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Reviewed provisional condensed consolidated results for the year ended 31 March 2019
HOSKEN PASSENGER LOGISTICS AND RAIL LIMITED
Incorporated in the Republic of South Africa
Registration number: 2015/250356/06
JSE share code: HPR
ISIN: ZAE000255907
("HPLR" or "the Company")
REVIEWED PROVISIONAL CONDENSED CONSOLIDATED RESULTS for the year ended 31 March 2019
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
ASSETS
Non-current assets 1 610 505 1 709 120
Property, plant and equipment 1 579 256 1 462 937
Goodwill 8 451 8 451
Intangible assets 57 78
Investments in associates 22 342 18 343
Other financial asset - 218 897
Deferred taxation 399 414
Current assets 609 825 630 598
Other financial asset - 237 503
Inventories 17 559 15 714
Trade and other receivables 68 933 67 816
Taxation 2 376 1 435
Cash and cash equivalents 520 957 308 130
Total assets 2 220 330 2 339 718
EQUITY AND LIABILITIES
Equity 1 158 702 1 406 308
Equity attributable to equity holders of the parent 1 115 079 1 373 693
Non-controlling interest 43 623 32 615
Non-current liabilities 633 272 557 397
Borrowings 341 182 300 887
Post-employment medical benefit liability 64 675 58 928
Deferred taxation 227 415 197 582
Current liabilities 428 356 376 013
Trade and other payables 159 866 124 720
Current portion of borrowings 166 901 149 323
Taxation 5 653 4 340
Provisions 95 936 97 630
Total equity and liabilities 2 220 330 2 339 718
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
for the year ended 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
Revenue 1 779 849 1 808 406
Other income 14 541 4 501
Operating expenses (1 382 392) (1 358 793)
Operating profit 411 998 454 114
Depreciation and amortisation (81 471) (112 076)
Investment income 48 810 22 310
Income from equity accounted investments 10 999 7 283
Finance costs (45 014) (39 618)
Profit before taxation 345 322 332 013
Taxation (100 406) (86 619)
Profit for the year 244 916 245 394
Profit attributable to:
Equity holders of the parent 233 908 235 947
Non-controlling interest 11 008 9 447
244 916 245 394
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
for the year ended 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
Profit for the year 244 916 245 394
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss
Cash flow hedging - current year losses - (343)
Cash flow hedging - amount capitalised to property, plant and equipment - 6 633
Taxation relating to cash flow hedging - (1 761)
Items that will not be reclassified subsequently to profit or loss
Actuarial (losses)/gains on defined benefit plans (2 730) 16 863
Taxation relating to actuarial (losses)/gains on defined benefit plans 764 (4 722)
Total comprehensive income for the year 242 950 262 064
Total comprehensive income attributable to:
Equity holders of the parent 231 942 252 617
Non-controlling interest 11 008 9 447
242 950 262 064
RECONCILIATION OF HEADLINE EARNINGS
for the year ended 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
Gross Net Gross Net
Earnings attributable to equity holders of the parent 233 908 235 947
Profit on disposal of plant and equipment (913) (657) (860) (619)
Impairment of property, plant and equipment 10 903 7 850 - -
Insurance claim for capital assets (9 492) (6 834) - -
Headline earnings 234 267 235 328
Earnings per share (cents)
Basic 80.66 81.36
Diluted 80.66 81.36
Headline earnings per share (cents)
Basic 80.78 81.15
Diluted 80.78 81.15
Weighted average number of shares in issue ('000)
Basic 290 000 290 000
Diluted 290 000 290 000
Actual number of shares in issue ('000) 290 000 290 000
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
Balance at the beginning of the year 1 406 308 829 570
Prior period restatements - adoption of IFRS 15 (4 272) -
Shares issued - 2 900 000
Share issue costs - (3 538)
Total comprehensive income 242 950 262 064
Equity settled share-based payments 3 816 -
Effects of changes in shareholding - (1 800 000)
Dividends (490 100) (131 986)
Distribution to shareholders - (649 802)
Balance at the end of the year 1 158 702 1 406 308
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 March 2019
Reviewed Audited
2019 2018
R'000 R'000
Cash flows from operating activities 356 795 249 763
Cash generated by operations 456 819 467 333
Investment income 55 012 15 132
Finance cost (45 013) (36 940)
Taxation paid (69 423) (63 776)
Dividends paid (40 600) (131 986)
Cash flows from investing activities 404 038 (97 117)
Dividends received 7 000 5 000
Acquisition of property, plant and equipment1 (56 348) (104 079)
Proceeds from settlement of financial asset 448 417 -
Proceeds from sale of property, plant and equipment 4 969 1 962
Cash flows from financing activities (548 006) (132 913)
Ordinary shares issued - 649 802
Other liabilities raised - (3 538)
Funding raised1 60 000 30 000
Funding repaid (158 506) (159 375)
Special dividends paid (449 500) -
Distribution to shareholders - (649 802)
Increase in cash and cash equivalents 212 827 19 733
Cash and cash equivalents
At the beginning of the year 308 130 288 397
At the end of the year 520 957 308 130
1 R156.4 million (2018: R155.9 million) of debt raised in the period relates to instalment sale agreements used to finance bus acquisitions, and has
therefore not been included in the cash flow statement as a cash flow amount.
