Imperial Logistics — BOAML Sun City Conference 2013
44 slides from Imperial Logistics's conference presentation, March 2013
Slide 1: BOAML Sun City Conference - Mar 2013
BOAML Sun City Conference - Mar 2013
Slide 2: Agenda
Agenda » Highlights of latest interim results » Strategy and prospects » Recent acquisitions and disposals » Divisional performance 2
Slide 3: Interim Results
T MOVING in HINKING ~ . > 7 Interim Results IMPERIAL
Slide 4: Highlights
Highlights Revenue 18% R45 262m Operating profit 12% R2 939m HEPS 14% 829 cps Core EPS * 15% 872 cps Interim dividend per share 27% 380 cps Good result overall - varied across the group *Core EPS mainly excludes : • amortisation of intangibles on acquisitions in the current period • business acquisi
Slide 5: Performance of the three business pillars
Performance of the three business pillars Distribution, Retail & Logistics Car Rental & Tourism Financial Services Revenue = R15,9 bn Revenue = R1,9 bn Revenue = R28,9 bn -1% 27% 14% Operating profit = R707m Operating profit = R183m Operating profit = R2,1 bn -1% -13% 19% The Three Pillars of Imperi
Slide 6: Key financial ratios
Key financial ratios Ratios H1 2013 H1 2012 F2012 Group operating margin 6,5% 6,8% 7,0% Net D:E ratio (excl. prefs) 52% 39% 39% ROIC^ 15,5% 15,9% 16,3% ROE # 22% 22.5% 23% ^ H1 2013 WACC = 8,9% # Based on core earnings 6
Slide 7: Divisional statistics
Divisional statistics Revenue Operating profit 5% SA logistics 19% 17% 14% 23% International Logistics 10% Car Rental and Tourism 10% 15% 6% Distributorships 4% Automotive Retail 34% 43% Financial Services Operating margin % 22.7 18.8 10.8 9.5 8.3 8.6 6.2 4.6 4.3 4.9 2.7 2.6 SA Logistics Internation
Slide 8: Revenue split between SA and ROA
Revenue split between SA and ROA » Rest of Africa expansion gaining momentum » Revenue up 24%; Operating profit up 22% » RTT Health Sciences acquisition will contribute further – approximately R240m p.a of revenue generated in rest of Africa 4% 5% 5% 18% 23% 26% 96% 95% 95% 82% 77% 74% Rest of Afric
Slide 9: Group profit trend
Group profit trend Revenue (LHS) Operating Profit (RHS) 3.0 2.9 60 2.6 3 2.4 2.1 40 1.8 45.3 42.4 2 Rbn 1.3 1.4 38.4 31.4 33.3 20 25.7 27.8 1 23.6 0 0 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 Jun 12 Dec 12 Core EPS HEPS 867 839 872 900 829 725 756 727 653 645 581 600 503 533 cps 472 431 269 283
Slide 10: Gearing
Gearing Net debt : equity (excl. prefs) » Excludes R441m of perpetual % preference shares 60 50 52 » Net D:E below target ratio of 60% - 80% 39 39 40 31 » Moody’s Ratings: 20 • Domestic short term credit rating P-1.za • Domestic long term credit rating A2.za 0 F2009 F2010 F2011 F2012 H1 2013 • Inter
Slide 11: Returns
Returns ROE# ROIC vs WACC 23.4 24 22.0 16.3 16.5 20.3 15.5 20 15 17.1 10-yr 16 avg. of 11.5 12.2 19% 11 12 9.4 10.9 10.5 10.1 8 9.7 8.9 7 4 0 3 F2009 F2010 F2011 F2012 F2013^^ H1 2013 F2009 F2010 F2011 F2012 # based on core earnings ROIC WACC ^^ annualised » ROE is healthy » Objective: Average ROIC
Slide 12: Strategy and Prospects
T MOVING WA in IMPERIAL et Aa 22804883. 5 eS SSGe00 0017S ee Zagat HELM Gat i Strategy and Prospects 12
Slide 13: Strategy
Strategy » Focused on generating higher returns on capital » Seeking growth opportunities in and adjacent to existing industries and geographies » Focused on expanding our footprint in logistics industry in Africa and abroad • Specific focus on consumer logistics in Africa • Europe to expand around
Slide 14: Recent acquisitions – Spent Rxx billion in last three years
Recent acquisitions – Spent Rxx billion in last three years [update] Imperial Logistics Africa Logistics South Africa Logistics International 100% Lehnkering 60% IJ Snyman Transport 80% Kings Transport 74,9% Dettmer Bulk 80% Transport Holdings 70% LaGrange Transport Reederei in Botswana (previously
Slide 15: Recent acquisitions and disposals
Recent acquisitions and disposals » Acquisitions during the period • Midas acquired 80 % of Afintapart SA (Pty) Limited – a commercial vehicle parts distributor • 60% of LTS Kenzam (Pty) Limited - a logistics business that distributes bituminous products throughout Southern Africa • 100% of RTT Heal
Slide 16: RTT Health Sciences acquisition
RTT Health Sciences acquisition 2 110 employees Medical Trans Africa Consumer Health Essentials 2012 Revenue: 2012 EBITDA: Enterprise value: EV/EBITDA 1st year ROIC* R1.1bn R101m R515m multiple: 5.1x (incl. goodwill): 10.0% Earnings enhancing acquisition; meets internal acquisition criteria * Pre an
