Philip Michaux CEO of Automotive Retail

Risks, opportunities and performance drivers
Risks		Opportunities		Performance drivers
Interest rate increases		Growing South African middle class		Volume growth
Declining consumer spending and credit appetite		Opportunity for Jurgens Ci in the Australian market		Return on invested capital
Lack of availability of credit		Growth in supply of vehicles to full maintenance lease business		Sale of value-added products per car
		Growing parts and service revenues contributed from increase in motor vehicle car parc		Overhead absorption rates
				Contribution per employee
				Customer service index

Overview of operating units

Automotive Retail
South African Dealerships		The South African Dealerships unit is involved in the sale of new and used motor vehicles in the commercial, passenger and light commercial vehicle markets. It includes the sale of related financial services (which forms part of the Financial Services division), parts and vehicle servicing. Franchised dealerships represent every major OEM brand, including Audi, BMW, Chevrolet, Chrysler, Dodge, Ford, Freightliner, FUSO, Hino, Honda, Hyundai, Isuzu, Jaguar, Jeep, Land Rover, Lexus, MAN, Mazda, Mercedes-Benz, Mini, Mitsubishi, Nissan, Opel, Renault, Toyota, UD Trucks, Volkswagen and Volvo. It has BMW and Honda Motor Cycle and accessories dealerships. There are 14 standalone commercial vehicle dealerships.
UK Dealerships		In the United Kingdom, the Automotive Retail division is involved exclusively in the commercial vehicle market, from light commercial to medium, heavy and extra-heavy commercial vehicles. It sells new and used vehicles and vans as well as related financial services, parts and servicing. There are 30 franchised dealerships representing major brands that include DAF, Mercedes Benz, Volkswagen, Isuzu, Nissan, Fiat, Ford, Hino and MAN.
Non-OEM products		Through Beekman Canopies and Jurgens Ci, Imperial manufactures and sells caravans, canopies and related products. Beekman Canopies is a major canopy manufacturer in South Africa. Facilities located in the Western Cape and North West Province manufacturing over 100 models of fibreglass canopies and related accessories. The business has a 30-year track record as a leader in its industry. Jurgens Ci is a major caravan manufacturer in South Africa. A parts and accessories business imports camping-related products which are distributed through a Campworld dealer network of 36 branches. Jurgens Ci assembles and distributes caravans in Australia as well. Jurgens Ci houses major brands including Jurgens, Jurgens Safari, Sprite Gypsey, Howling Moon, WJ Motor Homes and Campworld. Prestige Safari Centre, which has 10 retail stores and fitment centres round the country, offering a one-stop shop for 4x4 accessories and outdoor equipment. Jurgens is active in the manufacture of canvas products, road and off-road trailers, canopies and truck bodies. Jurgens Ci and Beekmans employ a combined 1 655 staff in manufacturing in the Western Cape, KwaZulu-Natal and at its plants in Brits in the North-West province.

Results

R million	2013			2012		Change %		H2 2013			H2 2012		Change % on H2 2013		H1 2013		Change % on H1 2013
Revenue	22 702			19 560		16,1		11 776			9 683		21,6		10 926		7,8
Operating profit	651			573		13,6		352			312		12,8		299		17,7
Operating margin (%)	2,9			2,9				3,0			3,2				2,7

	2013			2012
Return on invested capital (%)	13,4			12,0
WACC	8,7			9,8

The division produced a pleasing set of results for the year. Growth in new vehicle retail sales units from South African operations was 10% ahead of industry growth. Used vehicle sales also improved by 7,5% compared to the prior year.

Passenger car volumes were strong and were up 9,7% due to a well-balanced franchise mix that benefited from a good new model lineup and growth in the entry-level segment.

Commercial unit vehicle sales (including light commercial) was up 10,7% across all brands in South Africa.

Growth in after-sales service revenue was satisfactory, while parts revenue grew encouragingly as we continue to focus on growing revenue streams from after-sales activities. The significant increase in new car sales over the last few years bode well for the future after-sales parts and services revenue for the division.

In the UK, the division continues to produce good results in a depressed market. The benefit of multi-franchising a number of sites with light commercial vehicles has paid off well and the recent acquisitions of Watts (a DAF dealer) and Orwell (a Mercedes-Benz commercial vehicle dealer) also contributed positively.

Beekman Canopies continues to perform well and successfully expanded its distribution network during the year. Jurgens Ci was impacted by industrial action in the first half of the financial year and produced a mixed set of results. The caravan market also remains muted due to lower consumer spending on leisure activities in South Africa. The Australian caravan assembly and distribution operations however, performed better.