NOTES TO THE REVIEWED PROVISIONAL CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The reviewed provisional condensed consolidated results for the year ended 31 March 2019 have been prepared in accordance with International Financial
Reporting Standards ("IFRS"), the disclosure requirements of IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the
South African Companies Act, No. 71 of 2008 (as amended) and the Listings Requirements of the JSE Limited.
The accounting policies applied by the Group in preparation of these reviewed condensed consolidated financial statements, other than the adoption of
IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers, are consistent with those applied by the Group in its consolidated
financial statements for the year ended 31 March 2018. The adoption of IFRS 9 had no material impact on prior year figures presented and consequently
no adjustments were made to opening retained earnings. IFRS 15 was adopted using the modified retrospective approach whereby no comparative figures were
restated, but instead a cumulative catch-up adjustment was recognised in opening retained earnings. The adjustment was to recognise Deferred revenue on
the sale of multi-journey tickets that expire subsequent to year-end. In prior years, revenue was recognised on the date of sale of these tickets. Details
of the standards adopted will be provided in the annual financial statements. As required by the Listings Requirements of the JSE Limited, the Group reports
headline earnings in accordance with Circular 4/2018 - Headline Earnings, as issued by the South African Institute of Chartered Accountants.
These provisional condensed consolidated financial statements were prepared under the supervision of the Chief Financial Officer, Mr Mark Wilkin CA(SA).
OPERATING SEGMENTS
The Directors have considered the implications of IFRS 8: Operating Segments and are of the opinion that the operations of the Group constitute one operating
segment, being the provision of passenger transport services within South Africa. Resource allocation and operational management are performed on an aggregate
basis. Performance is measured based on profit or loss before tax as shown in internal management reports that are reviewed by the Chief Operating Decision
Maker, who is the Group's Chief Executive Officer.
REVIEW OF THE INDEPENDENT AUDITOR
The provisional condensed consolidated financial statements for the year ended 31 March 2019 have been reviewed by BDO Cape Incorporated, who expressed an
unmodified review conclusion. The auditor's report does not necessarily report on all the information contained in the financial results. Shareholders are
therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report
together with the accompanying financial information from the issuer's registered office.
OTHER FINANCIAL ASSET
On 1 October 2018, R237.5 million was received as part settlement of the promissory notes ceded to HPLR on the restructure of the Group. On 21 December 2018,
the remaining instalment of the promissory note was sold for R240.2 million, which reflected a discount of R1.8 million on the carrying value of the financial
asset at the date of sale. Shareholders are referred to the SENS announcement released on 21 December 2018 (also available on the Company's website) for details
relating to the sale.
The instalments were secured by way of Investec Bank payment obligations and carried interest at 8.5% compounded annually. Included in Investment income in the
statement of profit and loss is interest earned on the financial asset for the year ended 31 March 2019 of R23.1 million (2018: R6.2 million).
The statement of cash flows reflects the total proceeds realised from this financial asset as cash flows from investing activities. The equivalent interest
received on this financial asset is included as Investment income in the statement of cash flows.
COMMENTARY AND RESULTS
During the 2019 financial year, the Group had to contend with a myriad of operational challenges, including, a five-week protected strike and an additional
illegal strike that affected the MyCiti operations; unparalleled fuel price increases of 48% compared to the prior year; and the destruction of buses with
the run-up to the national elections.
Overall demand for reliable road-based passenger public transport services continued to increase as a result of problems on the rail system in the Cape metropole.
Regrettably, in the run-up to national and provincial elections, widespread service delivery protests negatively affected the provision of scheduled bus services, particularly in areas adjacent to mushrooming informal settlements across the city. In addition, rivalry in the taxi industry sparked sporadic violence and disruption to road based public transport.
Group revenue reflected a decrease of 1.6% from the prior year partly as a result of the strikes mentioned above. Two fares increases totalling 14.5% were
implemented over the financial year.
Despite the increase in the fuel price and 8.5% increase in wages from the prior year, which make up the Group's two largest cost drivers, management's focus on
finding efficiencies across its operations showed positive results containing the increase in operating expenses to 1.7% from the prior year. These cost-saving initiatives covered areas affecting fuel, labour, electricity and water costs.
The net effect is a decrease in operating profit of 9.3% from the prior year. Whereas profit for the year is reflected 0.2% lower than the previous year,
largely due to interest received on the financial asset and the effect of the reassessment of residual values of buses as explained below.
