Integrated Report 2020

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Our strategy

Our purpose-driven strategy aligns our people, client and profit propositions and reimagines 'One Imperial', equipped to grow and unlock value in a post-pandemic world. Our integrated and innovative solutions, supported by best-in-class and emerging technologies and a culture of client-centred collaboration, will enable us to compete and win in our chosen markets and industries in a new world.

We operate as 'One Imperial', with one positioning, one culture, under one brand, servicing our clients as one business able to provide integrated, end-to-end solutions, serving as the 'Gateway to Africa'.
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OUR STRATEGIC POSITIONING

We are transforming Imperial from a regional portfolio of businesses to an integrated, end-to-end market access and logistics business

Our strategic intent is to become the ‘Gateway to Africa’ – transforming from an asset-heavy, 3PL logistics player to an innovative, asset-right business

Key differentiators:

  • Ability to build this business in some of the most challenging markets in Africa
  • Ability to develop leading positions as a strategic market access and logistics partner to multinational principals and clients

Grow both organically and through strategic acquisitions in Africa and selected markets

A business of scale

Unlock increasing value for our clients, principals, shareholders and other stakeholders


OUR STRATEGIC PILLARS

Executing our strategy

We are organising, optimising and positioning Imperial for growth based on the solutions we offer, supported by investment in our key strategic enablers. Our immediate focus remains to deliver the best from our current operations, ensuring they are lean, service our clients profitably, execute the basics brilliantly to maximise their organic growth potential, while delivering our longer-term strategic initiatives.

Our strategic pillars

Pillar   What it means Strategic initiatives
Operate as 'One Imperial', offering unique
end-to-end solutions		   Our clients, principals and customers want to engage with a business that is able to provide integrated and innovative solutions, and that facilitates local relevance to enable them to compete and win in their chosen markets. Clients want simplicity, flexibility and visibility of their supply chains. Imperial provides end-to-end access to markets, with the flexibility to adjust to different needs. Operating as ‘One Imperial’ with one brand positioning, one collaborative culture, one strategy and group-wide systems and processes to facilitate one client experience is necessary and will provide end-to-end visibility and insights for Imperial and our clients. Our scale and unique integrated logistics and market access solutions – rooted in a deep understanding of the industries in which we operate – will drive the competitiveness and resilience of our clients. 
  • Understanding industries, client and principals needs.
  • Offering unique integrated logistics and market access solutions – 'one stop shop'.
  • Becoming a trusted brand.
  • Sharing capabilities for economies of scale and skills, to facilitate cross-selling and upselling.
  • Ability to forward and backward integrate.
 
 
Key performance measures
  • Organic revenue and operating profit growth - Logistics: 2 times GDP growth + inflation;
    Market Access: low double-digit growth.
  • Growth in continuing HEPS compared to the prior year.
  • Good free cash flow generation with a free cash conversion ratio of 70% to 75%.
  • Maintain or increase contract renewal rates with strong new business rates.
  • Progress forward and backward integration initiatives.
  • Client satisfaction (net promoter score).
  • Branding and stakeholder perception assessment.
  • Cost improvement.

 

Pillar   What it means Strategic initiatives
People are our
greatest asset		   With ongoing investment in our talent pipeline – and a focus on leveraging skills and expertise across the group – our strategy will ensure that the business is well-equipped with talented and skilled people and expertise, supported by optimal systems and processes, to drive strategic execution, competitive differentiation, operational efficiency and innovation.
  • Creating a ‘One Imperial’ culture.
  • Transforming leadership diversity and mindset.
  • Attracting and retaining the best talent and
    skills.
 
 
Key performance measures
  • Improve employee turnover.
  • Increase employee engagement.
  • Improve employee diversity in line with business targets.
  • Improve Barrett employee culture survey score.
  • Implementing the right organisational structure to support the strategy, coupled with good succession planning.

Pillar   What it means Strategic initiatives
Extensive Africa footprint,
serving as a ‘Gateway to
Africa’		   Our uniquely positioned Market Access and Logistics Africa businesses give our principals and clients access to some of the fastest growing and most challenging markets in the world, reducing the complexity and risk involved in operating in those markets. Expanding our footprint and scale – and our enviable local knowledge and footprint – we provide end-to-end access to markets, customers and consumers. Our focus now is to expand our geographical footprint on the African continent.
  • Becoming the leading market access/ logistics partner in Africa.
  • Focusing on key industries: healthcare, consumer, automotive, chemicals and industrial.
  • Expanding footprint and scale.
  • Ensuring local relevance.
 
 
Key performance measures
  • Expanding into new geographies, industries and capabilities.
  • Effective capital allocation of R3 billion to R5 billion debt capacity (medium-term guidance) into key strategic areas.
  • Adding new strategic clients and principals.
  • Achieve ROIC target of WACC + 3%.
  • Achieve free cash conversion targets.
  • Organic revenue and operating profit growth.
       
