Salient features

  Year ended 
30 June 
2018 
R’000 
Year ended 
30 June 
2017 
R’000 
1. Interest-bearing borrowings
  Australia  1 102 826  1 289 527 
  Germany  755 459  769 045 
  South Africa  2 076 857  1 695 585 
  United Kingdom  1 299 533  1 069 506 
  Spain  119 135  – 
    5 353 810  4 823 663 
2. Share statistics
  Total issued less treasury shares (’000) 362 280  349 013 
  Weighted number of shares (’000)1  359 012  348 723 
  Diluted weighted number of shares (’000) 360 035  351 274 
  Net asset value per share (cents)2  2 704.6  2 394.1 
  1 As a result of the bookbuild undertaken by the Group in October 2017, the comparative weighted and diluted weighted number of shares in issue had to be adjusted in terms of IAS 33.28.
  2 Net asset value per share is calculated as the capital and reserves attributable to equity shareholders of Super Group divided by the total issued less treasury shares. 
3. Capital commitments
  Authorised but not yet contracted for capital commitments, excluding
full maintenance lease assets 
1 058 602  913 103 
 

Capital commitments will be funded from normal operating cash flows
and the utilisation of existing borrowings facilities. 

   
4. Related party transactions
 

The Group, in the ordinary course of business, entered into various sales and purchase transactions on an arms’ length basis with related parties.

Certain related parties of subsidiary companies sub-contract vehicles to the Group. Sales, purchases and management fees received amounted to R244.3 million (June 2017: R82.4 million), R54.2 million (June 2017: R48.7 million) and R19.1 million (June 2017: R2.7 million) respectively for these services. These transactions were entered into in the normal course of business under terms and conditions that were no more favourable than those arranged with third parties. Net amounts owing by key employees of these subsidiaries was R120.2 million (June 2017: Rnil).

The Group utilises Fluxmans Attorneys, a director-related entity, to assist with corporate law advisory services in respect of various transactions and several other corporate and labour matters. These transactions are performed at an arm’s length basis.

The Group encourages its employees and key management to purchase goods and services from Group companies. These transactions are generally conducted on terms no more favourable than those entered into with third parties on an arm’s length basis although in some cases nominal discounts are granted. Transactions with key management personnel are conducted on similar terms. No abnormal or non-commercial credit terms are allowed and no impairments were recognised in relation to any transactions with key management personnel during the year nor have they resulted in any non-performing debts at year-end. Similar policies are applied to key management personnel at subsidiary level who are not defined as key management personnel at Group level.

5. Subsequent events
 

The directors are not aware of other matters or circumstances arising subsequent to the reporting date up to the date of this report, which will materially affect these results.

The JSE listed Super Group’s SPG004 senior unsecured notes, in terms of its DMTN Programme dated 22 October 2013 on 27 September 2018. The value of the SPG004 issue was R450 million with interest of three-month Johannesburg Interbank Agreed Rate (JIBAR) plus 200 basis points, coupon rate payable quarterly on 27 March, 27 June, 27 September and 27 December of each year. The maturity date of this issue is 27 September 2023.

6. Significant events
 

inTime acquisition of Ader

inTime acquired Ader effective 4 July 2017 for a purchase consideration of R173.8 million. The statement of financial position as at 30 June 2018 has been impacted by increases in intangible assets of R135.4 million, goodwill of R67.3 million, trade and other receivables of R263.4 million, interest-bearing borrowings of R119.1 million and trade and other payables of R318.9 million as a result of this acquisition. Trading relating to the 12 months ended 30 June 2018 has been included in the statement of comprehensive income.

SG International Holdings Limited acquisition of SMC

SG International Holdings Limited acquired SMC effective 4 July 2017 for a purchase consideration of R414.3 million. The statement of financial position as at 30 June 2018 has been impacted by increases in goodwill of R152.2 million, inventories of R557.0 million and trade and other payables of R701.7 million as a result of this acquisition. Trading relating to the 12 months ended 30 June 2018 has been included in the statement of comprehensive income.

