Imperial Logistics — H1 F2021 Earnings Presentation
57 slides from Imperial Logistics's earnings presentation, February 2021
Slide 1: Investment community presentation
Investment community presentation Interim results for the 6 months ended 31 December 2020
Slide 2: Agenda
Agenda Overview Impact & response to COVID-19 Operating context Operating performance Financial review Strategy Looking ahead 2
Slide 3: Overview
We offer a unique value proposition as the ‘Gateway to Africa’ for clients & principals through integrated market access & logistics solutions in five key industries Overview
Slide 4: Our purpose
Our purpose Connecting Africa & the world & improving people’s lives with access to quality products & services 4
Slide 5: Key features
Key features Revenue* EBITDA* Operating profit* Interim ROIC of 4.1 % +15% -2% -18% cash dividend of 83 vs. WACC of 7.5 % R26.4bn R2.6bn R1.2bn cents per share (19% increase in depreciation) Total HEPS Continuing Net debt:EBITDA Core EPS** R13.7bn -3% 1.8x Cash & liquidity position 185 cps -39% well
Slide 6: Operational overview
Operational overview • Despite challenging trading conditions & impact of COVID-19, Imperial: › recorded strong recovery in volumes & profitability compared to H2 F2020 › increased revenue compared to prior period › generated strong free cash flow › maintained strong balance sheet › demonstrated res
Slide 7: Operational overview
Operational overview • H1 F2021 performance negatively impacted by: › various & extended levels of COVID-19 lockdown restrictions › associated once-off costs due to COVID-19 › costs related to investment in people, processes, structure & systems to support strategy › lower operating margin of 4.6% f
Slide 8: Strategic overview
Strategic overview • Significant progress recorded against ‘Gateway to Africa’ & ‘One Imperial’ strategy • Executed acquisitions in Market Access & Logistics Africa • Concluded sale of European shipping business › R3.4bn proceeds received from disposal on 31 July 2020 › attractive PAT multiple of c.
Slide 9: Impact & response to COVID-19
We play a critical role in the lives of our countries & communities by providing access to quality products & services Impact & response to COVID-19
Slide 10: Playing our part during COVID-19
Playing our part during COVID-19 • Play a critical role in supply of essential services & products • Well-positioned to provide logistics & distribution capabilities for COVID-19 vaccines in South Africa & other African countries › set-up a task force across Market Access & Logistics Africa to ensur
Slide 11: Operating context
We are a purpose-driven organisation focusing on people, profit & planet Operating context
Slide 12: Operating context
Operating context Market Access (28% group revenue; 34% group operating profit) • severe impact of COVID-19 on economies – will continue until vaccines are available & herd immunity is achieved • most countries re-introduced COVID-19 restrictions • all businesses currently in operation • strong posi
Slide 13: Group revenue variance y/y by industry – impact of COVID-19
Group revenue variance y/y by industry– showing the impact of COVID-19 for continuing operations 3 months 9 months 12 months (Jan 2020 to Mar 2020) (Apr 2020 to Dec 2020) (Jan 2020 to Dec 2020) revenue variance % revenue variance % revenue variance % Automotive 15.0 5.9 8.1 Chemicals (1.2) 0.2 (0.2)
Slide 14: Revenue % split by key industry for continuing operations
Revenue % split by key industry for continuing operations Group revenue per 5 key industries Revenue per 5 key industries per business MARKET ACCESS LOGISTICS AFRICA LOGISTICS INTERNATIONAL 16% 32% 4% 7% 9% 20% 21% 16% 40% 48% 47% 50% 14% 17% 26% 1% 1% 31% 0% Consumer Industrial & Commodities Consum
Slide 15: Operating performance
We have a strong track record & experience in operating & growing in Africa – taking our clients & principals’ products to some of the fastest growing & most challenging markets in the world Operating performance
Slide 16: Business overview
Business overview Market Access Logistics Africa Logistics International • Take ownership of inventory & responsibility • Integrated freight management, contract logistics, • Partner with clients to integrate logistics functions for the full order to cash function LLP & supply chain services with si
