Imperial Logistics — FY2012 Earnings Presentation
48 slides from Imperial Logistics's earnings presentation, August 2012
Slide 1: Results presentation
Results presentation For the year ended 30 June 2012
Slide 2: Agenda
Agenda » Highlights » Divisional performance » Financial Review » Group prospects and strategy » Questions » Appendix 2
Slide 3: Highlights
Highlights Revenue 25% R80 830m Operating profit 25% R5 638m (Margin maintained at 7,0%) HEPS 14% 1566 cps Core EPS * 32% 1623 cps Dividend per share ^ 42% 680 cps * Core EPS excludes once-off non-operational items, the most significant being: − 147 cps income from the Lereko BEE structure in the pr
Slide 4: Improving profit trend
Improving profit trend Excl. businesses sold or unbundled Revenue (LHS) Operating Profit (RHS) 3.0 60 2 6 2.6 3 2.4 2.1 40 1.8 42.4 2 Rbn 1.4 38.4 1.3 33.3 1.2 31 4 31.4 25.7 27.8 20 28.6 23.6 1 0 0 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Dec 11 Jun 12 Core EPS HEPS 867 839 900 725 756 727 653
Slide 5: Performance of the three business pillars
Performance of the three business pillars Distribution, Retail & Logistics Car Rental & Tourism Financial Services Revenue = R27,7 bn Revenue = R3,8 bn Revenue = R51,9 bn 34% 15% 22% *PBT = R1,2 bn *PBT = R247m *PBT = R3,5 bn 27% 17% 23% The Three Pillars of Imperial * Core PBT 5
Slide 6: Business conditions in key markets
Business conditions in key markets » Strong growth continued in the SA motor vehicle market » Manufacturing sector of the SA economy is currently weak » German export industries enjoyed significant growth despite European debt crisis, assisted by a weaker Euro » Car rental remains highly competitive
Slide 7: Southern Africa logistics
ING T HINKING YY ERIAL = Southern Africa logistics
Slide 8: Southern Africa logistics
Southern Africa logistics Revenue (Rm) Operating profit (Rm) Operating Margins +19% +16% 6 2% 6.2% 16 457 5.5% 5.7% 910 4.9% 13 788 786 2012 2011 2012 2011 2012 2011 H2 H1 2012 2012 Satisfactory performance under tough trading conditions » Manufacturing sector under pressure » Market is price compet
Slide 9: Southern Africa logistics
Southern Africa logistics Revenue by activity Revenue by sector 10% 42% 35% 38% 7% 7% 9% 7% 27% Steel and Metals 2% 3% 6% 4% 5% FMCG Distribution and warehousing Fuel and Gas Mining 4 PL Wood and paper Cement, bricks, constructon Transport Agriculture Chemicals Glass Steel, metals and auto Other 9
Slide 10: International logistics
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Slide 11: International logistics (EURO)
International logistics (EURO) Revenue (€m) Operating profit (€m) Operating Margins +52% +55% 5.7% 5.4% 5.3% 1 087 59 5.0% 716 38 2012 2011 2012 2011 2012 2011 H2 H1 2012 2012 Results exceeded expectations » German export industries enjoyed significant growth » New contracts gained and record volume
Slide 12: International logistics (ZAR)
International logistics (ZAR) Revenue (Rm) Operating profit (Rm) Operating Margins +64% +71% 5.6% 5 3% 5.3% 5.1% 4.9% 11 247 598 6 848 350 2012 2011 2012 2011 2012 2011 H2 H1 2012 2012 Exchange rate benefit » 2012 Average R/€: 10.38 vs 2011 Average R/€: 9.49 » Excluding Lehnkering revenue and operat
Slide 13: International logistics
International logistics Revenue by sector 18% 28% 2% 3% 3% 3% 4% 6% 20% 13% Chemicals Steel manufacturing Automotive Paper/Packaging Mechanical engineering Energy F d Food Aliminium Apparel Imperial Shipping Group Sub contractor services Lehnkering p Panopa Neska Brouwer Shipping 13
Slide 14: Strong growth in German exports
Strong growth in German exports Exchange Rate EUR/USD Employment GDP Export 160 154 149 148 150 147 141 143 144 140 137 137 143 138 130 127 133 125 120 120 110 111 109 108 110 107 112 105 105 101 102 100 100 106 105 100 102 103 104 103 100 100 100 100 101 90 80 2002 2003 2004 2005 2006 2007 2008 200
Slide 15: Car rental and tourism
ING T HINKING YY IMPERIAL as Ga mei ee Fit _ anas | Car rental and tourism
Slide 16: Car Rental and Tourism
Car Rental and Tourism Revenue (Rm) Operating profit (Rm) Operating Margins +15% +8% 10.8% 10.6% 10.0% 380 9.1% 3 801 351 3 313 2012 2011 2012 2011 2012 2011 H2 H1 2012 2012 Improved performance in H2 year-on-year » Car rental market remains highly competitive » Pressure on rental rates easing; good
