Imperial Logistics — FY2021 Earnings Presentation
52 slides from Imperial Logistics's earnings presentation, Jun 30, 2021
Slide 1: Investment community presentation
Investment community presentation Unlocking & delivering Annual results for the 12 months ended 30 June 2021 sustainable value
Slide 2: Agenda
Agenda 1. Overview: unlocking value 2. Operating performance 3. Financial review 4. Strategy 5. Looking ahead 6. Appendices Results for the 12 months ended 30 June 2021 2
Slide 3: Overview: unlocking value
Overview: unlocking value 1
Slide 4: Our purpose
Our purpose Connecting Africa & the world & improving people’s lives with access to quality products & services Results for the 12 months ended 30 June 2021 4
Slide 5: Key highlights
Key highlights Interim cash Revenue* EBITDA* Operating profit* dividend ROIC of 9.0% 13% 22% 60% 83 cps vs. WACC of 7.7% R52.2bn R5.0bn R2.3bn No final dividend declared Total EPS Total HEPS Continuing Net debt:EBITDA >100% 218% Core EPS** 1.3x Cash & R14.4bn 512 cps 334 cps 215% well within
Slide 6: Overview
Overview Despite challenging trading conditions & impact of COVID-19, Imperial: • recorded a strong recovery in volumes & profitability compared to F2020 • higher operating margin of 4.5% from 3.1% • generated strong free cash flow • maintained strong balance sheet • demonstrated resilience & sust
Slide 7: Operational overview & context
Operational overview & context F2021 performance positively impacted by: F2021 performance negatively impacted by: • strong recovery in volumes in most key markets • various & extended levels of COVID-19 lockdown • proceeds of R4.7bn from disposal of European restrictions, particularly alcohol,
Slide 8: Group revenue, operating profit & total assets trend
Group revenue, operating profit & total assets trend Revenue Operating profit Total assets Rm Rm Rm 42 825 45 342 52 089 2 367 1 454 2 335 36 060 42 526 30 329 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Note: Numbers
Slide 9: 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 LOGISTICS 12% ACCESS AFRICA LOGISTICS INTERNATIONAL 33% 1% 15% 8% 1% 17% 23% 38% 49% 50% 32% 18% 50% 17% 5% 10% 21% Consumer Healthcare Automotive Consumer He
Slide 10: Operating performance
Operating performance 2
Slide 11: 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 12: Group revenue & operating profit per business line
Group revenue & operating profit per business line Revenue Operating profit Operating margin Rm Rm % 2 367 5,5 2 335 52 089 422 346 45 342 3.1 42 825 4,5 12 830 1 454 11 789 65 3,2 2.7 13 550 0.6 6.2 1 183 3.1 1 187 678 4.9 24 132 21 892 19 254 10 021 11 661 15 127 758 711 806 7.6 6.1 5.3 Jun 19 Jun
Slide 13: Growth trend: Market Access
Growth trend: Market Access 29% group revenue & 35% group operating profit Revenue Operating profit 4 year Rm 2 year Rm +30% +13% CAGR= CAGR= +19% +3% 7 616 8 437 10 021 11 661 15 127 758 711 806 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 19 Jun 20 Jun 21 Delivered resilient performance in challenging c
Slide 14: Growth trend: Logistics Africa
Growth trend: Logistics Africa 30% group revenue & 42% group operating profit Revenue Operating profit 4 year Rm 2 year Rm +2% +31% CAGR= CAGR= +5% -8% 15 567 15 804 14 288 14 454 13 122 1 160 4 354 4 498 987 5 621 5 359 756 5 408 455 178 85 7 714 8 667 9 095 11 213 11 306 705 671 809 Jun 17 Jun 18
Slide 15: Growth trend: Logistics International (Euro)
Growth trend: Logistics International (Euro) 41% group revenue & 23% group operating profit Revenue Operating profit 4 year €m 2 year €m +10% +900% CAGR= CAGR= +1% +4% 1 191 1 130 1 156 1 101 1 055 30 27 7 9 475 519 608 543 467 3 582 583 587 588 681 20 3 21 3 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 1
Slide 16: Growth trend: Logistics International (Rands)
Growth trend: Logistics International (Rands) Revenue Operating profit 4 year Rm 2 year Rm +17% +>100% CAGR= CAGR= +7% +10% 21 158 18 991 18 350 18 114 542 16 308 449 168 8 332 8 191 7 435 7 682 9 480 482 7 374 (33) (20) 8 626 9 511 10 159 10 679 12 826 (13) Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 19
Slide 17: Financial review
Financial review Pls a
Slide 18: Maintaining a sound financial position
Maintaining a sound financial position Safeguarding & preserving our balance sheet, managing debt levels to remain well within bank covenants, maintaining liquidity & conserving cashflows • proactive measures to reduce fixed overhead costs • excellent working capital and capex management • generat
Slide 19: Group performance against medium term guidance
Group performance against medium term guidance F2021 Medium term guidance over 3 years 13% revenue growth Logistics: 2x GDP growth + inflation Revenue & operating profit 60% increase in operating profit Market Access: Low double digit growth Cash conversion continuing capex 86% Targeted cash convers
