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Integrated Report 2011

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Integrated Report 2011

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Super Group’s Integrated Report for the year ended 30 June 2011 is published in various media. An abridged

version of certain sections is contained in this printed Integrated Report. The comprehensive Annual Financial

Statements, Corporate Governance Report and the Sustainability Report are available on the website

www.supergroup.co.za as well as on the CD included at the back of this Integrated Report.

Reporting on corporate responsibility issues are also being addressed by the divisions of the Group and where

targets and measure indicators have been used, these have been disclosed.

This Integrated Report has not been independently assured as a whole this year. The Group is assessing all

internal and external assurances already in place and matching it to its risk management. The Group aims to

achieve full assurance by June 2014. The Annual Financial Statements have been audited and the Independent

Auditor’s report can be found in the detailed Annual Financial Statements which are on the enclosed CD and

Super Group’s website www.supergroup.co.za.

Super Group’s Integrated Report aims to provide a balanced, understandable and complete view of the

business by reporting on the financial and non-financial performance of the Group. The previous year’s annual

report was published in October 2010. This Integrated Report was compiled for Super Group Limited and its

subsidiaries and covers the financial year from 1 July 2010 to 30 June 2011. The Annual Financial Statements

were prepared according to International Financial Reporting Standards (IFRS), the requirements of the South

African Companies Act, the Listings Requirements of the JSE Limited (JSE), recommendations of the King III

Report and the discussion paper on Integrated Reporting released by the South African Integrated Reporting

Committee. The Group took a decision not to report in accordance with the guidelines of Global Reporting

Initiative (GRI G3) and therefore the checklist has not been included. For additional financial information and

recent announcements please visit our website at www.supergroup.co.za.

About this Integrated Report

Sustainability ReportThe comprehensive Sustainability Report is available on the website and on the CD included at the back of this Integrated Report.

Annual Financial StatementsThe Group’s consolidated annual financial results are included on the attached CD as well as the website.

FIN

SR

WEB WebsiteSuper Group’s reporting is fully integrated, there may be links that relate to information on our website. The website is: www.supergroup.co.za

Scope of the Integrated Report

Super Group Limited(Incorporated in the Republic of South Africa)Registration number 1943/016107/06ISIN number: ZAE000011334Share code: SPG

Corporate Governance ReportThe comprehensive Corporate Governance Report is also available on the website and on the CD included at the back of this Integrated Report.

CG

Reporting structure

Annual Financial Statements

Detailed Corporate Governance Report

Detailed Sustainability Report

All documents are available on the website and on the CD included at the back of this Integrated Report.

Financial statements

Sustainability

http://www.supergroup.co.zahttp://www.supergroup.co.zahttp://www.supergroup.co.zahttp://www.supergroup.co.za

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1Super Group Integrated Report as at 30 June 2011

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2 Group overview 2 Highlights 3 Our vision 3 Our strategic focus 4 Super Group on the go 6 The Group at a glance 8 Definitions 9 Financial performance 10 Material risks and the management thereof 12 Board of directors14 Chairman’s statement18 Chief Executive Officer’s report21 Review of operations 22 Supply Chain 28 Fleet Solutions 32 Dealerships36 Sustainability and corporate governance 37 Abridged corporate governance report 40 Abridged sustainability report 42 Value-added statement 43 Remuneration report 50 Shareholders’ analysis52 Abridged Annual Financial Statements66 Corporate information66 Shareholders’ diary67 Notice of annual general meeting73 Form of proxy

Investor Updates

Online...access the latest investorinformation online atwww.supergroup.co.za

Included...The comprehensive

consolidated Annual Financial Statements,

Corporate Governance Report and Sustainability

Report are available on the CD included at the back of this Integrated

Report

Contents


DisclaimerThe Integrated Report may contain certain forward looking statements

concerning Super Group’s operations, business strategy, financial conditions,

growth, plans and expectations. These statements include, without limitation,

those concerning the economic outlook, business climate and changes in the

market. Such views involve both known and unknown risks, assumptions,

uncertainties and important factors that could materially influence the actual

performance of the Group. No assurance can be given that these will prove

to be correct and no representation or warranty expressed or implied is given

as to the accuracy or completeness of such views or as to any of the other

information in the Integrated Report.


Sustainability

http://www.supergroup.co.za

2 Super Group Integrated Report as at 30 June 2011

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12%

Highlights

Revenue R7,8 billion

Operating profit R612 million

Profit before income tax R470 million

Headline earnings continuing operations R339 million

Operating cash flow R1,2 billion

NAV per share 83,2 cents

Total consolidated gearing 27%

• Stevie Award – World Conglomerate of the Year CEO Honoree Award

• FleetAfrica awarded South Africa’s No 1 Empowered Transport

Company at the Metropolitan Oliver Empowerment Awards

• Kamogelo Mmutlana, CEO of FleetAfrica, was awarded Top Black

Businessman of the Year at the Metropolitan Oliver Empowerment Awards

• Sg fleet (Australia) received the Energex formal award for Customer Service

• Volvo Dealer of the Year and Volvo Aftermarket Dealer of the Year

Awards received during 2011

25%

116%

114%

17%

13%

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Our strategic focus

Our strategic focus within the Super Group businesses is to: • build world-class competencies in supply chain

by investing in our employees, facilities and technologies;

• secure long-term business relationships with all our customers;

• grow the top line revenue by securing additional long-term contracts;

• provide our customers with innovative business solutions;

• make strategic acquisitions of businesses that are complementary to Super Group’s existing core businesses at the appropriate price;

• optimise cost and cash management;• focus on where the Group can improve on the

impact of our businesses on the environment;• be a good corporate citizen in all the countries in

which the Group operates; and• ensure that effective corporate governance is

maintained at all times.


