B r i n g i n g t h e f u t u r e closer INFRASTRUCTURE Presented by: Mr Hilton Mer CEO: Metcash Trading Africa, Limited 1
OUR BRANDS 2
FACILITATING A BUSINESS APPROACH IN AFRICA HISTORIC EVENT FOR SOUTH AFRICA GOVERNMENT AND PRIVATE SECTOR DIALOGUE ACROSS THE CONTINENT ESSENTIAL TO FACILITATING SUCCESS PRIVATE SECTOR INVOLVEMENT REQUIRED TO HELP UPLIFT COMMUNITIES AND DEVELOP / GROW ECONOMIES CLEARLY THOUGHT OUT MESSAGES BY PRIVATE SECTOR MUST BE COMMUNICATED GOVERNMENT FACILITATES BUSINESS PROCESSES, FRAMEWORKS AND APPROPRIATE ENVIRONMENT Legal compliance necessary Remove unnecessary red tape Import duties/customs control Level playing field required Facilitation of controlled cross border trade Quo Vadis SADC and COMESA Repatriation of uninvested dividends PROSPERITY IN EUROPE AND NORTH AMERICA BUILT ON RECIPROCAL TRADING AND ACCOMMODATING BEST PRACTICE Africa needs to do likewise 3
GROWTH IN AFRICA GROWTH OF 4.2% PREDICTED IN 2004 (U.N.E.C.A) Dependent on weather and current international trends All 5 regions of the continent (S, C, E, W and N) set to demonstrate stronger growth (only Southern Africa in 2003) REASONS INCLUDE A reduction in armed conflicts and resumptions of certain internal peace talks Increase in countries eligible for debt relief Freesup resources for social expenditure and investment Improved world economic growth Will stimulate increased aid, trade and foreign investment in Africa NEED FOR AND MOVEMENT TOWARDS THE FOLLOWING FACTORS WILL ASSIST COUNTRIES GROWTH AND BUSINESS Poverty alleviation and promotion of social equity Strengthening legal and judicial systems, property rights, contract enforcement Promotion of consensus by all stakeholders Improvement in the quality of public regulation of liberalized economies Appropriate policies for developing individual economic sectors ALL OF THE ABOVE ARE RELEVANT AND IMPORTANT TO BUSINESS OPPORTUNITIES AND GROWTH IN THE FMCG INDUSTRY 4
INFRASTRUCTURAL REQUIREMENTS FOR LOGISTICAL SUCCESS THE GOVERNMENT FACTOR THE UNDERMENTIONED ISSUES STATE THE OBVIOUS BUT ARE WORTHY OF REPETITION: ELECTRICITY Light up the way Trading stores need lighting, computers, POS equipment and refrigeration Reliability essential otherwise business systems fail/ineffective Southern Africa Power Pool contributes to evolution of electricity market and integrated power expansion planning Acknowledge that several new country inter connections being considered TELECOMMUNICATIONS Mobile and fixedline networks offer opportunities Reliable fixedline networks needed for: Business communications Receiving and placing orders for goods Business data transmission and hence business analysis and control A cheaper alternative to Satellite phones 5
INFRASTRUCTURAL REQUIREMENTS FOR LOGISTICAL SUCCESS THE GOVERNMENT FACTOR (continued) RAIL/SEA TRANSPORT Facilitates importation and exportation of goods and products Ground transportation locally needs cohesive networks to dovetail on rail/sea transport ROADS Transportation of customers, staff, goods and products Modernization and industrialization dependent on suitable road infrastructure WATER AND SANITATION PRIVITASATION Can assist governments in facilitating improvements to these infrastructural elements 6
CHALLENGES IN DISTRIBUTION AND LOGISTICS INFRASTRUCTURAL INADEQUECIES Effective infrastructure required to facilitate the logistics of business Inbound logistics Outbound logistics Customer logistics Otherwise cost of operations increased / returns reduced SOME RELATIVELY SMALL POPULATIONS SPREAD OVER WIDE AREAS E.g. Mali, Sudan, Namibia, Botswana, Angola UNFAVOURABLE CLIMATIC CONDITIONS Snow in Lesotho Flooding and swollen rivers in Central Africa DIVISIONS BETWEEN SOME ETHNIC GROUPINGS POLITICAL INSTABILITIES AND INSURRECTIONS 7
GROUP AT A GLANCE Full Name: Metro Cash and Carry, Ltd. Market Capitalisation: ZAR4.25bn Shares in Issue: 1.824bn Current Share Price: ZAR2.30 12 month high/low: ZAR2.60 / ZAR1.75 Free Float: 94% Offshore Shareholding: 8% CAG% Turnover 9803: 36.2% CAG% Ops Income 9803: 32.3% 03A 02A 01A 00A 99A 98A Turnover 51.7bn 43bn 33bn 29bn 29bn 11bn Operating Income (EBITDA) 1,467m 1,115m 791m 903m 703m 362m Headline EPS cents 26.2 20.2 16.2 31.5 26.0 20.8 8
METCASH AFRICA THE BUSINESS LEADING WHOLESALE DISTRIBUTOR OF FAST MOVING CONSUMER GOODS IN AFRICA Food and nonfood groceries Liquor General merchandise CHAMPTION OF THE INDEPENDENT TRADER Hawker Spaza C Store Superette Supermarkets FRANCHISE AND BANNER ALLEGIANCES OFFERED Buying power passed down Collective corporate identity for independents Harnessed promotional activity 9
GEOGRAPHIC SPREAD 2003 AFRICA OPERATIONS +/ R17 Billion Turnover Rand Monetary Area (RMA) South Africa, Namibia, Lesotho, Swaziland 145 Metro C&C 12 Trade Centres 43 Liquor Stores 5 Distribution Centres Unitrade (UMS) Buying Group Hong Kong Trading South Africa Swaziland Namibia Lesotho AFRICA (Outside RMA) 239 Stores Combination of wholesale (predominantly) & retail Botswana Malawi Kenya Uganda Angola Zimbabwe Madagascar Mocambique Hong Kong South East Asia 10
11 STORE NUMBER ANALYSIS 439 18 42 379 TOTAL 199 12 42 145 RMA South Africa, Namibia, Lesotho & Swaziland 14 14 Angola 21 3 19 Zimbabwe 22 22 Uganda 152 152 Malawi 3 1 2 Kenya 27 2 25 Botswana 2003 Trade Centre Liquor stores C&C
12 BANNER STORES AFRICA 26 63 233 355 185 192 179 3268 TOTAL 63 KENYA 11 223 BuyRite 14 23 456 Viva 103 Super Rainbow 61 24 59 1253 Rainbow 4 7 10 72 Pop In 151 29 20 18 309 Square Deal 26 233 190 91 107 92 852 Lucky 7 UGANDA ZIMBABWE BOTSWANA SWAZILAND NAMIBIA LESOTHO RSA BANNER GROUP
STORE FORMATS IN AFRICA 13
STORE FORMATS 14
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