Slide 20: Impact of COVID-19 on results based on management estimates
Impact of COVID-19 on results based on management estimates June 2021 June 2021 June 2020 June 2020 Rm Revenue impact Operating Profit impact Revenue impact Operating Profit impact Logistics Africa 811 155 1 027 301 Market Access 681 81 1 481 197 International 1 086 110 1 432 549 Group 2 578 346 3 9
Slide 21: Profit & loss (continuing operations)
Profit & loss (continuing operations) Jun 2021 Jun 2020 Rm Rm % Change Revenue 52 208 46 380 13 EBITDA 4 986 4 098 22 Operating profit (note 1) 2 336 1 459 60 Impairment of properties net of recoupments (note 2) (118) (194) (39) Amortisation & impairment of intangible assets arising on business comb
Slide 22: Profit & loss (continuing operations)
Profit & loss (continuing operations) Jun 2021 Jun 2020 Rm Rm % Change Profit before financing costs & associates 1 547 1 017 52 Net financing costs (note 1) (742) (762) (3) Income from associates (note 2) 3 22 (86) Tax (note 3) (274) (159) (72) Net profit for the year – continuing operations 534 11
Slide 23: Reconciliation between earnings & headline earnings
Reconciliation between earnings & headline earnings Jun 2021 Jun 2020 Rm Rm Earnings (loss) – total operations 951 (303) Continuing operations 358 42 Discontinued operations 593 (345) Recoupment from the disposal of property, plant & equipment (IAS 16) (34) (54) Loss on disposal of intangible assets
Slide 24: Reconciliation between headline earnings & core earnings
Reconciliation between headline earnings & core earnings Jun 2021 Jun 2020 Rm Rm Continuing headline earnings 617 295 Amortisation of intangible assets arising on business combinations 369 374 Re-measurement of put option liabilities (39) (277) Re-measurement of contingent consideration liabilities
Slide 25: Financial position
Financial position Jun 2021 Jun 2020 Rm Rm % Change Goodwill & intangible assets (note 1) 6 121 7 084 (14) Investments in associates, other investments & other financial assets 538 469 15 Property, plant & equipment 2 937 3 326 (12) Transport fleet (note 2) 3 132 5 186 (40) Right-of-use assets 4 297
Slide 26: Financial position
Financial position Jun 2021 Jun 2020 Rm Rm % Change Net debt (note 1) (4 038) (8 391) (52) Lease obligations (4 866) (6 080) (20) Other liabilities (1 811) (2 524) (28) Total equity (note 2) 7 759 8 272 1. Decrease, impacted mainly by: 2. Movement due to: cash inflow from operations before working
Slide 27: Cash flow operating activities
Cash flow operating activities Jun 2021 Jun 2020 Rm Rm Cash generated by operations (before interest & taxes paid) (note 1) 4 908 4 536 Net working capital movements (excludes currency movements & net acquisitions) (note 2) (1 046) 559 Net interest & tax paid (1 226) (1 285) Cash inflow from operati
Slide 28: Cash flow summary
Cash flow summary Jun 2021 Jun 2020 Rm Rm Cash flow from operating activities 2 636 3 810 Investing activities: 3 313 (1 772) Capital expenditure (note 1) (733) (1 482) Net disposal (acquisitions) of subsidiaries & businesses (note 2) 4 195 (276) Net movement in associates, investments, loans & othe
Slide 29: Leverage
Leverage Net debt to EBITDA used for bank covenant calculation excluding IFRS 16 Liquidity remains strong 2.8 R14.4bn unutilised banking facilities 54% of debt is long-term in nature 2.0 36% of debt is at fixed rates 1.8 1.5 1.6 All debt requirements accommodated 14 471 1.3 in banking mark
Slide 30: Strategy
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Slide 31: The pillars of our business strategy
The 6 pillars of our business strategy Operate as Extensive ‘One Imperial’, People are Africa footprint – serving International Go digital, Integrating environmental, offering unique our greatest as a ‘Gateway footprint be digital, social & governance end-to-end solutions asset to Africa’ & expertis
Slide 32: End-to-end value chain
End-to-end value chain INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTICS SALES & MARKETING 6a. Retail services 7a. Consumer 1a. Raw materials Road, air & ocean demand generation 5a. Formal retail Air, road & ocean; Exports sourcing & procurement 6b2. Informal retail Road 2. Manufacturing 3. Warehousin
Slide 33: Africa footprint
Africa footprint In-country operations Countries serviced through partnership network Market Access: Healthcare Market Access: Consumer Logistics: Freight Logistics: Contract Logistics Results for the 12 months ended 30 June 2021 33
Slide 34: Strategic overview
Strategic overview Significant strategic acquisitions announced - J&J Group & Deep Catch Namibia Holdings Concluded sale of European & South American shipping Concluded sale of Pharmed – underperforming & low return on effort Concluded B-BBEE deal for a 25% shareholding in Imperial Logistics
Slide 35: Digital & IT initiatives enabling 'One Imperial'
