rensburg was appointed acting CEO of Motus in addition to his
role as the Chief Financial Officer (CFO) of Motus.
Consequently, Mr Mohammed Akoojee was appointed acting CEO of Imperial Holdings, in addition to his role as the CFO,
until the conclusion of the proposed unbundling.
Mr Marius Swanepoel will continue to serve as the CEO of Imperial Logistics and will undertake the role of the CEO of
Imperial which will be renamed Imperial Logistics on conclusion of the proposed unbundling. Mr Swanepoel will retire as
CEO in June 2019 and will remain as director to 31 December 2019. Mr Akoojee will succeed Mr Swanepoel as CEO with
effect from 1 July 2019.
Prospects
Over the past 12 months, the group has produced solid financial results in testing trading conditions, while
approaching the final stages of one of the most comprehensive organisation renewals by a South African-based multinational.
We anticipate that both Imperial Logistics and Motus will deliver solid operating and financial results in the
financial year to June 2019, subject to stable currencies in the economies in which each operates.
For the financial year to June 2019, we expect:
- Imperial Logistics and Motus will have appropriate capital structures, with minimal impact on funding and costs, to
enable each to fund its own growth and strategic aspirations while continuing to pay a stable dividend (approximately
45% of HEPS);
- Imperial Logistics and Motus to record growth in revenues and operating profit; and
- Growth in headline earnings per share for Imperial Logistics and Motus, subject to any once-off costs relating to the
proposed unbundling.
Appreciation
As we are approaching the possible end of an era and potentially the last financial reporting year for Imperial
Holdings in its current structure, we extend gratitude to 48 339 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 four years was among the most complex and ambitious in South African business.
A particular thanks is extended to our previous leaders, management, colleagues and co-directors for their invaluable
guidance and counsel during the 70-year history of one of South Africa's most extraordinary companies.
Finally, we thank our owners and funders for their continued support through the years.
Mohammed Akoojee
Acting Chief Executive Officer and Chief Financial Officer
20 August 2018
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 2018
Preference shareholders
Notice is hereby given that a gross final preference dividend of 416,62500 cents per preference share has been
declared by the board of Imperial, payable to the holders of the 4 540 041 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 333,30000 cents per share.
Ordinary shareholders
Notice is hereby given that a gross final ordinary dividend in the amount of 387,00000 cents per ordinary share has
been declared by the board of Imperial, payable to the holders of the 201 971450 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 309,60000 cents per share.
The company has determined the following salient dates for the payment of the preference dividend and ordinary
dividend:
2018
Last day for preference shares and ordinary shares respectively to trade
cum preference dividend and cum ordinary dividend Tuesday, 25 September
Preference and ordinary shares commence trading ex preference dividend
and ex ordinary dividend respectively Wednesday, 26 September
Record date Friday, 28 September
Payment date Monday, 1 October
The company's income tax number is 9825178719.
Share certificates may not be dematerialised or rematerialised between Wednesday, 26 September 2018 and
Friday, 28 September 2018, both days inclusive.
On Monday, 1 October 2018, 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 1 October 2018 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
Monday, 1 October 2018.
On behalf of the board
RA Venter
Group Company Secretary
20 August 2018
Auditor's report
These summarised consolidated financial statements for the year ended 30 June 2018 have been audited by
Deloitte & Touche, who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the consolidated 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 2018
The results of the Motus businesses are presented in the summarised consolidated statement of profit or loss
as discontinued operations. The following shows the combined results of the continuing and the discontinued
operations after eliminating inter-group transactions. Regent's results for 2017 have been included as a
single line item under discontinued operations.
% change Total Continuing Discontinued Total Continuing Discontinued
Con- Dis- operations operations operations operations operations operations
R million Total tinuing continued 2018 2018 2018 2017* 2017 2017
Revenue 11 3 17 128 683 51 303 77 380 115 889 49 635 66 254
Net operating expenses (119 842) (47 408) (72 434) (107 311) (45 772) (61 539)
Profit from operations
before depreciation
and recoupments 8 841 3 895 4 946 8 578 3 863 4 715
Depreciation, amortisation,
impairments and recoupments (2 435) (1 082) (1 353) (2 529) (1 124) (1 405)
Operating profit 6 3 9 6 406 2 813 3 593 6 049 2 739 3 310
Recoupments from sale
of properties,
net of impairments 639 22 617 212 181 31
Amortisation of
intangible assets
arising on business
combinations (432) (417) (15) (521) (505) (16)
Foreign exchange losses (93) (50) (43) (619) (194) (425)
Other non-operating items (358) (113) (245) (357) (257) (100)
Profit before net
finance costs 6 162 2 255 3 907 4 764 1 964 2 800
Net finance cost (18) (22) (13) (1 386) (649) (737) (1 680) (831) (849)
Profit before share
of results of
associates and
joint ventures 4 776 1 606 3 170 3 084 1 133 1 951
Share of results
of associates
and joint ventures 90 56 34 103 61 42
Profit before tax 4 866 1 662 3 204 3 187 1 194 1 993
Income tax expense (1 458) (566) (892) (901) (228) (673)
Net profit for the year 49 13 75 3 408 1 096 2 312 2 286 966 1 320
Net profit for the year
- Regent 279 279
33 13 45 3 408 1 096 2 312 2 565 966 1 599
Net profit attributable to:
Owners of Imperial 3 273 928 2 345 2 601 802 1 799
Non-controlling interests 135 168 (33) (36) 164 (200)
3 408 1 096 2 312 2 565 966 1 599
Earnings per share (cents)
Basic 26 16 30 1 681 477 1 204 1 339 412 927
- Excluding Regent 38 16 49 1 681 477 1 204 1 221 412 809
- Regent 118 118
Diluted 25 15 30 1 634 463 1 171 1 302 401 901
- Excluding Regent 38 15 49 1 634 463 1 171 1 187 401 786
- Regent 115 115
Headline earnings
per share (cents)
Basic 13 43 2 1 570 543 1 027 1 390 379 1 011
- Excluding Regent 27 43 19 1 570 543 1 027 1 240 379 861
- Regent 150 150
Diluted 13 43 2 1 526 527 999 1 351 368 983
- Excluding Regent 27 43 19 1 526 527 999 1 205 368 837
- Regent 146 146
* Restated revenue and net operating expense, refer to note 3.1.