The strategic vision for Super Group is to provide end-to-end supply chain solutions,

fleet management and dealership services to a diversified customer base in Southern

Africa, Australia, the United Kingdom and New Zealand and to become a leading

transport logistics and mobility group in the countries it operates.

Our vision


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2009

Peter Mountford appointed as CEO

DisposalDisposal of Emerald Risk Underwriters, AutoZone and Mica

2009 – 2011: Where have we come from since 2009?

Recapitalisationof the Group by R1,2 billion

2009

2009

2010

2009 2010

Disposal�Winding down and disposal of SGIP businesses

Super Group on the go

Repaid Repaid Term Loans and reduced total consolidated gearing by R606 million to 27%

2010

Acquisitions Acquired the minority interest in FleetAfrica Eastern Cape

Award�Received Top Empowerment Company – Logistics Award at the Metropolitan Oliver Empowerment Awards

2010

2010

AwardAwarded the 2009 Enterprise Development Award by EES-SIYAKHA/BEESA Group

2010

Acquisitions Second Land Rover dealership

2010 2011

AcquisitionsAcquired Volkswagen and Audi dealerships – expanding the product range

20112011

Award �Awarded JSE’s Transport Sectors most empowered company

Stevie AwardWorld Conglomerate of the Year CEO Honoree Award

2011 2011

AwardFleetAfrica awarded South Africa’s No 1 Empowered Transport Company at the Metropolitan Oliver Empowerment Awards

PerformanceReturned to profitability

Award Kamogelo Mmutlana, CEO of FleetAfrica, was awarded Top Black Businessman of the Year at the Metropolitan Oliver Empowerment Awards

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2011 – 2013 Where are we going tomorrow?Our strategy for the next two years is clear.

AcquisitionsAcquired Haulcon, a specialised bulk dry powder and liquids distribution business, effective 1 July 2011

Complementary strategy• Expanding operations through

strategic acquisitions in core competency and synergistic areas

Organic strategy• Emphasis is on sustainable growth

and service within core business units

• Ensuring cost containment mentality is maintained

• Training and development of staff to optimise efficiencies

• Continuing focus on cash and working capital management

Investors• Delivering a strong return on equity to shareholders

through solid financial performance and corporate governance principles

20132011

2012 – 2013

2012 – 2013

2012 – 2013

Restructure of Sg fleet (Australia)Introduced new minority shareholders, Champ Ventures and Sg fleet (Australia) management

2011

2011

AwardSg fleet (Australia) received the Energex formal award for Customer Service

AwardVolvo Dealer of the Year and Volvo Aftermarket Dealer of the Year

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The Group at a glance

Division Business description

Supply Chain South AfricaThe South African operations provide dynamic supply chain solutions by integrating operational excellence (management of assets) with appropriate, proven technology and ongoing innovation to create tangible value for customers.

This division provides a comprehensive suite of integrated supply chain services including transportation, warehousing, distribution, international forwarding, customs brokerage, vehicle rental and customised international supply chain technologies.

African LogisticsAfrican Logistics provides long distance, cross-border transport, clearing and forwarding, third-party distribution and transport brokerage in Sub-Saharan Africa.

International (Mauritius)This business provides the international procurement of inventory on behalf of AutoZone and other Group companies.

FleetAfricaFleetAfrica is a leading provider of fleet management solutions to Government, municipalities, other parastatals as well as large corporates in South Africa.

Sg fleet (Australia)Sg fleet (Australia) is the largest fleet management, leasing and salary packaging business in Australia. This business provides a comprehensive range of fleet management solutions to both public and private sector clients. Sg fleet (Australia) is also an acknowledged leader in the Australian novated lease and commercial fleet segments. Sg fleet (Australia) has subsidiary operations in New Zealand and the United Kingdom.

The Super Group Dealerships business comprises: • 20 passenger franchise dealerships; and • 3 commercial franchise dealerships.

These dealerships represent most of the major vehicle brands in South Africa. The majority of the dealerships are located in Gauteng.

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36%

Contribution to revenue

Contribution to operating profit

Contribution to profit before income tax

30% 34%

24% 59% 58%

40%

11% 8%

Area of operations

For a full review of Supply Chain please see the Review of Operations on pages 22 to 27 of this report.

SC

For a full review of Fleet Solutions please see the Review of Operations on pages 28 to 31 of this report.

FS

For a full review of Dealerships please see the Review of Operations on pages 32 to 35 of this report.

