Passenger transport. Operational review / Diversified logistics revenue-earning vehicles. Revenue increased by 7% employees
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1 Operational review / Diversified logistics Passenger transport revenue-earning vehicles Revenue increased by 7% employees 10.4 million passengers per annum 72 KAP Integrated Report 2017
2 A complete transport solution to customers in the commuter, personnel, intercity and tourism markets Specialised service offering focuses on innovation, safety, service and cost optimisation, and has resulted in the division s positioning as a market leader providing world-class passenger services to customers in southern Africa s fast-growing markets. Bulawayo Harare Revenue split 55% Commuter and personnel 25% Intercity 8% Gautrain bus feeder 8% Tourism 4% Rest of Africa Nationally Beira Maputo Nacala Tete Depots 25 Intercity destinations 143 Servicing terminals 19 KAP Integrated Report
3 Operational review / Diversified logistics Passenger transport Business environment Services Megabus operates in the commuter and personnel markets under mid to long-term contracts with government, as well as with large corporate entities. The Megabus service remains the mainstay of the passenger transport division with its long-term contractual business model. The intercity business operates in southern Africa under the Greyhound and Citiliner brands, transporting passengers between cities and towns daily. Mega Coach and Magic Transfers service the inbound tourism markets and the South African corporate market. The intercity and tourism operations are leaders in the coach segment and offer a high standard of safety, service and reliability. Mega Express operates and manages the Gautrain feeder and distribution service, which was the first of its kind in commuter transport in South Africa. Passenger safety is a critical element of management in the passenger transport division. The division has, over time, reported low incident rates due to diligent driver training and control procedures, and disciplined vehicle maintenance in an environment where road safety is often affected by third-party behaviour and road surface conditions. Vehicles are also equipped with tracking devices and speed control and monitoring equipment. Greyhound Luxury coach operator transporting more than passengers per annum over 17 million kilometers. Citiliner Semi-luxury coach service transporting more than passengers annually over 10 million kilometres. Mega Bus Operating in the commuter and personnel markets under mid to long-term contracts with government, as well as with large corporate entities. Mega Coach With a fleet in excess of 80 expertly driven and well-maintained vehicles, Mega Coach is rated as one of the leading coach companies in southern Africa, servicing the corporate and tourism markets. Bonjala Bus Servicing the North West Province, catering mainly for commuters staying in the surrounding rural areas, with platinum mining as the main economic activity. Magic Transfers Chauffeur-driven transport from Johannesburg, Durban and Cape Town International airports. This exclusive service is available 24 hours a day, 7 days a week, 365 days of the year. 74 KAP Integrated Report 2017
4 We strive to be the preferred passenger transport service provider, differentiated by high standards of safety and reliability. Nico Boshoff, CEO: Passenger division Group strategy Key facts Market leadership Greyhound and Citiliner are market leaders in intercity travel, while the commuter and personnel operations are leaders in the regions within which they operate. The economy of scale benefits of a large national business facilitate continued investments in order to effectively compete with regional competitors. R212 million capex invested in new fleet 39 million litres of fuel used per annum High barriers to entry The passenger transport sector is highly regulated in terms of operating licences, vehicle maintenance and safety. 112 million km travelled annually 10.4 million passengers per annum Industry diversification The passenger division has a balanced exposure to the commuter, personnel, intercity and tourism sectors. Staff turnover remained low at 2% (FY16: 2%) R8.7 million investment in employee training Adding value through specialisation The passenger division consistently invests to remain at the forefront of technology in passenger transport and safety, in order to improve the customer experience and operating efficiencies, which enhances margins. R638 million spent on salaries and employee benefits for the year Fleet size increased from 45 vehicles at start of contract in Mozambique to 90 vehicles Leveraging our African base The passenger division has effectively leveraged off the Unitrans footprint in Mozambique to secure a 90-bus personnel contract. Additional work secured with existing customer KAP Integrated Report