The cash flows of the Motus businesses were as follows:
2018 2017
Cash flows from operating activities 4 312 1 272
Cash flows from investing activities (61) (591)
Cash flows from financing activities (3 623) (273)
Summarised consolidated statement of profit or loss
for the year ended 30 June 2018
R million Notes % change 2018 2017*
Continuing operations
Revenue 3 51 303 49 635
Net operating expenses (47 408) (45 772)
Profit from operations before depreciation and recoupments 3 895 3 863
Depreciation, amortisation, impairments and recoupments (1 082) (1 124)
Operating profit 3 2 813 2 739
Recoupments from sale of properties, net of impairments 22 181
Amortisation of intangible assets arising on business
combinations (417) (505)
Foreign exchange losses (50) (194)
Other non-operating items 7 (113) (257)
Profit before net finance costs 2 255 1 964
Net finance cost 8 (22) (649) (831)
Profit before share of results of associates and joint ventures 1 606 1 133
Share of results of associates and joint ventures 56 61
Profit before tax 1 662 1 194
Income tax expense (566) (228)
Profit for the year from continuing operations 13 1 096 966
Discontinued operations 2 312 1 599
Profit for the year from Motus (held for distribution
to owners of Imperial) 75 2 312 1 320
Profit for the year from Regent 279
Net profit for the year 3 408 2 565
Net profit attributable to:
Owners of Imperial 3 273 2 601
- Continuing operations 928 802
- Discontinued operations 2 345 1 799
Motus 2 345 1 571
Regent 228
Non-controlling interest 135 (36)
- Continuing operations 168 164
- Discontinued operations (33) (200)
Motus (33) (251)
Regent 51
Earnings per share (cents)
Continuing operations
- Basic 16 477 412
- Diluted 15 463 401
Discontinued operations
- Basic 1 204 927
Motus 49 1 204 809
Regent 118
- Diluted 1 171 901
Motus 49 1 171 786
Regent 115
Total operations
- Basic 26 1 681 1 339
- Diluted 25 1 634 1 302
* Represented for discontinued operation. Restated revenue and net operating expense, refer to note 3.1.
Summarised consolidated statement of comprehensive income
for the year ended 30 June 2018
R million 2018 2017
Net profit for the year 3 408 2 565
Other comprehensive income (loss) 655 (405)
Items that may be reclassified subsequently to profit or loss 722 (521)
Exchange gains (losses) arising on translation of foreign operations 538 (724)
Reclassification of gain on disposal of investment in associate (8)
Movement in hedge accounting reserve 301 244
Income tax relating to items that may be classified to profit or loss (117) (33)
Items that may not be reclassified subsequently to profit or loss (67) 116
Remeasurement of defined benefit obligations (75) 199
Income tax on remeasurement of defined benefit obligations 8 (83)
Total comprehensive income for the year 4 063 2 160
Total comprehensive income attributable to:
Owners of Imperial 3 899 2 209
Non-controlling interest 164 (49)
4 063 2 160
Earnings per share information
for the year ended 30 June 2018
%
R million change 2018 2017
Headline earnings reconciliation
Earnings 26 3 273 2 601
Recoupment for the disposal of property, plant and equipment (IAS 16) (809) (323)
Recoupment for the disposal of intangible assets (IAS 38) 5 3
Impairment of property, plant and equipment (IAS 36) 117 32
Impairment of intangible assets (IAS 36) 15 30
Impairment of goodwill (IAS 36) 92 123
Impairment of investment in associates and joint ventures (IAS 28) 8 34
Loss on disposal of subsidiaries and businesses (IFRS 10) 147 151
Remeasurements included in share of result of associates (6)
Reclassification of loss on disposal of available-for-sale
investments (IAS 39) (8)
Tax effects of headline earnings adjustments 221 66
Non-controlling interest share of headline earnings adjustments (6) (9)
Headline earnings 13 3 057 2 700
Headline earnings per share (cents)*
Continuing operations
- Basic 43 543 379
- Diluted 43 527 368
Discontinued operations
- Basic 1 027 1 011
Motus 19 1 027 861
Regent 150
- Diluted 999 983
Motus 19 999 837
Regent 146
Total operations
- Basic 13 1 570 1 390
- Diluted 13 1 526 1 351
Additional information
Net asset value per share (cents) 11 464 10 550
Dividend per ordinary share (cents) 710 650
Number of ordinary shares in issue (million)
- total shares 202,0 201,1
- net of shares repurchased 198,8 196,6
- weighted average for basic 194,7 194,3
- weighted average for diluted 200,3 199,8
Number of other shares (million):
Deferred ordinary shares to convert to ordinary shares 5,8 6,7
* 2017 represented for discontinued operations.
