Our strategy
Our strategy aligns our people, client and profit propositions, which are rooted in our commitment to ESG leadership, to deliver 'One Imperial' as the 'Gateway to Africa'.
Our integrated innovative solutions are supported by our investment in best-in-class and emerging technologies, and in developing a culture of client-centred collaboration. Our strategic progress is enabling us to compete better and to win in our markets and industries, in a world where the criticality of resilient and optimised supply chains has never been clearer to clients and countries.
Our strategic pillars, challenges, risks and responses
- 1Operate as ‘One Imperial’, offering unique, end-to-end solutions
- 2People are our greatest asset
- 3Extensive Africa footprint, serving as a ‘Gateway to Africa’
- 4Leveraging footprint and network in Africa for growth
- 5Go digital, be digital, enable digital
- 6Integrating ESG practices
Pillar:1Operate as ‘One Imperial’, offering unique end-to-end solutions
What this means for our stakeholders
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. They 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 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 and countries in which we operate – will drive the competitiveness and resilience of our clients, principals and customers.
Strategic initiatives
- Understanding industries and client, principal and customer needs.
- Offering unique integrated logistics solutions and market access solutions.
- Becoming a trusted brand and partner.
- Sharing capabilities for economies of scale and leveraging skills across the group, to facilitate cross-selling and upselling.
- Ability to forward and backward integrate - to become a 'one–stop shop'.
Key performance measures
- Organic revenue and operating profit growth.
- Growth in continuing headline earnings per share (HEPS) compared to the prior year.
- Good free cash flow generation.
- Contract renewal and gain rates.
- Progress forward and back integration initiatives.
- Client satisfaction (client surveys).
- Employee satisfaction (Barrett Survey Score).
Strategic challenge: Simplifying the business from a complex, regional portfolio into an integrated market access and logistics business
Associated strategic risk
Failure to execute on strategic initiatives
- Ability to deliver 'One Imperial' culture and integrated strategy may be limited by continued use of disparate and fragmented legacy systems.
Strategic responses
- Transforming into an integrated logistics and market access business, offering end-to-end solutions that provide simplicity, flexibility and visibility to our clients, principals and customers.
- New organisational structure focused on two solutions (market access and logistics).
Headline progress
- Organised and operating Imperial based on the solutions we offer to our clients, principals and customers (our capabilities) and less so on regions.
- Significant investment and progress in establishing Logistics Africa, Market Access and 'One Imperial' commercial and key account management function.
Pillar:2People are our greatest asset
What this means for our stakeholders
We are investing significantly in our people, with a clear focus on building our talent pipeline, and leveraging skills and expertise across the group. Our people strategy will ensure that the business is well-equipped with talented and skilled people equipped with the relevant skillsets and expertise, supported by optimal systems and processes, and the desired culture, to drive strategic execution, competitive differentiation, operational efficiency and innovation.
Strategic initiatives
- Creating a 'One Imperial' culture.
- Transforming leadership diversity and mindset.
- Attracting and retaining best talent and skills.
Key performance measures
- Employee engagement.
- Employee diversity.
- Improve employee culture survey score.
- Building the right organisational structure to implement the strategy, coupled with good succession planning.
Strategic challenge: Moving from a decentralised model to operating as 'One Imperial' – leveraging synergies, expertise and clients.
Associated strategic risk
Attracting and retaining talent
- Inability to attract and retain necessary skills at all levels may result in existing operational capacity not being fully utilised and an under-investment in transformation and diversity.
- New technologies and ways of working require new skills for the future while retaining the right skills for today.
Strategic responses
- Aligning our processes and organisational design to 'One Imperial', including the roll-out of a single finance, IT, human resources and communications system.
- Client and principal value proposition are centred on selling as 'One Imperial' and leveraging cross-selling and upselling opportunities.
- People proposition is centred around our purpose, collaboration and being part of a 'One Imperial' business.
- Investing in talent pipeline and leveraging skills and expertise across the group.
- Aligning remuneration KPIs to include 'One Imperial' initiatives.
Headline progress
- Finalised and implemented organisational structures to enable 'One Imperial' and 'Gateway to Africa' strategy.
- Introduced and rolling out a consistent 'One Imperial' people model and the associated ways of work for all our people practices.
- Progressing plans to introduce a centre-led training initiative regarding digitisation, and driver and controller training.
- Various communication initiatives to promote 'One Imperial'.
- Established a co-creation lab for increased collaboration with key principals and clients, to facilitate selling as 'One Imperial'.
- Invested c.R290 million in 'One Imperial' initiatives in F2021.
