INVESTMENT COMMUNITY PRESENTATION LEADERS IN Results for the six months ended MOBILITY 31 December 2017 20 February 2018
AGENDA OPERATIONS FINANCIAL LOOKING OVERVIEW CONTEXT STRATEGY REVIEW REVIEW FORWARD 2
GROUP OVERVIEW GROUP REVENUE OPERATING PROFIT HEPS 11% 5% 16% R66 520 million R3 093 million 717 cents PER SHARE EPS NET DEBT : EQUITY RATIO INTERIM DIVIDEND 9% 80% 323 cents 671 cents (INCL PREF SHARES AS EQUITY) (45% of HEPS) PER SHARE 71% INCL. SCHIRM PROCEEDS ROIC OF 12.2% VS WACC OF 9.2% ROE OF 12.5% (H1 2017: 12.1%) Note: Prior year restated for VAPS reallocated from discontinued to continuing operations (R36 million increase in operating profit) & prior year restatement (R40 million increase in operating profit) ROE, ROIC & WACC are calculated on a rolling 12 month basis on continuing operations 3
OVERVIEW > All key financial metrics improved in mixed trading conditions > Record H1 revenue & increase in operating profit: higher vehicle sales in Motus, acquisitions & good performance from Imperial Logistics, mainly SA > Foreign revenue & operating profit increased by 20% & 4% respectively > Significant progress in achieving appropriate capital structure & balance sheet; expected to be in place by June 2018 > Advanced stages of comprehensive organisation renewal 4
GROWTH TREND IN FOREIGN OPERATIONS REVENUE (Rm) OPERATING PROFIT (Rm) 3 year 3 year 30 684 CAGR= CAGR= 15% 11% 1 211 25 628 1 205 25 271 24 457 24 239 1 077 1 060 1 035 958 20 165 20 187 794 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H1 2017 H2 2017 H1 2018 H1 2018 H1 2015 H2 2015 H1 2016 H2 2016 H1 2017 H1 2017 H2 2017 H1 2018 H1 2018 Foreign revenue up 20% to R30.7bn (46% of group) > Foreign operating profit up 4% to R1.1bn (35% of group) > Growth in foreign operations to offset the limited growth opportunities dictated by Imperial’s position as a South African market leader in logistics & motor vehicles 5
AGENDA OPERATIONS FINANCIAL LOOKING CONTEXT OVERVIEW STRATEGY REVIEW REVIEW FORWARD 6
OPERATING CONTEXT – IMPERIAL REGIONS South Africa (54% revenue; 65% operating profit) > High unemployment, struggling State Owned Enterprises (SOE’s) & pressure on government finances continue to erode consumer & business confidence > New political leadership: less corrupt, more accountable government & an improved confidence & growth > R/US$ exchange rate strengthened by 10%: positive emerging market sentiment & weakening of the US$ > Depressed volumes & competitive pressures in logistics > Highly competitive vehicle market: NAAMSA national vehicle unit sales increased by 5% African Regions (9% revenue; 15% operating profit) > Firming commodity prices & gradually strengthening domestic demand improved economic prospects > Cost of & access to currency in Nigeria improved > Hesitant investment & consumer purchasing in Kenya resulting from political uncertainty & disruptive elections > Namibia’s 5 th successive quarter of recession > Increased competition & subdued demand from key aid & relief markets 7
OPERATING CONTEXT – IMPERIAL REGIONS Eurozone, UK & Australia (37% revenue; 20% operating profit) > Economic conditions in Europe buoyant > Economic growth & the passenger vehicle market in the United Kingdom depressed by Brexit uncertainties > The Australian vehicle market growing steadily but margins on new vehicles under pressure > Conditions in Imperial’s remaining operating jurisdictions are stable Sectoral diversity & management initiatives = low correlation with jurisdictions economies 8
AGENDA OPERATIONS FINANCIAL LOOKING STRATEGY OVERVIEW CONTEXT REVIEW REVIEW FORWARD 9
STRATEGIC UPDATE The transformation & development of Imperial has been directed at value creation through strategic clarity (portfolio rationalisation), managerial focus (organisation structure) and shareholder insight (disclosure). Progress has exceeded expectations > Divisions managed & reported on separately: decreasing functional support & associated costs from Holdings > Restructuring has enhanced management focus, capital allocation, intra-divisional collaboration & the elimination of complexity, duplication & cost within the Divisions > Organisation structures & management of Divisions continually refined pursuant to their operation as fully independent (possibly publically traded) entities > The self-sufficiency, independence & balance sheet capacity necessary for both Division’s strategies a priority: progress to date has been good but we expect this to be in place by June 2018 > Key strategic question whether the long term fortunes of Imperial Logistics & Motus will be enhanced by separate listings: currently assessing whether value will accrue from the management of each division having direct access & accountability • to debt & equity markets; & determining whether investors will attribute additional combined value to direct investment in either division • > The unbundling of Motus will be the most effective path to separate listings. Decision to be taken in late June or early July 2018, following due consultation with relevant stakeholders 10