Summarised consolidated statement of financial position
at 30 June 2018
R million Notes 2018 2017 2016
ASSETS
Goodwill and intangible assets 9 8 575 9 529 7 501
Investment in associates and joint ventures 752 1 002 993
Property, plant and equipment 3 042 10 371 11 602
Transport fleet 5 358 5 560 5 953
Deferred tax assets 783 1 509 1 387
Investments and other financial assets 206 805 404
Vehicles for hire 3 963 3 469
Inventories 2 194 16 953 16 717
Tax in advance 364 330 484
Trade and other receivables 9 774 13 353 12 717
Cash resources 2 818 4 499 2 321
Assets held for distribution to owners of Imperial 10 36 637
Assets and businesses held for sale 979 6 287
Total assets 70 503 68 853 69 835
EQUITY AND LIABILITIES
Capital and reserves
Share capital and share premium 1 030 1 030 1 030
Shares repurchased (560) (574) (1 226)
Other reserves 271 24 1 003
Retained earnings 22 050 20 262 19 366
Attributable to owners of Imperial 22 791 20 742 20 173
Put arrangement over non-controlling interest (566) (1 148) (1 307)
Non-controlling interest 900 667 909
Total equity 23 125 20 261 19 775
Liabilities
Non-redeemable non-participating preference shares 441 441 441
Retirement benefit obligation 1 216 1 229 1 531
Interest-bearing borrowings 8 098 19 146 18 396
Maintenance and warranty contracts 3 022 3 156
Deferred tax liabilities 1 137 1 115 881
Other financial liabilities 1 209 1 952 2 335
Trade, other payables and provisions 10 087 21 350 19 630
Current tax liabilities 236 337 673
Liabilities associated with assets held for distribution
to owners of Imperial 10 24 954
Liabilities associated with businesses held for sale 3 017
Total liabilities 47 378 48 592 50 060
Total equity and liabilities 70 503 68 853 69 835
Summarised consolidated statement of changes in equity
for the year ended 30 June 2018
Put
arrangement
Attributable over non- Non-
Share capital Shares Other Retained to owners controlling controlling Total
R million and premium repurchased reserves earnings of Imperial interest interest equity
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
Transfer of reserves
on disposal of
Mix Telematics Limited (108) 108
Movement in of
statutory reserve 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 delivered to
settle share-based
obligations 39 (39)
Share-based equity
reserve hedge cost (222) (222) (222)
Ordinary dividends paid (1 461) (1 461) (1 461)
Cancellation of 7 865 456
ordinary shares 613 (613)
Non-controlling
interest acquired,
net of disposals and
shares issued 119 119
Net decrease in
non-controlling
interest through buyouts (167) (167) 159 (85) (93)
Realisation on disposal of
subsidiaries (198) 258 60 60
Non-controlling interest
share of dividends (227) (227)
At 30 June 2017 1 030 (574) 24 20 262 20 742 (1 148) 667 20 261
Total comprehensive income
for the year 693 3 206 3 899 164 4 063
Share-based cost charged
to profit or loss 219 219 219
Share-based equity reserve
transferred to
retained earnings on vesting 135 (135)
Shares delivered
to settle
share-based obligations 170 (170)
Share-based equity
reserve hedge cost (32) (32) (32)
Ordinary dividends paid (1 285) (1 285) (1 285)
Repurchase of 712 857 shares
at an average cost of
R219 per share (156) (156) (156)
Non-controlling interest
acquired, net of disposals
and shares issued 350 350
Net decrease in
non-controlling
interest through buyouts (596) (596) 582 (88) (102)
Realisation on disposal of
subsidiaries (2) 2
Non-controlling interest
share of dividends (193) (193)
At 30 June 2018 1 030 (560) 271 22 050 22 791 (566) 900 23 125
Summarised consolidated statement of cash flows
for the year ended 30 June 2018
R million Note 2018 2017*
Cash flows from operating activities
Cash generated by operations before movements in net working capital 8 721 8 388
Movements in net working capital 811 688
Cash generated by operations before interest and taxes paid 9 532 9 076
Net finance cost (1 386) (1 670)
Tax paid (1 336) (1 520)
Cash generated by operations before capital expenditure on rental assets 6 810 5 886
Expansion capital expenditure - rental assets (293) (1 118)
Net replacement capital expenditure - rental assets (786) (591)
- Expenditure (4 052) (3 422)
- Proceeds 3 266 2 831
5 731 4 177
Cash flows from investing activities
Acquisition of subsidiaries and businesses (1 211) (1 706)
Disposal of subsidiaries and businesses 2 070 19
Net proceeds from sale of fixed assets - excluding rental assets 1 248 45
Net replacement capital expenditure - excluding rental assets (1 008) (999)
Net movement in other associates and joint ventures 514
Net movement in investments, loans and other financial instruments (209) 188
890 (1 939)
Cash flows from financing activities
Hedge cost premium paid (362) (10)
Settlement of cross-currency swap instruments (152)
Repurchase of ordinary shares (113)
Dividends paid (1 478) (1 688)
Purchase of non-controlling interests (684) (252)
Capital raised from non-controlling interests 223 149
Net (decrease) increase in interest-bearing borrowings (4 382) 613
(6 948) (1 188)
Net (decrease) increase in cash resources (327) 1 050
Effects of exchange rate changes on cash resources in a foreign currency 129 (224)
Cash resources at beginning of year 4 499 3 673
Cash resources at end of year 11 4 301 4 499
* Restated, refer to note 3.2.
Notes to the summarised consolidated financial statements
for the year ended 30 June 2018
1. Basis of preparation
The summarised consolidated financial statements have been prepared in accordance with the framework concepts
and recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its
interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective
for the group at 30 June 2018 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 the minimum requirements of 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 2018.
The directors take full responsibility for the preparation of the summarised consolidated financial statements
and that the financial information has been correctly extracted from the underlying annual financial statements.
These summarised consolidated financial statements and the full set of consolidated annual financial statements
have been prepared under the supervision of R Mumford, CA(SA), and were approved by the board of directors
on 20 August 2018.
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 2017.
3. Restatement of comparative information
3.1 Revenue restatement
Revenue for continuing operations for 2017 has been restated. In 2017, inter-company revenue of R950 million was
incorrectly included in external revenue and as a consequence was not eliminated from the consolidated revenue.
This error originated from the International Logistics segment. The restatement had no impact on profits, cash
flows or the financial position, it only affected revenue and net operating expenses as detailed below:
Statement of profit or loss
R million 2017
Revenue (decrease) (950)
Net operating expenses (decrease) 950
Profit from operations before depreciation and recoupments (no impact)
3.2 Restatement of cash flows
The June 2017 statement of cash flows was restated to exclude short-term loans and overdrafts from cash and
cash equivalents. The movements in short-term loans and overdrafts are now reflected as cash flows under
financing activities as part of the net increase (decrease) in interest-bearing borrowings to facilitate
improved understanding. The impact was an increase in outflow under financing activities of R896 million
as illustrated below. The restatement had no impact on the group's financial position.
Statement of cash flows
R million 2017
Financing activities
Net decrease in interest-bearing borrowings (896)
(896)
4. Presentation of discontinued operations
The result of Imperial's automotive business (Motus) is presented as a single line item in the summarised
consolidated statement of profit or loss under discontinued operations. The assets and related liabilities are
shown under "Assets held for distribution to owners of Imperial" and "Liabilities directly associated with
assets held for distribution to owners of Imperial" on the summarised consolidated statement of financial position.
The summarised consolidated statement of changes in equity and the summarised consolidated statement of cash flows
are shown in total for continuing operations (Imperial Logistics), Motus and Regent for 2017. Further disclosure
for Motus is provided above and in note 10.
Certain notes to the consolidated statement of financial position include movements from Motus in the current
and prior year up until the point of reclassification as held for distribution to owners of Imperial. The notes
to the consolidated statement of profit or loss relate to continuing operations (Imperial Logistics). The
earnings per share information is reconciled in total and distinguishes between continuing and discontinued
operations for the per share values.
