A Turnaround Success Story

Why SkyNet Worldwide Express

  • Turnaround and restructuring where we invested:
    • “We eat our own cooking”
  • Competitive industry with international participants
  • Root causes of distress include flawed strategy to merge with road-freight Crosscape business (clash of business models)
  • Bloated cost structure due to inappropriate supplier contracts

Background

  • SkyNet is an express courier (smaller and time sensitive parcels)
    • Owned fleet and owner-driver network of c.500 vehicles
  • Incurring significant losses (cashflows under significant pressure)
  • Commercially and technically insolvent at the time of acquisition
  • Operating conformance levels deteriorating
  • 1,500 jobs directly at risk of loss

Engagement

  • Invested in SkyNet in July 2018 / exited investment in October 2021

Key actions undertaken

1. Restructuring and new management recruited: Replacement of key leadership for the roles of CEO, CFO and Commercial Executive.

2. Line-haul contract & fleet rationalization: Rates reduced for line-haul to align with market rates, saving c.R17m p.a.

3. Right size and correct size staff: Headcount reduced to effect c.R40m in yearly savings.

4. Revenue initiatives: Return focus to premium, high- margin services; Defined our sweet spot; under 30 kgs.

Key take-aways

  • Successful economic outcome: 23% IRR and 2.0x money back
  • We understand what it means to be a business owner – “we have walked in your shoes”

Financial earnings turnaround

  • Improved from EBITDA loss of (R64.5m) in FY18 to EBITDA profit of R37.0m in FY21