Slide 17: Group revenue & operating profit per business line
Group revenue & operating profit per business line Revenue Operating profit Operating margin Rm Rm % 26 197 1 480 6,6 6,1 22 787 1 327 22 496 1 251 21 765 241 3,5 3,7 6 604 259 4,8 237 6 897 6 788 3,6 7 063 7,2 6,8 733 648 592 4,9 12 178 (24) (0,1) 9 818 9 586 10 119 420 506 205 422 8,2 9,2 3,3 5,7
Slide 18: Growth trend: Market Access
Growth trend: Market Access 4 year Revenue YOY 2 year Operating profit YOY CAGR= Rm growth CAGR= Rm growth +16% +35% +0% -17% 4 070 4 305 5 116 5 480 6 181 7 415 420 506 205 422 DEC 16 DEC 17 DEC 18 DEC 19 H2 F2020 DEC 20 DEC 18 DEC 19 H2 F2020 DEC 20 Delivered resilient performance in challenging c
Slide 19: Growth trend: Logistics Africa
Growth trend: Logistics Africa 4 year Revenue YOY 2 year Operating profit YOY CAGR= Rm growth CAGR= Rm growth -1% -2% -12% -25% 606 627 10 015 8 287 8 261 473 7 649 8 077 163 7 306 3 052 235 115 2 325 3 299 2 951 2 863 2 711 130 371 464 157 358 4 988 6 963 4 786 5 310 4 595 5 752 (27) DEC 16 DEC 17
Slide 20: Growth trend: Logistics International (Euro)
Growth trend: Logistics International (Euro) 4 year Revenue YOY 2 year Operating profit YOY CAGR= €m growth CAGR= €m growth -3% +1% 0% -18% 18 22 632 18 599 1 5 548 548 554 6 502 17 17 (19) 12 319 242 222 319 257 220 (18) 313 280 291 306 282 332 (1) DEC 16 DEC 17 DEC 18 DEC 19 H2 F2020 DEC 20 DEC 18
Slide 21: Growth trend: Logistics International (Rand)
Growth trend: Logistics International (Rand) 4 year Revenue YOY 2 year Operating profit YOY CAGR= Rm growth CAGR= Rm growth +8% +22% +9% +3% 10 705 302 347 356 9 518 9 300 24 9 000 8 755 78 122 7 932 4 279 278 269 (359) 234 4 201 3 946 4 077 5 046 (340) 4 000 3 932 4 472 4 799 4 809 5 223 6 426 (19)
Slide 22: Financial review
We are focused on generating growth, higher returns, increased margins & strong free cash flow – supported by a strong balance sheet & sound capital management Financial review
Slide 23: Maintaining a sound financial position
Maintaining a sound financial position • Safeguarding & preserving the balance sheet, managing debt levels to remain well within bank covenants, maintaining liquidity & conserving cashflows › proactive measures to reduce fixed overhead costs – Logistics Africa removed costs of c.R200m (annualised) ›
Slide 24: Impact of COVID-19 on results
Impact of COVID-19 on results Rm Estimate of lost revenue* Estimate of lost operating profit* Impact on margin (%)* Logistics Africa 502 98 0.8 Market Access 364 41 0.3 Logistics International 741 83 0.5 Group 1 607 222 0.5 * Based on management’s best estimate 24
Slide 25: Profit & Loss (continuing operations)
Profit & Loss (continuing operations) Dec 2020 Dec 2019* Rm Rm % Change Revenue 26 360 22 955 15 EBITDA 2 551 2 594 (2) Operating profit (note 1) 1 201 1 463 (18) Recoupments net of impairments to properties 10 15 (33) Amortisation & impairment of intangible assets arising on business combinations (
Slide 26: Profit & Loss (continuing operations)
Profit & Loss (continuing operations) Dec 2020 Dec 2019* Rm Rm % Change Profit before other non-operating items & taxation 892 1 014 (12) Other non-operating items (note 1) (435) (32) >100 Income tax expense (158) (316) (50) Net profit (loss) for the year - continuing operations 299 666 (55) Discont
Slide 27: Reconciliation between earnings & headline earnings
Reconciliation between earnings & headline earnings Dec 2020 Dec 2019* Rm Rm Earnings 814 423 - Continuing operations 232 590 - Discontinued operations 582 (167) Recoupment from the disposal of property, plant & equipment (IAS 16) (31) (41) Loss on disposal of intangible assets (IAS 38) 3 Impairment
Slide 28: Reconciliation between headline earnings & core earnings
Reconciliation between headline earnings & core earnings Six Six months Six Twelve Twelve months Dec months months months Dec 2020 2019* Dec 2018 Jun 2020 Jun 2019 Rm Rm Rm Rm Rm Continuing headline earnings 336 595 658 295 870 Amortisation of intangible assets arising on business combinations 195 1
Slide 29: Financial position
