Osman Arbee Chairman of Autoparts

Operating units

Autoparts		Autoparts is involved in wholesaling and distributing vehicle parts and accessories for motor vehicles that are generally outside manufacturer warranty and service plans. The division includes Midas, which sells parts and accessories through 20 owned stores and 419 franchised stores and workshops in South Africa and 46 in the rest of Africa. Alert Engine Parts is one of the largest distributors of engine components. Its range spans top-quality house brands and those from original equipment manufacturers, and services the southern African automotive after-sales market. Turbo Exchange is a highly specialised and leading distributor and refurbisher of turbochargers. In line with the group’s strategy to extend into other areas of parts distribution, 80% of Afintapart SA, a commercial vehicle parts distributor, was acquired by Midas during the period. This acquisition has strengthened the group’s positioning in the distribution of aftermarket parts in the commercial vehicles market. The division forms a valuable part of our motor value chain.

Risks, opportunities and performance drivers
Risks		Opportunities		Performance drivers
Increased competition		Growth potential in the African market		Return on invested capital
Disintermediation by manufacturers		Commercial vehicles aftermarket parts industry		Revenue growth
Rapid technological change		Increase the number of value brands		Cost management
OEMs entering the aftermarket		Targeting the workshop market		Working capital management

Results

R million	2013			2012		Change %		H2 2013			H2 2012		Change % on H2 2013		H1 2013		Change % on H1 2013
Revenue	4 473			4 134		8,2		2 209			2 043		8,1		2 264		(2,4)
Operating profit	293			278		5,4		149			138		8,0		144		3,5
Operating margin (%)	6,6			6,7				6,7			6,8				6,4

	2013			2012
Return on invested capital (%)	24,0			29,9
Return on invested capital before amortisation of intangibles and acquisition cost (%)	24,2			29,9
WACC	9,2			9,7

The Autoparts business is being reported separately for the first time.

Midas performed satisfactorily in a sluggish and competitive market. The industry is mature but stable as it is represented by a large national car parc of approximately 10 million vehicles with an average age of approximately 12 years. During the year, some pressure was also experienced on discretionary products like camping equipment and accessories.

NAC and Tourism

R million	2013			2012
Revenue	1 112			1 906
Operating profit	1			54

Included in the Other segment result is NAC, the aircraft distributor and aviation services business and the tourism businesses.

The group disposed of its 62% shareholding in NAC at the end of January 2013.

After the reporting date the group disposed of its tourism division, which had been subscale in the context of the group. This transaction is still subject to the approval of the Competition Commission.

Alert Engine Parts performed well while Turbo Exchange was negatively impacted by competitively priced imports.

Geriban, our 30% held associate in Zimbabwe traded well during the year, while NGK in which we own a 25% shareholding performed in line with the prior year.