Slide 17: RTT Health Sciences presence in Africa
RTT Health Sciences presence in Africa Presence in 6 Sub – Saharan countries » South Africa • Jet Park 30 000m2 • Centurion 26,500 m2 » Rest of Africa • Kenya • Nigeria • Ghana • Malawi • Swaziland » Delivers, through agents to 27 further countries across Africa » 2 110 staff members » 26 Trained ph
Slide 18: Rationale for RTT Health Sciences acquisition
Rationale for RTT Health Sciences acquisition » In line with consumer growth strategy in Africa » Compliments Imperial Logistics service offering » Expansion to the growing Nairobi facility (Kenya) Pharma and Healthcare industries » Strengthens exposure to high growth African economies Accra facilit
Slide 19: Current footprint and potential future markets
Current footprint and potential future markets Tunisia Morocco Algeria Libya Western Egypt Sahara Cape Verde Mauritania Mali Niger Chad Eritrea Senegal The Gambia- Burkina Sudan Guinea-Bissau- Faso -Djibouti Guinea Benin Nigeria Ethiopia Sierra Leone- Cote Central Liberia D’Ivoire Ghana African Repu
Slide 20: Drivers of SA vehicle market
IN 6 ~ D THINKING Y Drivers of SA vehicle market IMPERIAL
Slide 21: South African new vehicle sales
South African new vehicle sales » Fundamentals continue to be good • Good levels of credit availability • Low interest rates • Still below peak of 2006 • Underpenetrated market relative to developed world – in line with emerging market peers Passenger car sales Vehicle penetration in SA (units) (uni
Slide 22: Vehicle affordability good
Vehicle affordability good » New car prices have lagged inflation » Weaker currency poses a risk but low interest rates will assist New Car Pricing vs Used Car Pricing vs CPI (Jan 2002 = 100) 190 ― New Car Pr Index Jan 2002 = 100 180 ― Used Car Pr Index Jan 2002 = 100 ― CPI Jan 2002 = 100 170 160 15
Slide 23: Vehicle affordability good
Vehicle affordability good » Debt servicing costs have declined » Consumers are changing their cars much earlier » Will support demand Debt service cost as a percent of Replacement cycles getting shorter disposable income (loan duration) 14% 50 12% 45 10% 40 8% 35 6% 4% 30 Used 2% 25 New 0% 20 Apr-0
Slide 24: South African vehicle credit growth
South African vehicle credit growth » Credit availability is key for vehicle sales growth » Motor vehicle finance dominates secured credit agreements – 88% » Credit growth in vehicles underpin growth in car sales » Despite moderation in growth, vehicle credit remains in double digit territory Credit
Slide 25: Integrated motor value chain
Integrated motor value chain » Finance – JV’s with Nedbank & MFC » Insurance - Regent » Vehicle tracking - Mix » Warranties – Liquidcapital/Regent » Maintenance/Service plans – Liquidcapital » Used Cars – Auto Pedigree, Imperial Select (±60,000 units » Parts & Services revenue p.a) growing faster th
Slide 26: Cumulative sales of vehicle brands distributed
Cumulative sales of vehicle brands distributed 800000 722892 700000 660758 600000 567176 500000 482751 426630 400000 368523 300000 285600 192334 200000 107363 100000 60227 37112 19113 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD Note: Includes AMH, Chery, Foton, Mitsubishi, Rena
Slide 27: Prospects
Prospects » Imperial holds leading positions in its main markets » Trading conditions in SA logistics are challenging » RTT acquisition will contribute in second half and enhance our capabilities » African logistics to continue gaining momentum » International logistics – slow down expected, in line
Slide 28: Divisional Performance
FAST MOVING ~™~ FORWARD THINKING VY IMPERIAL Divisional Performance
Slide 29: Southern Africa logistics
Southern Africa logistics Revenue (Rm) Operating profit (Rm) Operating Margins +4% -22% 6.2% 4.9% 8 677 4.6% 8 311 513 400 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Challenging trading conditions in SA, Rest of Africa strong » Strike had a material impact across all South African busin
Slide 30: Southern Africa logistics
Southern Africa logistics Revenue by activity Revenue by sector 49% 36% 38% 17% 8% 10% Steel and Metals 2% 15% 26% Consumer Goods & Retail Freight & Transport Industrial Products Warehousing & Distribution Construction Supply Chain Management Chemicals, Fuel & Gas Mining & Agriculture 31
Slide 31: Southern Africa logistics