Exchange rate movements

The Group operates in foreign countries which use currencies other than presentation currency. The main currencies used in the Group’s foreign operations are Australian Dollar, US Dollar, Euro and the Pound Sterling. The movement of the Rand against these currencies during the year has had an effect on the Group’s condensed consolidated financial statements and has resulted in a foreign currency translation adjustment of R226.7 million increasing total equity.
30 June
2018 
30 June
2017 
%
Change 
  Average currency rate to the South African Rand 
  Australian Dollar  9.93  10.25  (3.1)
  US Dollar  12.85  13.61  (5.6)
  Euro  15.31  14.84  3.2 
  Pound Sterling  17.30  17.27  0.2 
  Closing currency rate to the South African Rand 
  Australian Dollar  10.16  10.07  0.9 
  US Dollar  13.72  13.07  5.0 
  Euro  16.03  14.95  7.2 
  Pound Sterling  18.11  17.04  6.3 
 

The non-South African operations account for 60% (June 2017: 58%) and 63% (June 2017: 60%) of the Group’s total assets and liabilities respectively.

The non-South African operations generated 47% (June 2017: 40%) and 60% (June 2017: 61%) of the Group’s revenue and operating profit respectively.
    Hierarchy  
    Level 2
R’000
Level 3
R’000
Valuation technique
7 FAIR VALUE    
  Property, plant and equipment – Land, buildings and leasehold improvements  2 589 415  External valuations were performed during the year. The valuation model considers the present value of net cash flows to be generated from these properties, taking into account expected rental growth rate, void period, occupancy rate, lease incentive costs such as rent-free periods and other costs not paid by tenants. The expected net cash flows are discounted using risk-adjusted discount rates. Among other factors, the discount rate estimation considers the quality of a building and its location (prime vs secondary), tenant credit quality and lease terms. 
  Investment properties    151 000   
  Deferred contingent purchase consideration receivable – GWM    60 000  Due to the sale of the GWM business in 2016 and the related profit warranties not being met, the amount receivable is certain at year-end according to the purchase agreement and has been assessed as recoverable. 
  Deferred contingent purchase consideration payable – Legend    62 488  An obligation exists at acquisition date resulting from the possibility of the acquiree’s aggregate profit after tax for the three-year period ending 30 June 2019 exceeding R155 million. The deferred contingent purchase consideration is calculated by applying 75% to every R1 excess over the R155 million aggregate profit after tax. The present value of this obligation is determined using a pre-tax discount rate of 9.5%. The date of exercise is the second business day after the aggregate profit after tax is agreed. 
  FEC liabilities  2 447  The fair values are based on broker quotes. Similar contracts are traded in an active market and reflect the actual transactions in similar instruments. 
  FEC assets  15 775     
  Legend put option    36 130  This put option is calculated as the fair value of the business at exercise date of the option, by present valuing the free cash flows for a 10-year period post the date of exercise. The present value is determined by using a pre-tax discount rate of 9.5%. The option can be exercised on 1 October 2019. 
  inTime put option    141 282  This put option is calculated as the fair value determined by using the average audited EBITDA for the three years preceding the put option exercise date at a price earnings multiple of 7.5, adjusted for net debt. The present value has been determined using a pre-tax discount rate of 7.7%. The put option can be exercised from 30 June 2020 to 30 June 2025. 
 

The carrying value of all other financial instruments approximates the fair value of the financial instruments at 30 June 2018.

Movement in Level 3 financial instruments measured at fair value

The following table shows a reconciliation from the opening to closing balances of Level 3 financial instruments carried at fair value:
  Property, plant and equipment – Land, buildings and leasehold improvements  Total
30 June 2018
R’000
3Total
30 June 2017
R’000
  Opening balance  2 120 365  1 474 689 
  Net additions  115 520  260 956 
  Acquisition of businesses  263 820  446 492 
  Revaluation  73 987  (9 148)
  Other  15 723  (52 624)
  Closing balance  2 589 415  2 120 365 
  Investment properties 
  Opening balance  149 800  143 200 
  Fair value adjustment to profit or loss  1 200  6 600 
  Closing balance  151 000  149 800 
  Put option liabilities 
  Opening balance  270 784  302 990 
  Movement through statement of changes in equity  (93 372) (32 206)
  Exercised – Digistics  (102 665) – 
  Exercised – Legend  (18 418) – 
  Subsidiary acquired – Legend  –  36 802 
  Fair value adjustment  18 068  (44 388)
  Foreign currency translation  9 643  (24 620)
       
