Four consecutive years of a downturn in new car sales partly contributed to listed specialised logistics group OneLogix incurring R4.4m in retrenchment costs from the retrenchment of 50 people at its Vehicle Delivery Services (VDS) business in the year to May.
Ian Lourens, the group chief executive of OneLogix, said yesterday that another contributory factor for the retrenchments was a customer that expected VDS to enter into a three-year contract without any price escalation. Lourens said the group had a total workforce of about 3500 people, with the VDS business employing about 900 of them.
“We thought it imprudent to enter into that contract and the result was that we lost probably about 40-odd percent of that contract. Had we done so, we would have had continual retrenchments down the road,” he said.
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Post its year-end, OneLogix has embarked on a process to restructure and strengthen its balance sheet through the sale of its 49percent stake in for R65m and the sale and lease-back of its Umlaas Road vehicle storage facility for R240m cash. The logistics hub has the capacity to store 9000 passenger vehicles under cover and a further 1000 commercial vehicles.
Conflict
Lourens said the rationale for the sale of DriveRisk was the growing conflict between OneLogix’s customers base and DriveRisk. This was bedevilling their relationship with the majority shareholder of DriveRisk to the extent that OneLogix’s continued presence as a minority shareholder would have been detrimental to that business, he said. Lourens said the rationale for the sale and lease-back of its Umlaas Road vehicle storage facility near Durban was that OneLogix did not want to have such a large amount of capital tied up in property and would rather invest it productive logistics assets.
He said OneLogix had signed a 10-year lease for the facility, but had an option to renew that lease for a considerable period and therefore was not losing control of the property. “We will still be using it and in fact we have options on land surrounding that development as well. It simply means a restructuring of our balance and using the capital to deploy not so much into property but into assets that we can sweat a lot better,” he said.
Lourens said the effective date of the sale and lease-back transaction would be September 15 this year. OneLogix yesterday reported a 15% increase in headline earnings a share to 29.6c from 25.7c in the previous year. Revenue rose by 12% to almost R2bn from R1.8bn.
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Operating profit improved by 9% to R148.2m from R135.8m. Net cash generated from operating activities grew by 18% to R205.1m from R173.2m.
A final dividend a share of 5c was declared. Shares in OneLogix dropped 1.54% on the JSE yesterday to close at R2.56.