2018 Final Results

Super Group achieves record final results in a tough global environment

Super Group, a leading transport logistics and mobility group,today reported a record set of results for the year ended 30 June 2018.This was mainly attributable to the excellent performance of the commodities businesses within Supply Chain Africa, good contributions from the acquired businesses, and solid results from SG Fleet.

Group CEO, Peter Mountford, commented that this has been a stellar performance despite challenging circumstances, with the Dealerships SA and UK operations also outperforming their respective markets. “The South African consumer business operated in an environment characterised by poor consumer demand and competitive trading conditions.”

Mountford said that the mining commodity industry in Africa experienced an excellent year with good volume growth. “However, our consumer – facing and industrial operations in South Africa faced serious headwinds such as the VAT increase, fuel price hikes, high price inflation and increasing unemployment levels.The European and UK economies also faced a number of challenges and uncertainties arising from the protracted Brexit negotiations.”

He added that the Australian economic climate improved towards the end of the first half of the financial year, with conditions remaining above average for the rest of the period.

Super Group, continuing its strategy of geographically diversifying its revenue stream reported revenue and operating profit from its non-South African businesses of 47 % (June 2017: 40 %) and 60 % (June 2017: 61 %), respectively.The average Rand exchange rate for the year strengthened against the Australian Dollar(AUD) and the US Dollar(USD), but weakened against the Pound Sterling(GBP) and the Euro(EUR).

Group revenue increased by 19.4 % to R35.7 billion(June 2017: R29.9 billion), primarily due to the significant volume increase in Supply Chain Africa’s commodities businesses, the acquisitions of the Slough Motor Corporation(SMC) dealerships in the UK and inTime’s net acquisition of an 88 % interest in the Spanish courier company, Servicios Empresariales Ader, SL(Ader).Revenue also increased as a result of the inclusion of Essex Auto Group(EAG) and the Western Cape dealerships for the full year.The acquired businesses contributed 10.8 % to revenue growth.

Operating profit before capital items of R38.5 million(June 2017: R17.5 million) increased by 16.0 % to R2 474.0 million from R2 133.5 million in the comparable prior year.The capital items mainly relate to the impairment of certain properties in Dealerships UK and the impairment of goodwill in Phola Coaches.

“The UK properties were revalued during the year and this resulted in a net value increase of R36.4 million.In terms of IFRS, R54.8 million positively impacted equity and R18.4 million was impaired against profits.The impairment of a portion of the Phola Coaches’ goodwill relates to the termination of a staff transportation scheme by a major mining client,” Mountford said.

Operating profit increased by 15.1 % to R2 435.5 million(June 2017: R2 116.1 million).The main reason for the softening of the margin was due to the acquisition of lower margin businesses, namely SMC and Ader.The acquired businesses contributed 3.5 % to operating profit growth.

Profit before tax increased by 14.7 % toR2 105.0 million(June 2017: R1 836, 1 million).

Earnings per share(EPS) and headline earnings per share(HEPS) increased by 12.7 % to 320.8 cents(June 2017: 284.7 cents) and 15.3 % to 332.2 cents(June 2017: 288.2 cents), respectively.

Operating cash flow increased by 21.4 % for the year to R3 776.7 million(June 2017: R3 111.4 million) mainly because of the strong cash generation from the Supply Chain Africa businesses, a combination of the acquisition of SMC, and the inclusion of the Western Cape dealerships and Motiva for the full year compared to the prior year.The Group invested R2 517 million in net additions and acquisitions to ensure future growth.

No dividend was declared.

Mountford said that the Group has mixed views on the economic conditions and prospects for its businesses, across its geographical regions, for the coming financial year.

“Locally, despite new political leadership, policy uncertainty remains extremely negative and there is still no indication of economic stimulus or encouragement of investments.South African consumers are under even more pressure and therefore we expect the low growth rates to persist.The medium – term outlook for the rest of Africa remains subdued for consumer – facing industries and growth prospects in the supply chain industries continue to be weighed down by margin pressure on the back of severe competition and poor consumer demand.

“In Australia, demand for higher value-add solutions in the FML market continues, as well as for management services for electric fleets. Telematics and driver safety applications are likewise growing steadily.The New Zealand economy has also seen a relatively lengthy period of strong growth.

“There was some improvement in the economic climate in the UK during the year, which was reflected in an uptick of interest in tool – of – trade, particularly light commercial vehicles, salary packaging services, and personal contract hire.The UK dealership market seems to be stabilising despite continuing uncertainty regarding the potential Brexit outcome.

“In Europe, Germany, with its high employment rate, remains a challenge in terms of driver shortages in the inTime business.The US’s trade wars, together with the Brexit outcome uncertainty, plagues the European market and continues to be a concern for the Supply Chain Europe businesses.Nevertheless, the inTime business should perform adequately into the forthcoming financial year.”

Mountford concluded that the Group’s strategy of being an innovative, integrated mobility solutions company remains integral to growing and expanding its core businesses, with the Group exploring viable acquisition opportunities, both locally and abroad. “We should perform reasonably well in the next year, mainly on the back of a strong African commodities performance and new business in the South African consumer – facing operations.”