  Closing balance  177 412  270 784 
Financial asset/(liability) – Deferred contingent purchase considerations  GWM
R’000 
Legend
R’000 
Total
30 June 2018
R’000 
Total
30 June 2017
R’000
Opening balance  60 000  (24 501) 35 499  57 462 
Subsidiary acquired – Legend  –  –  –  (35 547)
Fair value adjustment to profit or loss  –  (37 987) (37 987) 13 584 
Closing balance  60 000  (62 488) (2 488) 35 499 

Sensitivity analysis

Land and buildings

The estimated fair value would increase/(decrease) if:

Occupancy rate was higher/(lower), the rent-free periods were (increased), the yield was lower/(higher) and rental growth was higher/(lower).

Deferred contingent purchase considerations

The significant assumptions included in the fair value measurement of the deferred contingent purchase consideration for Legend is based on the projected income that is not observable in the market. The following table shows how the fair value of the payable would change if the projected earnings assumption was increased by 100bps:

 
Fair value
R’000 
Increase in
liability
R’000 
Deferred contingent purchase consideration payable – Legend  63 121  633 

Due to the Group having disposed of GWM, the deferred contingent purchase consideration of R60 million is certain.

Put options

The significant assumption included in the fair value measurement of the put option liabilities relates to the projected income that is not observable in the market. The following table shows how the fair value of the liabilities would change if the earnings assumption was increased by 100bps:

 
Fair value
R’000 
Increase in
liability
R’000 
Legend  36 449  319 
inTime  145 194  3 912 
Year ended
30 June
2018
R’000 
Year ended
30 June
2017
R’000 
8. Capital items
  Impairment of property, plant, equipment and intangible assets  23 818  20 604 
  Impairment of goodwill  37 155  4 521 
  (Profit)/loss on sale of property, plant and equipment  (23 946) 254 
  Loss on sale of business  2 623  – 
  Fair value adjustment to investment property  (1 200) (6 600)
  Reversal of impairment of equity-accounted investee  –  (1 305)
  Capital items before tax and NCI  38 450  17 474 
  Tax effect of capital items  2 329  (5 064)
  NCI effect of capital items  363 
  Capital items after tax and NCI  41 142  12 416 
30 June
2018 
R’000 
9. Operating rental commitments
  Property  1 624 097 
  – less than one year  309 283 
  – between one and five years  698 578 
  – thereafter  616 236 
  Rental and transport fleet  470 894 
  – less than one year  86 161 
  – between one and five years  295 448 
  – thereafter  89 285 
  Other  60 229 
  – less than one year  13 323 
  – between one and five years  38 260 
  – thereafter  8 646 
  Total rental commitments  2 155 220 
  – less than one year  408 767 
  – between one and five years  1 032 286 
  – thereafter  714 167 
     
Year ended
30 June 
201 8
R’000 
Year ended
30 June 
2017 
R’000  
10. GEOGRAPHICAL DISCLOSURE
  Revenue  35 662 856  29 873 856 
  South Africa  18 911 963  17 855 966 
  United Kingdom  10 496 610  7 305 555 
  Australia  2 519 712  2 458 924 
  Europe  3 103 273  1 997 915 
  Africa and other  631 298  255 496 
  Net capex  1 310 128  1 086 925 
  South Africa  963 578  825 766 
  United Kingdom  99 213  127 283 
  Australia  104 383  63 887 
  Europe  24 779  16 484 
  Africa and other  118 175  53 505 
           
30 June
2018
R’000 
30 June
2017
R’000 
  Segment Assets  25 172 793  21 932 238 
  South Africa  10 680 233  9 615 265 
  United Kingdom  6 036 848  4 689 747 
  Australia  4 367 390  4 306 841 
  Europe  3 256 455  2 583 343 
  Africa and other  831 867  737 042 
  Segment Liabilities  16 535 178  14 283 311 
  South Africa  6 222 846  5 773 673 
  United Kingdom  5 135 796  3 929 392 
  Australia  3 261 504  3 183 838 
  Europe  1 618 535  1 149 640 
  Africa and other  296 497  246 768