DS


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Operating profit marginEarnings before interest and taxation (EBIT) as a percentage of revenue

Net assets Total assets excluding cash and cash equivalents less total liabilities excluding bank overdrafts, interest-bearing borrowings, FML borrowings deferred tax and income tax payable

Consolidated gearingNet debt excluding insurance cash and cash equivalents as a ratio to total equity

Return on total assetsEBIT as a percentage of average total assets

Return on equityProfit attributable to equity holders of Super Group as a percentage of average capital and reserves attributable to equity holders of Super Group

Return on net assetsEBIT as a percentage of average net assets

Net asset turnRevenue divided by average net assets

Basic earnings per share (EPS – Continuing)Earnings for the year – continuing operations attributable to equity holders of Super Group divided by the weighted average number of ordinary shares in issue during the year

Headline earnings per share (HEPS – Continuing)Headline earnings – continuing operations divided by the weighted average number of ordinary shares in issue during the year

Closing earnings yieldHeadline earnings per share – continuing operations as a percentage of market value per share at 30 June

Closing price : earnings ratioMarket value per share at 30 June divided by headline earnings per share – continuing operations

Definitions


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Financial performance

Year ended 30 June 2011 2010 2009

Profit information– Continuing operationsRevenue R’million 7 835 6 992 7 139Operating profit (EBIT) R’million 612 490 547Operating profit margin % 7,8 7,0 7,7Profit after income tax R’million 368 172 118Headline earnings R’million 339 159 166

Financial positionTotal assets R’million 7 486 7 583 8 828Total equity R’million 2 831 2 551 1 188Total liabilities R’million 4 655 5 032 7 640Net assets R’million 3 447 3 609 4 221Consolidated gearing % 27,3 52,9 293,3Cash from operations before working capital R’million 1 243 1 059 1 054

Asset managementReturn on total assets % 8,1 6,0 5,6Return on equity % 13,0 8,2 (90,2)Return on net assets % 17,3 12,5 10,5Net asset turn times 2,2 1,8 1,4

Shareholders’ ratiosBasic earnings per share cents 10,1 6,5 22,5Headline earnings per share cents 10,7 7,4 36,4

Stock exchange statisticsMarket value per share– At year end cents 79 66 64– Lowest (12 months to 30 June) cents 54 46 46– Highest (12 months to 30 June) cents 84 128 525Closing earnings yield % 13,5 11,2 55,6Closing PE ratio times 7,4 8,9 1,8Market capitalisation – close R’million 2 586 2 160 349Weighted number of shares 3 165 103 2 141 758 457 002


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Super Group classifies the issues that have a material impact on the divisions into six strategic risks, namely Strategic, Human Resources, Financial, Operations, Compliance and Information Technology (IT) risks. Management analyses the risks affecting their business and implements control processes to mitigate these risks on an on-going basis.

Each division is responsible for identifying, assessing and recording risks and to monitor procedures aimed at mitigating them. The Group Risk Officer facilitates risk sessions with each division and ensures that the risks identified have been correctly assessed. Risks are assessed based on the potential impact on the business, financial position and reputation. A scale of 1-5 was used where 1 was “Minor” and 5 “Catastrophic”. Risks are also assessed on the likelihood of the risk occurring after taking into account controls in place to mitigate them. We once again used a scale of 1 to 5, where 1 is “Rare” and 5 is “Almost certain”. When we rate a risk ‘5’, it means the controls in place will not prevent the risk from happening due to factors outside the Group’s control.

The Group Risk Management Committee (GRMC) sets out the risk policy, detailing the objectives, scope, approach and roles and responsibilities. The GRMC meets three times a year and is chaired by a non-executive director. The membership of this committee comprises two non-executive directors; the Group Chief Executive Officer and Group Chief Financial Officer. The Group Risk Officer is invited to the meeting.The risks are as follows:

The Board reviews the list of strategic and critical risks regularly as required by King III and also approves the risk tolerance of the Group.

Material risks and the management thereof

RISK

The strategic risk considers the brand and reputation of the Group, the Group’s strategy, initiatives, communication and investor relations.

IT risks contemplate the application development, availability, continuity and the data integrity of the Group’s information technology systems.

StrategicThe Human Resources function assesses capacity requirements, employment of skills, compensation and benets as well as the culture of the organisation.

Human Resources

IT

Compliance risks are those that consider the adherence to and compliance with governance, legal and regulatory issues.

Compliance

Operational risks are associated with sales and marketing, customer service, production and delivery.

Operational The nancial risks pertain to the accounting, reporting structures and tax of the Group.

Financial

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The management and mitigation of these risks

Division Risk Context Mitigating factors

Supply Chain Multinational relationships and competitors hinder growth in Supply Chain

Multinational companies operating in South Africa use suppliers of services who are contracted on a global basis.

• Continuous focus on customer service and service delivery at all levels.

• Expanding our competitive product offerings to the market.

African Logistics

Africa socio-economic environment, including commodity cycles

Understanding the commodity and capital investment cycles.

• Management in Zimbabwe closely monitor trends and cycles.

• Drive costs and revenue initiatives to support the achievement of our financial targets.