5. New and revised IFRS in issue but not yet effective
IFRS that will become applicable to the group in future reporting periods include 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). Details of these standards are outlined in the 30 June 2018 annual
consolidated financial statements. The following updates are provided:
IFRS 9 The group anticipates that the application of IFRS 9 will have no material impact on amounts reported
in respect of the group's financial assets and financial liabilities.
IFRS 15 A detailed review of the potential impact of IFRS 15 has been finalised. The group, especially in the
Logistics operations, has a substantial number of long-term contracts. All material contracts have
been assessed for any impact in terms of the five-step approach. This review shows that there will not
be a material impact on the current measurement of revenue.
IFRS 16 The initial assessment has been done and it is estimated that the right of use asset and lease
liability that will be recognised on adoption of the standard in the continuing operations will
amount to R7,7 billion (Motus: R1,6 billion).
2018 2017
6. Foreign exchange rates
The following major rates of exchange were used in the translation of the
group's foreign operations:
SA Rand:Euro
- closing 16,01 14,92
- average 15,34 14,81
SA Rand:US Dollar
- closing 13,71 13,06
- average 12,86 13,58
SA Rand:Pound Sterling
- closing 18,10 17,02
- average 17,31 17,23
SA Rand:Australian Dollar
- closing 10,13 10,04
- average 9,97 10,24
Rm Rm
7. Other non-operating items
Remeasurement of financial instruments not held for trading 73 (29)
Remeasurement of put option liabilities 42 (39)
Gain on remeasurement of contingent consideration liabilities 31 2
Reclassification of gain on disposal of investment in associate 8
Capital items (186) (228)
Impairment of goodwill (26) (86)
Loss on disposal of subsidiaries, businesses and associates (149) (64)
Business acquisition costs (11) (78)
(113) (257)
8. Net finance cost
Net interest paid (649) (826)
Fair value losses on interest-rate swap instruments (5)
(649) (831)
R million 2018 2017
9. Goodwill and intangible assets
Goodwill
Cost 7 298 7 679
Accumulated impairment (1 077) (985)
6 221 6 694
Carrying value at beginning of year 6 694 5 424
Net acquisition and disposal of businesses 213 2 012
Impairment charge (92) (123)
Currency adjustments 359 (619)
Reclassified to assets held for distribution to owners of Imperial (953)
Carrying value at end of year 6 221 6 694
Intangible assets 2 354 2 835
Goodwill and intangible assets 8 575 9 529
10. Assets and associated liabilities held for distribution to owners of Imperial
The assets and associated liabilities held for distribution to owners of Imperial relate to Motus.
The major classes of assets and liabilities held for distribution to owners of Imperial were as follows:
Assets
Goodwill and intangible assets 1 230
Property, plant and equipment 6 787
Vehicles for hire 3 924
Investments, investment in associates and joint ventures 1 001
Inventory 15 636
Trade and other receivables 5 258
Income tax assets 1 084
Cash resources 1 483
Properties held for sale 234
Assets held for distribution to owners of Imperial 36 637
Liabilities
Interest-bearing borrowings 7 328
Maintenance and warranty contracts 2 846
Trade and other payables and provisions 14 014
Income tax liabilities 672
Other liabilities 94
Liabilities associated with assets held for distribution to owners of Imperial 24 954
11. Cash resources
Cash resources - as disclosed on the statement of financial position 2 818 4 499
Cash resources - included in assets held for distribution to owners of Imperial 1 483
4 301 4 499
12. Fair value of financial instruments
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.
Fair value of financial assets and financial 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
R million value value*
Listed corporate bonds^ 3 548 3 533
Listed non-redeemable non-participating preference shares 441 322
*Level 2 of the fair value hierarchy as derived from a market which is not considered active.
^Redeemed on 6 August 2018, refer to note 15.
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.
R million Level 2 Level 3
Financial assets
Interest-rate swap instruments and foreign exchange contracts (included
in trade receivables) 9
Foreign exchange contracts (included in assets held for distribution
to owners of Imperial) 432
Financial liabilities
Put option liabilities (included in other financial liabilities) 1 015
Contingent consideration liabilities (included in other financial liabilities) 14
Cross-currency and interest-rate swap instruments (included in other
financial liabilities) 22
Foreign exchange contracts (included in trade, other payables and provisions) 15
Foreign exchange contracts (included in liabilities held for distribution to
owners of Imperial) 46
Transfers between fair value hierarchy levels
The group recognises transfers between levels of the fair value hierarchy as at the end of the reporting
period during which the change has occurred. There were no transfers between the fair value hierarchies
during the year.
12. Fair value of financial instruments continued
Movement in level 3 financial instruments measured at fair value
The following table shows a reconciliation of the opening and closing carrying values of level 3 financial
instruments carried at fair value:
Contigent
Put consideration
R million option liabilities liabilities Total
Carrying value at beginning of the year 1 553 45 1 598
Arising on acquisition of business 102 102
Fair value to profit or loss (42) (31) (73)
Settlements (582) (100) (682)
Currency adjustments 86 (2) 84
Carrying value at end of year 1 015 14 1 029
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 include the assumed
probability of achieving profit targets and the discount rates applied. The assumed profitabilities were
based on historical performances but adjusted for expected growth.
Increase Decrease
Carrying in carrying in carrying
R million value value value
FINANCIAL INSTRUMENT AND KEY ASSUMPTION
Put option liabilities / earnings growth 1 015 3 (17)
Contingent consideration liabilities / assumed profits 14 (1)
R million 2018 2017
13. Contingencies and commitments
Capital commitments 216 1 448
Contingent liabilities 415 649
14. Significant related party transactions
As part of the implementation process for separate listing of Imperial's automotive operations, known as
Motus, the following significant transfer of businesses, between related parties within the group occurred
during the year:
Imperial Group Limited transferred its logistics business to Imperial Logistics South Africa Holdings
Proprietary Limited. Imperial Group Limited changed its name to Motus Group Limited.