Slide 17: Distributorship
FAST MOVING FORWARD THINKIN G YY IMPERIAL Distributorship
Slide 18: Distributorships
Distributorships Revenue (Rm) Operating profit (Rm) Operating Margins +29% +33% 8.7% 8.8% 8.6% 8.4% 28 318 2 456 21 947 1 844 2012 2011 2012 2011 2012 2011 H2 H1 2012 2012 Strong growth continues » New vehicle registrations in SA 20% higher, compared to market growth of 13% » Improved stock availabi
Slide 19: 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 20: Automotive parts and industrial products
Automotive parts and industrial products » Pursued strategy to add aftermarket vehicle parts, components, industrial equipment and new areas of distribution » Acquisitions of Midas Midas, Turbo Exchange Exchange, Goscor, Goscor E-Z-GO, E-Z-GO Datadot, Datadot Segway and the recently acquired Bobcat
Slide 21: Automotive Retail
N ING T HINKING YY IMPERIAL Automotive Retail
Slide 22: Automotive Retail
Automotive Retail Revenue (Rm) Operating profit (Rm) Operating Margins +14% +15% 3 2% 3.2% 19 560 2.9% 2.9% 2.6% 17 150 573 497 2012 2011 H1 2012 H1 2011 2012 2011 H2 H1 2012 2012 Good growth in operating profit » New passenger car sales up 18%, ahead of market growth in this segment of 13% » Notabl
Slide 23: Financial Services
Financial Services
Slide 24: Financial Services
Financial Services Revenue (Rm) Operating profit (Rm) +17% +2% 775 760 3 999 3 409 2012 2011 2012 2011 Operating profit split Net Underwriting Margins Investment income, including fair value adjustments 11.4% U d Underwriting iti result lt Other Financial Services 9.0% 775 760 7.8% 6.8% 175 206 244
Slide 25: Financial services
Financial services » Regent underwriting result declined by 20%; weaker underwriting conditions in short term motor comprehensive market » Individual life had a good year » Investment returns were down - lower interest rates & volatile equity markets » Regent Botswana and Lesotho also performed well
Slide 26: Financial Review
HINKING YY IMPERIAL = & > ® o~ © O Cc © — i
Slide 27: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% » All divisions showed strong turnover growth – Organic growth = 17% » Logistics: +34%; Germany performed very well; Acquisitions contributed positively (Lehnkering & smaller bolt-ons) » Distributorships: +29%; strong vehicle unit sale
Slide 28: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% Operating profit 5 638 4 526 25% Operating profit margin 7,0% 7,0% » Organic growth = 20% » Margins up in Distributorships and International Logistics » Growth from parts, service and Other Financial Services assisted margins » CIC and
Slide 29: Divisional statistics
Divisional statistics Revenue Operating profit 5% SA logistics 14% % 16% 20% 23% International Logistics 10% 10% Car Rental and Tourism 13% Distributorships 7% 5% Automotive Retail 34% 43% Financial Services Operating margin and ROIC (%) 31 4 31.4 22.0 19.4 11.9 13.8 12.0 10 0 10.0 10.0 10 0 87 8.7
Slide 30: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% Operating profit 5 638 4 526 25% Amortisation of intangible assets (128) (15) Foreign exchange (losses) / gains (10) (51) Business acquisition costs (51) - Recoupments from sale of properties (32) 7 Exceptional items (12) (46) Fair val
Slide 31: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% Operating profit 5 638 4 526 25% Amortisation of intangible assets (128) (15) Foreign exchange (losses) / gains (10) (51) Business acquisition costs (51) - Recoupments from sale of properties (32) 7 Exceptional items (12) (46) Fair val
Slide 32: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% Operating profit 5 638 4 526 25% Amortisation of intangible assets (128) (15) Foreign exchange (losses) / gains (10) (51) Business acquisition costs (51) - Recoupments from sale of properties (32) 7 Exceptional p items ((12)) ((46)) Fa
Slide 33: Income statement
Income statement Rm 2012 2011 % Change Revenue 80 830 64 667 25% Operating profit 5 638 4 526 25% Amortisation of intangible assets (128) (15) Foreign exchange (losses) / gains (10) (51) Business acquisition costs (51) - Recoupments from sale of properties (32) 7 Exceptional items (12) (46) Fair val
