Company Announcement - Logistics hub offers point of differentiation
• Trading profit up 25%
• Operating profit up 16%
• Cash generated from operations before net finance costs, taxation and dividends up 26%
• Core HEPS from continuing operations up 11%
• Second phase of Logistics Hub in KwaZulu-Natal completed

OneLogix Group Limited, the niche logistics provider, today released its interim results for the six months ended 30 November 2015. Despite poor trading conditions, the majority of the businesses performed satisfactorily. “We have concluded a particularly busy chapter in our history and are pleased to say that we have continued to reduce our dependence on the automotive industry. We are now in a position to fully utilise our expertise in logistics management, and the new Logistics Hub in KwaZulu-Natal is operating according to plan. Recent acquisitions have also been successfully integrated,” said Ian Lourens, OneLogix Group CEO.

Abnormal Logistics
Abnormal Logistics contributed 51% to total revenue from continuing operations. “While slower, more competitive and retracting markets were felt across this segment of the business, all of the businesses did benefit from the new logistics hub, which is extremely positive,” said Lourens. In the case of OneLogix VDS, business picked up slightly towards the end of the interim period. Once again market share gains were due to the fact that VDS offers exceptional and cost-effective customer service. OneLogix CVDS retained its leading market position despite a quiet market. “The establishment of the logistics hub has enhanced the service offering capabilities of this well-positioned company, which continues to produce extraordinary, near 100%, levels of on-time deliveries.”

Revenue in OneLogix Projex contracted in line with declining projects and related cargo moving through the Durban port. An improvement in profitability was due to effective margin management and process improvements, which will be enhanced in the consolidation with Madison.

Primary Product Logistics
This segment contributed 41% to total revenue from continuing operations. “The strong management team has seen to it that full advantage was taken of the recent investment in fleet and synergies realised from the Vision and Cryogas acquisitions to ensure OneLogix United Bulk performed ahead of expectations,” commented Lourens. The acquisitions have been fully integrated and offer effective customer, management, fleet and operational value to the group. These three businesses, now all operating under the OneLogix United Bulk brand, have increased market share in the various liquid bulk logistics market segments. A solid customer base, good leadership and investment in additional fleet assisted market expansion and ensured that OneLogix Linehaul delivered a strong performance. The new acquisition, Jackson – a market leader in the top-end logistics of agricultural products in South and Southern Africa – performed well. Buffelshoek, acquired by the group at the same time as Jackson, exceeded expectations within its market niche of agricultural input and final farm produce.

Other Logistics Services
The remaining businesses contributed 8% to total revenue from continuing operations for this interim period. Atlas 360 performed well but traded down, mostly because it incurred set-up costs related to its foray into a new market segment of truck bulbar manufacture and installation. OneLogix Cargo Solutions maintained its important role within the group by offering facilities support primarily in import and export warehouse handling and storage.

Financial Summary
Revenue from continuing operations increased by 28% to R896,7 million on the back of the maiden contributions of Jackson and Buffelshoek for the period and the newly acquired Vision and Cryogas contributed to earnings for the last two months of the period. Trading margins from continuing operations decreased slightly to 9,5%, which resulted in growth in trading profit of 25% to R85 million. “All staff are now shareholders of the group but this impacted trading profit due to a charge of R8,1 million relating to our ongoing commitment to skills upliftment in terms of the B-BBEEE amended codes of good practice,” Lourens explained.  He added that the majority of the charge will be recovered by learnership allowances and deductions afforded by the South African Revenue Services.

Operating profit increased by 16% from R68,1 million to R79,3 million during the period. Earnings per share (“EPS”) and headline earnings per share (“HEPS”) declined by 17% and 18% respectively, due to the additional shares issued to Kagiso Capital in January 2015 as well as the IFRS II share based payment charge of R6.7 million which was not incurred in the prior comparable period. OneLogix provides a core headline earnings number, which are headline earnings adjusted for the amortisation charge of intangibles recognised on business combinations and charges relating to share-based payments. Core HEPS from continuing operations increased by 11% to 20,3 cents per share. Cash generated from operations increased 26% to R112,9 million. Lourens indicated that the group remains pleased with this number as it is a reflection of its continuing ability to convert trading profits into cash and further supports the strong focus on working capital management. No interim dividend was declared, with the company opting to retain cash reserves. 

Recent investments in fleet, properties and acquisitions have increased the scale of OneLogix operations significantly and the group remains satisfied that the financial position will be able to support and fund the strategy.

Corporate Transactions and Acquisitions
During the period, a related-party transaction saw the group purchase a further 26% stake in United Bulk for R30,5 million, settled by the issue of 5,8 million fully paid up OneLogix shares. OneLogix now owns 100% of United Bulk. “We are delighted with the transaction as management and shareholding interests are now fully aligned,” said Lourens. 
In an effort to ensure a diversified revenue stream is maintained, OneLogix continues to make strategic, niche acquisitions. As such the group acquired a 100% interest in the specialist liquid bulk logistics company Vision Transport and a 74,2% interest in Cryogas Express, for cash purchase considerations of R110 million and R5,5 million respectively. Vision is a well-established and respected operator in the solvent and acids markets of South Africa and neighbouring countries. With a number of blue-chip customers there have been immediate management, operations, fleet and marketing synergies. Similarly, Cryogas Express has facilitated an important extension of the group’s bulk liquid business into the local and regional Cryogenics markets.

Post Interim Period Events
“The OneLogix Logistics Hub is our differentiator in the market and with phase II successfully completed, post the interim period, we are pleased that we are able to offer clients 9,000 passenger vehicles, undercover storage bays and a further 1,000 bays for commercial vehicles. All group companies benefit from the Hub, which also offers facilities such as workshops, refuelling, offices, driver accommodation and fleet parking areas,” Lourens commented. In December 2015 an additional 24% in Madison was acquired for a cash consideration of R5 million, taking the OneLogix shareholding to 75%. This paved the way for the rationalisation of the Projex and Madison businesses whereby the new shareholding will be 86,9 % held by OneLogix and the balance by management.

Prospects
“There is no doubt that trading conditions will be difficult across the group’s companies for the foreseeable future. Our attention will focus on ensuring maximum efficiencies across the businesses, where each company is well placed in its respective market, has a proven business model, and is led by proficient management and quality staff. We are confident therefore that market share growth will be a top priority. The group is always mindful of start-up and acquisitive opportunities and will continue to assess all opportunities appropriately,” Lourens concluded.