Fleet Solutions

Fleet Solutions in focus

The Fleet Solutions division has operations in South Africa, Australia, New Zealand and the United Kingdom. The division provides world-class fleet solutions to suit individual customer needs and requirements, focusing on the containment of costs and operating risks associated with fleet ownership.

From fully maintained operating leases through to pure fleet management services for corporate and government clients and small to medium businesses.

We deliver optimal solutions utilising the latest fleet management technologies supported by specialist skills resulting in lower operating risk management, higher utilisation, improved efficiencies and greater cost savings.

Operating environment

SG Fleet operates in Australia, New Zealand and the United Kingdom with Fleet Africa operating in sub-Saharan Africa.

Fleet Africa

Strategy

Fleet Africa’s strategy is to be a leading provider of fleet solutions in Southern Africa in commercial and specialised fleets for both private and public enterprises.


Refer to website for more information

Material risks

Mitigation of risks

  • Dependency on large State-owned company contracts
  • Target private company tender providers

  • Secure more long-term business opportunities
  • Explore opportunities beyond the borders of South Africa
  • African risk – political
  • Appropriate ownership structures are in place
  • Staff retention
  • Payment of market-related salaries and meaningful performance-related incentives
  • Foreign exchange fluctuations
  • Invoicing in the same currency that the majority of costs are incurred

Opportunities

  • The trend by the large corporate companies to outsource the management of their fleet continues.
  • The public sector continues to pose good growth opportunity.
  • Focusing on new fleet management opportunities in sub-Saharan Africa.
  • Provide consulting services in the fleet management arena to existing and potential customers.
  • Collaboration with SG Fleet in respect of product innovation and systems development.
  • Partnership with telematics service provider to provide leading technology at competitive pricing.
R’000 Change % Year ended
30 June 2018
Year ended
30 June 2017
Revenue (0.3) 621 300 623 357
Operating profit (20.4) 116 997 146 921
Operating profit margin   18.8% 23.6%
Profit before taxation (16.4) 108 146 129 284
Net operating assets 4.2 1 035 491 993 739
RNOA   8.3% 10.8%
WACC  

11.2%

Activities

Fleet Africa, one of only two specialised fleet management solutions companies in South Africa, provides flexible, turnkey fleet management solutions, which are designed to meet the specific transport and vehicle management needs of government and parastatal customers. Specialised skills and the latest technology are used to leverage ownership and operating risks, through off-balance sheet financing, improved fleet utilisation, increased efficiencies and cost savings.

Additional value-added services are provided including driver, fuel and tyre management; accident and insurance administration fleet optimisation and route planning; vehicle tracking and recovery; and access to Fleet Africa’s 24/7/365 call centre and national service/repair network. Fleet Africa is one of the leading “true” fleet management companies providing custom solutions that are tailored to each client’s unique business requirements. Through its customer-centric approach, experience, specialist skills-base, and application of advanced technologies, Fleet Africa’s clients are assured of a sustainable, reliable fleet management partner. Fleet Africa, through dedication and commitment, retained its B-BBEE level 2 contributor status following the onerous changes to the B-BBEE Charter and is ISO9002 certified.

Results for 2018

Fleet Africa’s results for the year ended 30 June 2018 were disappointing given the loss of the Polokwane contract and the slow roll-out of the City of Tshwane emergency vehicles FML contract, as well as the National Department of Transport’s (NDoT’s) fleet maintenance contract. The implementation of the City of Tshwane’s emergency vehicles FML contract has now been completed.

Fleet Africa retained its Level 2 B-BBEE contributor status, which was critical for the business

Governance and sustainability

Refer to the Corporate Governance and Sustainability Reports on the Group’s website.

Outlook for 2019

Fleet Africa operates in a highly competitive environment where the lead-times on government contracts are protracted and unethical practices, historically, were the order of the day. We are more optimistic given government’s anti-corruption drive. Due to Fleet Africa being selective when exploring and tendering on new fleet management contract opportunities, as well as having its own anti-corruption stance, the business should benefit from operating in a more ethical environment.