Pillar   What it means Strategic initiatives
International footprint
and expertise		   We understand the demands of the African continent and have the proven expertise to partner with multinational clients wanting to enter and grow in emerging economies. Our broad, multinational client base benefits from our strong international logistics expertise and experience, with access to first–world technology and industry trends. This will ensure that we provide quality, customised and fit-for-purpose solutions and a seamless client experience which includes reduced complexity and risk, facilitating trade flows into and out of Africa. Through our broad spectrum of expertise, we will also grow outside of Africa in selected markets.
  • Connecting trade flows into and out of Africa.
  • Targeting multinational client base that can be leveraged into Africa.
  • Creating cross–selling and upselling opportunities.
  • Enhancing our client marketing opportunities and positioning.
 
 
Key performance measures
  • Adding new strategic clients and principals.
  • Organic revenue and operating profit growth.
  • Maintaining or increasing contract renewal rates with strong new business gains.
  • Exploring and executing options to strategically align the international portfolio.
       
Pillar   What it means Strategic initiatives
Go digital, be digital, enable digital   Imperial’s digital strategy centres on the use of best-in-class and emerging technologies to provide clients with the innovative solutions they require to differentiate themselves. We embrace market disrupters and leverage innovation so that our clients will not only survive but thrive well into the future. Digitalisation, data, new technologies and automation – including the rise of ecommerce, online consumer engagement and telemedicine – will shape our business model and help to futureproof our business. As such, prioritising investment in digital and data initiatives as core enablers to our strategy is critical in transforming Imperial, improving efficiency, facilitating revenue growth and creating new revenue streams.
  • Becoming data and insights driven, internally and for our clients.
  • Leveraging technology platforms to provide visibility and integrate with point of sale.
  • Establishing partnerships and expand our ecosystem.
  • Expanding our services into ecommerce, ecommerce fulfilment and digital freight exchanges.
 
 
Key performance measures
  • Venture fund: progress against the fund mandate and strategic objectives, specifically including alignment with and sharing of learnings with business.
  • Digital capabilities: design, approval and implementation of specific digital capabilities as prioritised by business and functions.
  • IT strategy and enterprise architecture: alignment between businesses and functions, with sign-off of roadmaps (priorities, phasing, funding, resources).
  • Data-driven decisions: aligning digital and IT to support businesses and functions in an agile way, evidenced by specific case studies.
       
Pillar   What it means Strategic initiatives
Integrating environmental, social and governance practices   As a purpose-driven organisation, Imperial focuses on people, profit and planet. We make a difference to people’s lives and play a key role in the development of Africa and her people. We facilitate access to quality products and services for millions of people in our countries of operation, which include food, fuel, medicine, and many other products that improve the quality of people’s lives. To deliver our purpose and protect our commercial and social licences to operate, we are accelerating our investment in embedding ESG into our daily business to ensure proactive management of our impacts beyond compliance requirements.
  • Protecting our licence to operate and reputation.
  • Proactively managing and investing in ESG as part of our daily course of business.
  • We care about our communities, environment and countries of operation.
  • Purpose-driven.
  • People, planet and profit focused.
 
 
Key performance measures
  • Maintaining global ESG ratings.
  • CSI spend of 1% of net PAT impact for businesses in addition to group initiatives.
  • Branding and stakeholder perception assessment.
  • No material reputational events.
  • Complete socioeconomic impact study in Nigeria and South Africa.
  • Execute waste management objectives.
       

How our strategy addresses our challenges

The last two years have entailed significant strategic focus, rationalisation and restructuring as we undertook the following:

  • Refined our positioning as the 'Gateway to Africa' and 'One Imperial'.
  • Simplified and reduced complexity.
  • Assessed, addressed and exited non-core, low return on effort and underperforming businesses.
  • Significantly reduced costs.
  • Concluded and integrated strategic acquisitions.
  • Defined our path as a transformational organisation rather than a transactional one, with significant focus on our people and organisational design, digital, data and ESG as core enablers of our strategy.

The Covid-19 crisis has further amplified the need to position Imperial for growth and longevity well beyond the pandemic. Our decisive strategic actions over the last 18 months have stood us in good stead and the tough decisions and trade-offs we made as a business - such as removing significant costs, the closure of the CPG business, and the disposal of the European shipping business and Pharmed, and focusing the business on cash flow generation and capital management – have contributed to Imperial's resilience as we now navigate these uncertain times.

Despite Covid-19-related restrictions, our business remains focused on strategic delivery and growth opportunities. While the virus has added complexities to our day-to-day operations, we are not deviating from our strategic journey of transforming Imperial from a portfolio of regional businesses to an integrated end-to-end market access and logistics business – with the strategic intent of becoming 'One Imperial' and a 'Gateway to Africa'.

