Imperial Logistics — Investor Day (June 2016)
57 slides from Imperial Logistics's investor day presentation, Jun 15, 2016
Slide 1: Pre-Close Period Update
PRE-CLOSED PERIOD UPDATE INVESTMENT COMMUNITY 15 JUNE 2016
Slide 2: Agenda
AGENDA CHANGES, ORGANISING ORGANISING ORGANISING REVISED CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 2
Slide 3: Agenda
AGENDA CHANGES, ORGANISING ORGANISING ORGANISING REVISED CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS & PALLETWAYS & & & QUESTIONS GUIDANCE OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 3
Slide 4: 2016 Guidance
2016 GUIDANCE Logistics Africa > WAS – We expect to grow revenue with a marginal growth in operating profit > NOW – We expect to grow revenue with a marginal decline in operating profit Logistics International > UNCHANGED – We expect revenue & operating profit to decline in Euro’s due to strategic d
Slide 5: Agenda
AGENDA CHANGES, ORGANISING ORGANISING ORGANISING CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS REVISED GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 5
Slide 6: What Has Changed – Imperial Regions (South Africa)
WHAT HAS CHANGED – IMPERIAL REGIONS South Africa (59% revenue; 66% operating profit) > Global developments (↓ commodity prices & exports; ↓ ZAR) > Structural impediments to growth: • unemployment, low skills, labour legislation & militancy • low public service competence & capacity • energy & water
Slide 7: What Has Changed – Imperial Regions (Eurozone, Rest of Africa)
WHAT HAS CHANGED – IMPERIAL REGIONS Eurozone (29% revenue; 18% operating profit) > Slower than expected recovery in Eurozone > UK 2015 GDP growth lower than 2014 > Specific uncontrollable factors affecting Imperial • unusually long period of low water levels on European waterways exerted pressure on
Slide 8: What Has Changed – Imperial Sectors
WHAT HAS CHANGED – IMPERIAL SECTORS Logistics South Africa > Dramatic decline in commodity volumes > More sophisticated, demanding, price sensitive customers > Increasing competition > Clients applying for business rescue > Skills shortage > Fraud & theft Logistics Rest of Africa > Commodity decline
Slide 9: What Has Changed – Imperial Sectors
WHAT HAS CHANGED – IMPERIAL SECTORS Logistics International > Synchronisation of union wages in some locations > Increasing administration: labour, regulatory, sustainability/green issues > Clients demanding shorter term contracts > Industry 4.0: innovation; information systems; big data; 3D printin
Slide 10: What Has Changed – Imperial Sectors
WHAT HAS CHANGED – IMPERIAL SECTORS Vehicle Retail, Rental & Aftermarket Parts > Declining national vehicle market > Manufacturing capacity exceeds demand: stock pressure from OEM’s > Price increases & NCA2 impact on affordability > Online research impact on customer knowledge & margins > Down tradi
Slide 11: Imminent Threats
IMMINENT THREATS Declining economic growth forecasts (global & local) RSA > Higher interest rates > RSA ratings downgrade? > Recession? > Increasingly toxic socio-economic circumstances depressing confidence • Service delivery protests • University & school closures / protests • Racism • Corruption,
Slide 12: What Are Our Strategic Challenges
WHAT ARE OUR STRATEGIC CHALLENGES > High market shares in structurally low growth South Africa (3 years) > Impact of Rand weakness on imports & acquisition currency > Low organic growth other than in Africa > Capital intensity, particularly in logistics > Avoiding strategic / financial acquisition e
Slide 13: Investment Strategy (22nd February 2016)
INVESTMENT STRATEGY (22ND FEBRUARY 2016) > Imperial strives to create long term value for stakeholders through strategic clarity, financial discipline, operational excellence & strictly defined capital allocation principles > Our investment thesis is unchanged: • We will release capital & sharpen ex
Slide 14: Update – Disposals
UPDATE – DISPOSALS Major disposals previously announced: >Regent (subject to regulatory approval), Goscor, Neska Recently concluded: > MixTelematics R470m (subject to Mix shareholder approval) 24 various smaller disposals in ILA, VIDD & VRAPP 9 disposals of dealerships in VRAPP Total businesses & pr
Slide 15: Investment Strategy
INVESTMENT STRATEGY > Imperial strives to create long term value for stakeholders though strategic clarity, financial discipline, operational excellence & strictly defined capital allocation principles > Our investment thesis is unchanged: • We will release capital & sharpen executive focus, by disp
Slide 16: Update – Investment in South Africa