CHANGE IN ACCOUNTING ESTIMATE OF RESIDUAL VALUES
In line with the Group's accounting policies, management reassessed the residual values of buses during the year, the impact of which is considered significant. The net effect of the changes in the current financial year was a decrease in depreciation of R42.2 million.
RECONCILIATION OF HEADLINE EARNINGS
The destruction of Golden Arrow buses is reflected in the Headline earnings reconciliation as impairment of property, plant and equipment totalling R10.9 million (gross); of which R9.4 million (gross) is recoverable from insurance proceeds and reflected as insurance claims for capital assets.
BUSINESS COMBINATION SUBSEQUENT TO YEAR END
At year-end Golden Arrow Bus Service Proprietary Limited ("GABS") held 33.33% of the issued share capital of Sibanye Bus Services Proprietary Limited
("Sibanye") and 50.06% of the issued share capital of Table Bay Area Rapid Transport Proprietary Limited ("TBRT").
On 1 April 2019, GABS acquired an additional 33.33% of the issued share capital of Sibanye for a purchase consideration of R26.6 million and an additional 24.97% of the issued share capital of TBRT for a purchase consideration of R39.2 million, increasing it's holding in these companies to 66.66% and 75.03% respectively.
Had the acquisitions occurred on 1 April 2018, Sibanye would have increased Group revenue by an additional R87.2 million and Group profit after tax would have
increased by an additional R16.7 million. As TBRT is already consolidated into the results of the Group it would not have had an effect on Group revenue nor
Group profit after tax reflected.
The fair value of net assets acquired in Sibanye, for which the purchase price allocation is provisional, is as follows:
Rm
Property, plant and equipment 59.1
Current assets 48.1
Non-current liabilities (34.6)
Current liabilities (20.5)
Net assets 52.1
Less Non-controling Interest (17.4)
Net assets acquired 34.7
Less:
Purchase consideration (26.6)
Fair value of interest previously held (17.4)
Goodwill 9.3
CHANGES IN DIRECTORATE
Ms Faith Mahloma resigned as an independent non-executive director on 17 April 2019 and Ms Rachel Watson was appointed to succeed Ms Mahloma as an
independent non-executive director with effect from the same date.
There were no other changes in directorate during the period under review.
ORDINARY DIVIDEND TO SHAREHOLDERS
The directors have approved and declared a final ordinary dividend of 28 cents (gross) per HPLR share for the year ended 31 March 2019 from income reserves.
The salient dates for the payment of these dividends are as follows:
Announcement date Thursday, 23 May 2019
Last day to trade cum dividend Tuesday, 11 June 2019
Commence trading ex-dividend Wednesday, 12 June 2019
Record date Friday, 14 June 2019
Payment date Tuesday, 18 June 2019
No share certificates may be dematerialised or rematerialised between Wednesday, 12 June 2019 and Friday, 14 June 2019, both dates inclusive.
In terms of legislation applicable to Dividends Tax ("DT") the following additional information is disclosed:
The final ordinary dividend shall constitute a "dividend" as defined in the Income Tax Act, No. 58 of 1962.
The local DT rate is 20%.
The number of ordinary shares in issue at the date of the declaration is 290 000 000.
The DT amounts to 5.6 cents per share for the final ordinary dividend.
The net local dividend amount is 22.4 cents per share for the final ordinary dividend for all shareholders who are not exempt from DT.
HPLR's income tax reference number is 9754/276/16/1.
In terms of DT legislation, any DT amount due will be withheld and paid over to the South African Revenue Service by a nominee company, stockbroker or Central
Securities Depository Participant (collectively "regulated intermediary") on behalf of shareholders. All shareholders should declare their status to their
regulated intermediary as they may qualify for a reduced DT rate or exemption.
For and on behalf of the Board of Directors
FE Meyer ML Wilkin
Chief Executive Officer Chief Financial Officer
23 May 2019
Directors:Y Shaik* (Chairman), TG Govender* (Deputy Chairman), FE Meyer (Chief Executive Officer), ML Wilkin (Chief Financial Officer), L Govender#* (Lead
Independent Director), NB Jappie#*, RD Watson#* (appointed 17 April 2019), KF Mahloma#* (resigned 17 April 2019).
*Non-excutive
# Independent
Company Secretary: HCI Managerial Services Proprietary Limited, Suite 801, 76 Regent Road, Sea Point, Cape Town, 8005 (PO Box 5251, Cape Town, 8000).
Auditors: BDO Cape Incorporated, 6th Floor, 123 Hertzog Boulevard,Foreshore,Cape Town, 8001 (PO Box 3883, Cape Town, 8000).
Transfer Secretaries: Computershare Investor Services Proprietary Limited,Rosebank Towers, 15 Biermann Avenue,Rosebank, 2196.
(PO Box 61051, Marshalltown, 2107).
Sponsor: Investec Bank Limited, 100 Grayston Drive, Sandown, Sandton, 2196 (PO Box 785700, Sandton, 2146).
Website Address: www.hplr.co.za
Date: 23/05/2019 11:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.