Southern Africa logistics Prospects » Trading conditions in SA Logistics to remain challenging » Trend to outsourcing to drive future growth » With infrastructure and network, ideally positioned to capitalise on growth opportunities » Expansion into Africa will continue gaining momentum » RTT Health
Slide 32: International logistics (EURO)
International logistics (EURO) Revenue (€m) Operating profit (€m) Operating Margins +69% +45% 5.7% 5.0% 669 4.3% 29 397 20 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Slowing German economy » Tougher trading conditions; contribution of Lehnkering assisted growth » Volumes depressed acros
Slide 33: International logistics (ZAR)
International logistics (ZAR) Revenue (Rm) Operating profit (Rm) Operating Margins +74% +52% 5.6% 7 211 4.9% 307 4.3% 4 159 202 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Exchange rate benefit » 2012 Average R/€: 10.79 vs 2011 Average R/€: 10.47 34
Slide 34: International logistics
International logistics Revenue by sector 18% 29% 11% 2% 2% 4% 16% 5% 12% Chemicals Steel Automotive Energy Paper/Packaging Agricultural Imperial Shipping Imperial Shipping Group Group Food Other Lehnkering Lehnkering Services Panopa Panopa Neska Neska Brouwer Shipping Brouwer Shipping 35
Slide 35: International logistics
International logistics Prospects » Future performance to be impacted by slowing German economy » Lehnkering to have a positive impact on results as it will make a contribution for the full year » Businesses remain well positioned in attractive niches in the logistics industry in Germany » Acquisiti
Slide 36: Car Rental and Tourism
Car Rental and Tourism Revenue (Rm) Operating profit (Rm) Operating Margins -0.8% -13 % 10.8% 9.5% 9.1% 1 924 1 939 210 183 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Performance below expectation » Margin improvement vs H2 2012 due to turnaround at Auto Pedigree & Panelshops » Revenue
Slide 37: Car Rental and Tourism
Car Rental and Tourism Prospects » Conditions in car rental and tourism will continue to be tough » Improvement expected in used car market as price differential between used and new cars widen » Inbound travel demand expected to be slow Strategic objectives » Improve return on invested capital » Ma
Slide 38: Distributorships
Distributorships Revenue (Rm) Operating profit (Rm) Operating Margins +17% +13% 8.8% 8.6% 1 316 8.3% 15 843 1 162 13 590 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Performed well » Excellent revenue growth mainly due to improved after sales » Impacted by supply disruptions due to strike
Slide 39: Automotive parts and industrial products
Automotive parts and industrial products Revenue (Rm) Operating profit (Rm) Operating Margins +11% +16% 7.3% 7.0% 7.5% 3 862 282 3 477 243 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H1 2012 H2 2012 » Overall margin improvement evident » Contributed R3,9bn of turnover and R282m of operating profit » Aut
Slide 40: Distributorships
Distributorships Prospects » While inventory position has improved, product supply remains tight but stable » Continue benefiting from growth in parts and service revenue streams as the car parc of imported brands grow » Autoparts should perform solidly in competitive market » Goscor will capitalise
Slide 41: Automotive Retail
Automotive Retail Revenue (Rm) Operating profit (Rm) Operating Margins +11% +15% 3.2% 2.7% 2.6% 10 926 9 877 299 261 H1 2013 H1 2012 H1 2013 H1 2012 H1 2013 H2 2012 H1 2012 Good growth in operating profit » New vehicle unit sales 9% up; in line with the industry » Used vehicle sales improved; good g
Slide 42: Automotive Retail
Automotive Retail Prospects » Outlook for new vehicle sales is for a slower growth » Well balanced portfolio – ideally positioned to take advantage of any growth opportunities presented by market » Used car market should improve further Strategic objectives » Target best in industry ROIC & operating
Slide 43: Financial Services
Financial Services Revenue (Rm) Operating profit (Rm) +18% +43% 491 2 165 1 833 344 H1 2013 H1 2012 H1 2013 H1 2012 Operating profit split Net Underwriting Margins Investment income, including fair value adjustments Underwriting result 9.0% Other Financial Services 7.2% 6.8% 491 431 344 151 95 119 1
Slide 44: Financial Services
Financial Services Prospects » Earnings in Financial Services division should be robust » Increasing annuity income due to new business being placed on its book » Investment portfolio continues to be conservatively managed despite increased exposure to equity markets Strategic objectives » Increase