UPDATE – INVESTMENT IN SOUTH AFRICA Acquisitions: > Teamcar, Maxifren, Fairdeal by Midas > 14.06% Midas minority (now own 90%) > Axnosis by Resolve > 10% minority in AMH for R750m 2016 Capex: > R3.2 billion 16
Slide 17: Investment Strategy
INVESTMENT STRATEGY > Imperial strives to create long term value for stakeholders though strategic clarity, financial discipline, operational excellence & strictly defined capital allocation principles > Our investment thesis is unchanged: • We will release capital & sharpen executive focus, by disp
Slide 18: Update – Investment in Rest of Africa
UPDATE – INVESTMENT IN REST OF AFRICA Acquisitions: > 51% MiFone International > 70% Imperilog Botswana 2016 Capex: > R47 million 18
Slide 19: Investment Strategy
INVESTMENT STRATEGY > Imperial strives to create long term value for stakeholders though strategic clarity, financial discipline, operational excellence & strictly defined capital allocation principles > Our investment thesis is unchanged: • We will release capital & sharpen executive focus, by disp
Slide 20: Update – Investment in Global Logistics
UPDATE – INVESTMENT IN GLOBAL LOGISTICS Acquisitions: >Van den Anker by Logistics International >Humberside Tail Lifts by VRRAP (UK Commercial vehicles) >A further 10% of Imres by Logistics Africa (now own 80%) >96% Palletways subject to regulatory approval by Logistics International (announced June
Slide 21: Investment Strategy
INVESTMENT STRATEGY > Imperial strives to create long term value for stakeholders though strategic clarity, financial discipline, operational excellence & strictly defined capital allocation principles > Our investment thesis is unchanged: • We will release capital & sharpen executive focus, by disp
Slide 22: Update – Investment in Human Capital & Information Systems
UPDATE – INVESTMENT IN HUMAN CAPITAL & INFORMATION SYSTEMS Human Capital >Training & management development >Executive, leadership & organisation development Information Systems >Major systems implementations: • Logistics Africa – SAP & other • Logistics International – Integration • VIDD – Dealer M
Slide 23: Agenda
AGENDA STRATEGIC ORGANISING ORGANISING ORGANISING REVISED CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 23
Slide 24: Palletways – Acquisition Overview
PALLETWAYS – ACQUISITION OVERVIEW > Acquisition of ~96% of Palletways announced 1 June 2016 > Subject to approval by the European Competition Authorities > Enterprise value consideration £162.9 million (ZAR3.8 billion): • funded by existing unutilised foreign credit facilities (mainly) & cash (£’s)
Slide 25: Palletways – Business Overview
PALLETWAYS – BUSINESS OVERVIEW > Leading European operator in express small consignment palletised freight market (#1 in UK, Italy & Iberia), with a competitive cost advantage in the 1-3 express pallets market 25
Slide 26: Competitive Set in UK, Italy & Iberia
COMPETITIVE SET IN UK, ITALY & IBERIA Number of pallets per year by pallet network, 2014 (#m pallets) United Kingdom Italy # hubs # hubs 4.6 4 1.6 3 3.5 6 1.2 5 3.0 1 0.6 7 2.5 2 Iberia 2.5 1 1.8 1 0.5 2 1.8 1 0.3 1 0.9 2 0.2 1 Source: Palletways; Transport Intelligence; Association of Pallet Networ
Slide 27: Palletways – Business Overview
PALLETWAYS – BUSINESS OVERVIEW > Leading European operator in express small consignment palletised freight market (#1 in UK, Italy & Iberia), with a competitive cost advantage in the 1-3 express pallets market > Express delivery solution for small consignments of palletised freight across 20 Europea
Slide 28: Palletways – Strategic Rationale
PALLETWAYS – STRATEGIC RATIONALE > Strategically aligned within Imperial’s capability set > Value accretive > Strong trading momentum & inherent organic growth potential > Strong organic volume growth in all networks, both historically (~9% CAGR) & prospectively (GDP ±4-5%) > Margin improvement driv
Slide 29: Palletways – Business Model
PALLETWAYS – BUSINESS MODEL 29
Slide 30: Palletways – Competitive Landscape
PALLETWAYS – COMPETITIVE LANDSCAPE Pallet networks are in a segment between traditional pallet logistics & parcel operators LTL / FTL providers Ordinary service National post carriers (contract) Pallet Networks Ordinary service (occasional) Local Courier Services Express Less than Truckload Full Tru
Slide 31: Palletways – Market Growth
PALLETWAYS – MARKET GROWTH Pallet networks are increasing market share rapidly ADDRESSABLE MARKET GROWTH FORECAST, 2014A -2018E COMMENTARY % European Growth p.a. Express pallet networks expected to outperform and take further market share growing at more than 10% per annum Total road freight ` +3.
