Torched buses, no-go areas impact on HCI division’s results

HOSKEN Passenger Logistics and Rail, a division of Hosken Consolidated Investment (HCI), bore the brunt of social unrest in the build-up to the recent South African election in its results for the year to March.

It recorded a 1.6 percent decline in group revenue as some buses were torched, routes became no-go areas and taxi violence had an impact on business fluidity and rocketing fuel prices.

In its maiden results since listing on the JSE in April last year, the group, which is the holding company of Golden Arrow Bus Services, said group revenue fell to R1.7 billion from R1.8bn in the previous period.

Its revenue was also hurt by unparalleled fuel price increases of 48 percent compared to the prior year, and two labour strikes, one protected and another not.

“Regrettably, in the run-up to national and provincial elections, widespread service delivery protests negatively affected the provision of scheduled bus services, particularly in areas adjacent to mushrooming informal settlements across the city,” the group said.

Hosken Passenger Logistics and Rail, which marks a year since it listed on the JSE in April – in the Travel and Leisure sector of the JSE’s main board – saw operating expenses increase in the current year to R1.38bn from R1.35bn in the previous, largely because of the disruption and destruction it experienced.

The group’s operating profit declined to R411 million from R454m in the previous period, while finance costs grew significantly to R4m.

“Despite the increase in the fuel price and 8.5 percent increase in wages from the prior year, which make up the group’s two largest cost drivers, management’s focus on finding efficiencies across its operations showed positive results containing the increase in operating expenses to 1.7 percent from the prior year.

“These cost-saving initiatives covered areas affecting fuel, labour, electricity and water costs,” the group said in its financials for the year to March.

It said this resulted in a decrease in operating profit of 9.3 percent from the prior year.

Profit for the year was 0.2 percent lower than the previous year, largely due to interest received on the financial asset and the effect of the reassessment of residual values of buses.

Two fares increases totalling 14.5 percent were implemented over the financial year.

But overall demand for reliable road-based passenger public transport services continued to increase as a result of problems besetting the rail system in the Cape metropole, the group said.

The group sourced R156.4m of debt in the period for instalment sale agreements used to finance bus acquisitions as opposed to R155.9m in the previous period.

HCI shares closed 0.85 percent lower at R103.89 on the JSE yesterday.