Pillar:3Extensive Africa footprint, serving as a ‘Gateway to Africa’
What this means for our stakeholders
Our uniquely positioned market access business in pharmaceuticals and consumer goods in over 20 countries in Africa, gives our clients, principals and customers access to some of the fastest growing and most challenging markets on the continent, reducing the complexity and risk involved in operating in those markets. Leveraging our vast footprint and scale – and our enviable local knowledge – we provide end-to-end access to markets, customers and consumers. Our focus now is to expand our geographical footprint and reach on the African continent.
Strategic initiatives
- Becoming the leading market access and logistics partner in Africa.
- Focusing on core industries.
- Leveraging footprint and scale.
- Ensuring local relevance.
Key performance measures
- Organic revenue and operating profit growth.
- Achieve return on invested capital (ROIC) targets.
- Achieve free cash conversion targets.
- Adding new strategic clients and principals.
- Expanding into new geographies, industries, and capabilities.
- Best practice development.
- Cost performance.
Strategic challenge: Growing the business – focused capital allocation.
Associated strategic risk
Macroeconomic uncertainty and volatility of trade and demand dynamics in key markets
- Exposure to domestic and global economic and market conditions, together with heightened uncertainty during the COVID-19 pandemic, may impact business activity and result in slower than planned recovery in markets in which we operate.
- Business planning and forecasting contain an increased level of uncertainty.
- Currency volatility and foreign exchange management in key markets.
Integrating new business acquisitions, projects, and partnerships
- Inability to unlock synergies and inadequate integration may have an adverse effect on operations.
- Increased risk of entering markets that are not well-understood.
- Undue reliance on third-party partnerships in new markets may have an adverse impact on reputation.
Strategic responses
- Drive solid organic growth through strong contract renewal and gain rates, as well as converting contract pipelines.
- Driving acquisitive growth. All acquisitions will be assessed on strict criteria:
- Achieving our strategic objective of 'Gateway to Africa'.
- Strong organic growth profile.
- Must achieve required returns (weighted average cost of capital (WACC) plus 3%).
- 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 businesses and regions.
- 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'.
Headline progress
- Contract renewal rate across our businesses on existing contracts is c.88%, with an encouraging pipeline of new opportunities.
- New business revenue of c.R5,9 billion p.a. was securedon a rolling 12-month basis to the end of June 2021.
- Five new clients onboarded into our multi-market aggregation solutions in Healthcare business.
- Material contract with P&G secured in the consumer industry in Nigeria.
- Developed Integrated Commercial Solutions capability in Market Access Healthcare business.
- Concluded strategic acquisitions of R120 million.
- Backward integration in Healthcare in South Africa through our 49% investment in Kiara Health since August 2020.
- Concluded 25% B-BBEE transaction in Logistics South Africa to enhance B-BBEE and women ownership.
- Announced the acquisition of the J&J Group, which will transform and expand our reach in Africa and provide access to new trade corridors.
- Announced the acquisition of Deep Catch Namibia, which will provide new category expansion, a new capability and extend our network in Market Access.
Pillar:4Leveraging footprint and network in Africa for growth
What it means
We understand the demands of the African continent and have the proven expertise to partner with clients, principals and customers wanting to enter and grow in emerging economies. We continue to connect African markets and capabilities with an international network to provide our clients and principals with end-to-end solutions from source to end consumers in Africa. This will ensure that we provide quality, customised and fit-for-purpose solutions and a seamless client experience. Through our broad spectrum of expertise, we will also grow in selected new markets and capabilities outside Africa
Strategic initiatives
- 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
- Contract renewal and gain rates.
- Client satisfaction (client surveys).
Implementation challenge: Asset intensity and commoditised business.
Strategic risks and their potential impact
Maintain cash flow by managing underperforming assets, optimising capital investment and reducing cost base
- Inability to appropriately manage capital levels and contain costs may constrain growth and reduce cash flows.
- Market factors, particularly related to COVID-19, may continue to drive cost pressure and constrain profitability and growth.
- Reduced investment in strategic initiatives, particularly digital innovation and acquisitive growth strategies due to capital constraints.
Our strategic response
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 in both market access and logistics.
- Asset-right acquisitions.
- Transforming contract logistics and road freight to move from asset- heavy capabilities to asset-right innovative solutions.
- Improve efficiency, reduce costs and investment in hard assets, reducing our asset intensity.
The progress we have made
- Reduced costs of c.R200 million (annualised) in Logistics Africa.
- Consolidated road freight businesses in Logistics Africa.
- Partnering with Lori Systems to expand the digital freight exchange capabilities.
- Significant new business gained in LLP (c.R1.3 billion).
- Concluded Parcel Ninja acquisition (e-commerce fulfilment).
Commoditised business
- Exiting non-core, underperforming low return on effort businesses.