Group Changing regulatory environment

Compliance with a wide range of regulatory requirements including licensing, consumer protection, new legislation and AARTO regulations.

• The development of new revenue models.• Specialist regulatory and government relation

teams that understand the legislation and regulation environment.

Group Customer concentration The Group faces intensive competition in all our markets. The ability to compete depends on our network, quality of service and the use of market leading technologies.

• Continued efforts to achieve new business. • A wide range of services at competitive prices.• Continued efforts to offer more value to customers.

Group General economic and industry

The Group is exposed to industrial action, industry import costs such as toll fees, fuel price fluctuations and other factors that impact the industry.

• Where possible, the Group passes the cost of fuel price, toll fees and wage increases to the customers through generally accepted escalation arrangements.

• The Group has a human resources function that manages labour force challenges.


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Executive directorsPeter Mountford (53) BCom, BAcc, HDip Tax, MBA, CA(SA)Chief Executive Officer. Appointed 29 July 2009Peter is a qualified chartered accountant with an MBA from Warwick University. His business experience includes the role of Managing Director of SAB Diversified Beverages which included SAB’s Supply Chain Services and Logistics interests. He was previously the Managing Director of Super Group’s Logistics and Transport division until June 2002 after which he joined Imperial Holdings Limited (Imperial). Over the six years to April 2008 he fulfilled the role of CEO of the Consumer Logistics Division at Imperial. He rejoined Super Group in May 2008 as Managing Director of the Supply Chain Division. Peter was appointed CEO on 29 July 2009. Peter is also a director of the Road Freight Association.

Colin Brown (42) BCompt (Hons), MBL, CA(SA)Chief Financial Officer. Appointed 28 February 2010Colin is a Chartered Accountant and has an MBL from the UNISA School of Business Leadership. Colin provided support services to the Group`s treasury activities from June 2009 to February 2010, and was subsequently appointed to the Board as Chief Financial Officer. Prior to that, Colin was CFO and a member of the board of Celcom Group Limited, a business in the mobile phone industry and previously listed on the Alternative Exchange (AltX) of the JSE Limited. Colin has also held the Financial Director position at EDS Africa Limited and Fujitsu Services South Africa, both multi-national companies in the Information Technology services industry.

Non-executive directorsPhillip Vallet (65) BA, LLBNon-Executive Chairman. Appointed 1999 Phillip qualified as a lawyer in 1971. He is the senior partner and CEO of Fluxmans Attorneys, specialising in corporate law. Phillip joined the Board in 1999. From April 2009 to 29 July 2009 he acted as interim CEO until the appointment of Peter Mountford to the position. Phillip retained certain executive functions relating to the corporate actions and disposals up to end of August 2009. He assumed the position as Non-Executive Chairman effective 1 November 2009. Phillip is currently a non-executive director of Caxton and CTP Publishers and Printers Limited and certain private non-listed companies.

John Newbury (69) Lead Independent Non-Executive Director. Appointed 1 November 2009John is a vastly experienced industrialist whose expertise has him serving on the boards of and chairing a number of listed and unlisted companies. Companies chaired by John include Tracker Investment Holdings (Proprietary) Limited, Blue Bulls Company (Proprietary) Limited, MARC Group Limited and Metropolitan Health Limited. John`s business career spans four decades with a significant focus on the motor industry. He served as Chief Executive of Nissan South Africa for 17 years, until retirement in 2000. John is a non-executive director at Dimension Data Holdings plc, Metropolitan Life Limited, MMI Holdings Limited, Momentum Group Limited and National Airways & Finance Corporation Limited. John was appointed Lead Independent Director effective 23 November 2010.

David Rose (69) BCom, BA, CA(SA)Independent Non-Executive Director. Appointed December 2008David is a Chartered Accountant and an independent consultant. David is a non-executive director and the Audit Committee Chairman of Primeserv Limited. He spent 41 years with Fisher Hoffman, a major national firm of Chartered Accountants. He became a partner of the firm in 1970 and was Managing Partner of the Johannesburg office as well as Chairman of the National Practice from 1991 to 1998.

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Valentine Chitalu (47)ACCA (UK), MPhil (UK)Independent Non-Executive Director. Appointed December 2008Valentine is an entrepreneur in Zambia and Southern Africa, specialising in Private Equity and General Investments. In the early part of his career, he worked at KPMG London Office. Valentine was previously Chief Executive Officer at the Zambia Privatisation Agency where he was responsible for the divestiture of over 240 enterprises. He later worked for CDC Group Plc, both in London and Lusaka, and is currently a non-executive director of the CDC Group Plc; a Fund-of-Funds Group based in London. Valentine holds several other board positions in Zambia, Australia and the United Kingdom. He is currently Chairman of Zambian Breweries, MTN (Zambia) Limited and the Phatisa Group. Valentine is a UK Qualified Accountant and holds a Masters Degree in Development Economics from Cambridge University in the United Kingdom.

