final results presentation - super group ltd...supply chain africa delivered a strong performance...

FINAL RESULTS

PRESENTATION

for the year ended 30 June 2019

2SUPER GROUP ANNUAL RESULTS for the year ended 30 June 2019

Prospects

Agenda

Results at a Glance Divisional ReviewsReviewed

Annual ResultsSupply Chain

Fleet Solutions

Dealerships


for the year ended 30 June 2019

Super Group reported an excellent set of results for the year ended 30 June 2019 despite the challenging trading environment

Supply Chain Africa delivered a strong performance mainly attributable to the sub-Saharan commodities businesses

Supply Chain Europe performed poorly on the back of a depressed automotive market in Germany

SG Fleet’s performance for the year was under pressure having to negotiate a range of external and legislative challenges in 1H2019

Fleet Africa secured new FML contracts as well as additional ad hoc business from existing contracts

Dealerships SA outperformed NAAMSA, with Dealerships UK delivering a solid performance despite Brexit uncertainty

Results

at a

Glance

0

10

20

30

40

2015 2016 2017 2018 2019

Revenue

R37.9bn2018: R35.7bn – up 6.2%

0

1

1

2

2

3

3

2015 2016 2017 2018 2019

Operating profit

R2.6bn2018: R2.4bn – up 7.0%

0

1

1

2

2015 2016 2017 2018 2019

Headline earnings

R1.4bn2018: R1.2bn – up 13.6%

CAGR 5-yr: 21.5% CAGR 5-yr: 14.1% CAGR 5-yr: 13.2%


Corporate actions concluded during the year

Business Description Interest Date

Consideration

R’million

Supply Chain Africa Acquired Cargo Works (a specialist overnight cargo business) 80.0% 02/07/18 (49.5)

Dealerships SA Acquired Orbit Motors (a division of Rola Motors) 100.0% 01/10/18 (1.1)

Corporate Listed its SPG004 senior unsecured notes - 27/09/18 450.0

Corporate Listed its SPG005 senior unsecured notes - 15/03/19 300.0

Corporate Listed its SPG006 and SPG007 senior unsecured notes - 18/06/19 1 000.0

Supply Chain Africa Acquired the remaining minority interest in Legend Logistics (Legend) 100.0% At 30/06/19 (174.5)

SG Fleet

During the financial year, Super Group received 3,958,732 shares from SG Fleet’s

Dividend Reinvestment Plan for R147.5 million and purchased an additional

4 366 928 shares for a total amount of R106.2 million during the year

59.2% At 30/06/19 (253.7)


Industry reviews

R’million Southern Africa International

Supply Chain Commodity transport volumes remained strong

The industrial operations continued to be impacted by low

economic growth, poor manufacturing volumes

exacerbated by Eskom load-shedding

Both the SA commodity and industrial logistics sector,

specifically in Mpumalanga and KwaZulu-Natal (KZN),

negatively impacted by the ongoing criminal attacks on

trucks

The consumer-facing businesses affected by reduced

consumer spending and high unemployment rates

The Worldwide Harmonised Light Vehicle Test Procedure

(WLTP) in Germany negatively impacted new vehicle

sales as a result of delays in vehicle manufacturing

Significant diesel price increases – challenging to recover

from customers

Shortage of subcontractors in Germany continues to

increase costs

The Spanish courier and express transport industry

impacted by start-up businesses, creating a highly

competitive environment

Fleet Solutions Following the National Election, a number of FML tenders

have been released by State-owned Companies (SOC),

parastatals and municipalities

Joint Venture agreement concluded with Co-Op Bank in

Kenya

Australian retail market experienced a challenging year

Novated lease market impacted by reduced private new

car sales

New Zealand economy expanding at a moderate rate

UK FML market also under pressure given Brexit

uncertainty

Dealerships Tough trading conditions

NAAMSA new vehicle sales: 3.5%

The overall UK general dealership market: 5.1%

Brexit uncertainty continues


52%

28%

10%

8% 2%

South Africa

United Kingdom

Australia

Europe

Africa and other

50%

13%

33%

2%

2%

International vs South African operations

Super Group’s international operations contributed 48% (June 2018: 47%) to revenue and 50% (June 2018: 60%)

to operating profit

Revenue per country Operating profit per country


Net operating assets and RNOA

4 005

5 038

2 6512 474

1 035 1 130

3 389 3 419

1 096 1 201

1 579 1 595

0

1 000

2 000

3 000

4 000

5 000

6 000

FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19 FY18 FY19

SC Africa SC Europe Fleet Africa SG Fleet Dealerships SA Dealerships UK

The Group’s RNOA for the year ended June 2019 is 12.3% (June 2018: 12.3%)

