Investment Community Presentation Results for the six months ended 31 December 2018
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 2
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 3
Group highlights Continuing revenue* Continuing operating profit* Continuing HEPS +6% R1.3 billion +24% R26.6 billion in line with H1 F2018 300 cents per share Continuing EPS Net debt : equity ratio Final dividend +57% 45% of HEPS 52% 295 cents per share 135 cents per share Improved significantly from 114% in December 2017 ROIC OF 12.2% (H1 F2018: 11.7%) VS WACC OF 9.8% ROE OF 11.7% (H1 F2018: 10.1%) Net debt to 12 month EBITDA of 1.7x Note: Numbers reported are for Imperial Logistics. ROE, ROIC & WACC are calculated on a rolling 12 month basis * Excluding businesses held for sale 4
Overview Satisfactory performance in mixed trading conditions • Excellent performance from Logistics African Regions • Unsatisfactory performance of Consumer Packaged Goods (CPG) business in Logistics South Africa • Automotive & express palletised distribution businesses in Logistics International under pressure • Each division focused on concluding the rationalisation of their portfolios & reducing costs – by H2 F2019 • Renewal rate on existing contracts in excess of 90%; encouraging pipeline of new opportunities supported • by an excellent new contract gain rate New business revenue of c.R4.0 billion was secured during the past 12 months; • the full benefit should be realised in F2020 5 5
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 6
Leading market positions in South Africa, selected industries in African Regions & certain specialised capabilities in Europe International Revenue by industry ¹ Finland Sweden Established international contract logistics platform with • Netherlands specialised capabilities & leading positions in Automotive Germany 3 Belgium 2 12 16 (Germany & Poland) & Chemicals (Germany & Netherlands) UK Poland Luxembourg Czech Republic 3 38 Makes a significant contribution to Germany’s powerful • Hungary Switzerland 43 Inter- 9 South African 17 France Austria 51 national manufacturing & export industries 49 Regions Africa Bulgaria 11 Portugal Market leader in express palletised distribution services in UK • Italy Spain 15 3 24 1 Leading market share in inland waterways • African Regions Consumer packaged goods Mining & manufacturing Chemicals & energy UAE (Dubai) Healthcare Automotive Other industries Offers unique route-to-market solutions and is strongly • positioned in Southern, East and West Africa Nigeria Ghana Operates in the defensive, high growth Healthcare & CPG • Revenue by capability ¹ industries Kenya The managed solutions operating model (asset light) • Tanzania 6 5 leverages South African expertise in under-developed & 11 1 6 21 fragmented 3PL markets Zambia 1 19 43 2 Malawi Inter- South African 47 Mozambique national Africa Regions South Africa Zimbabwe Botswana 34 Namibia 82 23 Leading logistics provider with specialised end-to-end • Swaziland capabilities South Africa More than double the revenue of its nearest competitor, with • Transportation management Warehousing & distribution management growth potential Supply chain management solutions Lead logistics provider (LLP) Integrated solutions offered in all significant industries, with • Route-to-market solutions the potential for leadership in more industries as the 3PL market matures Asset right (% of revenue) ILSA: ~30% ILAR:~98% ILI: ~60% 1: Financial figures for revenue for rolling 12 month period 7
Vision & strategy Strategy focused on sustainable revenue growth, enhanced returns & improved competitiveness To be an internationally acclaimed Tier One provider of outsourced value-add logistics, supply chain management & route-to-market solutions - customised to ensure relevance & competitiveness of its clients in the industries & geographies in which it participates Aspirations Grow sustainable revenue focused organic Achieve targeted returns risk-adjusted on Improve competitiveness by investing in growth, complemented by strategic invested capital per region people, processes, digitisation & innovation, acquisitions & leveraging operational excellence across different businesses 5 corporate strategies formulated to turn our vision into reality Corporate strategies Offer fully integrated Client-centricity Asset rightness Flawless execution Local relevance solutions • Deliver client-centric • Maximise agility by • Deliver superior service • Maximise value for • International Freight solutions reducing asset intensity excellence clients Management • Build credibility among • Align asset investments • Boost client confidence • Understand unique • Expand into select clients with secured revenue to establish long term complexities & geographies & industries loyalty requirements • Prove industry expertise • Integral partner of choice in selected markets • Foster interdependence • Leverage local ownership to clients with clients & partnerships 8
Strategic initiatives to drive growth Logistics South Africa Logistics African Regions Logistics International Regional initiatives • Retain & expand contracts • Leverage unique ability to provide brand • Leverage specialised capabilities owners with access to fragmented markets • Leverage B-BBEE credentials • Seek opportunities to expand specialist • Expand managed solutions offerings capabilities • Exit unviable contracts & operations • Grow proprietary multi-market aggregation • Strong focus on improved returns • Drive organic revenue growth solution • Invest in commercial & sales capabilities • Rationalisation of costs & operations • Business restructure & cost rationalisation Excellent contract gain; renewal rates & CPG & Healthcare contract gains Significant savings through headcount • • • strong pipeline of new opportunities reductions in administrative functions Expansion of managed solutions offering • & process efficiencies (completed in Conclusion of B-BBEE transaction to form in Kenya & Mozambique • Progress made H2 F2019) a 51% black owned & 30% women owned Further partnerships with multinational ito initiatives • business Expansion of specific capabilities through clients who are benefitting from our • strategic acquisitions & portfolio Continued rationalisation of operations multi-market aggregation solution • enhancements, including IFM, in progress (ongoing) - including the consolidation of cold storage & ambient facilities in CPG - Numerous senior appointments bolster • will result in significant cost savings sales capabilities to drive contract renewal; gain rates & create global expertise in key Exiting of unprofitable contracts (ongoing) • industries (Auto, Chemicals, Healthcare) Reducing fleet size & overheads • 9
Growth trend in operations outside South Africa Revenue Operating profit R million R million 4 year 4 year 4% 10% CAGR= CAGR= 6% 7% 867 835 18 751 791 779 16 977 16 138 677 14 787 14 366 Dec 17 Dec 18 Dec 17 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Revenue outside South Africa up 10% to R18,8 billion (70% of group revenue) • Operating profit outside South Africa up 5% to R867 million (65% of group operating profit) • Growth in operations outside South Africa to offset limited growth opportunities dictated by our position as a South African market leader; & enhances our existing footprint & capabilities outside the region 10
Agenda Operations Financial Looking Overview Strategy Context Review Review Forward 11
Operating context South Africa (30% revenue; 35% operating profit) Despite marginal economic growth, lower consumer affordability due to high unemployment, • VAT & fuel price increases & economic uncertainty ahead of the elections persists Depressed volumes & ongoing competitor & client pressures - particularly in the consumer • & manufacturing businesses Rest of Africa (24% revenue; 35% operating profit) Primary positioning as a healthcare & CPG route-to-market partner • Economic prospects improving in certain countries in sub-Saharan Africa • Performance in the rest of Africa impacted by: • recessionary conditions in Namibia • slower than expected economic recovery in Kenya • general political uncertainty • 12
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