Neill Davies (75)CA(SA)Independent Non-Executive Director. Appointed 1 November 2009Neill has had a long career in industry and commerce in both executive and non-executive positions. Since retiring from the Altron Group, where he held the position of Chief Financial Officer and later Executive Deputy Chairman, he has served on various boards of listed companies. He held the position of Chairman of the boards of Concor Limited, Rand Leases G.M. Limited and Astrapak Limited. Other non-executive directorships have included Austro Limited, Anglo American Industrial Corporation Limited, JD Group Limited, Advtech Limited, Brait S.A. Limited, Bytes Limited and AFGRI Limited. He is currently a non-executive director of Savcio Holdings (Proprietary) Limited.

Dr Enos Banda (46)BA (Hon) Financial Accounting; LLM (distinction); Doctor of Jurisprudence Independent Non-Executive Director. Appointed 1 July 2011 Enos Banda is a South African entrepreneur and investment banker who is founder and CEO of Freetel Capital (Pty) Limited. He has served as chairman of the South African National Electricity Regulator and chairman of the Municipal Infrastructure Investment Unit of the SA Government. He was country head for global bank Credit Suisse First Boston and later, head of Sub-Saharan Africa for HSBC Corporate and Investment Bank. He has practised law in both the United States and in South Africa. He is admitted to the New York law bar and he is an Advocate of the Supreme Court of South Africa. Enos sits on the boards of a number of listed and unlisted entities, as well as the board of Norilisk Nickel MMC. He was formerly the Chairman of the Gold Reef Resorts Group.

Group Company SecretaryNigel Redford (57) BAcc, CA(SA)Group Company Secretary. Appointed 31 March 2010Nigel is a Chartered Accountant. Nigel spent 10 years at Dimension Data and held a number of financial and operational positions within the Dimension Data Group. He has also held the Financial Director positions at High Performance Systems, Hewlett Packard South Africa, Technology Application Group (a division of Datakor) and Compusons. Nigel joined Super Group in April 2009 where he provided his services to the Group’s finance function to March 2010. He was subsequently appointed the Group Company Secretary for Super Group.

Executive management Philip Smith (46) BCom; BAcc and CA(SA)Executive Director of Super Group Trading (Pty) Limited and Group Executive of Fleet Solutions and Corporate Services. Philip qualified as a Chartered Accountant in January 1990 after which he completed his compulsory military service. He joined Macsteel (Pty) Limited from 1991 to 1995 where he gained valuable managerial and corporate finance experience. Philip was appointed by Super Group in 1996 to perform the due diligence on the Motolink Group. In 2002, Philip became the Managing Director of the Supply Chain Management Division. In 2008 Philip assumed responsibility for Fleet Solutions and the closure of the SGIP division. Philip has been extensively involved in all corporate finance activities of Super Group.

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Super Group returns to growth

IntroductionWe are pleased to present our first Integrated Report for the year ended 30 June 2011. We have set ourselves the objective of producing a report that meets the Reporting Standards set by the South African Institute of Chartered Accountants (SAICA) and is in compliance with the King III Report on Corporate Governance.

Following extensive restructuring of the Group during the previous two years, the Group was able to focus on the implementation of its strategy and return to growth. Prudent management of its cash resources and focus on its core businesses has ensured that the Group has established a sustainable business model.

During the year, the Group concluded the restructuring of the shareholding of its Australian subsidiary, Sg fleet (Australia), positioning this business for good growth. A number of acquisitions enhancing the Group’s core businesses were successfully initiated during the year.

The year at a glanceThe Group has reported revenue of R7,8 billion (2010: R7,0 billion), an increase of 12% notwithstanding accounting requirements resulting in certain lease income in FleetAfrica not being classified as revenue. Operating profit increased by a satisfying 25% to R612 million from R490 million. We are pleased with the good performances by both the Fleet Solutions and Dealerships Divisions. Although our core Supply Chain business performed very well, the results were negatively impacted by poor performance in our Sherwood International operations. This disappointing performance has been addressed by management. The African Logistics business returned to profitability as a result of improved volumes, pricing and the investment in a fleet renewal programme. Cost control remained a key focus area and along with the benefit of cost cutting in the previous financial year contributed to a moderate increase in overhead expenses. Profit before taxation from continuing operations was 116% higher than the previous year at R470 million for the year (June 2010: R218 million). Headline earnings from continuing operations were R339 million for the year ended 30 June 2011 (June 2010: R159 million). The Group did not declare a dividend during the year.

Cash generated by operations, before working capital, was R1,2 billion. The Group was able to make voluntary payments against the term loans during the first half of the financial year, repaying them in full by December 2010, almost two years ahead of the contracted repayment date. The balance sheet is healthy and the Group is positioned to continue pursuing strategic opportunities as and when they occur.

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Super Group was able to focus on implementing its strategy and return

to growth despite challenging economic and market conditions

The national and global environmentThe recovery in the economy was not equal over all sectors. Car sales improved considerably, whereas volumes in basic foodstuffs and auto parts showed only modest growth. With consumer indebtedness remaining reasonably high we expect that continued growth will be moderate. However, we expect better growth in the mining and minerals sector and are well positioned in our African Logistics business to benefit from the resumption of capital investment in mines in the DRC, Zambia and Zimbabwe as well as other large infrastructure projects requiring the transport of materials and equipment from the various ports in the region.

