OneLogix still planning management buyout and delisting

OneLogix, the JSE-listed niche logistics provider, is still planning a management buyout and delisting of the company from the JSE.

There has not been a change of heart about this, OneLogix CEO Ian Lourens said on Thursday.

Read: OneLogix aiming to conclude management buyout by April/May this year

“The company will take on debt to fund the management buyout and it does not pose insurmountable problems, but there have been a couple of issues we have had to deal with,” said Lourens.

“The fact of the matter is it is going ahead. I can’t give you a definite date but the finalisation is imminent.”

Lourens said in February that the aim was to complete the process by April or May.

“That target has moved out. We working our best to make it happen as soon as possible.”

The company published a cautionary announcement in December 2021, which has been renewed five times, advising shareholders that its board is considering a potential delisting of the company to be effected via a cash offer of R3.30 per share.

This represents a 32.5% premium to the 30-day volume-weighted average price of R2.49 per ordinary share as at the close of trade on 17 December 2021.

OneLogix has not yet made a formal offer to shareholders.

The motivation for the proposed delisting is the extremely low liquidity in OneLogix’s ordinary shares, which has deterred institutional investors, and the substantial costs associated with a listing on the JSE.

Lourens said on Thursday members of OneLogix management are the biggest shareholders in the company with just under 50% of the shares in issue.

Co-founder and current executive director Neville Bester is the biggest single shareholder.

A Sens announcement published on Thursday advised shareholders that Best-Krug has acquired all of NJB Investco Proprietary Limited’s shares in OneLogix and now holds 34% of OneLogix’s total shares in issue.

Lourens said this is part of the proposed management buyout and delisting process, with Bester having to change his shareholding entity.

Trifecta of trouble

Increasing fuel prices, temporary overcapacity in its Umlaas Road vehicle and truck storage facility, and a freak hail storm that damaged “a couple of thousand” vehicles dented OneLogix’s financial performance in the year to end-May 2022.

Fuel prices

Lourens said OneLogix is contractually able to recover increases in the fuel price from some customers, but in many cases does not recover these costs immediately.

He said the recovery of these costs has to phase in over a period of time, which results in a margin squeeze.

“We are at the wrong end of the cycle now. When fuel prices come down, we are at the right end of the cycle because we only pass it on over a period of time. This has knocked us quite badly.”

He added that when OneLogix has been able to recover the fuel costs, it has inflated the group’s revenue.

In the year to end-May, it boosted OneLogix’s revenue by about R190 million.

Microchip shortage

Lourens added that OneLogix came on line with the third phase of its Umlaas Road vehicle storage facility development at the exact time that motor vehicle and truck markets were hobbled by the lack of microchips that were necessary for their final completion.

Read: The wait for semiconductors turns ominous for automakers

He said this meant there were no cars to store when OneLogix came online with a huge amount of additional storage space.

“That is what has knocked us more than anything else, but that has started to rectify itself,” he said.

“The truck market for all intents and purposes is exactly back where it was pre-Covid-19 pandemic and motor cars are pretty much getting there as well.”

Freak hailstorm

Lourens said OneLogix was not negligent in not having insurance cover for the freak hailstorm.

He said hailstorms do not occur in that area and OneLogix was advised that it did not need cover.

“We have all sorts of cover but for minor damage to individual vehicles, we take cover up to a certain level and above that we take the risk.

“A good couple of thousand of vehicles were damaged and we had to bear the excess of what we were not insured for. It was a fairly large number of cars but a small amount per vehicle in repair costs but that amounted to R25 million, excluding our insurance proceeds.

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“So it was a big knock for us. It was effectively eight cents per share on our earnings per share [EPS] metrics,” he said.

And the civil unrest …

OneLogix also took a knock from the productivity lost over the period of the unrest in KwaZulu-Natal in July 2021 and the costs incurred to secure its operations.

Lourens said this resulted in an estimated R20 million decline in revenue and R10 million in profitability.

Read:

Full-year figures

OneLogix’s revenue increased by 24% to R3.07 billion in the year to end-May 2022 from R2.46 billion in the previous year.

Lourens said revenue increased across all of the group’s operations and has returned to similar or better levels than prior to the Covid-19 pandemic.

Operating profit, excluding capital items, increased by 16% to R138.7 million from R119.4 million after including the hail damage costs incurred in the year but offset by once-off retrenchment costs incurred in the prior year.

Earnings per share decreased by 72% to 3.5 cents from 12.5 cents.

Headline earnings per share dropped by 69% to 3.4 cents from 11.1 cents.

A dividend was not declared.

Lourens said that going forward, OneLogix’s strategy remains unaltered.

“Especially during these trying economic times, we will continue to focus on extracting maximum efficiencies from existing businesses in order to protect and grow their individual market shares in their respective markets,” he said.

Shares in OneLogix remained unchanged on Thursday to close at R2.93 per share.