Company Announcement - Transactions drive growth agenda
• Revenue up 8%
• Trading Profit up 15%
• Core HEPS from continuing operations up 17%
• Cash generated from operating activities by continuing operations up 9%
• Final dividend of 6 cents per share declared

OneLogix Group Limited, the niche logistics provider, today released final results for the year ended 31 May 2015. “This year was an eventful one for us, having concluded a number of significant acquisitions, as well as the sale of PostNet. We also introduced a new BEE partner, Kagiso Capital, and put a staff share participation scheme in place,” said OneLogix Group CEO, Ian Lourens.

Re-iterating a previously made statement, Lourens added: “These actions have been undertaken to strategically position the Group for the next phase of growth, ensuring structures are well aligned and that we have cash to grow our niche businesses as well as focus on organic growth.”

Review of operations
Subsequent to the disposal of the entire shareholding in PostNet in December 2014 for a consideration of R190,6 million, the Group is now structured into three businesses – Abnormal Logistics, Primary Products Logistics and Other Logistics Services.

Abnormal Logistics
Abnormal Logistics contributed 66% of total revenue from continuing operations. The completion of phase I of the OneLogix Logistics Hub at Umlaas Road in KwaZulu-Natal was completed during the year under review, with phase II alongside the Hub currently underway. The Hub is utilised by all Group companies but particularly by OneLogix Vehicle Delivery Services, and will continue to enhance the competitive advantage of VDS. “VDS is a mature business operating in an established, competitive and difficult market,” said Lourens. “It retains a leadership position through a strong and motivated leadership team that has mastered a complex business model, which focuses on customer service, improving operational efficiencies and which has the ability to identify business opportunities,” he indicated.

OneLogix Commercial Vehicle Delivery Services, which boasts an eight-year record of near 100% on-time deliveries, traded ahead of expectations, aided by the new Hub. The freight logistics market proved to be challenging for OneLogix Projex, which is a significant player operating from Durban harbour. Madison, which specialises in the movement of heavy and abnormal equipment, especially heavy duty crane loads, recovered well from earlier strikes in the platinum sector.

Primary Product Logistics
This segment contributed 26% to total revenue from continuing operations. OneLogix United Bulk performed well after recovering from the platinum belt and metalworker strikes at the start of the financial year. Its strong customer base in the local and regional liquid bulk delivery market was expanded to include the cryogas market by way of a small acquisition, concluded post year-end. OneLogix Linehaul, the third successful Group start-up, traded ahead of expectations for the year. Jackson and Buffelshoek, two new acquisitions, contributed to earnings from 1 April 2015 and performed in line with expectations.

Other Logistics Services
The remaining businesses contributed 8% to total revenue from continuing operations. Atlas 360 performed well and will be relocating to expanded premises in the near future. The extension of its services beyond traditional panel beating helped bolster its position in the market. OneLogix Cargo Solutions, a business acquired at the end of May 2014, maintained its strategic contribution to the group with facilities support. DriveRisk (a 49% owned associate), despite a weakening Rand, was able to maintain its leading position in the driver behaviour management market, with a strong and well-established blue chip customer base.

Financial Summary
Revenue from continuing operations increased by 8% to R1,37 billion on the back of the maiden contribution of OneLogix Linehaul for a full financial year and newly-acquired Jackson and Buffelshoek contributing to results for the last two months of the year. Organic growth was restrained due to tough trading conditions being experienced in the Group’s markets. Trading margins from continuing operations improved to 9,1% from 8,6% in the previous financial year. Net finance costs increased by 18% to R23,6 million, due to the increased investment in infrastructure and fleet, which was partially offset by the interest earned on the dual cash injections from the PostNet and Kagiso Capital transactions. “Proceeds from both transactions will be used to pay down short-term debt and the balance used to fund the Group’s growth through acquisition and organic activities and further investment in revenue generating investment in properties,” said Lourens.

The results in 2015 were negatively impacted by the once-off, non-cash flow, share-based payment charge amounting to R71,6 million made in terms of IFRS 2 and relating to the implementation of the Kagiso Capital specific issue of shares for cash. Earnings per share grew 78% from 35,0 cents to 62,4 cents. The current year earnings were enhanced by a net disposal gain of R144,2 million realised on the PostNet disposal and offset by the R71,6 million share-based payment charge relating to the issue of shares to Kagiso Capital.  The disposal gain from PostNet is excluded from headline earnings and core headline earnings measures and as a result headline earnings per share (“HEPS”) and diluted HEPS from continuing operations decreased from 31,2 cents to negative 1,7 cents. OneLogix aims to present stakeholders with the same information that management uses to evaluate the performance of the Group’s operations. Accordingly, core headline earnings is also presented, which are headline earnings adjusted for the amortisation charge of intangibles recognised on business combinations and share-based payments. Core HEPS from continuing operations increased by 16% to 33,1 cents and diluted core HEPS from continuing operations increased by 11% to 31,7 cents.

Cash flows from operations by continuing operations reflected a pleasing increase of 9% to R129,85 million due to the sustained ability of the Group to convert trading profits into cash and the relentless focus on working capital management. Investments in operations infrastructure continued with a total of R299,5 million allocated to fleet expansion and maintenance, property, other assets and IT-related assets. Net proceeds of R9,9 million were received on the disposal of tangible assets. OneLogix declared a final dividend of 6 cents per share, taking the total dividend for the year to 14 cents per share. In the previous corresponding period no dividend was declared due to the impact of the Izingwe share buy-back on cash reserves and funding requirements for the development of the Logistics Hub.

Corporate Transactions and Acquisitions
During the year OneLogix concluded five related-party transactions, with the Group acquiring further shareholdings as follows:

• 10% in Projex for a purchase consideration of R7,9 million (R3,8 million settled in cash and the issue of
1 071 428 OneLogix shares for the balance). OneLogix now owns 90% of Projex.
• 25% in CVDS, purchased for R15,4 million (R5,25 million settled in cash and the issue of 2 571 428 OneLogix shares for the balance). OneLogix now owns 100% of CVDS.
• 14% in United Bulk, purchased for R14,7 million, settled through the issue of 3 714 285 OneLogix shares. OneLogix now owns 74% of United Bulk.
• 30% in QSA, purchased for R2,5 million, paid in cash. OneLogix now owns 85% of QSA.
• 2.7% in Atlas360 purchased for R0,8 million, paid in cash. OneLogix now owns 71.3% of Atlas360.

On 9 February 2015 the Group also acquired a 74% interest in four specialised logistics companies, known as Jackson and Buffelshoek, for R106 million. These are leading logistics operators in the refrigerated fresh produce, industrial food and related markets in South and Southern Africa. “This acquisition complements our operations and represents the continued and systematic progression of our acquisition strategy of further reducing dependence on the auto-logistics component of the business,” said Lourens.

Post Year-End Activity
OneLogix acquired 100% of Vision Transport, an acid and solvent transportation business with a blue-chip customer base, for a purchase consideration of R110 million. This transaction is subject to approval by the Competition Authorities. A transaction was also concluded for a 75,1% share in Cryogas for R5,5 million; these businesses will be housed within United Bulk.

Prospects
Lourens concluded by re-iterating that the Group’s strategy remains unchanged: “We will continue to focus on our strengths, which include growing existing businesses, establishing in-house start-ups where aligned new opportunities arise and seek out appropriate acquisitions.”