The local logistics industry experienced moderate growth in volumes in the fast moving consumer goods (FMCG) and freight businesses. Moderate growth is anticipated to continue during the next year. The automotive business displayed signs of recovery and we expect similar growth in the next year. Mining output recovered in the areas of operations covered by African Logistics, significantly improving southbound loads. A recovery in capital investment and donor funding would result in an increase in northbound loads. Future logistics prospects remain promising on the continent with the division positioned to benefit from any continued improvement in volumes. In the 7th Annual State of Logistics survey for 2010, the inefficiencies in South Africa’s logistic system were highlighted. In the report the industry’s major goal was said to be the efficient solving of the time and place discrepancy between supply and demand. If efficiencies are not improved, South Africa risks losing competitiveness in the global market, especially to neighbouring countries such as Namibia and Mozambique who offer more efficient and cost effective alternatives. The logistics industry has suffered a few major setbacks in the last year, ranging from increasing petrol price hikes to truck driver strikes. It is widely known that the fuel price and the exchange rate are the two major drivers of logistic costs and, with the fuel price increasing and the rand weakening, it is a challenge to maintain costs. Carbon emission taxes, also implemented this year, have a fundamental effect on logistic costs. The business was negatively affected by the week long road freight sector strike in February 2011 which impacted the Supply Chain and SG Convenience businesses. The industry is concerned about the impact of the introduction of toll road tariffs in Gauteng as this will have a widespread impact on the country, not only the logistics sector and motorists.

Motor dealers have had a good year with a healthy recovery in demand for new vehicles. National statistics on new car sales have also improved with year-on-year volumes to 30 June 2011 growing by 23,1% against a decline of 2% in the previous year. Growth is expected to moderate in the year ahead on the back of a higher base. The catastrophic earthquake and tsunami which hit Japan in March 2011 had an effect on the industry and disrupted new car sales. It is expected that Japan will be back to normal production in the next three months. Used car sales decreased overall as entry level car prices are


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competitive in comparison to pre-owned car prices. It has been reported that pre-owned car prices would need to drop by 5% – 7% if dealers were to maintain sales levels. Commercial vehicle sales were up but this is as a result of the replacement cycle and not fleet extensions. The new Consumer Protection Act implemented as of October 2010 has had no effect on the business during the year besides the added administrative burdens. It is still too early to report on the possible effect it could have on our dealerships. We believe the growth in new car sales will continue, albeit at single digit figures. The high toll road tariffs as well as the continuing high fuel prices will need to be figured into the equation when buying a new car. It is difficult to predict the impact of these on market growth.

The business case for large institutions to outsource their fleet management remains compelling, both locally and internationally. The improved availability of finance in South Africa has enabled FleetAfrica, part of the Fleet Solutions Division, to continue to pursue opportunities in the market.

The Australian fleet market was reasonably buoyant during the year and Sg fleet (Australia) was successful in securing additional significant parastatal, utility and corporate contracts during the year.

Corporate governance and social investmentCorporate governance remains a focus area for Super Group. Our Corporate Governance Report sets out our principles and policies in more detail.

We are conscious of our responsibility towards the effects of our operations and products on the environment and the need to uplift the communities around us. The Sustainability Report covers the Group’s progress with environmental and sustainability issues as well as our activities for the benefit of society and the policies we adhere to.

Board changesAs a result of me serving as Interim CEO of the Group for a period during 2009, effective 23 November 2010, in terms of the JSE Listings Requirements and King III, John Newbury was appointed as Lead Independent Director.

In order to strengthen the Board’s capabilities, Dr Enos Banda was appointed as an Independent Non-Executive Director to the Board on 1 July 2011. We look forward to Enos contributing to the continued success of the Group.

OutlookWe are confident that Super Group has now put the problems of the past behind it and that the continued implementation of the strategy adopted by the Board for the Group, will benefit our shareholders.

With the uncertain global economy, we foresee that the Group will be faced with global as well as local challenges, but we are confident that the Chief Executive Officer and his team will continue to grow the Group for the benefit of its stakeholders.

AppreciationI would like to take this opportunity to thank our management team for their dedication and hard work during this year and for their efforts in returning the Group to profitability and restoring credibility with our suppliers and customers. To my fellow Board members, your commitment is greatly appreciated.

Phillip ValletNon-Executive Chairman

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Super Group on track with a solid performance

The year in perspectiveDespite the continuing difficult economic and trading environment, Super Group delivered a satisfactory set of results for the year to 30 June 2011. An overall improvement in operating efficiencies and cost containment initiatives contributed significantly to the improvement in Group operating margins.

A number of new business contracts were successfully implemented in the Supply Chain and Fleet Solutions operations in both South Africa and Australia. Most notable are the renewals of the City of Johannesburg (COJ) Red Fleet and the Western Australian Government fleet contracts.

Emphasis has been strongly focused on effective cash generation and the management of working capital exposures, resulting in a net cash retention for the year of R672 million despite a net capital spend on property, plant and equipment of R245 million.