Digital & IT initiatives enabling ‘One Imperial’ Improve Reposition Imperial Imperial Cloud migration Integration tools Digital courier exchange Supply chain control tower eLearning Digital Mobile (OneLink) Bridge SHORT <> MEDIUM TERM VALUE Logistics control tower Fintech Robotic process automation
Slide 36: Our ESG strategy prioritises people, planet & profit
Our ESG strategy prioritises people, planet & profit – to deliver sustainable value to key stakeholders Our ESG aspiration: Striving for zero harm to people & the environment • Define metrics & set up ESG metrics reporting template • Execute priority initiatives • Execute priority initiatives • Asse
Slide 37: Independent socioeconomic impact assessment in two key markets
Independent socioeconomic impact assessment in two key markets quantified impacts >R244bn & alignment with 10 SDGs (F19 & F20) SOUTH AFRICA NIGERIA (R98bn impact) (R146bn impact) IN-SCOPE MARKETS IMPERIAL’S GREATEST ASSET ‘GATEWAY TO AFRICA’ BEYOND IMPERIAL GO DIGITAL, GO GREEN GOING THE EXTRA MILE
Slide 38: DP World makes an offer to acquire 100% stake in Imperial
DP World makes an offer to acquire 100% stake in Imperial DP World made a cash offer of R66 per share to acquire all outstanding shares of Imperial Logistics International is part of this offer Offer implies an estimated aggregate cash consideration of c.R12.7bn • represented a premium of c.40
Slide 39: Looking ahead
Looking ahead 5
Slide 40: Guidance for F2022
Guidance for F2022 Impact of COVID-19 & ensuing uncertainty to continue to affect operations & performance in the short term July & August 2021 trading negatively impacted by external factors For F2022*, we expect Imperial’s continuing operations to deliver: • revenue growth compared to F2021
Slide 41: Thank you
Thank you www.imperiallogistics.com
Slide 42: Appendices
Appendices 6
Slide 43: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Growing the • Solid organic & acquisitive growth • Contract renewal rate is 88%, with encouraging pipeline business – • All acquisitions assessed on following criteria: • New business revenue of c.R5
Slide 44: 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 to an innovative asset-right business using data • Reduced costs of c.R200m p.a. in Logistics Africa & technology as a differentiator, & achieved through: • Cons
Slide 45: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Investment • Proactive ongoing investment in digital & data initiatives • Innovation fund now has 9 portfolio companies: in digital, data is top of mind & core to our strategy › Field Intelligence –
Slide 46: How our strategy addresses our challenges & progress made
How our strategy addresses our challenges & progress made Challenge Strategic response Progress made Moving from • Aligning processes & organisational design to ‘One Imperial’ • Organisational structures to enable ‘One Imperial’ strategy finalised decentralised to – roll-out of a single finance, hum
Slide 47: Playing our part during COVID-19
Playing our part during COVID-19 Play a critical role in supply of essential services & products Awarded opportunity to participate in the importation of COVID-19 vaccines into SA Well-positioned to provide logistics & distribution capabilities for COVID-19 vaccines in SA & other African count
Slide 48: Group revenue variance y/y by industry
Group revenue variance y/y by industry – showing the impact of COVID-19 for continuing operations Pre-COVID-19 (no restrictions) COVID-19 9 months 3 months 12 months 9 months 3 months 12 months YOY revenue variance % (Jul 2019 to Mar 2020) (Apr 2020 to Jun 2020) (Jul 2019 to Jun 2020) (Jul 2020 to M
Slide 49: Key industry trends & context
Key industry trends & context Healthcare (c.22% group revenue) Revenue growth of 19.3% Contract renewal rate of 100% with strong new business pipeline Key industry of operation & growth Increased cross-selling & improved collaboration efforts across the businesses led to development of addit
Slide 50: Key industry trends & context
Key industry trends & context Automotive (c.17% of group revenue) Strong revenue growth of 25.7% Automotive sector facing various challenges (globally and especially in Europe) • shortage of automotive chips as consumer demand for personal devices rose (COVID-19) Automotive manufacturers accel
Slide 51: Key industry trends & context
Key industry trends & context Industrial & Commodities (c.17% of group revenue) Revenue growth of 8.2% driven by strong contract renewals >95% Industrial & commodities operations recovered to pre-pandemic levels during the past 6 months Well-diversified exposure across multiple industrial & co
Slide 52: Disclaimers
Disclaimers Independent Board responsibility statement with respect to the DP World Offer: The independent board of the Company accepts responsibility for the information contained in this document insofar as such information relates to the offer by DP World Logistics FZE and, to the best of its kno