Challenge   Strategic response Progress made
Growing the
business –
focused capital
allocation		    
  • Solid organic and acquisitive growth expected to F2025.
  • All acquisitions will be assessed on the following criteria:
    • Achieving our strategic objective of ‘Gateway to Africa’.
    • Must achieve required returns (WACC + 3%).
    • The extent to which Imperial can add value and leverage synergies and drive growth opportunities.
    • The extent to which Imperial can add value and leverage synergies and drive growth opportunities.
  • Integration, efficiency, cross-selling and upselling opportunities across Market Access and Logistics.
  • Capital will also be allocated to group-wide systems, digital and data initiatives, processes and people – all of which are critical to our growth strategy and achieving ‘One Imperial’.
  • Four new acquisitions in Market Access and Logistic businesses in Africa, mainly in healthcare and consumer industries to the value of c.R900 million.
  • Acquired minorities and moved Imperial Clearing and Forwarding in South Africa into Logistics International.
  • Acquired Turkish air and sea freight forwarding company, Mex Logistics.
  • Established LLP capability.
  • Contract renewal rate across our divisions on existing contracts is c.80%, with an encouraging pipeline of new opportunities.
  • New business revenue of approximately R6,2 billion secured in F2020.
  • Expanded Simplified Solutions in Healthcare, adding four new principals.
  • Expanded Market Access capability in South Africa and signed our first principal.
  • Expanded demand generation, light contract manufacturing and brand partnership services.
  • Added sourcing and procurement capabilities to industries other than healthcare.
       
Asset intensity  
  • Transforming Imperial from an asset-heavy 3PL logistics player to an innovative asset-right business using data and technology as a differentiator, achieved through:
    • Investment in digital and data initiatives.
    • Asset-light acquisitions.
    • Transforming contract logistics and road freight to move from asset-heavy industries to asset-light industries.
    • Improve efficiency, reduce costs and investment in hard assets, reducing our asset intensity.
  • Property, plant, equipment, transport fleet (including right-of-use assets) and working capital as a percentage of revenue for each business:
    • Market Access: c.29%.
    • Logistics Africa: c.32%.
    • Logistics International: c.35%.
  • Significant growth and capital allocated in Market Access, which is an asset-light, cash generative business.
 
       
Simplifying the business from a
complex, regional portfolio into an integrated Market Access and Logistics business		  
  • Transforming into an integrated logistics and market access business, offering an end-to-end service.
  • Provide simplicity, flexibility and visibility to our clients and principals.
  • New organisational structure focused on two solutions (market access and logistics).
  • Regional structure will be secondary.
  • Organised Imperial based on the solutions we offer and less so on regions.
  • Imperial now operates within two overarching solutions – market access and logistics.
  • Heads of key industries appointed for Market Access.
  • Reorganised commercial function to sell as ‘One Imperial’.
  • Cost saving of c.R200 million in South Africa planned from F2021.
       
Commoditised
businesses		  
  • Exiting non-core, underperforming, low return on effort businesses.
  • Investing in new age businesses.
  • Focusing on data and technology to remain relevant.
  • Sold our non-core European shipping business at a competitive price.
  • Entered into an agreement for the sale of Pharmed.
  • Exited CPG.
  • Further consolidation of freight business in South Africa.
  • Progressing well with the acquisition of ecommerce fulfilment, digital freight capabilities and point of sale integration initiatives.
 
       
Under-investment
in digital, data and innovation		  
  • Move away from asset-heavy, traditional ‘walls and wheels’ logistics, to forward thinking and innovative solutions; proactive ongoing investment in digital and data initiatives is top of mind and core to strategy.
  • Capital will be allocated to:
    • Our innovation fund with significant activity and opportunities identified.
    • Executing digital and data initiatives to facilitate transformational shift.
  • Appointed a group chief digital officer.
  • Three investments concluded in our venture fund: digital distributor, digital freight forwarder and a point-of-care diagnostics enabler.
  • Progressing well with the acquisition of ecommerce fulfilment and ecommerce capabilities.
    • Read more about our key digital and data initiatives in our digital and data report in Digital and data.
 
       
Moving from a
decentralised
model to
operating as
‘One Imperial’		  
  • Transitioning to ‘One Imperial’ brand through brand migration and architecture process.
  • Aligning our processes and organisational design to ‘One Imperial’, through the roll-out of single finance, HR, IT and communications systems.
  • Client value proposition centred on selling as ‘One Imperial’, and leveraging cross-selling and upselling opportunities.
  • People proposition is centred on collaboration and being part of a ‘One Imperial’.
  • Contract renewal rate across our divisions on existing contracts is c.80%, with an encouraging pipeline of new opportunities.
  • Appointed a group chief people officer.
  • Key black and female management appointments
    made.
  • Commenced transformation of our culture which is key to achieving ‘One Imperial’ strategic intent.
  • Established a shared set of values to drive a fundamental shift in the current culture.
  • Established and advancing our global and regional women’s forums and initiatives.
  • Imperial was recognised as the top company for students to work for under the transport and logistics segment, in the recent South African Graduate Employers Association study.
       
Creating shared
and sustainable
value – focusing
on ESG		  
  • Shifting to a purpose-driven organisation.
  • A strategy pillar includes investing in and integrating ESG initiatives into daily business activities, which will be tracked and measured.
  • Continuing to invest in our communities through strategic CSI initiatives across regions focusing on healthcare, education, safety, skills and sport development.
  • Integrated ESG into our strategy and business practices, including establishing a CSI/ESG committee.
  • Developed and rolling out group-wide ESG and climate change policies and guidelines, a first for the group.
  • Advancing ESG reporting standards and global membership – Imperial is now a signatory of the UN Global Compact.