Dear Stakeholders,
Whilst the year ending March 2021 is likely to be one of Inhance Group’s most successful to date, it will also be remembered as our most challenging. After 10 consecutive years of revenue and profit growth, and an excellent year in 2019 which included winning Platinum and Gold at the South African Logistics Achievers awards, we began 2020 with lofty ambitions. There is a saying I often use when I think we are getting too confident; “Don’t get drunk on your own wine”. Perhaps we weren’t drunk, but we were certainly a little tipsy! Then something happened that none of us saw coming…
When I first heard about the Covid-19 outbreak in Wuhan, China, the speed of transmission and the resultant lockdown of the city had me very worried. I was with a friend of mine who had previously worked in public health, and I questioned the viability of such a containment strategy. It seemed unfathomable that a worldwide lockdown could be a possibility, but as it turned out, that is exactly what happened. For the first time in over 100 years, the world was faced with a pandemic that impacted almost every place on earth.
As we struggled to get to grips with the impact of the pandemic, I was tested in ways I had not yet experienced as a leader. I found that my customers, staff, and my family had to compete for a progressively diminishing amount of my time. I took comfort in knowing I was not alone in this, and in time we all learned to deal with our new circumstances.
Despite these challenges, and remarkably often because of them, Inhance had a very successful year. We were forced to innovate faster, to respond to challenges in a smarter way, and, when the situation called for it, to simply grit it out. We increased our headcount when many were retrenching, and our revenue and profits also increased. We are stronger as a business than we were a year ago, and well positioned to tackle the challenges ahead.
I am grateful for the blessings of good health, the support I have received from my loved ones, and for the comfort of a home to enjoy with my family. We were among the fortunate few. During these times we must be mindful of those who suffered the most through the pandemic, and whilst we did what we could to help our communities, much more is needed from all of us.
As we start off the year, it’s a good time reflect on how far we have come, and how much further we need to go. In this letter, I will review our 2020 performance and 2021 outlook in the context of our broader definitions of success, which are mentioned below:
- Creating value for our customers
- Leading our field in terms of product and services innovation
- Positively impacting our broader communities, our staff and our environment
- Building a sustainable and profitable business
Creating Value for Customers
We are here to serve, to passionately commit ourselves to our customers’ success and to immerse ourselves in their worlds. I believe our customers see this, I believe they understand that their business matters to us and that we take our obligations very seriously.
In 2020, more of our client solutions went live in a single year than ever before. Due to the pandemic, we were challenged to find ways to implement solutions remotely via platforms like MS Teams and Zoom. We aided many of our customers to continue trading through these challenging times by identifying areas requiring improvement, providing solutions to deliver those improvements, and sharing the risk with our customers, as part of our commitment to their success. Our risk-share deals are based on clear, definable measures for a 12-month cycle and always include a balanced scorecard of savings, profit, and supply chain performance to ensure our work creates a sustainable platform for success.
We also enabled many of our clients to move to home delivery solutions, providing them with the technology and service platforms to deal with the surge in home delivery services during the pandemic.
Our total customer savings for the year was more than two times our revenue, allowing our customers to deal with the impact of the pandemic whilst creating a stronger and more sustainable platform for the future.
Looking forward to 2021, we will strive to further innovate, to keep adding value wherever we can and to share risk with our clients so that we only win when they win.
Product & Service Innovation
Building on 2019’s successes 2020 marked a year in which we further advanced our solution offerings.
We invested about 8% of revenue in R&D, launching new innovations in the areas of Supply Chain Control Tower, Smart City, Waste Management, Business Intelligence, Supply Chain Planning, and Home Delivery Solutions.
In three short weeks, we developed an integrated Covid symptom screening and reporting solution, enabling us to assist both our clients and our staff to keep safe and comply with regulations. To date we have recorded over 1.5 million entries and aided in the tracking and isolation of those at risk.
In addition, we were able to leverage 3rd Party technologies to great effect, including Opsi Systems, SAGE, Microsoft, AWS, and many more. We are grateful for the important part they played in creating value for our clients.
I would like to acknowledge the achievements of our respected competitors and colleagues in this industry. Competition creates pressure to innovate, and we all need that pressure to be at our best.
