McMillan Shakespeare CEO Mike Salisbury talks with Fleet Auto News’ Caroline Falls about the growth and the challenges facing the salary packaging and fleet management services company.
FAN: Can you tell us how you came to lead Smartgroup?
Deven: I joined the company in 2000 in a business development role. I came from a management consultancy firm, Booz Allen Hamilton. Back-then Smartgroup was basically a start-up company. In 2002, they decided to name the sales manager as the CEO — that was me.
FAN: In February, you announced double digit revenue and profit growth for Smartgroup for 2015. Can you sum up the key drivers of growth for the company in the current year?
Deven: We take company culture seriously; we always have, long before it became the buzzword it is today. We strive to have a very engaged workforce, an innovative and customer-focused culture with industry-leading systems. We’ve been named an AON Hewitt Best Employer twice, and have also twice been named one of Australia’s most innovative companies by the BRW. Also, just last year, we received the highest audit score ever awarded in the history of the Customer Service Institute of Australia. Our experience is when you have these fundamentals in place, good things tend to happen.
FAN: In March, Smartgroup’s Smartfleet unit was named one of two fleet managers for the NSW government’s 22,000 vehicles after a long tender process. What does this mean for Smartgroup? How significant a client for your company is that?
Deven: This is a critical development for us. It’s a model that we have advocated for quite some time, where fleet management is unbundled from lease funding. In this arrangement, we are one of two fleet management administrators, from which all the various government departments can choose. Then there is a separate panel of leasing companies that can bid to provide the funding. All credit to the NSW Government for following through with this innovative model.
FAN: What Smartgroup businesses/brands are you most excited about?
Deven: Well, all of them really. Smartsalary and Smartleasing continue to do well more than a decade since inception. Smartfleet, which has just won this NSW government tender, is entering a new phase that is particularly exciting, especially if other governments or companies follow the NSW government model. Also, we have recently completed three acquisitions, each of which we are quite excited about. What’s really nice is that all of the brands are part of an ecosystem that fit in nicely with one another.
FAN: What are the key trends for Australian fleet management services in the next year to five years? And, what are the key challenges?
Deven: I think it’s all going to be about how to deliver fleet services more cost effectively. As the NSW government move highlights, the days of being awarded a large multi-year, sole-provider contract for end-to-end fleet management services may be numbered.
I think many of the key trends will be focussed on further innovation and improved service delivery. Whether this be through better pooling of vehicles, or smarter sourcing arrangements like NSW government has gone for – whatever might reduce costs or make the spend go further has got to be a focus.
FAN: How mature is the Australian fleet management services market? Are growth opportunities abundant? Or minimal?
Deven: I think it is quite mature with a number of very competitive listed and unlisted players. Given the pace of technological change and scale of some of the budgetary issues coming upon governments and organisations more broadly across the country, we think that this sort of flux and change in the business environment leads to opportunity. It’ll be about which fleet management companies are best positioned to capture these new opportunities.
FAN: Has listing on the ASX been a positive for the company?
Deven: Any significant change such as a listing comes with its challenges. I must say though that it has been net quite positive. It is lovely now that nearly half of our staff are shareholders. It has also been a real positive in terms of being able to attract top quality Directors to our Board. The guidance we get from our entire board and especially our Chairman, Michael Carapiet, has been incredible — certainly a big learning and development opportunity for myself and the entire executive team.
FAN: Broking houses are starting to analyse companies like Smartgroup and rivals SGFleet and McMillan Shakespeare. Can you name analysts that follow and publish commentary on Smartgroup?
Deven: Macquarie Bank, Morgans, Credit Suisse, Morgan Stanley and Ord Minnett have analysts following us.
FAN: Are you anticipating any 2016 Federal Budget measures that may affect your business, for example any changes to taxation on novated leases?
Deven: We are in frequent discussions with both major political parties. We don’t believe that there are any plans afoot that would adversely impact salary packaging or fleet management.