Group WACC is 9.2%

RNOA% 12.6 15.6 3.8 1.1 8.3 7.8 20.3 18.7 22.2 19.5 12.8 13.6

WACC% 12.0 4.6 12.0 6.0 12.0 5.8

Divisional ReviewsPeter Mountford

Supply Chain


Supply Chain Africa

Revenue Operating profit

Revenue increased by 19.0% attributable to the excellent

performance by the commodities businesses in sub-Saharan Africa

and solid performances in the industrial supply chain businesses

The consumer-facing operations experienced difficult trading

conditions, impacted by negative consumer sentiment and a severe

competitive environment

SG Convenience most severely impacted

Operating profit increased by 49.6% largely due to the commodities

businesses

Included in this figure are:

an impairment of goodwill of R30 million in SG Convenience;

largely offset by

profits on the sale of trucks amounting to R28 million

The operating profit margin increased from 6.9% to 8.7%

Revenue (R’m) Operating profit (R’m)

4 321 4 657

5 923

4 023

4 827

5 3688 344

9 484

11 291

0

2 000

4 000

6 000

8 000

10 000

12 000

Jun 2017 Jun 2018 Jun 2019

First half

Second half

261 262

469188

393

510

449

655

979

0

100

200

300

400

500

600

700

800

900

1 000

1 100

Jun 2017 Jun 2018 Jun 2019


Supply Chain Europe


Revenue decreased by 7.6% and in Euro-terms, by 12.6%

The decrease was mainly as a result of a significant decline in:

new vehicle production volumes in Germany - down 14.3%;

transport activities – down 22.9%; and

kilometers traveled – down 21.7%

Gross profit margin improved from 29.2% to 30.3%

Operating profit decreased by 70.9% and in Euro-terms, by 72.4%

The operating profit margin decreased from 4.3% to 1.4% due to:

the sharp fall in automotive sales volumes; and

cost pressures due to a 10% increase in the average diesel price

and the continued shortage of subcontractors in Germany


1 001

1 608 1 512

997

1 4951 355

1 998

3 1032 867

0

500

1 000

1 500

2 000

2 500

3 000

3 500

Jun 2017 Jun 2018 Jun 2019

First half

Second half

5563

33

65

71

6

120

134

39

0

50

100

150

Jun 2017 Jun 2018 Jun 2019

Fleet Solutions


Fleet Africa



Revenue increased by a pleasing 12.4% on the back of:

completing the roll-out of existing contracts; and

securing ad hoc business on existing contracts

Operating profit increased marginally by 0.7%

The operating profit margin decreased from 18.8% to 16.9% as the

roll-out of a large parastatal maintenance contract and a municipality

FML contract were completed, which margins are lower than ad hoc

contracts

327 316 315

296 305

383623 621

698

0

200

400

600

800

Jun 2017 Jun 2018 Jun 2019

First half

Second half

7861 63

69

56 55

147

117 118

0

50

100

150

200

Jun 2017 Jun 2018 Jun 2019


SG Fleet



Revenue increased by 62.9% or 59.5% in AUD-terms due to the

change in revenue recognition on vehicle disposals (IFRS 15)

SG Fleet had a challenging year with negative consumer perception

prior to the recent election, which resulted in:

a decline in vehicle retail sales; and

novated leases

Operating profit decreased by 9.6%

The operating profit margin decreased from 31.9% to 17.7% (18.8%

excl. impairment mentioned below)

An impairment of R59 million was made against goodwill as a result

of the nlc brand in Australia being discontinued – operate under one

name, SG Fleet

1 400 1 600

2 5431 586 1 563

2 610

2 986 3 163

5 153

0

1 000

2 000

3 000

4 000

5 000

6 000

Jun 2017 Jun 2018 Jun 2019

First half

Second half

438493 455

501516

457

9391 009

912

0

200

400

600

800

1 000

1 200

Jun 2017 Jun 2018 Jun 2019

Dealerships


Dealerships SA



Revenue decreased by 13.1% mainly as a result of Mercedes-Benz

changing its franchise model to an agency model and the closure of

two dealerships

Despite the decrease, Dealerships SA outperformed NAAMSA

statistics, reporting:

1.5% decrease in new vehicle sales; and

8.9% decrease in used vehicle sales

Operating profit decreased by 3.8%, reflective of the tough trading

conditions and closure of dealerships

Operating profit margin increased from 3.4% to 3.8%, mainly

attributable to Mercedes-Benz trading model change

4 2625 017

4 156

4 813 4 340

3 978

9 075 9 357

8 134

0

2 000

4 000

6 000

8 000

10 000

Jun 2017 Jun 2018 Jun 2019

First half

Second half

140167 161

148

156 150

288

323 311

0

50

100

150

200

250

300

350

Jun 2017 Jun 2018 Jun 2019



Revenue decreased in rand-terms by 2.2% and in GBP-terms by

7.8% as a result of Allen Ford’s total new unit sales declining by

9.5% and used unit sales by 8.8%

Dealerships UK’s market share increased as follows:

