Imperial Logistics — Imperial Holdings — FY2007 Earnings Presentation
37 slides from Imperial Logistics's earnings presentation, 2007
Slide 1: Accelerating entrepreneurial momentum
accelerating entrepreneurial momentum Imperial Imperial Holdings Limited | Audited R its 2007 Holdings
Slide 2: Agenda
Agenda I t d ti and Introduction d strategic t t i intentions i t ti H b tB Hubert Brody d Results presentation Tak Hiemstra
Slide 3: Imperial today
Imperial today • A group with substantial scale in long term sustainable sectors of the South African economy • Weighted W i ht d ttowards d th the ttransportt needs d off individuals i di id l and d businesses • Occupying specific sweet spots in the motor vehicle market – The best established fully
Slide 4: Imperial today (continued)
Imperial today • An entrepreneurial leasing arm with a large asset base and a powerful yellow plant business • A travel business consisting of a leading car rental company with strong local and international brands and a listed tourism specialist
Slide 5: Why is it such a great business?
Why is it such a great business? • Because it consistently Innovations delivers • At the core Because it innovates and reinvents of South Africa’s Headline EPS • B Establishment Because 1600 it iis th there wheregrowth ofh motor th ti story focused the action iis financial services 1400 businesses •
Slide 6: Challenges
Challenges • Wey have ya substantial Cyclicality Cyclicality platform for international of consumer spending expansion: i – Perception of over-borrowed consumers Currencyfor Capacity exposure growth – Rate Car•25% hikes salesofggrowth 25% revenuetemporarily p 20%), (2006: y slowing and 13% g of but
Slide 7: Strategic intentions
Strategic intentions • Business mix being reassessed to optimise shareholder value • Cash generation and higher returns on capital are an absolute p priority. y – Capital allocation will be to areas of optimal returns • Our core business themes will reflect the above two objectives • Current initiat
Slide 8: Results to June 2007
Imperial Holdings Limited | Audited Results 2007 A Hendings Results to June 2007 accelerating entrepreneurial momentum
Slide 9: Highlights
Highlights % Change Headline earnings per share 1434 cents 17.3% Revenue R66.2 bn 22.4% EBITDA R6.9 bn 14.1% Operating profit R5.0 bn 12.7% Profit attributable to shareholders R3.1 bn 26.9%
Slide 10: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22.4% 10% hereof from MCC and UK acquisitions
Slide 11: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22.4% Operating profit 5 024 4 458 12.7% O Operating ti margin i 7 6% 7.6% 8 2% 8.2% Decline due to lower import margins, Commercial Vehicle Holdings loss and lower margin UK businesses
Slide 12: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22 4% 22.4% Operating profit 5 024 4 458 12.7% Operating margin 7.6% 8.2% Interest, fair value adjustments and forex (1 046) (968) 8.1% movements Interest rate increases and higher debt off-set by lower o e ccharges a ges for
Slide 13: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22 4% 22.4% Operating profit 5 024 4 458 12.7% Operating margin 7.6% 8.2% Interest, fair value adjustments and forex (1 046) (968) 8.1% movements Associates 327 282 16.0% 13% increase from Imperial p Bank
Slide 14: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22.4% Operating profit 5 024 4 458 12.7% Operating margin 7.6% 8.2% Interest, fair value adjustments and forex Interest (1 046) (968) 8 1% 8.1% movements Associates 327 282 16.0% Exceptional items 10 (53) -118.9% 118 9% Taxat
Slide 15: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22.4% Operating profit 5 024 4 458 12.7% Operating margin 7.6% 8.2% Interest,, fair value adjustments j and forex (1 046) (968) 8 1% 8.1% movements Associates 327 282 16.0% Exceptional items 10 (53) -118 118.9% 9% Taxation (1
Slide 16: Income statement extracts
Income statement extracts R million 2007 2006 Change Revenue 66 214 54 105 22.4% O Operating ti profit fit 5 024 4 458 12 7% 12.7% Operating margin 7.6% 8.2% Interest, fair value adjustments and forex (1 046) (968) 8 1% 8.1% movements Associates 327 282 16.0% Exceptional p items 10 ((53)) -118.9% Ta
Slide 17: Effect of equity accounting of the Lereko investment
Effect of equity accounting of the Lereko investment As Headline earnings per share (cents) Pro forma* Difference disclosed 2006 1222 1363 11.5% 2007 1434 1492 4.0% Total earnings over two years 2656 2855 7.5% If the current accounting treatment was applied for the full 2006 and 2007 fi financial i
Slide 18: Balance sheet extracts
Balance sheet extracts Including Lereko vendor finance Rbn 2007 2006 Intangibles 1.2 1.0 Investments in associates and joint ventures 2.7 1.6 P Property, t plant l t & equipment i t 54 5.4 42 4.2 Transport fleet Mostly 2.8 2.6 Leasing assets Dealership 7.0 6.4 Vehicles for hire properties 1.0 0.9 In
Slide 19: Cash flow
Cash flow R million 2007 2006 change Operating cash flow 3 879 4 255 (9%) Less: replacement capex 1 208 1 104 9% Free cash flow 2 671 3 151 (15%) As % of headline earnings (cash conversion 101% 138% ratio) Utilised as follows: - Expansion capex and acquisitions 3 078 3 417 (10%) - Loans and investme