The Group repaid all of its term loans during the year reducing its consolidated gearing to 27%, compared to 53% as at the end of June 2010. The unrestricted gearing ratio, which excludes Full Maintenance Lease (FML) borrowings and restricted cash, has reduced to 17% as at June 2011.

The Group’s financial performanceRevenue from continuing operations increased by 12% to R7 835 million mainly as a result of new business generated in the Supply Chain South Africa and Fleet Solutions businesses and a 25% increase in new vehicle sales within the Dealerships operations.

Operating profits increased by 25% to R612 million for the year under review. The improvement in operating margin to 7,8% (June 2010: 7,0%) is mainly attributable to the return to profitability of the African Logistics operations and excellent performances in the Fleet Solutions and Dealership Divisions.

Profit before taxation increased by 116% to R470 million, reflecting the benefits of improved operational profitability and lower finance costs as a result of the positive net cash retained from operations. The Group’s operating cash flow of R1 243 million before working capital movements and finance costs was 17% up on the prior year.

The financial and operational performance by the continuing operations is set out in detail on pages 21 to 35.

In line with Super Group’s current policy, no dividend has been declared by Super Group for the year ended 30 June 2011.

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Strong cash flow generation has enabled the Group to reduce its borrowings

substantially and Super Group is in a sound financial position and is optimally

positioned for any improvement in economic activity in its core markets.

No material impairment of goodwill was required during the year and the main movement in goodwill is the effect of the translation of the goodwill in Australia at the year-end exchange rate.

Net debt for the Group reduced by 40% to R602 million from R1,0 billion last year. Net borrowings repaid during the year totalled R606 million. As a result, the consolidated gearing ratio (including the full maintenance leasing and Australian non-recourse borrowings and restricted cash) was down to 27% from 54% at June 2010. The interest cover also improved from 3,8 times to 8,1 times this year. With the term loans having been repaid, we are cancelling the term loan agreements and resuming normal banking relationships.

The Consolidated Statement of Financial Position reflects the benefit of strong cash flow generation over the past two financial years and the gearing levels are well within targeted levels. The net asset value per share of 83,2 cents is up by 13% from the 73,8 cents level at 30 June 2010.

Divisional reviewSupply Chain South Africa’s performance in increasing revenue and profit before taxation over the prior year was driven by an improved volume performance in the FMCG business and sales growth, albeit modest, in the Automotive and Staple Foods operations. The overall sector result was moderated by a disappointing result in the Sherwood International business. The Sherwood operational profitability declined significantly as a result of lower margins on a number of core beverage procurement contracts, the failure of a Swaziland agricultural supply contract to the Middle East and a marked decline in agricultural and mining equipment expenditure within Sub-Saharan Africa. As a direct consequence, operating profit declined by 5% for the year to June 2011, whilst the increase in profit before taxation over the prior year of 15% was below expectations.

FleetAfrica completed the roll-out of the new vehicle fleet on the Eastern Cape Provincial Government contract as well as extending both the City of Johannesburg (COJ) Red and Vanilla fleet contracts during the year. Revenue increased by 8%, operating profit by 22% and profit before taxation by 85%, mainly as a result of contract re-fleeting and the securing of a number of new corporate deals.

Sg fleet (Australia) reported strong operational results due to the strengthening of the Australian economy and a year of record sales origination. This business delivered a 9% increase in revenue and a 40% increase in operating profit. Fleet maintenance costs were well controlled and the business also benefited from an improvement in vehicle residual values. Sg fleet (Australia) increased its vehicle fleet by 3% over the year reflecting both good contract retention and the acquisition of a large national utility contract.

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Dealerships delivered a good performance, increasing revenue by 18% and operating profit by 53%. The strong sales performance and stringent control of costs facilitated a satisfactory increase in operating margins. The reported growth in new vehicle sales of 24,8% outperformed the industry by 1,7% over the period concerned.

The Dealership Division successfully acquired the Land Rover dealership in Vereeniging and the Volkswagen and Audi dealerships in Rustenburg. The introduction of the Volkswagen and Audi product ranges to the Super Group Dealership Division is a welcome addition to the existing product range and provides an expanded consumer reach into the future.

Subsequent to year-endSuper Group acquired Haulcon, a specialised bulk dry powder and liquids distribution business, at a cost of R28 million effective from 1 July 2011.

The Term Loan Agreement with the funders will soon be cancelled. New Term Sheets have been signed with the Lead Bankers. The process of unwinding the old agreements and security structures is underway and should be concluded in December 2011.

ProspectsSuper Group continues to execute its stated strategy for sustainable growth in revenue and earnings through organic expansion in the existing divisions and selected complementary strategic acquisitions. The acquisition of Haulcon reflects the type of synergistic acquisitions being pursued by the Group.

The local economy remains pedestrian and moderate volume growth is projected within the Supply Chain and FleetAfrica operations over the next year. The Sg fleet (Australia) business is currently reporting a strong pipeline and is well positioned for the delivery of organic growth in its core Australasian market. It expects to continue growth in New Zealand and United Kingdom markets with these areas moving to profitability.