Financial position Dec 2020 Jun 2020 Rm Rm % Change Property, plant & equipment 3 004 3 326 (10) Transport fleet 3 308 5 186 (36) Right-of-use assets 4 576 5 422 (16) Goodwill & intangible assets (note 1) 6 322 7 084 (11) Investments in associates, other investments & other financial assets 717 469
Slide 30: Financial position
Financial position Dec 2020 Jun 2020 Rm Rm % Change Net interest bearing borrowings excluding lease obligations (note 1) (5 509) (8 391) (34) Lease obligations (5 185) (6 080) (15) Other liabilities (2 085) (2 524) Total equity (note 2) 7 872 8 272 1. Decrease, impacted mainly by: 2. Movement due to
Slide 31: Cash flow operating activities
Cash flow operating activities Dec 2020 Dec 2019 Rm Rm Cash generated by operations before movements in net working capital (note 1) 2 587 2 682 Net working capital movements (excludes currency movements & net acquisitions) (note 2) (1 009) (1 094) Net interest & tax paid (683) (683) Cash inflow fro
Slide 32: Cash flow summary
Cash flow summary Dec 2020 Dec 2019 Rm Rm Cash flow from operating activities 895 905 Investing activities: 2 946 (837) Capital expenditure (1) (301) (815) Net disposals (acquisitions) of subsidiaries & businesses (2) 3 390 (75) Net movement in associates, investments, loans & other financial instru
Slide 33: Leverage
Leverage Net debt to EBITDA calculation excluding IFRS 16 • Liquidity remains strong 2,8 • R13.7bn unutilised banking 2,6 facilities 2,0 • 71% of debt is long-term in 1,8 1,6 nature 14 892 1,5 1,5 14 471 • 65% of debt is at fixed rates 12 634 12 512 11 571 11 666 • All debt requirements 10 694 accom
Slide 34: Group performance against medium term guidance
Group performance against medium term guidance H1 F2021 Medium-term guidance over 3 years 15% revenue growth Logistics: 2x GDP growth + inflation Revenue & operating profit 18% decrease in operating profit Market Access: Low double digit growth Cash conversion continuing capex 90% Targeted cash conv
Slide 35: Strategy
It is our strategic intent to become a ‘One Imperial’ business & serve as the ‘Gateway to Africa’ to our clients, principals & customers – transforming from an asset-heavy, 3PL logistics player to an innovative, asset-right business, focusing on Africa Strategy
Slide 36: Strategic positioning recap
Strategic positioning recap • Transform Imperial from a regional portfolio of businesses to an integrated, end-to-end market access & logistics business focusing on Africa • Strategic intent to become ‘One Imperial’ & serve as the ‘Gateway to Africa’ • Grow organically & through acquisitions in Afri
Slide 37: Africa footprint
Africa footprint Netherlands UK Belgium Germany Poland Czech Republic France Switzerland Italy Bulgaria u ga l Spain Po rt Turkey Syria China Iraq Iran Morocco Jordan Pakistan Algeria Libya Egypt Western Sahara Saudi Arabia UAE Oman India Mauritania Mali Niger Yemen Senekal Chad Sudan Burkina Guinea
Slide 38: The 6 pillars of our business strategy
The 6 pillars of our business strategy Operate as Extensive Integrating ‘One Imperial’, People are Africa footprint – Leveraging footprint Go digital, environmental, offering unique our greatest serving as a ‘Gateway & network in Africa be digital, social & governance end-to-end solutions asset to A
Slide 39: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Achieving • Replace disposals with strategically aligned acquisitions • Contract renewal rate is c.80%, with encouraging pipeline sustainable • Solid organic & acquisitive growth targeted to F2025 •
Slide 40: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Asset intensity Transforming Imperial from an asset heavy 3PL logistics player • Asset turnover improved from 64% in H1 F2020 to 81% in H1 F2021 to an innovative asset right business using data & tec
Slide 41: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Commoditised • Exiting non-core, underperforming, low return on effort & • Digital Fleet Management, enabling Road Freight Business businesses investment businesses • Partnerships to enable digital d
Slide 42: Digital & IT initiatives enabling 'One Imperial'
Digital & IT initiatives enabling ‘One Imperial’ Reposition Imperial Improve Imperial PRO VI DER I STI CS Cloud migration L E A D LOG AL DI GI T DFE N T Integration tools E ME SCCT SHORT <> MEDIUM TERM VALUE G CS eLearnings NA Digital TI OneLink MA PS IS Bridge HT G LCT SHI EIG LO FR T TOR L AC G IT
