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Unaudited interim results for the six months ended 31 December 2019
Imperial Logistics Limited
(Incorporated in the Republic of South Africa)
Registration number: 1946/021048/06
ISIN: ZAE000067211
Share code: IPL
(‘Imperial’ or ‘company’ or ‘group’)
IMPERIAL LOGISTICS LIMITED – unaudited interim results for the six months ended 31
December 2019
Imperial is an African and European focused logistics provider of outsourced,
integrated freight management, contract logistics and market access services. Ranked
among the top 30 global logistics providers, the group is listed on the JSE in South
Africa and employs over 27 000 people in 32 countries. With a focus on five key
industry verticals – automotive, chemicals, consumer, healthcare and
industrial – the group’s deep experience and ability to customise solutions
ensures the ongoing relevance and competitiveness of its clients.
GROUP KEY FEATURES
- Continuing revenue up 1% to R25,4 billion
- Continuing operating profit up 9% to R1,6 billion
- Continuing HEPS up 10% to 371 cents per share
- Continuing EPS up 12% to 372 cents per share
- Free cash conversion of 72% (H1 F2019: 75%)
- Net debt:EBITDA (excluding IFRS 16) 2,0x (H1 F2019: 1,5x)
- ROIC of 10,0% against WACC of 8,0% (H1 F2019: ROIC of 10,5% versus WACC of 8,3%)
- Interim cash dividend of 167 cents per share declared (before withholding tax) (H1
F2019: 135 cps); 45% of continuing HEPS
Note: Return on invested capital (ROIC) and weighted average cost of capital (WACC)
are calculated on a rolling 12-month basis. Comparatives have been restated for IFRS
16 – Leases and December 2018 was also represented for the consumer packaged goods
business in South Africa (CPG) – under discontinued operations.
RESULTS OVERVIEW
Imperial delivered a good performance – growing revenue and operating profit from
continuing operations by 1% and 9% respectively. Results benefited from new contract
gains and the benefits of the rationalisation and cost cutting in South Africa and
International in F2019, despite increasingly challenging trading conditions in most
of its markets that negatively impacted volumes across most businesses. Our balance
sheet management remained sound, with significant capacity to achieve our organic
and acquisitive growth strategies.
- Continuing revenue generated outside South Africa was R17,8 billion and accounted
for 70% of group revenue compared to R18,7 billion in the prior period (H1 F2019:
74% of group revenue).
- Continuing operating profit generated outside South Africa was R1,1 billion and
accounted for 64% of group operating profit, up 10% compared to R1,0 billion
generated in the prior period (H1 F2019: 64% of group operating profit).
- Continuing operating margin improved from 5,9% in the prior period to 6,4%.
- Imperial’s contract renewal rate across our divisions on existing contracts is
c.80%, with an encouraging pipeline of new opportunities, supported by a good new
contract gain rate in all three divisions despite macro-economic challenges.
- New business revenue of approximately R5,8 billion p.a. was secured to the end of
December 2019.
- Net working capital of R2 088 million improved by 16% compared to R2 492 million
at December 2018 but increased by 54% compared to the working capital at 30 June
2019 largely due to seasonal factors as previously experienced and new contract
gains. Net working capital was in line with our guidance of 4% to 5% of revenue.
- Net capital expenditure of R815 million increased from R700 million in H1 F2019
but was significantly lower than depreciation. Due to the implementation of IFRS
16 depreciation includes the depreciation of the right-of-use assets, whereas
capital expenditure does not include this. Excluding the depreciation of the
right-of-use assets, capital expenditure exceeded depreciation due to investment
in support of new contract gains.
- Net debt (excluding lease obligations) of R7,4 billion increased by 29% compared
to June 2019, mainly impacted by working capital movements, increased capital
expenditure and once-off effects of CPG.
- Free cash flow including CPG decreased to an outflow of R565 million from a cash
inflow of R255 million for the six months ending 31 December 2018. This outflow is
largely driven by CPG which incurred a cash outflow of R595 million as it is in
the closure process. Free cash flow excluding CPG decreased to an inflow of R30
million from a cash inflow of R58 million for the six months ending 31 December
2018.
- Discontinued operations: The unbundling of Motus was concluded in November 2018
and Motus is thus presented as a discontinued operation in the comparative
results. The CPG business in South Africa was classified as a discontinued
operation towards the end of the June 2019 financial year and while this business
was exited in November 2019, it is still currently being wound down. No further
trading losses will be incurred from CPG in H2 F2020. Total basic HEPS was
therefore down 77% to 190 cents per share and total basic EPS down 93% to 223
cents per share, which included contributions from CPG in the current period and
contributions from both CPG and Motus in the prior period.