Imperial Holdings Limited transferred its interest in Motus Group Limited, Motus Corporation Proprietary Limited
and Motus Capital Limited to the newly formed Motus Holdings Limited. Prior to the transfer of Motus Corporation
and Motus Capital to Motus Holdings, Imperial Holdings transferred its automotive subsidiaries in South Africa to
Motus Corporation and its southern African automotive subsidiaries to Motus Capital. Motus Holdings Limited, the
new parent of Motus Group, Motus Corporation and Motus Capital, is the designated entity for separate listing on
the Johannesburg Stock Exchange.
The above transfers of businesses were completed in terms of asset-for-share transactions, at fair value.
The group's consolidated financial statements were not affected by the above transactions as all inter-group
income and expenses were eliminated in full.
15. Events after the reporting period
On 6 August 2018 the group redeemed its listed corporate bonds at market value out of existing facilities at a
premium of R14 million over their carrying value.
On 13 August 2018, the group proposed the repurchase and delisting of the non-redeemable, non-participating
preference shares.
For dividend declarations, refer above.
Business combinations during the year
Businesses
acquired Nature of business Operating segment Date acquired % Rm
Surgipharm Limited Markets and Logistics African Regions Jul 2017 70 485
distributes
pharmaceutical,
medical, surgical
and allied supplies
in Kenya
Pentagon Motor Headquarted in Vehicle Retail and Rental Aug 2017 100 479
Holdings Limited Derbyshire, England,
operates 20 prime retail
dealerships for numerous
leading car and van
manufacturers
SWT Group Based in Australia Vehicle Retail and Rental Sep 2017 75 261
Proprietary Limited operates 16 car
dealerships
Arco Motor Industry Based in Taiwan,
Co Limited retails motor vehicle
engine parts around
the world Aftermarket Parts Mar 2018 60 185
Individually
immaterial acquisitions 119
1 529
Fair value of assets acquired and liabilities assumed at date of acquisition
Individually Individually
immaterial Total immaterial Total
R million Surgipharm acquisitions Logistics Pentagon SWT Arco acquisitions Motus*
Assets
Intangible assets
(excluding goodwill) 191 191 2 43 7 52
Property, plant
and equipment 33 5 38 338 26 4 7 375
Inventories 234 25 259 1 758 255 51 41 2 105
Trade and other receivables 280 34 314 427 55 25 12 519
Income tax assets 5 5 12 11 23
Cash resources 12 5 17 75 23 120 218
755 69 824 2 612 370 243 67 3 292
Liabilities
Interest-bearing borrowings 82 82 69 240 1 310
Other financial liabilities 198 198
Income tax liabilities 35 3 38 4 8 15 27
Trade, other payables and
provisions 234 24 258 2 230 58 26 10 2 324
549 27 576 2 303 306 41 11 2 661
Acquirees' carrying amount
at acquisition 206 42 248 309 64 202 56 631
Non-controlling interests (62) (13) (75) (19) (16) (81) (116)
Net assets acquired 144 29 173 290 48 121 56 515
Purchase consideration
transferred 485 52 537 479 261 185 67 992
Cash paid 393 42 435 479 261 185 67 992
Contingent consideration 92 10 102
Excess of purchase price
over net assets acquired 341 23 364 189 213 64 11 477
*The assets and liabilities of entities acquired by Motus have been reclassified to held for distribution to
owners of Imperial at 30 June 2018.
Reasons for the acquisitions
Reasons for the acquisition are outlined in this report.
Details of contingent consideration
The contingent consideration requires the group to pay the vendors an additional total amount of R102 million
over a period of six to 24 months if the entity's net profit after tax exceeds certain profit targets. The
contingent consideration liability pertaining to Surgipharm was paid during the year.
Acquisition costs
Acquisition costs for business acquisitions concluded during the year for continuing operations amounted to
R2 million (Motus: R6 million) and have been recognised as an expense in profit or loss in the 'Other
non-operating items' line.
Impact of the acquisitions on the results of the group
R million Logistics Motus
acquisitions acquisitions
The contributions of the new acquisitions during the year
were as follows:
Revenue 1 048 8 194
Operating profit 105 119
Profit after tax 48 38
The following was taken into account in arriving at the
profit after tax:
After tax funding cost for the new acquisitions 12 18
Amortisation of intangible assets arising on acquisition 33 3
Had the businesses been acquired at the beginning of the year their
contributions would have been as follows:
Revenue 1 154 10 070
Operating profit 117 132
Profit after tax 56 44
Continuing Discontinued
R million operations operations
The results of the combined continuing operations and the combined
discontinued operations would have been as follows:
Revenue 51 409 79 256
Operating profit 2 825 3 606
Profit after tax 1 104 2 318
Separate identifiable intangible assets
As at the acquisition date, the fair value of the separately identifiable intangible assets for Surgipharm was
R191 million and Arco was R42 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-from-royalty method for the brand name.
The significant unobservable valuation inputs were as follows:
Surgipharm Arco
% %
Brand name/trademark
- Discount rates 17,4 16,9
- Royalty rate 0,8 1,8
Contract-based intangible assets
- Weighted average discount rates 15,0 - 15,8 14,5 - 14,9
- Terminal growth rates 5,6 2,0
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 acquired by Logistics had gross contractual amounts of R382 million of which
R68 million were doubtful. The Motus acquisition had gross contractual receivables of R526 million with
R7 million as 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 - continuing operations
for the year ended 30 June 2018
Profit or loss
Logistics Logistics Logistics
Imperial South Africa African Regions International
R million 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 51 303 49 635 16 324 16 106 10 251 8 647 23 200 21 517
- South Africa 16 214 16 416 16 324 16 106
- Rest of Africa 10 823 9 947 10 251 8 647
- International 24 266 23 272 23 200 21 517
Operating profit 2 813 2 739 950 936 708 702 1 084 972
- South Africa 926 906 950 936
- Rest of Africa 759 740 708 702
- International 1 128 1 093 1 084 972
Depreciation, amortisation,
impairments and recoupments (1 477) (1 448) (509) (386) (288) (239) (643) (637)
- South Africa (526) (407) (509) (386)
- Rest of Africa (297) (260) (288) (239)
- International (654) (781) (643) (637)
Net finance cost (649) (831) (276) (298) (223) (212) (221) (195)
- South Africa (205) (389) (276) (298)
- Rest of Africa (232) (229) (223) (212)
- International (212) (213) (221) (195)
Pre-tax profits* 1 837 1 344 683 771 292 85 702 563
- South Africa 758 659 683 771
- Rest of Africa 332 101 292 85
- International 747 584 702 563
Additional segment information
Analysis of revenue by type
- Sale of goods 9 747 8 751 1 072 860 8 664 7 106
- Rendering of services 41 556 40 884 15 148 15 186 1 523 1 474 23 186 21 517
External revenue 51 303 49 635 16 220 16 046 10 187 8 580 23 186 21 517
Inter-group revenue 104 60 64 67 14
51 303 49 635 16 324 16 106 10 251 8 647 23 200 21 517
Analysis of depreciation,
amortisation, impairments
and recoupments (1 477) (1 448) (509) (386) (288) (239) (643) (637)
Depreciation and amortisation (1 126) (1 204) (539) (553) (80) (83) (491) (487)
Recoupments and impairments 66 261 78 211 (22) 10 25 66
Amortisation of intangible
assets arising from business combinations (417) (505) (48) (44) (186) (166) (177) (216)
Share of results of associates
(included in pre-tax profits) 56 61 7 5 14 19 29 28
Operating margin (%) 5,5 5,5 5,8 5,8 6,9 8,1 4,7 4,5
* Refer to glossary of terms below.
