David Smith, CEO of LiquidCapital

Operating units

Other Financial Services		LiquidCapital is positioned as a one-stop shop for motor-related financial services and products, providing a full suite of value-added financial products and vehicle financing solutions. LiquidCapital is also selling its products through some of Regent’s distribution channels. The LiquidCapital call centres act as a secondary sales channel for its products and provide an important sales channel for Regent’s products. The business specialises in contract maintenance, road-side assistance, service plans and vehicle maintenance products which it develops and administers in-house. Ariva, an initiative with JD Group, provides a long-term vehicle leasing product to the private individual. Imperial Fleet Management (IFM), a joint venture with WesBank, provides FML and other fleet management solutions to corporate and SMME clients. MiX Telematics is a listed associate company specialising in vehicle fleet telematics and stolen vehicle recovery systems.

Results

R million	2013			2012		Change %		H2 2013			H2 2012		Change % on H2 2013		H1 2013		Change % on H1 2013
Revenue	951			887		7,2		445			535		(16,8)		506		(12,1)
Operating profit	435			356		22,2		214			225		(4,9)		221		(3,2)
Operating margin (%)	45,7			40,1				48,1			42,1				43,7

Other Financial Services, mainly represented by LiquidCapital, performed well. The operating margin has the benefit of increasing investment income which was up by 32%, helping to improve the operating margin to 45,7%. The margin also benefits from a number of profit share arrangements including banking alliances where we recognise profit for which there is no corresponding revenue.

The joint venture profits with financial institutions were however, negatively impacted by more conservative impairment assumptions in the second half, in line with expectations and current market conditions. The advances book generated through these joint ventures has however grown encouragingly, as have the funds held under service, maintenance plans, warranties and roadside assistance. Innovation of new products, improving customer retention and good penetration rates in our sales channels also contributed positively to the growth in these businesses. This business provides a valuable annuity earnings underpin to the group’s future profits.

Volumes in Imperial Fleet Management continue improving as we gain new contracts. Ariva, a personal leasing alliance with JD Group is performing in line with expectations and presents growth potential in a largely untapped market.