Slide 32: Palletways – Footprint & Growth Platform
PALLETWAYS – FOOTPRINT & GROWTH PLATFORM Track record of consistent and strong historical growth, with a clearly defined strategic plan Fast growing addressable market - express pallet Livingston networks forecast to increase penetration rate Leeds Fradley central Organic growth through: and reg
Slide 33: Palletways – Growth Strategy
PALLETWAYS – GROWTH STRATEGY 1 Continue organic growth in established regional networks 2 Accelerate growth of high-margin cross-border volume through Palletways International 3 Maintain market leadership through continued development of technology & service offering 4 Exploit potential of German ma
Slide 34: Agenda
AGENDA STRATEGIC ORGANISING ORGANISING ORGANISING CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS REVISED GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 34
Slide 35: Next Steps in Unlocking Value
NEXT STEPS IN UNLOCKING VALUE Structure Imperial Holdings for a stronger role in directing & supporting divisions with: > Strategy > Capital > Structure (enterprise architecture) > Organisation effectiveness (OD&D, talent management, leadership development, transformation, succession & HR technology
Slide 36: Imperial Holdings Non-Executive Board
IMPERIAL HOLDINGS NON – EXECUTIVE BOARD Name Designation Suresh Kana (61) INED, Chair Board, Chair Nominations Com., Member Remunerations Com., Member Social & Ethics Com. Attendee Audit Committee Oshy Tugendhaft (67) NED, Deputy Chair, Member Nominations Com., Member Remunerations Com., Member Soci
Slide 37: Imperial Holdings Executive Board – Now
IMPERIAL HOLDINGS EXECUTIVE BOARD – NOW Name Designation Mark Lamberti (65) Group Chief Executive Officer, Chair Executive Com., Chair All Divisional Boards, Member Investment Com., Member Asset & Liability Com., Member Risk Com., Attendee Audit Com., Attendee Remco, Attendee Nomco, Attendee Social
Slide 38: Imperial Holdings Executive Board – April 2017
IMPERIAL HOLDINGS EXECUTIVE BOARD – 1 APRIL 2017 Name Designation Mark Lamberti (66) Group Chief Executive Officer, Chair Executive Com., Chair both Divisional Boards, Member Investment Com., Member Asset & Liability Com., Member Risk Com., Attendee Audit Com., Attendee Remco, Attendee Nomco, Attend
Slide 39: Imperial Holdings Executives
IMPERIAL HOLDINGS EXECUTIVES *Carsten Taucke – CEO Imperial International *Kerry Cassel – CEO Financial Services *Berenice Francis – Group Commercial *Taryn Marcus – Organisation Effectiveness > Vinolia Singh – Group Head of HR Technology *George Nakos – Group Corporate Finance *Craig Shaw – Group S
Slide 40: Agenda
AGENDA STRATEGIC ORGANISING ORGANISING ORGANISING CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS REVISED GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 40
Slide 41: Restructuring – Imperial Logistics
RESTRUCTURING – IMPERIAL LOGISTICS Short term objective to unlock shareholder value (approved 10th March) “Better coordinate relationships & opportunities with counterparties, & clarify the direction of growth & capital deployment in existing businesses & acquisitions.” Market Proposition An integra
Slide 42: Imperial Logistics Vision
IMPERIAL LOGISTICS VISION “To bring Imperial’s various logistics businesses together under one leadership team to identify & prioritise strategic opportunities, allocate capital, exploit synergies & disseminate management expertise; to create an increasingly global, asset light, cash generative, hig
Slide 43: Restructuring – Imperial Logistics
RESTRUCTURING – IMPERIAL LOGISTICS Management - One division, one board, one CEO, one executive committee: > Strategy & Long term planning > Budgets > Capital allocation >M&A > Key appointments > Property 3 sub divisions (RSA, RoA, International), 3 sub division CEO’s, 3 sub-division executive commi
Slide 44: Imperial Logistics Board – July 2016 to March 2017
IMPERIAL LOGISTICS BOARD – 1 JULY TO 31ST MARCH 2017 * Mark Lamberti – Chairman * ANO – Imperial Holdings NED * ANO – Imperial Holdings NED * Osman Arbee – Imperial CFO * Craig Shaw – Imperial Strategy Executive * George Nakos – Imperial Corporate Finance Executive * Taryn Marcus – Imperial Organisa