- Investing in new age businesses, centred on digital and IT capabilities.
- Focusing on data and technology to remain competitive and relevant.
- Exited Pharmed.
- Sold European and South American shipping.
- Progress with digital fleet management, enabling our road freight business.
- Project Blue Fleet is recording good progress, with the renegotiation of supply agreements for our largest cost items in Logistics Africa.
- Progress with partnerships to enable digital distributorships in our Market Access business.
Pillar:5Go digital, be digital, enable digital
What it means
Imperial's digital strategy centres on the use of best-in-class and emerging technologies to provide clients, principals and customers with the innovative solutions they require to differentiate themselves. We embrace market disruptors 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 e-commerce, online consumer engagement and telemedicine – will shape our business model and help to future-proof 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.
Strategic initiatives
- Becoming data and insights driven, internally and for our clients.
- Leveraging technology platforms to enhance visibility and integration.
- Establishing partnerships and expanding our ecosystem (network) to generate new revenue streams and create stickiness with clients and principals.
- Expanding services into e-commerce, e-commerce fulfilment and digital freight exchanges.
Key performance measures
- Innovation 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 group functions in an agile way, evidenced by specific case studies.
Implementation challenge: Investment in digital, data and innovation.
Strategic risks and their potential impact
Accelerated digital enablement and innovation
- Accelerated pace of technological change, driven by disruptive digital technologies may increase the risk of technological obsolescence.
- Inability to deliver new solutions may result in loss of competitive differentiation and operational effectiveness.
Our strategic response
- Proactive ongoing investment in digital and data initiatives is core to our strategy.
- Capital will be allocated to:
- Our Innovation Venture Fund with significant activity and opportunities identified.
- Executing digital and IT initiatives across the business to facilitate transformational shift.
The progress we have made
Imperial's joint venture with a technology partner, One Network, has been selected as preferred partner to steward OpenLMIS, an electronic logistics management information system for the public healthcare sector.
The Innovation Venture Fund now has nine portfolio companies:
- Field Intelligence, a digital pharmaceutical distributor operating in Nigeria and Kenya.
- Shypple, a digital freight forwarder operating between Asia and Europe.
- RedBird, a provider of rapid diagnostic tests to pharmacies in Ghana.
- Lori Systems, a digital road freight exchange operating in East and West Africa.
- Fulfilment Bridge, a cross-border digital logistics service provider serving e-commerce merchants in MENA.
- MDaas Global, the healthtech company building and operating a network of modern, tech-enabled diagnostic centres across Nigeria.
- Clockwork Logistics, a business-to-business provider of a highly configurable delivery platform and driver application.
- Cheefa, an asset-light e-pharmacy marketplace which creates a distribution channel to end consumers in Egypt and Saudi Arabia.
- Portcast, a Singapore-based B2B SaaS platform that provides real-time vessel and container tracking and dynamic demand forecasting.
Pillar:6Integrating ESG practices
What it means
As a purpose-driven organisation, Imperial focuses on people, planet, and profit. We make a difference to peoples' 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 on 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.
Strategic initiatives
- Protecting our licence to operate and reputation.
- Proactively managing and investing in ESG as part of our daily course of business.
- Demonstrating care for our communities, environment and countries of operation.
- Delivering responsible ESG practices, serving as a competitive advantage for clients, principals and customers.
Key performance measures
- Deliver key milestones against ESG strategy.
- Maintain or improve global ESG ratings.
- Year-on-year improvement in renewables and emissions.
- Deliver ESG change management programme.
Implementation challenge: Creating shared and sustainable value focusing on ESG.
Strategic risks and their potential impact
ESG integration and reputation
- Increased scrutiny and investor activism on climate change practices, and the ability of companies to deliver ethical business practices and sustainable supply chain management requires increased integration and disclosures of ESG practices.
- Reputational impact of non-compliance with laws and regulations, particularly due to increased focus on regulatory and compliance processes from all our clients, principals and customers across industries.
Our strategic response
- Shifted to a purpose-driven organisation.
- Proactively investing in and integrating ESG initiatives into daily business activities, which will be tracked and measured.
- Prioritising people and planet in addition to profit.
The progress we have made
- Approved and implementing a group ESG strategy with specific and measurable targets and KPIs.
- Invested R24,2 million in communities through strategic CSI initiatives across regions, focusing on healthcare, education, safety and skills development.
- Advancing ESG rating and reporting standards, with favourable ratings received from EcoVadis and CDP, among others.
- Gap analysis conducted against the TCFD framework.
- Significantly improved the diversity of the leadership teams, with the Logistics Africa executive committee members being 60% non-white and 50% women.