Profit or loss (continued)
Businesses Total Head office
held for sale Eliminations Logistics and eliminations
R million 2018 2017 2018 2017 2018 2017 2018 2017
Revenue 1 717 3 522 (93) (77) 51 399 49 715 (96) (80)
- South Africa 79 469 (93) (77) 16 310 16 498 (96) (82)
- Rest of Africa 572 1 300 10 823 9 947
- International 1 066 1 753 24 266 23 270 2
Operating profit 111 159 (5) 2 853 2 764 (40) (25)
- South Africa 2 (12) (5) 952 919 (26) (13)
- Rest of Africa 51 38 759 740
- International 58 133 1 142 1 105 (14) (12)
Depreciation, amortisation,
impairments and recoupments (21) (166) (7) (6) (1 468) (1 434) (9) (14)
- South Africa (1) (5) (7) (6) (517) (397) (9) (10)
- Rest of Africa (9) (21) (297) (260)
- International (11) (140) (654) (777) (4)
Net finance cost (22) (52) 32 (11) (710) (768) 61 (63)
- South Africa (10) 32 (11) (244) (319) 39 (70)
- Rest of Africa (9) (17) (232) (229)
- International (13) (25) (234) (220) 22 7
Pre-tax profits* 80 17 33 (16) 1 790 1 420 47 (76)
- South Africa 2 (29) 33 (16) 718 726 40 (67)
- Rest of Africa 40 16 332 101
- International 38 30 740 593 7 (9)
Additional segment information
Analysis of revenue by type
- Sale of goods 772 11 12 9 747 8 750 1
- Rendering of services 1 665 2 627 34 44 41 556 40 848 36
External revenue 1 665 3 399 45 56 51 303 49 598 37
Inter-group revenue 52 123 (138) (133) 96 117 (96) (117)
1 717 3 522 (93) (77) 51 399 49 715 (96) (80)
Analysis of depreciation,
amortisation, impairments and
recoupments (21) (166) (7) (6) (1 468) (1 434) (9) (14)
Depreciation and amortisation (15) (87) (7) (6) (1 132) (1 216) 6 12
Recoupments and impairments 81 287 (15) (26)
Amortisation of intangible
assets arising from
business combinations (6) (79) (417) (505)
Share of results of associates
(included in pre-tax profits) 50 52 6 9
Operating margin (%) 5,6 5,6
* Refer to glossary of terms below.
Segmental information - discontinued operations
for the year ended 30 June 2018
Profit or loss
Vehicle Import Vehicle Retail Aftermarket
Motus and Distribution and Rental Parts
R million 2018 2017 2018 2017 2018 2017 2018 2017^
Revenue 77 659 66 540 20 128 18 157 62 759 53 362 6 632 6 153
- South Africa 53 798 50 842 19 144 17 116 40 051 38 850 6 464 6 120
- Rest of Africa 1 199 1 224 984 1 041 176 150 38 33
- International 22 662 14 474 22 532 14 362 130
Operating profit 3 593 3 310 788 728 1 687 1 478 447 406
- South Africa 3 095 2 903 748 730 1 258 1 067 421 409
- Rest of Africa 94 52 40 (2) 54 57 (1) (3)
- International 404 355 375 354 27
Depreciation, amortisation,
impairments and recoupments (751) (1 390) (515) (622) (182) (721) (40) (41)
- South Africa (1 206) (1 287) (495) (606) (657) (635) (40) (40)
- Rest of Africa (62) (42) (20) (16) (42) (25) (1)
- International 517 (61) 517 (61)
Net finance cost (737) (849) (347) (499) (429) (356) (68) (69)
- South Africa (589) (751) (328) (483) (302) (276) (66) (69)
- Rest of Africa (31) (27) (19) (16) (12) (11)
- International (117) (71) (115) (69) (2)
Pre-tax profits* 3 448 2 090 432 (178) 1 842 1 127 388 364
- South Africa 2 516 1 789 435 (145) 935 809 362 345
- Rest of Africa 40 32 (3) (33) 42 46 19
- International 892 269 865 272 26
Additional segment information
Analysis of revenue by type
- Sale of goods 68 668 58 836 7 920 6 274 54 727 46 317 6 540 6 055
- Rendering of services 8 712 7 418 222 186 7 195 6 372 2 2
External revenue 77 380 66 254 8 142 6 460 61 922 52 689 6 542 6 057
Inter-group revenue 279 286 11 986 11 697 837 673 90 96
77 659 66 540 20 128 18 157 62 759 53 362 6 632 6 153
Analysis of depreciation,
amortisation, impairments
and recoupments (751) (1 390) (515) (622) (182) (721) (40) (41)
Depreciation and amortisation (1 340) (1 371) (527) (637) (760) (690) (39) (37)
Recoupments and impairments 604 (3) 12 15 585 (20) 6 1
Amortisation of intangible
assets arising from business
combinations (15) (16) (7) (11) (7) (5)
Share of results of associates
(included in pre-tax profits) 34 42 12 (6) 3 3 15 39
Operating margin (%) 4,6 5,0 3,9 4,0 2,7 2,8 6,7 6,6
* Refer to glossary of terms below.
