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Chairman’s review

Thulani S Gcabashe
Chairman

The year under review was characterised by generally tough trading conditions, not just in local markets but across the globe. The global economic crisis that ensued in 2009 continues to have a significant impact particularly on the European and United States economies. While South Africa has escaped the worst effects of the economic downturn, our economic recovery is nonetheless impacted by market conditions around the globe. On the positive side, many countries across Africa are starting to show strong economic growth rates, albeit off a relatively low base.

Within this global market context, Imperial’s strong performance during the year under review is particularly impressive. The group continues to benefit from the combination of sound strategic direction, committed staff, and a robust diversified portfolio of companies run by talented leaders.

Continuing the sustainability journey

As the world looks increasingly for assurance regarding the sustainability of large, multinational companies, Imperial continues to emerge as a positive example of triple bottom-line success.

This is the group’s second Integrated Annual Report, and I am pleased to see progress being made on the sustainability and reporting journey. But while integrated reporting is still relatively new, Imperial’s way of doing business has for some time been characterised by the mindful interaction with all stakeholder groups, including employees, communities, customers, suppliers, partners and society as a whole.

Investing in people

Imperial recognises the importance of developing, nurturing and caring for its people. During the year Imperial invested R171 million in a wide range of skills development programmes targeting employees at all levels, from artisans to executive leaders.

This is a considerable investment in people by any standard, and one that continues to pay rich dividends. Imperial’s approach to implementing innovative skills development programmes that acknowledge its unique culture can be seen across the group. These span from the three artisan training centres which could serve the skills needs of the motor industry on a much wider basis, to Europcar’s pioneering new Learning Centre. There are five modern technical training centres across the group while administrative and leadership skills are developed at six locations. There are 2 756 employees on learnerships across the group, of which 2 262 are black.

The group has strong central expertise in leadership, management and technical training. Over time this has evolved into certain competencies developing at various divisions catering for businessspecific needs. Many industry-leading programmes across the spectrum from technical training to leadership development take place continuously. These and other training initiatives provide Imperial with a significant competitive advantage at a time in which there is a shortage of skilled people.

Playing a conscious role in society

The broad and diverse nature of Imperial’s business means it touches almost every aspect of people’s lives. The company is mindful of the opportunity this presents for it to play a meaningful role in bringing about positive societal change, not only through its products and services but also through relevant and impactful community investment.

A solid education can drastically alter the course of an individual’s life for the better, providing opportunities for employment and selfsufficiency. The hands-on work being carried out by the Imperial and Ukhamba Community Development Trust in this regard continues to be groundbreaking. Through its investment in teacher training, teaching materials, libraries and facilities, cultural and sporting activities, the Trust is empowering thousands of historically disadvantaged children to reach their educational and personal potential, while nurturing their self-confidence and self-esteem.

An important safety awareness programme was launched during the year, targeted at the broader South African society. As a transportation leader and a company whose history is rooted in the automotive industry, Imperial is committed to ensuring that South Africa’s roads are safer for all citizens whether they be pedestrians or motorists. Over 14 000 people die on the country’s roads annually, costing it in excess of R60 billion a year.

Using its geographic footprint and network of companies, the group launched the Imperial I-Pledge road safety campaign, sparking a national movement towards safer roads. Over 72 000 individuals have so far voluntarily made their I-Pledge to be safer, more considerate, visible and alert road users. Raising awareness of how individual behaviour can make a difference, and harnessing the collective commitment and enthusiasm of so many citizens is a massive step in the right direction.

The group also made great strides in its ongoing drive to reduce its environmental impact. At a time when concerns about the effects of global warming are top of the world’s agenda, the company recognises its responsibility to reduce carbon emissions and manage natural resources wisely. The many awards and environmental initiatives across the group stand as testimony to its commitment in this regard. Among the most notable are new low-energy dealerships, office buildings and warehouses, waste and oil recycling, and the state-of-the-art water recycling wash bays that service the car rental, tourism and logistics businesses. With energy and water scarcity looming as the next global environmental crisis, initiatives such as these will prove increasingly important. Imperial has also implemented a central system to monitor and report on the various environmental impacts of the group together with comprehensive health and safety recordkeeping.

Being part of South Africa’s transformation

As a business leader and a socially engaged company, Imperial is committed to making a positive contribution to the transformation of South Africa’s society and economy through broad-based black economic empowerment.

We will continue to promote all facets of empowerment in our business, particularly the development, promotion and recruitment of black people in the group.

The company has improved its percentage of black management from 40,4% to 47,7% over the past two-year target-setting cycle. We have achieved our targets in the aggregate, however the group has experienced more difficulty in achieving its senior management targets. While we are certain that our internal people development processes will create a sustainable pipeline of talented individuals, we need to develop specific strategies aimed at accelerating the development of black managers to take up future leadership positions.

Individual business units of the group complete their own broad-based black economic empowerment scorecards. This ensures focus and alignment with industry charters where applicable. I am very satisfied that good progress is being made as shown by the number of companies that have achieved much improved scores including the large group companies that are now at a level 3.

We remain committed to maintaining a healthy and fruitful relationship with Lereko and Ukhamba, our two BEE shareholders. The Ukhamba Trust, which owns 47,1% of Ukhamba Holdings, is our staff empowerment vehicle. A portion of the value created through Ukhamba was liquidated and paid out to Ukhamba’s shareholders during December 2011. As a result, the Ukhamba Trust made a distribution of approximately R350 million to its 15 000 beneficiaries, being employees of the group. The Imperial and Ukhamba Community Development Trust, which holds a further 6% of Ukhamba Holdings also received a payout of approximately R50 million which will continue to promote effective learning and teaching at eight underprivileged schools serving 10 000 learners across Gauteng.

Financial performance

The financial performance of the group over the year was excellent, building on a strong prior year. There is a single-minded focus by management on returns, cash flow and on the identified areas of business in line with Imperial’s stated strategic intentions. It was particularly satisfying that the performance across all three the business pillars – logistics, car rental and tourism, and distribution, retail and financial services – was sound, reflecting healthy growth in each.

Corporate governance

Imperial is committed to the highest standards of corporate governance and to conducting its business in an ethical manner. The company has applied the recommendations of King III in line with the guidance issues by the JSE. Its sustainability ethos encompasses a commitment to good governance across a wide range of business areas and stakeholder groups.

Appreciation

On behalf of the board I would like to extend my gratitude to the 47 000 employees of Imperial who have been so instrumental in bringing about such a successful year, and to the executive team who, under the leadership of Hubert Brody, has expertly chartered the company.

Tak Hiemstra recently announced his intention to retire at the end of September 2012. He will however remain on the board as a non-executive director of the company. He has played an instrumental role in the group over the years in the establishment of important new businesses, key acquisitions and as a member of the leadership team. Imperial expresses its gratitude to him for 20 years of dedicated service to the group and we look forward to his contribution as a non-executive director. Mr Hiemstra’s responsibilities for strategic development will be assumed by Mr Mohammed Akoojee, who has been a member of the executive committee since January 2011.

I also wish to thank my fellow board members whose wisdom and insight has proved invaluable in steering the company towards the achievement of its strategic objectives. I deeply value their ongoing support.

Thulani S Gcabashe
Chairman
21 August 2012

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