Slide 43: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Moving from • Transitioning the brand positioning to ‘One Imperial’ brand • Organisational structures to enable ‘One Imperial’ strategy finalised decentralised • Aligning processes & organisational d
Slide 44: Looking ahead
We are a resilient & sustainable business, supported by ongoing delivery against our strategic imperatives Looking ahead
Slide 45: Guidance for F2021
Guidance for F2021 • Impact of COVID-19 & ensuing uncertainty to continue to affect operations & performance in the short term • For F2021*, we expect Imperial’s continuing operations to deliver: › double-digit revenue growth compared to F2020 › double-digit operating profit growth compared to F2020
Slide 46: Thank you
Thank you www.imperiallogistics.com
Slide 47: Appendices
Our philosophy when it comes to sustainability is to meet the needs of our clients now without compromising our ability to do so in the future Appendices
Slide 48: Our investment proposition
Our investment proposition • Focused on generating growth, higher returns & strong free cash flow – supported by a strong balance sheet & sound capital management • A purpose-driven organisation focusing on people, profit & planet • Led by a management team with vast experience, skills & track recor
Slide 49: End-to-end value chain
End-to-end value chain 6a. Retail services 7a. Consumer 1a. Raw materials demand generation Road, air & ocean 5a. Formal retail Air, road & ocean; Exports sourcing & procurement 2. Manufacturing 3. Warehousing 4. Distributors Air & road 5b. Informal retail 6b. Retail services Imports 1b. Packaging d
Slide 50: Geographic footprint
Geographic footprint In-country operations Countries serviced through partnership network Pharmaceutical & consumer health distributors Consumer goods distributors Freight management Sourcing & procurement 50
Slide 51: Our solutions: market access
Our solutions: market access • We take ownership of inventory & responsibility for the full order-to-cash function • Build complex route-to-market solutions that provide our principals’ access to consumers • Comprehensive channel strategies integrate sourcing, sales, distribution & marketing • Solut
Slide 52: Our solutions: logistics
Our solutions: logistics • Local market presence & a deep understanding of our clients businesses & the industries in which they operate • Expertly manage the movement of goods on behalf of clients between specified sources & destinations • Skilfully navigate different transportation modes (road, ri
Slide 53: Key industry trends & context
Key industry trends & context Healthcare (c.21% group revenue) • Revenue growth of 18% • Contract gain rate of c.50% • Key industry of operation & growth • Sales team focused on driving demand in the healthcare industry has now been fully deployed in South Africa • Number of COVID-19 vaccines now ap
Slide 54: Key industry trends & context
Key industry trends & context Automotive (c.16% of group revenue) • Strong revenue growth of 18% • Easing of restrictions in the industry after plant shut-downs impacted OEMs between March & June 2020 • More severe impact on European vehicle manufacturers than most other industries in 2020 • Industr
Slide 55: Key industry trends & context
Key industry trends & context Industrial & Commodities (17% of revenue) • Revenue growth of c.4% & strong contract renewals >95% • Industrial & commodities operations recovered to pre-pandemic levels during the past 6 months • Well-diversified exposure across multiple industrial & commodities sub-se
Slide 56: ESG focus in the six months to December 2020
ESG focus in the six months to December 2020 • Focus on embedding ESG practices in business, with strides made on women empowerment & gender quality: › Imperial subscribes to the UN Women Empowerment Principles › ongoing progress with global & divisional women’s forums initiatives › ranked 2nd in th
Slide 57: Disclaimer
Disclaimer Certain information presented in this results announcement constitutes alternate financial measures which are presented for illustrative purposes only. The responsibility for preparing and presenting the alternate financial measures and for the completeness and accuracy thereof is that of