- IFRS 16 – Leases standard was adopted with effect from 1 July 2019 using the full
retrospective approach; comparatives have therefore been restated. The impact of
IFRS 16 to equity at 1 July 2018 is a reduction of R403 million. On this date
right-of-use assets amounting to R5 335 million and lease obligations amounting to
R5 850 million were recognised as well as the deferred taxation related to the
recognition of these balances.
Note: Comparatives have been restated for IFRS 16 – Leases and December 2018 was
also represented for the CPG discontinued operation.
DIRECTORATE AND EXECUTIVE MANAGEMENT CHANGES
As previously announced, Ms Bridget Radebe and Mr Dirk Reich were appointed as
independent non-executive directors, effective 1 September 2019.
Ms Thembisa Skweyiya resigned from the board on 31 December 2019. The board thanks
Ms Skweyiya for her many years of counsel and guidance in her capacity as a non-
executive director and wishes her well.
In keeping with Imperial’s non-executive director succession planning, Mr Roddy
Sparks retired as lead independent director on 30 October 2019. He remains an
independent member of the board. Mr Graham Dempster was appointed to succeed Mr
Sparks as the lead independent director on the same date.
Ms Bridget Radebe has been appointed to succeed Mr Dempster as chairman of the audit
committee from 1 September 2020. Mr Dempster will remain a member of the audit
committee.
After 26 years of service to Imperial, Mr Nico van der Westhuizen, a member of the
Imperial executive committee, will be stepping down as CEO of Imperial Logistics
South Africa at the end of February 2020. He will be retiring from the group at the
end of June 2020 to ensure an orderly handover process. The board extends its
sincerest thanks and gratitude to Mr van der Westhuizen for his invaluable
contribution to the business, and wishes him well in his retirement. Mr Edwin Hewitt
has been appointed to succeed Mr van der Westhuizen from 1 March 2020.
PROSPECTS
Based on the first six months of trading, and particularly the increasingly
challenging and volatile economic and market conditions in which we operate, our
outlook for the financial year to 30 June 2020 is as follows:
We expect Imperial’s continuing operations to deliver:
- Single-digit revenue growth compared to the prior year.
- Low double-digit operating profit growth compared to the prior year.
- Low double-digit growth in continuing HEPS compared to the prior year.
- Good free cash flow generation.
The balance sheet of the business remains sound, with sufficient headroom in terms
of capacity and liquidity to facilitate our organic and acquisitive growth
aspirations.
SHORT FORM ANNOUNCEMENT
This short-form announcement is the responsibility of the directors. It is only a
summary of the information contained in the full announcement and does not contain
full or complete details. Any investment decision should be based on the full
announcement accessible from Tuesday, 25 February 2020, via the JSE link and also
available on the Company’s website
https://www.imperiallogistics.com/results/interim-results-2020/index.php
The forecast financial information contained in the prospects herein, is the
responsibility of the directors and has not been reviewed or reported on by
Imperial’s auditors.
Copies of the full announcement may also be requested by contacting Imperial’s
Investor Relations Executive, Esha Mansingh, and are available for inspection at the
Company’s registered office at no charge, weekdays during office hours.
The JSE link is as follows:
https://senspdf.jse.co.za/documents/2020/jse/isse/IPLE/HY20Result.pdf.
DECLARATION OF INTERIM ORDINARY DIVIDEND
For the six months ended 31 December 2019 notice is hereby given that a gross
interim ordinary dividend in the amount of 167,00000 cents per ordinary share has
been declared by the board of Imperial, payable to the holders of the 201 242 919
ordinary shares. The dividend will be paid out of retained earnings.
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 133,60000 cents per share.
The company has determined the following salient dates for the payment of the
ordinary dividend:
2020
Declaration date Tuesday, 25 February
Last day for ordinary shares to trade cum ordinary dividend Tuesday, 17 March
Ordinary shares commence trading ex-ordinary dividend Wednesday, 18 March
Record date Friday, 20 March
Payment date Monday, 23 March
The company’s income tax number is 9825178719.
Share certificates may not be dematerialised or rematerialised between Wednesday, 18
March 2020 and Friday, 20 March 2020, both days inclusive.
RA Venter
Group company secretary
25 February 2020
Company secretary
RA Venter
Investor relations and communications executive
E Mansingh
Sponsor
Merrill Lynch SA (Proprietary) Limited
Date: 25-02-2020 07:05:00
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