^ Revenue of R2 271 million was incorrectly included in Vehicle Retail and Rental's inter-group revenue.
2017 had been restated to reallocate the R2 271 million from Vehicle Retail and Rental to Eliminations. The impact
was a decrease in the revenue of Vehicles Retail and Rental with an opposite increase in Eliminations. Motus' total
revenue remained the same.
Profit or loss (continued)
Motor Related Businesses
Financial Services held for sale Eliminations
R million 2018 2017 2018 2017 2018 2017^
Revenue 2 166 2 036 427 (14 026) (13 595)
- South Africa 2 166 2 036 315 (14 027) (13 595)
- Rest of Africa 1
- International 112
Operating profit 889 833 (2) (218) (133)
- South Africa 889 833 (3) (221) (133)
- Rest of Africa 1
- International 1 2
Depreciation, amortisation,
impairments and recoupments (174) (183) 160 177
- South Africa (174) (183) 160 177
- Rest of Africa
- International
Net finance cost (49) (10) (11) 156 96
- South Africa (49) (10) (10) 156 97
- Rest of Africa
- International (1) (1)
Pre-tax profits* 844 828 (16) (58) (35)
- South Africa 844 828 (13) (60) (35)
- Rest of Africa 1
- International (3) 1
Additional segment information
Analysis of revenue by type
- Sale of goods 371 (519) (181)
- Rendering of services 1 098 823 50 195 (15)
External revenue 1 098 823 421 (324) (196)
Inter-group revenue 1 068 1 213 6 (13 702) (13 399)
2 166 2 036 427 (14 026) (13 595)
Analysis of depreciation,
amortisation, impairments
and recoupments (174) (183) 160 177
Depreciation and amortisation (173) (184) 159 177
Recoupments and impairments (1) 1 2
Amortisation of intangible
assets arising from business
combinations (1)
Share of results of associates
(included in pre-tax profits) 4 5 1
Operating margin (%) 41,0 40,9
* Refer to glossary of terms below.
^ Revenue of R2 271 million was incorrectly included in Vehicle Retail and Rental's inter-group revenue.
2017 had been restated to reallocate the R2 271 million from Vehicle Retail and Rental to Eliminations. The impact
was a decrease in the revenue of Vehicles Retail and Rental with an opposite increase in Eliminations. Motus' total
revenue remained the same.
Segmental information - continuing operations
at 30 June 2018
Financial position
Logistics Logistics Logistics
Imperial South Africa African Regions International
R million 2018 2017 2018 2017 2018 2017 2018 2017
Assets
Goodwill and intangible assets 8 575 9 529 860 920 2 601 2 210 5 105 5 540
Property, plant and equipment 3 042 10 371 1 333 1 256 387 356 1 433 2 278
Transport fleet 5 358 5 560 2 475 2 528 156 306 2 760 2 763
Vehicles for hire 3 963
Investments in associates
(excluding loans advanced
to associates) 510 686 70 17 296 298 176 137
Investments 30 403 29 23 5 5
Inventories 2 194 16 953 417 324 1 623 1 157 154 249
Trade and other receivables 9 774 13 353 4 080 3 824 1 993 1 356 3 744 3 830
Cash resources 207
Operating assets# 29 483 61 025 9 264 8 892 7 056 5 683 13 377 14 802
- South Africa 9 050 34 668 9 264 8 892
- Rest of Africa 7 056 6 464 7 056 5 683
- International 13 377 19 893 13 377 14 802
Liabilities
Retirement benefit
obligations 1 216 1 229 1 216 1 229
Maintenance and warranty
contracts 3 022
Trade and other payables
and provisions 10 087 21 350 3 727 4 076 2 387 1 922 3 680 3 945
Other financial liabilities 194 399 24 33 157 76 2
Operating liabilities# 11 497 26 000 3 751 4 109 2 544 1 998 4 898 5 174
- South Africa 4 055 15 773 3 751 4 109
- Rest of Africa 2 544 2 223 2 544 1 998
- International 4 898 8 004 4 898 5 174
Net working capital# 1 881 8 956 770 72 1 229 591 218 134
- South Africa 434 6 963 770 72
- Rest of Africa 1 229 914 1 229 591
- International 218 1 079 218 134
Net debt# 5 720 15 088 2 217 1 108 659 2 473 3 117 5 516
- South Africa 1 944 7 182 2 217 1 108
- Rest of Africa 659 2 781 659 2 473
- International 3 117 5 125 3 117 5 516
Net capital expenditure^# (839) (2 710) (397) 141 216 (93) (373) (554)
- South Africa (1 213) (1 900) (397) 141
- Rest of Africa 161 (165) 216 (93)
- International 213 (645) (373) (554)
* The assets and liabilities of Motus at 30 June 2018 have been reclassified to assets held for distribution to
owners of Imperial and are therefore not included on this segment balance sheet for 2018. Refer to the Motus segment
balance sheet.
^ Net capital expenditure for 2017 exclude Regent's net capital expenditure inflow of R47 million. The net capital
expenditure on the statement of cash flows amounts to R2 663 million which include the R47 million inflow from Regent.
# Refer to glossary of terms below.
Financial position (continued)
Head office
Eliminations Total Logistics and eliminations Motus*
R million 2018 2017 2018 2017 2018 2017 2018 2017
Assets
Goodwill and intangible assets 21 4 8 587 8 674 (12) 9 846
Property, plant and equipment 54 178 3 207 4 068 (165) 90 6 213
Transport fleet 5 391 5 597 (33) (37)
Vehicles for hire 3 963
Investments in associates
(excluding loans advanced
to associates) (39) 503 452 7 8 226
Investments 34 28 (4) 54 321
Inventories 2 194 1 730 15 223
Trade and other receivables (11) 83 9 806 9 093 (32) (16) 4 276
Cash resources 207
Operating assets# 25 265 29 722 29 642 (239) 108 31 275
- South Africa 25 265 9 289 9 157 (239) (15) 25 526
- Rest of Africa 7 056 5 683 781
- International 13 377 14 802 123 4 968
Liabilities
Retirement benefit
obligations 1 216 1 229
Maintenance and
warranty contracts 3 022
Trade and other payables
and provisions 142 276 9 936 10 219 151 228 10 903
Other financial liabilities (1) 182 109 12 172 118
Operating liabilities# 141 276 11 334 11 557 163 400 14 043
- South Africa 141 276 3 892 4 385 163 372 11 016
- Rest of Africa 2 544 1 998 225
- International 4 898 5 174 28 2 802
Net working capital# (153) (193) 2 064 604 (183) (244) 8 596
- South Africa (153) (193) 617 (121) (183) (369) 7 453
- Rest of Africa 1 229 591 323
- International 218 134 125 820
Net debt# (195) 198 5 798 9 295 (78) 14 5 779
- South Africa (195) 198 2 022 1 306 (78) 817 5 059
- Rest of Africa 659 2 473 308
- International 3 117 5 516 (803) 412
Net capital expenditure^# (24) 14 (578) (492) 61 (45) (322) (2 173)
- South Africa (24) 14 (421) 155 61 (44) (853) (2 012)
- Rest of Africa 216 (93) (55) (71)
- International (373) (554) (1) 586 (90)
* The assets and liabilities of Motus at 30 June 2018 have been reclassified to assets held for distribution to
owners of Imperial and are therefore not included on this segment balance sheet for 2018. Refer to the Motus segment
balance sheet.
