Fleet Solutions

FLEET AFRICA

Strategy

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

Philip Smith ⁽⁵⁵⁾

BCom, BAcc, CA(SA)

Executive Director of Super Group Trading (Pty) Ltd and Super Group Africa (Pty) Ltd

Bonisile Makubalo ⁽⁵⁰⁾

N.D. Mech Eng, MBA and busy with a PhD

Chief Executive Officer Fleet Africa

Activities

Fleet Africa, a specialised fleet management solutions company 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 as well as SOC’s. 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 1 contributor status.

Results for 2020

Fleet Africa reported a solid set of results for the year ended 30 June 2020, with Covid-19 having a minimal impact on the business. The results can be mainly attributable to the contracts secured at the end of the 2019 financial year as well as the replacement of vehicles on a major long-term FML contract, albeit slower than expected, as new vehicle supply over the hard lockdown period came to a stop.

The estimated impact of Covid-19 on revenue and profit before tax was immaterial. Direct Covid-19 related costs amounted to about R0.6 million.

Fleet Africa’s joint venture with the Co-op Bank in Kenya is making steady progress and has been awarded some government contracts.

Environment, sustainability and governance

Refer to the ESG Report.

Outlook for 2021

The outlook for 2021, depending on the Covid-lockdown period, is promising as there are some major FML tenders in the pipeline. Fleet Africa, with its strong B-BBEE credentials and the competitor market in a transition phase, is well positioned to secure and renew a number of FML contracts.

Fleet Africa’s joint venture in Kenya has some good opportunities in the pipeline for 2021.

SG FLEET

Strategy

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

Robbie Blau ⁽⁵²⁾

BComm LLB (Cum Laude), HDip Tax Law

Chief Executive Officer SG Fleet

Activities

SG Fleet is a leading provider of integrated mobility solutions, including fleet management, vehicle leasing and salary packaging services. 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 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 and selectively invests in new technologies and business models that are changing the way people move.

Results for 2020

SG Fleet’s overall results, in AUD terms, reflected the unprecedented challenging operating conditions during the reported period. In the Consumer business in Australia, negative consumer sentiment resulted in a decline in retail sales of vehicles and novated leases since the start of the financial year. This was compounded by the impact of the Covid-19 pandemic. Net revenue, in AUD, declined by 11.1%, with the business estimating that the impact of the Covid-19 crisis in the final quarter of the financial year resulted in a 42% reduction in net revenue when compared to the previous corresponding quarter. Operating profit declined by 42.0% in AUD-terms. The weakening of the average Rand against the AUD positively impacted profit before tax by R16.6 million for the year under review.

The Corporate business reported that its activity levels were largely maintained, with new opportunities continuing to emerge. Requirements resulting from the Covid-19 crisis drove strong demand for extra vehicles in certain segments. Overall, funded Corporate deliveries, including extensions, were up 9.2%. Patchy consumer demand and the unavailability of stock resulted in a decline of 33.6% in novated deliveries, including extensions, for the fourth quarter compared to the previous corresponding period. Passenger car sales in Australia were down 13.8% compared to the prior reporting period.

The estimated impact of Covid-19 on revenue and profit before tax was approximately R375.8 million and R202.5 million, respectively. Direct Covid-19 related costs amounted to about R5.5 million. IFRS 16 decreased operating profit and profit before tax by R0.8 million and R6.8 million, respectively.

In the UK, a significant level of new opportunities emerged and were successfully pursued, and the penetration of products within existing accounts grew further. New vehicle registrations declined sharply in the UK with the onset of the lockdown at the end of March 2020, with some signs of a return to normal emerging in early June 2020. Extension levels increased and the second-hand vehicle market briefly came to a standstill. Volumes and prices started to recover during June 2020, and the used vehicle market was performing strongly by the end of that month.

Activity levels in the third quarter in New Zealand were in line with the previous reported period. The Northpower contract, won last year, went live and the business had a further large win in the utility sector. New registrations came to a standstill by mid-April, and the business temporarily halted disposals. Signs of a recovery emerged during June 2020. Despite the crisis, activity levels remained relatively stable, helped by the business’ strong presence in the public sector.

Environment, sustainability and governance

Refer to the ESG Report.

Outlook for 2021

SG Fleet continued to make progress in terms of new business development and product penetration. Tender activity levels increased in the second half, with the business improving its success rate further. A large number of unchallenged contract renewals and extensions were also signed, which should benefit the business going into the 2021 financial year.

SG Fleet has also seen stronger disposal returns in recent months as the second-hand market rebounds in line with renewed interest in personal vehicles. While Australia is facing some vehicle supply disruption as a result of Covid-19, deliveries for the large contract wins achieved in the past few months will be made during the next six months. Corporate demand remains strong.

The Covid-19 crisis is making a lot of organisations think about their mobility management approach, and some will feel the time has come to hand over that management to a specialist, outsourced provider such as SG Fleet to be able to extract greater efficiencies.

On the consumer front in Australia, the country is showing signs of cautious optimism and growth, with the exception of one state. Meanwhile, opportunities continue to emerge at a rapid pace in the Corporate space in the UK and New Zealand.

For further detail, refer to SG Fleet’s website: www.sgfleet.com.