Slide 20: Ratios
Ratios 2007 2006 Operating margin 7 6% 7.6% 8 2% 8.2% Tax rate 29.2% 35.4% ROE 23.6% 25.6% Cash conversion ratio 101% 138% Net debt/equity 85.4% 91.4% Net debt/EBITDA 1.7 1.6
Slide 21: Scale of operations
Scale of operations 2007 2006 ∆ Vehicles sold 206 077 195 713 5% - Retail 185 826 175 573 6% - Wholesale 20 251 20 140 1% O Owned d fleets fl t 55 832 54 101 3% - Passenger and light commercials 37 828 37 201 2% - Forklifts 11 004 10 651 3% - Trucks 5 603 5 210 8% - Earth moving equipment 1 397 1 03
Slide 22: Expansions during the period
Expansions during the period • 22 new dealerships • Significant new logistics contracts • Acquisition of Alert Engine Parts and Jurgens Caravans • Expansion of Tourvest’s products in South Africa, Nigeria, East Africa and the Carribean • Mining and construction equipment distributors Terex Africa an
Slide 23: Seven divisions combining for sustainable growth
Seven divisions combining g for sustainable growth
Slide 24: Operating profit by division
Operating profit by division 6000 Logistics 5000 Leasing & Capital Equipment 4000 Aviation 3000 Car Rental & Tourism 2000 Distributorships 1000 Dealerships 0 2007 2006 Insurance
Slide 25: Logistics
Logistics R’ R’m ∆% % off group O Operating ti margin i Revenue 14 562 17.2 21.2 2007 2006 Operating profit 869 14.0 17.1 6.0% 6.1% Pre-tax profit 820 19.2 19.7 Southern Africa 14% p pre-tax p profit g growth and 20% adjusted j for BEE transactions in fuels division Good cash generation Firs
Slide 26: Leasing and Capital Equipment
Leasing and Capital Equipment R’ R’m ∆% % off group O Operating ti margin i Revenue 5 228 72.7 7.6 2007 2006 Operating profit 865 60.2 17.1 16.5 17.8 Pre-tax profit 565 67.2 13.6 Good all round but MCC advanced the division to a new level MCC executed t d wellll on severall new mining i i contra
Slide 27: Aviation
Aviation R’ R’m ∆% % off group O Operating ti margin i Revenue 3 925 17.2 5.7 2007 2006 Operating profit 324 15.7 6.4 8.3% 8.4% Pre-tax profit 230 32.2 5.5 Safair suffered from a lack of expansion capital, but good results were achieved from Aircraft sales European freight operations Dry lea
Slide 28: Car rental and Tourism
Car rental and Tourism (Car rental, wholly owned tourism businesses and Tourvest) R’ R’m ∆% % off group O Operating ti margin i Revenue 3 898 13.1 5.7 2007 2006 Operating profit 568 12.0 11.3 14.6% 14.7% Pre-tax profit 514 11.5 12.4 15% growth in car rental revenue from 13% fleet growth Poor per
Slide 29: Distributorships
Distributorships (AMH, Tyco, UK and SA truck and parts businesses and Australian dealerships) R’ R’m ∆% % off group O Operating ti margin i Revenue 20 824 30.1 30.4 2007 2006 Operating profit 1 251 -16.8 24.8 6.00% 9.4% Pre-tax profit 978 (25.2) 23.5 Weaker Rand hurt AMH margins, but margins recov
Slide 30: Dealerships
Dealerships R’m R m ∆% % of group Operating margin Revenue 16 941 13.1 24.7 2007 2006 Operating profit 458 21.5 9.1 Pre-tax profit 343 9.2 8.2 2.7% 2.5% A tough market with declining new car sales as rate hikes impacted strongly Used car volumes g grew 10% % and light g commercials 28% % The N
Slide 31: Insurance
Insurance Regent Insurance, Regent Life and Imperial Re) R’m R m ∆% % of group Operating margin Revenue 3 151 20.2 4.6 2007 2006 Operating profit 713 21.1 14.1 Pre-tax profit 710 19.9 17.1 22.6% 22.5% 15% and 23.9% premium income growth in Regent Life and Regent Insurance respectively 29% combin
Slide 32: Associates
Associates Imperial Bank – Our share of profits grew by 12.8% from R179 m to R202 m – Credit environment more difficult – Gross advances grew by 35% to R31.4 bn Attractive wealth creation in Ukhamba from new investments and its 34% share of DAWN Good performance from Aviation associates (SLF a
Slide 33: Black economic empowerment
Black economic empowerment Ukhamba now owns 5 963 099 Imperial shares, 53% of which accrue to 15 018 black employees and deprived communities Value per employee varies from R50 000 to R150 000 depending on years’ years service R1.4 billion in wealth has been created for previously disadvantage
Slide 34: Outlook
Outlook Good growth can be achieved despite temporary slowdown in vehicle market The slowdown is from a high base Light commercial sales are still growing strongly Used car volumes are growing The group is diverse with exposures to strong sectors in a fast growing economy The initial eff
Slide 35: Lereko accounting
Lereko accounting Imperial Holdings Limited 1. Restating Results for the Lereko Transaction Equity Accounting Lereko for the Current & Previous Reporting Periods - for the full 12 months 2007 % 2006 % 2005 Rm Rm Rm Headline earnings as published 2,657 16.0% 2,291 18.0% 1,941 Elimination of impact wh
Slide 36: Lereko accounting
Lereko accounting Imperial Holdings Limited q y accounting 2. Equity g Lereko into the Future - Call option receivable from Lereko will be included in Investments in Associates - This option for the delivery of Imperial shares is fair valued through the income statement and this will be separately d
Slide 37: Thank you
accelerating entrepreneurial momentum Imperial Hbldiegs Thank you