^ Net capital expenditure for 2017 exclude Regent's net capital expenditure inflow of R47 million. The net capital
expenditure on the statement of cash flows amounts to R2 663 million which include the R47 million inflow from Regent.
# Refer to glossary of terms below.
Segmental information - discontinued operations
at 30 June 2018
Financial position
Vehicle Import Vehicle Retail
Motus and Distribution and Rental
R million 2018 2017 2018 2017 2018 2017
Assets
Goodwill and intangible assets 1 230 846 122 110 649 355
Property, plant and equipment 6 787 6 213 682 511 5 590 5 279
Vehicles for hire 3 924 3 963 1 685 1 991 2 231 1 959
Investments in associates
(excluding loans advanced
to associates) 263 226 27 21 53 17
Investments 653 321 4 4
Inventories 15 636 15 223 3 798 5 445 10 167 8 350
Trade and other receivables 5 258 4 276 2 649 1 977 3 131 2 295
Cash resources 207
Operating assets# 33 751 31 275 8 967 10 059 21 821 18 255
- South Africa 24 471 25 526 8 448 9 439 13 333 13 198
- Rest of Africa 710 781 519 620 172 139
- International 8 570 4 968 8 316 4 918
Liabilities
Maintenance and warranty contracts 2 846 3 022
Trade and other payables and provisions 14 014 10 903 5 766 5 212 9 435 6 936
Other financial liabilities 94 118 50 102 43 11
Operating liabilities# 16 954 14 043 5 816 5 314 9 478 6 947
- South Africa 11 571 11 016 5 593 5 105 4 365 4 132
- Rest of Africa 253 225 223 209 23 13
- International 5 130 2 802 5 090 2 802
Net working capital# 6 880 8 596 681 2 210 3 863 3 709
- South Africa 5 183 7 453 493 1 916 2 429 2 871
- Rest of Africa 229 323 188 294 32 18
- International 1 468 820 1 402 820
Net debt# 5 845 5 779 1 099 2 895 4 648 3 678
- South Africa 4 796 5 059 960 2 658 3 638 3 239
- Rest of Africa 196 308 139 237 39 52
- International 853 412 971 387
Net capital expenditure# (322) (2 173) (124) (1 227) (170) (1 112)
- South Africa (853) (2 012) (120) (1 212) (706) (967)
- Rest of Africa (55) (71) (4) (15) (51) (55)
- International 586 (90) 587 (90)
# Refer to glossary of terms below.
Financial position (continued)
Aftermarket Motor Related
Parts Financial Services Eliminations
R million 2018 2017 2018 2017 2018 2017
Assets
Goodwill and intangible assets 455 364 4 9 8
Property, plant and equipment 420 413 109 11 (14) (1)
Vehicles for hire 1 732 1 915 (1 724) (1 902)
Investments in associates
(excluding loans advanced
to associates) 122 119 52 61 9 8
Investments 653 317 (4)
Inventories 1 446 1 121 270 397 (45) (90)
Trade and other receivables 691 592 453 682 (1 666) (1 270)
Cash resources 207
Operating assets# 3 134 2 609 3 273 3 599 (3 444) (3 247)
- South Africa 2 912 2 588 3 273 3 599 (3 495) (3 298)
- Rest of Africa 19 21 1
- International 203 51 50
Liabilities
Maintenance and warranty contracts 2 895 2 915 (49) 107
Trade and other payables and provisions 1 127 987 709 747 (3 023) (2 979)
Other financial liabilities 1 5
Operating liabilities# 1 128 992 3 604 3 662 (3 072) (2 872)
- South Africa 1 082 989 3 604 3 662 (3 073) (2 872)
- Rest of Africa 7 3
- International 39 1
Net working capital# 1 010 726 14 332 1 312 1 619
- South Africa 933 716 14 332 1 314 1 618
- Rest of Africa 10 10 (1) 1
- International 67 (1)
Net debt# 945 555 (1 426) (1 450) 579 101
- South Africa 1 068 536 (1 426) (1 450) 556 76
- Rest of Africa 18 19
- International (141) 23 25
Net capital expenditure# (14) (263) 8 (596) (22) 1 025
- South Africa (14) (262) 8 (596) (21) 1 025
- Rest of Africa (1)
- International (1)
# Refer to glossary of terms below.
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 of proceeds on sale.
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 in the prior year 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
cash resources in non-financial services businesses.
Weighted average cost - calculated by multiplying the cost of each capital component by its
of capital (WACC) (%) proportional weight, 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.
Corporate information
Directors
SP Kana# (Chairman), A Tugendhaft##, (Deputy Chairman), RJA Sparks# (Lead Independent Director),
M Akoojee (Acting Chief Executive Officer and Chief Financial Officer), OS Arbee, P Cooper#, GW Dempster#,
P Langeni#, MV Moosa##, T Skweyiya#, M Swanepoel
#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
1st Floor, Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
Auditors
Deloitte & Touche
20 Woodlands Drive
The Woodlands
Woodmead
2052
Sponsor
Merrill Lynch SA Proprietary Limited
The Place, 1 Sandton Drive
Sandton, 2196
The results announcement is available on the Imperial website: http://www.imperial.co.za/results/annual-results-2018/index.php
Date: 21/08/2018 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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