Positively impacting our broader communities, our staff and our environment
Our Communities
The virus came to us on a plane, but those most impacted in South Africa, are people who have never been on one. We have one of the most unequal societies on earth, and as usual it was the poor that suffered the most. They are the people who do not have space at home to be confined in over lockdown, who do not have access to remote learning, good healthcare, or good nutrition. Many South Africans lost their jobs due to the pandemic, further increasing the levels of inequality in our communities.
In terms of our giving initiatives, we therefore decided to temporarily shift our focus from supporting the education initiatives, through the Hantam Community Education Trust, to providing food for those most in need. During the darkest days of lockdown, in partnership with the HM Pitje Foundation , we provided over one million meals, in the form of nutritional food parcels, to people in the Tshwane region.
In 2021 we will continue to look for opportunities to reach out to those in need, and to support the Hantam Community Education Trust and the HM Pitje foundation. We are proud of the contributions we have made to our communities and believe that we are able to make a difference in people’s lives.
Our Staff
Our success as a company is driven by the passion and commitment of our people. I remain sincerely grateful for the sacrifices our team have made and the ongoing value they add to our business and our customers. We were fortunate to be able to show our appreciation to our staff by giving them above-market increases and bonuses, as well as the opportunity for training and skills development. We also launched an employee wellness program which focused on our staff’s mental health. This program provided free access to a helpline and one-on-one therapy should they need it.
We took every precaution to protect our staff’s health throughout the year. We implemented various Covid-19 prevention initiatives, such as office-entry temperature tests and screening, daily wellness checks on our app, PPE for staff working on site, and enforcing immediate isolation post-Covid contact. Through these initiatives, we have been able to keep our total infections low, had no service interruptions, and thankfully, nobody has been seriously affected to date.
We must, however, remain vigilant in our communities and be more careful than ever. The new Covid-19 strain is far more infectious, and our hospitals are overloaded with patients in need of care. We are therefore appealing to our staff to be responsible, and our customers to be understanding as we navigate the continuing effects of the virus.
As an organisation, we affirm our commitment to being inclusive and representative of a diverse workforce and are pleased with the progress we made in 2020. Our goal of achieving diversity and inclusivity is not driven by a scorecard or an impression we want to give the market. Diversity has proven to be a differentiator in every industry and every company we compare ourselves to, so it is the right thing to do and good for our business. We aim to further extend that inclusivity to recognising the strengths in our people beyond the obvious skills such as technical or operational capability. Our role as leaders is to find places in our business for our people to thrive, and value their skills and contributions in a way that allows them to be the best possible version of their work selves.
As we look forward to 2021/22, we will strive to further improve our staff’s work-life balance, to automate the mundane and time-consuming work, to invest in our people’s skills and to attract the talent we need to realise our ambitions for growth.
Caring for the Environment
In the work we do, we constantly strive to do more with less, and in so doing reduce the impact of our customers’ operations on the environment. Through the solutions we have deployed, we have achieved a combined reduction in CO2 emissions of over 300,000 tons per annum.
Furthermore, our work in the waste management sector in the UK and South Africa is helping the private and public sector to manage waste in a more sustainable way and improve traceability of hazardous waste to landfill.
Lastly, our Smart City solutions provide the technology needed to manage environmentally friendly, off-GRID solutions for water and energy supply to business and private users.
Building a Sustainable and Profitable Business
Despite the impact of the pandemic, Inhance continues to be in good financial health, and our financial projections to year-end March 2021 show both revenue and profit growth. Whilst profits increased in absolute terms, our earnings expressed as a percentage of revenue reduced. This was primarily due to a change in revenue mix, as we moved more from higher margin project work to annuity services.
Our company has always generated good cashflows, and whilst 2020 required careful cash management, we were still able to invest more in our solutions than ever before, as well as return a market related dividend to shareholders.
We secured several new customers in 2020, which will ultimately provide us with 50 % more annuity income into the 2021/22 financial year for the South African business. We are also pleased with our growth in offshore income, with the US and European revenue growth being particularly encouraging. We now have customers in over 25 countries and a direct presence in four of those.
Whilst the challenges of 2020 will continue into 2021, we look to the year ahead not with fear, but with enthusiasm. We will continue to grow, we will continue to innovate, and we will lead with compassion and kindness. I would like to close with my most sincere thanks to our staff, our customers, our partners, and our shareholders for their continued support in these unusual times.
Sincerely,
Ken Osler