5 Operational review / Diversified logistics Passenger transport Commentary The operations within the passenger transport division delivered mixed results for the year. Revenue increased by 7%, while operating profit decreased by 5%, primarily as a result of a particularly challenging intercity transport environment. The commuter transport operations performed well as commuter numbers stabilised, and the impact of prior period rationalisation initiatives were realised. The personnel transport operations showed a marked improvement with increased activity levels and the commencement of a significant new contract. Increased tourism activity provided strong support for the Mega Coach operations, which resulted in an improved performance. Mega Express, the Gautrain bus feeder system, performed to expectation with stable passenger numbers. Both the Tete and Nacala operations in Mozambique exceeded expectations as a result of good project execution by the implementation teams, as well as contract volume increases. The results of the intercity operations were disappointing. Revenue and operating profit decreased as a result of lower recorded industry passenger numbers and increased competition from low-fare airlines and competing bus operators. Revenue increased by 7%, while operating profit decreased by 5%. 76 KAP Integrated Report 2017
6 Outlook The division remains well positioned in terms of its modern and well-maintained asset base; diversification and strong cash conversion to sustain above-average returns on capital employed; and to competitively pursue expansion opportunities. The intercity operations will be an area of increased management focus during the upcoming year. KAP Integrated Report
7 Diversified logistics / Passenger transport Case study Public safety a key focus area Market leadership High barriers to entry The passenger transport division transports more than 10 million people over more than 112 million km annually. With such high volumes, it is key to the sustainability of the business to ensure that passengers are safe when using any of the services, and that third-party road users are considered when buses are in transit. To implement road safety successfully, a holistic approach is taken managing all aspects from vehicle maintenance and safety to continuous driver training. Highly skilled people are employed and entrusted with taking care of equipment and people s lives, which makes this a highly specialised and high barrier to entry business. Key elements to this strategy include: Sophisticated and advanced 24/7 vehicle monitoring control rooms Through tracking devices, the team monitors driver speed to ensure that the required limit is maintained throughout the journey. Should a driver exceed the company set speed limit (a maximum of 100 km/h), they are contacted by the tracking team to initiate immediate corrective action. Impact alerts are sent to this department for immediate follow-up. In addition, pre-loaded no-go areas are activated by alarms for scheduled routes and monitoring is managed through trip scheduling with automated reporting on driver, vehicle and trip performance. Pre-trip inspection Before any departure, all buses are fully inspected, including all roadworthy and critical safety checks. Preventative and regular maintenance All vehicles undergo weekly workshop inspections. All workshops are accredited by major OEMs of the bus fleet, including Volvo, Mercedes Benz and MAN. A strict preventative, predicative and component life management programme is followed, with advanced administrative maintenance control systems to support road safety. When tyres are scrapped and removed from vehicles, they are inspected for root causes. A preventative plan is then implemented to eliminate the root cause to ensure tyre safety. Drivecams To manage unusual driver behaviour or reactions, such as hard braking or sharp cornering, drivecams send alerts to operation managers. Unusual behaviour is recorded and corrective measures can be put in place immediately. Helivac emergency services A 24-hour medical call centre can provide drivers and hostesses with emergency medical advice, emergency medical response to the scene of an accident, medical transportation and trauma counselling. 78 KAP Integrated Report 2017
8 Scarce raw materials Skills and talent management Ongoing training Drivers: Training is conducted with driver trainers and drivers to ensure that the rules of the road are adhered too, correct driving habits are followed and all safety aspects are considered when on the road. Intercity is a registered Transport Education Training Authority (TETA) and manages all driver training for the business. Hostesses and hosts: Training includes basic first-aid training, fire evacuation training and preventative measures training for incidences such as breakdowns and safety procedures for accidents. Technicians: Training includes daily communication with workshop staff on safety priority elements and weekly themes that directly support safety aspects. Vehicle features Vehicle safety features include lane guard assist, emergency brake assist, seat belts and adaptive cruise control. Member of regulatory boards Members of management are active on regulatory boards that advise on and implement the Occupational Health and Safety Act and guidelines of the National Occupational Safety Association (NOSA), the leading global supplier of occupational risk management services and solutions. Roadworthiness All vehicles have to undergo a six-monthly certificate of fitness test with the national roads authority. Without this, a vehicle is deemed unroadworthy. Although this is an expensive test, at R per vehicle, it is a non-negotiable requirement. KAP Integrated Report
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