4.0 - Imperial
4.0 - Imperial
4.0 - Imperial
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Chief exeCutive offiCer’S report continued...<br />
businesses serve as a natural hedge against<br />
currency weakness and capital is repatriated<br />
from time to time when the exchange rate is<br />
favourable.<br />
Vehicle sales<br />
In southern Africa, the group retailed<br />
53 241 new and 47 925 used vehicles,<br />
respectively 35% and 19% down on last year.<br />
Notably, the vehicle sales market in South<br />
Africa for the year to 30 June 2009 recorded a<br />
30% decrease. This can only be described as<br />
severe circumstances for businesses where<br />
some 80% of overheads are fixed. The decline<br />
in the total vehicle market as well as the<br />
closure of 40 new and used car dealerships<br />
contributed to the drop in our vehicle sales. It<br />
is noteworthy however that the mix of new and<br />
used vehicles is nearly at a ratio of 1:1, which<br />
is viewed as healthy. The group also sold<br />
10 002 new vehicles to outside dealers as a<br />
distributor, a 40% decrease from last year.<br />
The Australian, Swedish and United Kingdom<br />
operations sold 10 727 new and 4 460 used<br />
vehicles, respectively 85% and 93% of last<br />
year’s sales.<br />
Financial results<br />
The group returned a profit attributable<br />
to <strong>Imperial</strong> shareholders of R1 518 million<br />
compared to a loss of R870 million in the<br />
prior year. The loss in the prior year included<br />
losses on the disposal and closure of the<br />
aviation and commercial vehicle assembly<br />
and distribution businesses, and in the current<br />
year, the gain on the disposal of Tourvest is<br />
included. Continuing operations recorded<br />
a 13% increase in headline earnings to<br />
R1 294 million or 698 cents per share.<br />
Net debt (excluding preference shares) was<br />
R5,1 billion compared to R8,5 billion a year<br />
ago, a decline of 39%. This reflects the<br />
strong focus placed on cash and liquidity<br />
management during the year.<br />
In the current economic climate, net capital<br />
expenditure was 33% lower at R1 755 million,<br />
primarily because of lower expansion capital<br />
expenditure. Replacement capital expenditure<br />
was maintained at prior-year levels.<br />
A final ordinary dividend of 120 cents per<br />
share was declared, bringing the total ordinary<br />
dividend for the year to 200 cents per share.<br />
Future strategic focus<br />
Through the recent restructuring of the group,<br />
we have succeeded in strengthening the<br />
balance sheet and management can now<br />
focus on expansion into our chosen focus<br />
areas. These areas are logistics, tourism and<br />
selected aspects of financial services that are<br />
aligned to our current business.<br />
Internationally, our expansion will be<br />
aligned to <strong>Imperial</strong> Logistics International,<br />
and opportunities in Europe in the current<br />
depressed regional economies are beginning<br />
to emerge. Our southern African logistics<br />
division will continue its organic and<br />
acquisitive growth and we will also pursue<br />
acquisitions that are adjacent to our current<br />
operations and skills base where we have a<br />
competitive advantage.<br />
In line with our stated goal of enhancing<br />
capital efficiencies and entering adjacent<br />
industries, the southern African logistics<br />
business created a fourth division housing its<br />
integrated services. Volition, recently acquired,<br />
has been transferred to this unit, and the<br />
objective is to complement and enhance<br />
the existing service offerings of <strong>Imperial</strong><br />
Logistics with professional services leveraging<br />
people, processes and information technology<br />
assets.<br />
We believe tourism in southern Africa has<br />
significant potential and will investigate related<br />
opportunities carefully with the intention of<br />
expanding the business in a manner that<br />
amplifies our current strong base in inbound<br />
tour operations and coach touring. We have<br />
appointed Moeketsi Mosola, the former CEO<br />
of SA Tourism, to build and carry out this<br />
initiative.<br />
The strategy to limit the group’s relative<br />
exposure to the motor retailing industry<br />
continues. Far-reaching steps have been<br />
taken to right-size our motor operations in<br />
line with our expectations for motor vehicle<br />
demand and our requirements for return on<br />
capital.<br />
Expansion of the group during<br />
the year<br />
In line with our refined focus, corporate activity<br />
was again concentrated in our logistics<br />
division during the year.<br />
The southern African logistics operations<br />
acquired majority stakes in Tip Trans Holdings,<br />
Express Hauliers, Logistical Transportation<br />
Services, Rustgold, Volition Consulting Services<br />
and the minority shareholding in Liebentrans.<br />
<strong>Imperial</strong> Logistics International acquired<br />
Hansmann, a logistics provider to the motor<br />
industry in Wolfsburg, Germany, and Garex,<br />
which provides similar services in Poland.<br />
The car rental and tourism division acquired<br />
the businesses of U-Drive, AA Autobay and<br />
Gage Car Hire Brokers.<br />
The dealership division acquired Key Delta,<br />
a franchise for Opel, Isuzu and Chevrolet, as<br />
well as the minority shareholders in Beekman<br />
Canopies and Jurgens Caravans.<br />
We established a joint venture with McCarthy<br />
Motor Holdings to import and distribute<br />
Chinese manufactured vehicles.<br />
Skills development, health and<br />
social investments<br />
The group’s training centre in Germiston,<br />
Gauteng for petrol and diesel mechanics was<br />
completed at a cost of R24 million and opened<br />
during the year. The centre is aligned to the<br />
MERSETA (the industry sector and education<br />
training authority), and has capacity to train<br />
640 apprentices per year, in conjunction with<br />
existing group facilities. Quality standards in<br />
the group’s dealerships will be maintained<br />
through this training initiative which also<br />
contributes to addressing the national skills<br />
shortage in this area.<br />
14<br />
<strong>Imperial</strong> holdings limited Annual Report 2009