Fleet Africa is pleased that it has renewed a FML contract with one of its existing large parastatal companies, which has been a client for 25 years. In addition, Fleet Africa won back a district municipality FML contract previously managed by the business. The business is in the final stages of completing its joint venture agreement with General Motors and Co-op Bank in Kenya and managed to secure an additional 132 vehicles on the Kenya government FML contract, which it won last year.

Fleet Africa continues to leverage various technological and vehicle intelligence offerings into its existing and new client environments.

SG Fleet

Strategy

SG Fleet’s strategy is to be the leading provider of integrated mobility solutions in its chosen markets.

Refer to website for more information

Material risks

Mitigation of risks

  • Inability to predict future market movements in the used vehicle market.
  • Strong manufacturer, dealer and wholesaler relationships.
  • Failure to obtain funding or appropriately priced funding.
  • Diversify key funders to reduce dependencies.

Opportunities

  • Focus on organic and acquisitive growth in corporate fleet management and novated lease markets in Australia, New Zealand and the United Kingdom.
  • Innovation and product development to enhance value add to customers and build a comprehensive offering of mobility solutions.
R’000 Change % Year ended
30 June 2018
Year ended
30 June 2017
Revenue 5.9 3 163 135 2 985 856
EBITA 7.1 1 073 587 1 002 689
EBITA margin   33.9% 33.6%
Operating profit 7.4 1 008 781 939 455
Operating profit margin   31.9% 31.5%
Profit before taxation 8.1 923 554 853 961
Net operating assets (4.7) 3 389 454 3 555 688
RNOA   20.3% 20.7%
WACC  

7.8%

Activities

SG Fleet is a leading provider of integrated mobility solutions, including fleet management, vehicle leasing and salary packaging services to corporate and government customers. SG Fleet has a presence across Australia, as well as in the United Kingdom and New Zealand. SG Fleet listed on the Australian Securities Exchange in March 2014.

The SG Fleet Group operates under two brands across corporate and consumer business segments: SG Fleet (operating in Australia, UK and New Zealand) and nlc (Australia).

The company has a unique position in the marketplace, built on the experience and product expertise of its team. SG Fleet prides itself on the strength of its relationships with blue-chip corporate and government customers. These long-term relationships have been built around a customer-centric approach to service delivery and the development of bespoke but scalable solutions to meet the needs of each customer.

An innovative mindset is core to everything SG Fleet does. The company actively contributes to the global discussion about the future of transport and is shaping the new mobility landscape in cooperation with all levels of government, as well as leading corporates. SG Fleet continuously evolves its highly advanced fleet management capabilities and flexible mobility solutions, consistently exceeding its customers’ expectations.

Results for 2018

SG Fleet successfully addressed a number of challenges encountered towards the end of the first half of the financial year to deliver a better performance in the second half. The overall business performed well, with good contributions from the acquisitions made in the UK in the previous year, as well as from the New Zealand operations. The main theme of the year has been the continued growth in the range of products and services provided to customers.

Total revenue and operating profit for the 2018 financial year, in AUD-terms, was up 9.4% and 10.8%, respectively, on the previous corresponding period. SG Fleet managed to increase its operating profit margin on the back of a greater contribution from the end-of-lease income revenue line.

The strengthening of the average Rand against the Australian Dollar negatively impacted Super Group’s profit before tax by an amount of R28.9 million (June 2017: R25.3 million).

Governance and sustainability

Refer to the Corporate Governance and Sustainability Reports on the Group’s website.

Outlook for 2019

Growth in the current financial year will come primarily from ongoing activities, supplemented by further product and services expansion, which are expected to accelerate in future years as the company brings its mobility services solutions to market. Both add growth layers to existing activities, as will any acquisitions.

Many of the products the company has already brought to market are only in the early stages of adoption, although that adoption is accelerating. There is an extensive range of solutions that will be rolled out over the next few years. Innovation remains a key driver in this process and to enhance that focus, the company has established a dedicated innovation hub.