MONEYWEB: You're with the Moneyweb Power Hour, coming to you from the Moneyweb studios in Rosebank, Johannesburg. Well, a little earlier Ian Liddle told us that he thought the Imperial results were disappointing. Tak Hiemstra, executive director of the group is with us in the studio - not Bill Lynch.

Bill has over the years graced us with his presence. He has decided to step down. So we asked our duo of Chris Buchanan and Geoff Candy to have a look a little closer at the career and life of the World Entrepreneur of the Year.

MC, ENTREPRENEUR OF THE YEAR: The 2006 Ernst Young World Entrepreneur of the Year - Bill Lynch, Imperial Holdings, South Africa! All right, Bill!
On the 10th of June last year South African business celebrated the achievements of a humble entrepreneur who had turned an ailing motor dealership in downtown Johannesburg into a R54bn motor-leasing, logistics and financial services company servicing markets in South Africa, the UK and Europe.

Later in the year we heard Bill Lynch announce the appointment of a deputy, amid speculation of retirement. Today that speculation was confirmed and Lynch will exit the executive business world. When Lynch arrived in the country 36 years ago, the motor trade was where he set his sights and, unlike business graduates who walk into well-paid jobs, this hard worker did his fair share of leg work on the streets.

BILL LYNCH: When I came to South Africa I didn't know anybody and there was nobody to help me but myself. And I had £2 000 in my pocket, which wasn't a great deal of money but was enough to keep the wolf from the door for a few months - if we had to. And I got a list of motor dealerships, which was the experience I had, you know, of being involved in motor dealerships.

I phoned them and I canvassed them and some of them rejected me and others offered me a job as a salesman. And one day I was passing Imperial and I thought it was a respectable-looking establishment, so let me phone them up. And I met up with Percy Abelkop, my predecessor at Imperial and within a short time, a week or two, I was working at Imperial.

MONEYWEB: His PA of 18 years says it has been a very special time working with him and, although they had been expecting his retirement, it had come a bit soon. She says he wasn't afraid of doing things himself:
Bill Lynch is somebody who, if he was in his office, would pick up the telephone himself. If he wanted to call, he would make his own telephone calls and very, very seldom he would actually ask me to get someone on the line for him, you know, but he would always make his own calls and I would take his messages if he was not in the office.

And the good about him is that he would return every single call, even if it meant a day later or two days later, and he would make sure that he would return every single call. He is so respectful towards me as well.
MONEYWEB: The Imperial Holdings reputation within the business community is impeccable, and Moneyweb Power Hour market watcher Wayne McCurrie nominated Imperial in the Ethics and Integrity Category of the Deloitte Good Governance Awards.

WAYNE McCURRIE: I mean, this is not just words on paper or the classic tick-the-box type of approach. You know, he does what he says he does and I must it's a very well structured report they put in their financial statements, detailing what they do in Ethics and Responsibility. It's divided into two sections, but it's part of a sustainability report, because they say long-term profitable growth must come, you know, on a sustainable long-term basis, and that the interaction with all of our stakeholders, with labour, you know, with Black Economic Empowerment, health and safety, corporate social investment, is all part of the sustainability of their company.

MONEYWEB: For Lynch, the business model is one that reflects his attitude to the workplace and the way he began his business career. The emphasis is on performance, steering well clear of established, top-heavy models.
BILL LYNCH: In Imperial we've obviously grown from small beginnings, and the first thing we did as we were getting bigger was to decentralise our business to give executives an equal measure of authority and responsibility, say to people, "That is your business, you're in charge of that, you have authority, you have responsibility, here's a bit of a vision for this business - what can you do, what can you add to it?

" The second one was to strongly resist bureaucracy. We have refused, for example, in Imperial to have a hierarchy chart. We don't try to say this is the guy that's in that block, and he's above that person, etc.

We refused to have that. We've haven't drawn up an organisational chart for 30 years in Imperial.
MONEYWEB: Bill Lynch is a man who does, rather than says, and this legacy will life long in the South African business world.

A successor at Imperial has not yet been named, but the person who finally gets the nod had better be prepared to fill a rather large set of shoes. This is Chris Buchanan for the Moneyweb Power hour.
MONEYWEB: Tak Hiemstra, the executive director of Imperial, is with us now.

It must give you a bit of a lump in the throat, Tak, listening like that about your long-time colleague.
TAK HIEMSTRA: Yes, Alec, I've heard those sentiments expressed over the years and fortunately he has instilled those values throughout the group through the years. So even if Bill is not there in the CEO seat I think those valued would still remain with us, I'm convinced of it.

MONEYWEB: And what happens from here? We understand that Mr Mohamed is not going to take up the position.
TAK HIEMSTRA: Yes, that has been clear from, you know, for quite a while now, so the board has appointed a nomination committee with about six or seven members, and they will start an interview process internally as well as externally with the aim of appointing a suitable successor by August.

MONEYWEB: And Bill - is it owing to health reasons that he's decided to step down?
TAK HIEMSTRA: No, Bill is well recovered from his illness last year. He's been back at work actually quite remarkably soon after his operation.

He didn't do a full day's work, but Bill is fine. It is not even noticeable that he was not well. But it was his choice.