Slide 34: Significant minorities' share of earnings
Significant minorities’ share of earnings F2012 vs F2011 Distributorships (excl. AMH) AMH International Logistics SA Logistics Other Net Minority earnings 34
Slide 35: Balance sheet
Balance sheet Rm 2012 2011 % Change Property, plant and equipment 8 080 6 550 23% Transport fleet 4 336 3 627 Vehicles for hire 2 321 2 057 I Intangible ibl assets 4 234 1 823 132% Other non-current assets 4 689 4 226 Net working capital 4 607 3 245 42% Cash resources 3 545 3 531 Assets 31 812 25 05
Slide 36: Gearing
Gearing Net debt : equity (excl. prefs) » Excludes R441m of perpetual % preference shares 90 81 N t D:E » Net D E wellll b l below ttargett ratio ti off 60% -80% 60 50 39 39 » Moody’s Ratings: 31 30 • Domestic short term credit rating P-1.za • Domestic long term credit rating 0 F2008 F2009 F2010 F20
Slide 37: Improving returns
Improving returns ROE# ROIC vs WACC 23.4 16.5 16.3 24 20.3 20 15 17.1 12.2 10-yr 11.5 16 11.2 avg. of 12.0 19% 11 12 10.9 9.4 10.5 10.1 9.6 9.7 8 7 4 0 3 F2008 F2009 F2010 F2011 F2012 F2008 F2009 F2010 F2012 F2011 8 9 0 2 8 9 0 2 # based on core earnings » Improving ROE » Objective: Average ROIC > t
Slide 38: Key financial ratios
Key financial ratios Ratios F2012 F2011 F2010 G Group operating margin 7,0% % 7,0% % 6,2% % Net D:E ratio ( (excl. l prefs) f ) 39% 31% 39% ROIC^ 16,3% 16,5% 12,2% ROE # 23% 20% 17% ^ WACC = 9,7% # Based on core earnings 38
Slide 39: Changes in total shareholders' interest
Changes in total shareholders’ interest Rm Total shareholders’ interest on 30 June 2011 13 016 Attributable profit 3 388 Cash flow hedges 427 F Forex translation l i diff differences 210 Dividends paid to Imperial shareholders (1 091) Dividends received from Ukhamba in excess of its carrying value1
Slide 40: Cash flow
Cash flow Rm 2012 2011 % Change Cash generated by operations (pre working capital) 8 198 6 375 29% Net working capital movements (758) (298) 154% Cash generated by operations pre-capital pre capital expenditure 7 440 6 077 Net finance costs and tax paid (2 203) (1 784) Cash flow from operating activ
Slide 41: Analysis of working capital
Analysis of working capital Rm 2012 2011 % Change Increase in working capital# 758 298 154% Stock turn (times) 5,6x 5,3x Net working capital turn (times) 20,6 21,1x A Asset t turn t still till good d despite d it increase i in i working ki capital it l » Support of higher revenue in the group – reve
Slide 42: Cash flow
Cash flow Rm 2012 2011 % Change Cash flow from operating activities (pre capex) 5 237 4 293 22% Proceeds from sale of Imperial Bank - 477 Net acquisition of subs and businesses (1 868) (943) Capital expenditure (2 592) (1 528) 70% Expansion (1 125) (687) 64% Replacement (1 467) (841) 74% » Net R1,9
Slide 43: Cash flow
Cash flow Rm 2012 2011 % Change Cash flow from operating activities (pre capex) 5 237 4 293 22% Proceeds from sale of Imperial Bank - 477 Net acquisition of subs and businesses (1 868) (943) Capital expenditure (2 592) (1 528) 70% Dividend received from Ukhamba 387 - Net movement in associates and J
Slide 44: Strategy and Prospects
ING T HINKING YY IMPERIAL Strategy and Prospects
Slide 45: Strategy
Strategy » Focused on generating higher returns on capital • Capital management well entrenched throughout the Group » Seeking S ki growth th opportunities t iti iin and d adjacent dj t tto existing i ti iindustries d t i andd geographies » Seek expansion of logistics activities on the African conti
Slide 46: Recent acquisitions – Spent R1,9 billion in 2012
Recent acquisitions – Spent R1,9 billion in 2012 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 i l an 60% Synchro
Slide 47: Prospects
Prospects » Trading conditions in Southern African logistics to remain challenging • Acquisitions, contract gains and expansion into Africa will provide growth » International logistics - substantial base for further growth • Lehnkering will make a contribution for the full year in 2013 » Growth in
Slide 48: Thank you
N ING T HINKING YY ERIAL = = Thank you