Slide 45: Imperial Logistics Board – April 2017 to June 2018
IMPERIAL LOGISTICS BOARD – 1 APRIL 2017 TO 30TH JUNE 2018 * Mark Lamberti – Chairman * Moses Kgosana – Imperial Holdings NED * ANO – Imperial Holdings NED * Mohammed Akoojee – Imperial CFO * Craig Shaw – Imperial Strategy Executive * George Nakos – Imperial Corporate Finance Executive * Taryn Marcus
Slide 46: Agenda
AGENDA STRATEGIC ORGANISING ORGANISING ORGANISING CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS REVISED GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 46
Slide 47: Restructuring – Imperial Vehicles
RESTRUCTURING – IMPERIAL VEHICLES Short term objective to unlock shareholder value (approved March 10th) “Restructure to reduce expenses & capital employed, while mitigating currency risk & maintaining market share in a declining South African vehicle market.” Market Proposition Sub-Saharan Africa’s
Slide 48: Restructuring – Imperial Vehicles
RESTRUCTURING – IMPERIAL VEHICLES Imperatives > Importer & distributor: meet manufacturer volume / market share targets > Retailer: operate most efficient dealership network > Improve on combined forecast 3 year financial metrics One division, one board, one CEO, one executive committee: > Strategy
Slide 49: Imperial Vehicles Vision (Short Term)
IMPERIAL VEHICLES VISION (SHORT TERM) “To integrate & restructure Imperial’s various vehicle businesses under one leadership team, with a shared purpose to create the most competitive & profitable distributor & retailer of vehicles & related products & services in sub-Saharan Africa, with selected i
Slide 50: Imperial Vehicles Board – July to December 2016
IMPERIAL VEHICLES BOARD – 1 JULY TO 30 DECEMBER 2016 Mark Lamberti – Executive Chairman * ANO – Imperial Holdings NED * ANO – Imperial Holdings NED Osman Arbee – Imperial CFO / Chief Executive Designate * Craig Shaw – Imperial Strategy Executive * Taryn Marcus – Imperial Organisation Effectiveness E
Slide 51: Imperial Vehicles Board – January to March 2017
IMPERIAL VEHICLES BOARD – 1 JANUARY TO 31ST MARCH 2017 * Mark Lamberti – Chairman * Yunaid Waja – Imperial Holdings NED * ANO – Imperial Holdings NED * Craig Shaw – Imperial Strategy Executive * Taryn Marcus – Imperial Organisation Effectiveness Executive * Berenice Francis – Imperial Commercial Exe
Slide 52: Imperial Vehicles Board – April to June 2017
IMPERIAL VEHICLES BOARD – 1ST APRIL TO 30TH JUNE 2017 * Mark Lamberti – Chairman * ANO – Imperial Holdings NED * ANO – Imperial Holdings NED * Mohammed Akoojee – Imperial CFO * Craig Shaw – Imperial Strategy Executive * Taryn Marcus – Imperial Organisation Effectiveness Executive * Berenice Francis
Slide 53: Imperial Vehicles Board – July 2017 to June 2018
IMPERIAL VEHICLES BOARD – 1 JULY 2017 TO 30TH JUNE 2018 * Mark Lamberti – Chairman * ANO – Imperial Holdings NED * ANO – Imperial Holdings NED * Mohammed Akoojee – CFO Imperial * Craig Shaw – Imperial Strategy Executive * Taryn Marcus – Imperial Organisation Effectiveness Executive * Manny de Canha
Slide 54: Imperial Vehicles ExecuCom – July 2017 to June 2018
IMPERIAL VEHICLES EXECUCOM – 1 JULY 2017 TO 30TH JUNE 2018 Osman Arbee – Chief Executive Officer > Ray Levin – Import & Distribution Mentor Ockert Janse van Rensburg – Chief Financial Officer / Executive Small Co’s (from January 2018) ANO – Chief People Officer Niall Lynch – MD Hyundai Nicholas de C
Slide 55: Summary
SUMMARY Imperial Holdings is being strengthened to support a major organisational renewal of a large South African public group: > Capital > Strategy > Structure > Organisation Effectiveness (OD&D, talent management, leadership development, transformation, succession & HR technology) > Governance Im
Slide 56: Agenda
AGENDA STRATEGIC ORGANISING ORGANISING ORGANISING REVISED CHALLENGES FOR FOCUS FOR FOCUS FOR FOCUS GUIDANCE & PALLETWAYS & & & QUESTIONS OUR GROWTH GROWTH GROWTH RESPONSE - HOLDINGS - LOGISTICS - VEHICLES 56
Slide 57: Thank You
THANK YOU mlamberti@ih.co.za