He is 63 years old, it is retirement age, and I think Bill felt the time is right.
MONEYWEB: Seven months ago he certainly didn't have this idea, but I guess illness does do that to you.
TAK HIEMSTRA: Seven months ago we thought he was going to be with us for another three years or so, but.

..
MONEYWEB: Tak, these results, as you heard earlier from Ian Liddle, have been interpreted as disappointing.

In fact, if you were to strip out your BEE deal that you have - well, taking it off the balance sheet has made quite an impact on your results positively, and you have stripped out the acquisition of MCC, which is the mining open pit construction business - these would have been pretty disappointing.
TAK HIEMSTRA: Yes, that's right - if you were to strip out MCC, they would have been lower. Look, we always knew that our distributorships business, which has become so big in our lives, you know, we never held it back.

We never purposefully said this was getting too big in our lives. We made the money out of it that we could, But we always knew if the rand was going to get weaker, we would see a shrinkage in margins.
MONEYWEB: This is in importing, mainly of motor vehicles.

TAK HIEMSTRA: Yes, it is a pure import and distribution business, so we're directly buying in other currencies.
MONEYWEB: Tata has done well, but Renault, which is another part of that business, has done very poorly.
TAK HIEMSTRA: Ja, that's true.

Renault - we sold a controlling interest to Renault of France a few years ago, so we haven't been responsible for the management of Renault, and it has been disappointing in the last six months.
MONEYWEB: Not too long ago Moneyweb had an analysis of resale values and Renault came out right at the bottom of the pile. I think it was something like 50% that you lost buying a Renault in year one to year two.

Has anything been done about addressing that?
TAK HIEMSTRA: I'm not so close to the management of that business, Alec. I'm sure Carlos Ghosn of Renault would be very aware of the resale values of his vehicles, but I can't really.

..
MONEYWEB: Maybe not in South Africa, though.

But the word that comes through consistently in these results is competition, competition, competition. It does appear as though in many of the areas - and Imperial is a big group - that you operate in competitive pressures are high.
TAK HIEMSTRA: That's right, and that's why we have to watch our cost base.

We operate in industries where the barriers to entry are not particularly high. It doesn't take too much of an investment to start a small trucking company. In the car-rental business there've been many new entrants into the market, and there's fierce competition for the slice of the pie which in itself has actually grown quite strongly.

But I think it's a sign of a strong economy if there are a lot of new players coming in, competing, driving the cost down for the consumer. But yes, you're quite right, it is something that we are up against and our answer to that is efficiency and lower costs and innovative marketing and plain good management.
MONEYWEB: And profit margins did drop in certain of the divisions in this past reporting period.

Are you anticipating that that's something that's going to be with us now, because competition is here - or a more competitive field is here?
TAK HIEMSTRA: The largest area of a drop in margin was in our import and distribution business. Now there we have to wait for car prices to go up, and we have seen a price increase.

And as costs pressure are there with a weaker rand, that will happen. In our logistics business, our domestic Southern African logistics business, our margins have dropped from 8.3% to 7.

5%. That has been partly as a result of the higher fuel price.
MONEYWEB: But these are your two biggest profits generators in the group - and the profit margins in your two biggest areas are down.

TAK HIEMSTRA: That is why we have to look for higher turnover, that's why we have to push volumes. We have to get used to lower margins and make it up in volumes. We have to look for suitable acquisitions, we have to look for new ways of doing business to attract new customers.

If you look at our leasing business, where we have acquired MCC, that's now a typical example of a business that has felt the competitive pressures. Full maintenance leasing of passenger cars has become a commodity. Manufacturers are in it, the banks are in it, so we saw that we have to go to higher value-added businesses.

We've branched out into the forklift market, we have a much larger exposure to commercial vehicles, and we saw that we need a new asset class, which we found in earth-moving equipment.
MONEYWEB: Tak, just to close off with, you did enter Australia a few years ago. It wasn't a happy experience.

I remember Carol Scott sitting in the seat that you're sitting in, bemoaning that issue. You went back into Australia, though, recently - and it doesn't look like it's too happy thus far. Ian LIddle says you've got to take these risks, but is maybe Oz just not the place for Imperial?

TAK HIEMSTRA: No, I can't say that. Oz is not the place for Imperial. It's too completely different scenarios.

What we now have is Ford dealerships. We've got seven Ford dealerships in Sydney. We had nine, we closed two down.

That is more to do with Ford, the brand, itself. It has given up a lot of market share in Australia - as much as 3.5% they've given up - and that's in the six-cylinder market, and because of the higher fuel prices.

The Asian cars which are also more accessible to Australia have outperformed the larger vehicles. Also, General Motors haven't done well in Australia. So, maybe we picked the wrong brand.

But it's a matter of restructuring the business, closing non-profitable dealerships down, restructuring the properties and doing the things that we have been doing for 30 years here in South Africa with the dealerships.
MONEYWEB: Tak Hiemstra is an executive director of the Imperial Group. David Shapiro, do you know what the market cap has risen by in those 30 years?

DAVID SHAPIRO: In fact, I've got the numbers here - and that's a remarkable growth from R35m to R35bn.
MONEYWEB: A thousand times in 20 years.
DAVID SHAPIRO: In fact, it's going to be a huge challenge - a 29% compound interest per annum over that time.

So I think the new CEO is going to have his work cut out for him. But maybe that's the challenge that the business needs as it redefines itself.