Ford from 6.82% to 7.06%

Kia from 1.73% to 1.85%

Operating profit increased by 18.6% and in GBP-terms, by 11.9%

The operating profit margin increased from 2.3% to 2.8%

Given the prevailing economic circumstances, Dealerships UK

performed strongly

The impact of the rand weakening against the average GBP by 6.1%

resulted in an increase of R11.7 million

Dealerships UK


2 782

4 765 4 985

4 058

5 160 4 7206 840

9 925 9 705

0

2 000

4 000

6 000

8 000

10 000

12 000

Jun 2017 Jun 2018 Jun 2019

First half

Second half

72

111 116

103

116

154

175

227

270

0

50

100

150

200

250

300

Jun 2017 Jun 2018 Jun 2019

Reviewed

Annual ResultsColin Brown


Revenue and EBITA analysis (excl Services and Corporate)

26%

9%

2%9%26%

28%

EBITA

per division

Revenue

per division

June 2019 June 2018

Supply Chain Africa

Supply Chain Europe

Fleet Africa

SG Fleet

Dealerships SA

Dealerships UK

30%

8%

2%14%

21%

25%

36%

4%4%

35%

11%

10%

26%

8%

4%41%

12%

9%


Statement of Comprehensive Income

R’million

30 June 2019

Reviewed

30 June 2018

Audited Change %

Revenue 37 861.8 35 662.9 6.2

EBITA 2 774.6 2 612.8 6.2

Amortisation of PPA intangibles (169.0) (177.3) (4.7)

Operating profit 2 605.6 2 435.5 7.0

Net finance charges (346.5) (330.5) 4.9

Profit before tax 2 259.1 2 105.0 7.3

Income tax expense (636.8) (612.8) 3.9

Profit for the year 1 622.3 1 492.2 8.7

EBITA includes capital items to the amount of R68.3 million (June 2018: R38.5 million), mainly relating to impairment of intangible assets of R59 million due to the discontinuation of the nlc brand by SG Fleet in Australia

Average interest rate paid on borrowings was 6.0% (June 2018: 5.8%)

Average interest rate earned on cash was 3.4% (June 2018: 3.1%)

Tax rate, excluding capital items, is 27.5%


Statement of Financial Position

Assets – R’million

30 June 2019

Reviewed

30 June 2018

Audited Change %

FIXED ASSETS 16 470.3 15 923.6 3.4

Property, plant and equipment 6 077.3 5 152.7 17.9

Investment property 164.2 151.0 8.7

Full maintenance lease assets 1 551.6 1 563 2 (0.7)

Goodwill and intangible assets 8 454.8 8 761.8 (3.5)

Investments and other non-current assets (incl. deferred tax) 222.4 294.9 (24.6)

CURRENT ASSETS 13 810.3 12 623.6 9.4

Inventories 4 488.9 4 179.6 7.4

Trade and sundry receivables 5 744.2 5 092.7 12.8

Cash and cash equivalents 3 577.2 3 351.3 6.7

TOTAL ASSETS 30 280.6 28 547.2 6.1


Statement of Financial Position

Equities and liabilities – R’million

30 June 2019

Reviewed

30 June 2018

Audited Change %

Total equity 12 613.0 11 377.1 10.9

Fund reserves and provisions 875.9 931.9 (6.0)

Deferred tax liabilities 530.7 541.9 (2.1)

Interest-bearing borrowings 5 741.8 5 353.8 7.2

FML borrowings 877.7 851.4 3.1

Non-controlling interest put options and other liabilities 101.2 317.5 (68.1)

Trade and other payables (incl tax payable) 9 540.3 9 173.6 4.0

TOTAL EQUITIES AND LIABILITIES 30 280.6 28 547.2 6.1


Net borrowings

R’million

Borrowings

30 June 2019

Cash

30 June 2019

Net borrowings/

(cash)

30 June 2019

Net borrowings

30 June 2018

Change

%

Africa 4 560.2 (1 842.0) 2 718.2 943.9 188.0

United Kingdom 904.8 (350.0) 554.8 1 033.4 (46.3)

Australia 1 154.5 (983.6) 170.9 249.9 (31.6)

Europe - (401.6) (401.6) 626.7 (164.1)

Total 6 619.5 (3 577.2) 3 042.3 2 853.9 6.6

13.7%

17.4%

0.0%68.9%

United Kingdom

Australia

Europe

Africa

2019 2018Borrowings

27.4%

20.1%

14.1%

38.4%


Debt maturity profile

-

500

1 000

1 500

2 000

2 500

Year 1 Year 2 Year 3 Year 4 Year 5<

R’m

illio

n

Secured asset-based borrowings Secured property borrowings and other

SG Fleet borrowings Corporate bond

Acquisition borrowings FML borrowings

1 491

1 283

461

2 031

1 390


Investing R2.1 billion for the future

3 3513 577

3 792

420 45

(652)(364)