CAPITAL ALLOCATION OBJECTIVE 1 We will release capital & sharpen executive focus, by disposing of non-core, strategically misaligned, underperforming or low return on effort assets > Non-strategic properties for proceeds of R606m > Laabs GmbH in Europe for €2m (R32m) in October 2017 > Interests in smaller entities in Imperial Logistics amounting to approximately R55m Disposals post H1 2018: > Schirm GmbH, the contract manufacturing service business of Imperial Chemical Logistics GmbH for €134m (R2bn). Transaction concluded on 17 January 2018 & payment was received on 30 January 2018 11
CAPITAL ALLOCATION OBJECTIVE 1 (CONT.) Disposals in progress: > Non-strategic properties: 27 properties with a carrying value of R543m are held for sale > Transport Holdings in Botswana for R200m, subject to funding approval > Disposal of 30% of Imperial Logistics South Africa to a BBBEE partner progressing steadily. Finalisation expected by June 2018, resulting in Imperial Logistics South Africa becoming a 51% Black Owned Enterprise Continual analysis of the strategic alignment & financial performance of businesses will result in refinements to the portfolios of both divisions over the medium term 12
CAPITAL ALLOCATION OBJECTIVE 2 We will invest capital in South Africa to maintain the quality of our assets & our market leadership in logistics & motor vehicles H1 2018 Capex: > R1.3bn invested, mainly in vehicles for hire 13
CAPITAL ALLOCATION OBJECTIVE 3 We will invest capital in Africa (ex RSA) primarily to achieve our 2020 objective for the revenue & profits generated by Logistics African Regions to equal those of Logistics RSA > 70% of Surgipharm Limited for USD35m (ZAR490m), effective 1 July 2017 strategically aligned to accelerate our industry presence & relationships with pharmaceutical principals on the • African continent provides an excellent platform for further growth in other East African markets • performed below expectation due to political uncertainty and disruptive elections in Kenya • 14
CAPITAL ALLOCATION OBJECTIVE 4 We will invest capital generated from operations & divestments to grow our businesses beyond the continent, with an emphasis on logistics > Pentagon Motor Holdings (21 prime UK retail dealerships) for £28m (R479m) effective 1 September 2017 supports Motus’ strategy to deploy capital & vehicle retail expertise to grow beyond South Africa, & complements • existing commercial vehicle business in the UK performance depressed by declining UK passenger vehicle sales, market realignment from diesel vehicles & Vauxhall • changing ownership from General Motors to the French PSA group. H2 promising > 75% of SWT Group Pty Ltd (16 Australian dealerships) for AUD24.2m (R261m), effective 1 October 2017 performed in line with expectations & complements our existing dealership footprint in Australia • > R312m capex, invested in operations mainly in Europe & United Kingdom 15
CAPITAL ALLOCATION OBJECTIVE 5 The development & sustainability of Imperial will be underpinned by investment in human capital & information systems H1 2018 Capex on HC & IS > R235m H uman Capital > Enterprise Architecture project completed & implementation of recommendations in progress > Continuous investment in HR technology: work centric approach using core data to enable development decisions for people. Roll out to second & third tiers of management underway 16
CAPITAL ALLOCATION OBJECTIVE 5 (CONT.) Information Systems > Major systems implementations during H1 2018: Logistics South Africa & African Regions – SAP, Soloplan, IFM, MDS (CRM) • Logistics International – SAP, Soloplan, Next Generation Infrastructure & developing global template-based industry • specific solutions > Extensive use of technology in logistics: market-leading innovation initiatives including block chain, augmented reality & indoor navigation; fleet management & control; driver monitoring; warehouse picking systems; distribution market segmentation; etc. Note: Significant IT projects for Motus will be implemented in H2 2018 17
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