Chief Financial Officer’s Report

Super Group delivered excellent financial results that reflect the hard work and dedication of all employees, despite challenging macroeconomic and trading conditions across the various geographies. Cash generation has been good, and we have maintained a strong Statement of Financial Position. Super Group weathered a volatile socio-economic climate, and this year’s profitability well exceeds pre-pandemic levels. The Group’s diversification strategy further buoyed performance, while its competitiveness was evidenced in significant new client wins, contract renewals and market share gains. Rigorous cost management helped mitigate escalating inflation, diesel price increases and Rand volatility.

FINANCIAL PERFORMANCE

Group revenue increased by 30.6% to R61.88 billion (2022: R47.37 billion) and EBITDA increased by 20.8% to R8.49 billion (2022: R7.03 billion). The revenue of SG Fleet included a full year’s performance from LeasePlan compared to 10 months in the prior year. The LeasePlan business integration has progressed well with a focus on further benefit extraction.

Operating profit increased by 20.7% to R3.95 billion (2022: R3.27 billion), while the operating profit margin for the Group remained at 6.4% when excluding Services.

The proportion of Super Group’s revenue and operating profit derived from its non-South African businesses was 54% (2022: 52%) and 56% (2022: 60%), respectively. The geographic diversity of the Group is illustrated below:

The divisional contribution to revenue and operating profit, excluding Services, is summarised in the graphs below. For more detail on the underlying operations, refer to the Divisional Overview.

Net finance costs increased by 31.5% to R1.0 billion (2022: R763.3 million), mainly due to interest rate increases, higher levels of inventories in the Dealerships operations and the inclusion of LeasePlan for the full year.

Profit before tax increased by 18.7% to R2.97 billion (2022: R2.50 billion). Excluding the Services segment, profit before taxation increased by 31.2% from R2.30 billion to R3.02 billion.

Earnings per share grew by 24.9% to 472.9 cents per share (2022: 378.5 cents) and headline earnings per share increased by 23.3% to 469.4 cents (2022: 380.7 cents). Excluding the Services segment, growth in headline earnings per share was 46.9%. The weighted average number of shares decreased by 6.1% to 337.8 million (2022: 359.6 million) as a result of the Group repurchasing 25 197 982 shares over the past 18 months.

The Group’s return on equity was 11% compared to 10.8% in the previous year.

DIVIDEND DECLARATION

A gross dividend of 80 cents per share (2022: 63 cents) has been declared out of income reserves in respect of the ordinary shares of no-par value for the year ended 30 June 2023. Dividend withholding tax of 20%, or 16 cents per share, will be applicable, resulting in a net dividend of 64 cents per share, unless the shareholder concerned is exempt from paying dividend withholding tax or is entitled to a reduced rate in terms of an applicable double-tax agreement.

The issued share capital at the declaration date was 346 309 812 ordinary shares.

FINANCIAL POSITION

Total assets increased by 25.9% to R73.03 billion (2022: R58.03 billion), largely as a result of the impact of the weakening Rand on translating foreign operations, increased vehicle fleets in the Supply Chain businesses, increased lease portfolio assets in SG Fleet, and higher inventory levels as a result of improved availability of stock in the dealerships.

The net asset value per share increased by 20.5% from R38.40 as at 30 June 2022 to R46.27 as at 30 June 2023.

The Group’s RNOA (after tax) was 10.2% (2022: 10.3%) and the Group’s WACC was 7.0% (2022: 6.3%). Net operating assets includes warehouse debt and lease portfolio receivables.

The net operating assets, RNOA and WACC for each division are set out below.

DEBT

The Group raised a net R1.81 billion of listed senior unsecured notes during the year. The net debt position, excluding right-of-use (ROU) lease liabilities and securitised lease portfolio warehouse borrowings, was R4.38 billion (2022: R3.74 billion). The net debt to equity (gearing) ratio, excluding ROU lease liabilities and securitised lease portfolio warehouse borrowings, was 22.5% as at 30 June 2023 (2022: 22.1%).

Below is a breakdown of net borrowings per region and our debt maturity profile.

DEBT COVENANTS

The Group met its debt covenants and has sufficient debt facilities to meet its current obligations. The covenants in the graphs below exclude SG Fleet and IFRS 16.

CASH AND CASH EQUIVALENTS

Operating cash flow increased by 18.9% to R8.72 billion (2022: R7.33 billion). Working capital outflow of R4.27 billion was recorded compared to an outflow of R2.57 billion in the prior year. This largely reflects a R4.79 billion net increase in lease portfolio assets within the Fleet Division.

Total dividends paid to Super Group shareholders was R211.3 million (2022: R174.5 million), representing a dividend cover of 5.9 on basic EPS.

Cash outflow on acquiring Super Group shares was R527.8 million (2022: R291.1 million) as part of a Board-approved share repurchase programme whereby the Group bought and cancelled a total of 17 535 265 shares during the year.

The Group remains highly cash-generative and continues to explore acquisition opportunities, both locally and internationally, that meet its strategic requirements and create shareholder value. Cost savings initiatives and asset management focus will continue in the new financial year. The main levers for continued growth, including stronger markets, cost savings and efficiencies, provide comfort that profitability momentum will be maintained going forward.

CORPORATE ACTIONS

The Group raised a net R1.81 billion of listed senior unsecured notes during the year in terms of its domestic medium-term notes programme dated 29 April 2020 (as amended). The following senior unsecured notes were listed this year:

• SPG011 to the value of R300 million (3 years);
• SPGC03 to the value of R200 million (12 months);
• SPG012 to the value of R550 million (5 years);
• SPGC04 to the value of R200 million (12 months); and
• SPG013 to the value of R810 million (5 years).

The Group repaid R250 million of senior unsecured notes in respect of SPG008 during the current financial year.

• The Group made the following acquisitions during the financial year:
• On 23 August 2022, Dealerships UK acquired Delgarth Limited for R272.9 million.
• On 14 July 2022, Dealerships UK acquired Gillingham Ford.
• On 3 March 2023, Dealerships UK acquired Romford Suzuki.
• On 1 July 2022, Supply Chain Europe acquired Delver Logistics S.L.U. and Pamplona T.I. Transporte Inmediato.
• RSC Consulting Services Proprietary Limited and Clean Tech 360 Proprietary Limited were purchased on 1 February 2023.

Subsequent to year end, the Group acquired 78.82% of UK-based logistics firm CBW Group Holdings Limited (trading as Amco) for a purchase price of GBP30.3 million. Super Group raised a five-year corporate bond on 29 June 2023 amounting to R810 million in order to fund the acquisition, which will significantly complement the Group’s supply chain offering.

ECONOMIC VOLATILITY

Weak economic growth and challenging trading conditions, including the impact of sharp increases in inflation, the price of fuel and interest rates, will continue to affect our businesses. The Group generally passes these increases on to clients in the Supply Chain and Fleet Solutions divisions through contracted escalation clauses.

APPRECIATION

I express my sincere appreciation to the finance team for their ongoing commitment to the highest standards of integrity and financial discipline, and for their support over the past year. I thank my fellow Board members and the Group Executive Committee for their support and guidance.

Colin Brown
Chief Financial Officer and Debt Officer

29 September 2023