(663) (219)

(1 425)(341) (41) (277)

(49)

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

O

pen

ing

ca

sh b

ala

nce

Ope

ratin

g c

ash f

low

Work

ing

cap

ital

Net fin

ance

costs

pa

id

Ta

xatio

n p

aid

Div

ide

nd

pa

id t

on

on

-contr

olli

ng

in

tere

sts

Net a

dditio

ns to

PP

E

&

in

tan

gib

les

Net a

dditio

ns to

FM

L

Acqu

isitio

n o

f bu

sin

esse

s

(net

of

ca

sh)

A

dd

itio

na

l in

ve

stm

ent

in e

xis

ting

sub

sid

iari

es

Net b

orr

ow

ing

s r

ais

ed

(

incl F

ML)

Fo

rex a

dju

stm

en

ts

Oth

er

Cash a

t 3

0 J

un

e 2

01

9

Cash flow movement

(R’m)


Key financial data

* Free cash flow is calculated by reducing cash generated from operations with income tax paid, net maintenance capex and tax on net finance costs

30 June 2019 30 June 2018

Return on Equity 12.6% 12.7%

Return on Net Operating Assets 12.3% 12.3%

Group Weighted Average Cost of Capital 9.2% 8.6%

Net debt to equity% 24.1% 25.1%

Net debt to EBITDA ratio 0.8 0.8

Net interest cover 11.1x 10.4x

Free cash flow* R2 124m R2 732m

Total unutilised funding facilities (excluding Corporate bond) R4 033m R4 787m

Closing currency rate movement between 30 June 2018 and 30 June 2019: Change %

AUS Dollar 2.7

Euro -

Pound Sterling 1.2

US Dollar 2.7

ProspectsPeter Mountford


Corporate actions post year end

Acquisition of Lieben Logistics (Lieben) and GLS Supply Chain Equipment (GLS)

Super Group acquired, effective 1 July 2019:

a 65% interest in Lieben for R498.8 million. Lieben is a diversified logistics and supply chain management company

focused on transportation services to clients in an assortment of industries including retail, meat, fresh produce and

other cold-chain goods. Lieben also transports dry goods for its extensive client base. It operates from depots and

satellite offices in Cape Town, Port Elizabeth, East London, Durban and Johannesburg; and

a 51% interest in GLS for R96.3 million. GLS is a leading supplier of returnable packaging solutions and outsourced

equipment services to optimally manage, store and progress products through different supply chain operations

Both these acquisitions will form part of Supply Chain Africa

Acquisition of Trans-Logo-Tech (TLT)

Supply Chain Europe’s inTime acquired an 80% interest in TLT, effective 5 July 2019 for R184.3 million

TLT is a Fifth Party Logistics provider focusing on organisational consulting and support, material flow planning, logistics,

production, development and engineering services

The rationale for these transactions is in line with Super Group’s strategy over the past seven years, namely to make selective

acquisitions in its core businesses


Prospects

R’million Southern Africa International

Supply Chain Expecting to benefit from positive commodities cycle in sub-

Saharan Africa

Negative macro-economic factors to hamper meaningful growth

SG Consumer and Digistics secured significant new contracts

reflecting the ongoing rationalisation taking place in the

consumer logistics industry

SG Convenience potential to further expand customer base

Supply Chain Europe’s businesses continues to face a number of

major uncertainties, namely:

the outcome of the protracted Brexit negotiations;

the impact of the US Trade Wars;

continuing changing legislation in relations to vehicle emissions;

and

subcontractor shortages in Germany

Fleet Solutions New contracts secured bodes well for 2019/2020

New Government, SOC and parastatal tender pipeline

promising

East Africa opportunities good

Australian economy had a temporary bounce post elections and

interest rate cut, but expected to remain unchanged

Corporate business won some attractive new contracts and

market positioning

A new protected lease product and recovery in novated leases

to boost competitiveness and product penetration

Dealerships Continued downward trend forecasted for dealerships market

given slow economic growth

Interest rate cut not enough, hoping for further interest rate cuts

Uncertainty around Brexit outcome continues to suppress

growth

Market conditions, both locally and globally, for FY2020 expected to be similar to FY2019

Super Group is however expected to benefit from opportunities, especially in the consumer distribution and FML environment,

as well as product and technology innovation to unlock shareholder value

THANK YOUFurther information available

on www.supergroup.co.za

final results presentation - super group ltd...supply chain africa delivered a strong performance...

Documents