Dealerships anticipate that the new vehicle sales growth will continue, although not at the double digit percentages experienced over the past year. The supply issues as a result of the Japanese tsunami should return to normal by the end of December 2011.

Strong cash flow generation has enabled the Group to reduce its borrowings substantially and Super Group is in a sound financial position and is optimally positioned for any improvement in economic activity within its core markets.

AppreciationI would like to express my gratitude to both our executive management team and all our employees for their hard work and commitment to the Group over the past year.

To my fellow Board members, thank you for your advice and support during the year and I believe that we have established a strong platform from which to build Super Group in the future.

I would also like to extend our appreciation to our customers for their commitment to Super Group and to our shareholders and funders for supporting the Group in this consolidation and recovery phase. The Group is optimally placed for growth into the future and the primary focus will remain the enhancement of shareholder value and returns into both the forthcoming financial year and the medium term.

Peter MountfordChief Executive Officer

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ActivitiesSupply Chain South Africa The Supply Chain South Africa Division delivers an end-to-end supply chain solution to its customers through the integration of multiple underlying business units. Services include supply chain optimisation, consulting, technology, procurement, third party distribution, transport, warehousing, inbound and outbound freight forwarding, customs clearing, import and export consolidation, bulk material handling, international airfreight services and bonded cross-border transport.

Unique logistical assets such as the Super Park distribution hub and Supply Chain South Africa’s world-class technology solutions allow the division to drive efficiencies for clients within a multi-principal, multi-modal environment. By way of example, aggregating loads across customers and managing backhaul capacity optimises route networks and reduces overall supply chain system costs. Combining these unique assets with

Supply Chain

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30 June 2010

30 June 2009

Revenue 8,6 2 792 600 2 572 285 2 753 531

– South Africa 9,0 2 429 246 2 228 673 2 311 149– African Logistics 4,8 360 223 343 612 442 382– International (Mauritius) Nm 3 131 — —

Operating profit/(loss) 8,3 182 716 168 669 277 530

– South Africa (4,6) 164 801 172 784 158 896– African Logistics Nm 16 696 (18 882) 44 779 – International (Mauritius) Nm 1 219 14 767 73 855

Operating margin (%) 6,5 6,6 10,1

– South Africa 6,8 7,8 6,9– African Logistics 4,6 Nm 10,1– International (Mauritius) 38,9 Na Na

Profit /(loss) before income tax 32,4 169 620 128 133 195 434

– South Africa 15,3 148 250 128 618 63 618– African Logistics Nm 7 073 (28 615) 31 391– International (Mauritius) Nm 14 297 28 130 100 425

Nm – Not meaningfulNa – Not applicable

Peter Mountford – Group CEO (53)BCom, BAcc, HDip Tax, MBA, CA(SA)Chief Executive Officer

Peter is a qualified chartered accountant with an MBA from Warwick University. His business experience includes the role of Managing Director of SAB Diversified Beverages which included SAB’s Supply Chain Services and Logistics interests. He was previously the Managing Director of Super Group’s Logistics and Transport division until June 2002 after which he joined Imperial Holdings Limited (Imperial). Over the six years to April 2008 he fulfilled the role of CEO of the Consumer Logistics Division at Imperial. He rejoined Super Group in May 2008 as Managing Director of the Supply Chain Division. Peter was appointed CEO on 29 July 2009. Peter is also a director of the Road Freight Association.

Peter Mountford is the CEO of Supply Chain.

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a highly skilled team and more than 20 years of supply chain expertise allows the division to achieve industry-leading operational excellence in integrated supply chain solutions.

The Supply Chain South Africa business comprises five main underlying businesses, namely:• Supply Chain;• Micor (freight forwarding and clearing);• Sherwood International (procurement); • Trans Africa Logistics (TAL) (cross border bulk terminals and mining); and• SG Convenience (forecourt, retail and spaza trading solutions).

Supply Chain manages integrated supply chains in the automotive, FMCG, staple food, freight and truck rental sectors. More than 95% of revenue streams are contracted over average periods of three to five years. Contract terms vary per customer but are predominantly annually indexed, thereby moderating exposure to cost escalations. Costs are approximately 63% variable and key cost drivers include turnaround time, utilisation, load efficiency, volumes and distance travelled.

Micor is a freight forwarding and clearing agent with a focus on diversified industrial customers. Blue chip clients include AutoZone, Dunlop, Marcopolo, Cadbury and Lil-Lets South Africa. Micor’s business is impacted by the trend in imports. Micor provides a seamless supply chain offering, ensuring that goods move from point A to point B in the most cost and time effective manner, and in the same condition that they were in when collected from the supplier, resulting in enhanced product lifecycles, reduced inventory costs, and greater return on working capital for the importer.

Sherwood International provides outsourced procurement solutions in Sub-Saharan Africa in the commodities, industrial, beverage and construction sectors. Blue chip clients include SABMiller Exports, Mubex (Mauritius Breweries) and Lumwana Mine.

TAL is a bulk material handling and transportation business with various commodity-based contracts within South Africa and the SADC region. Blue chip clients include Nu-Coal and Xstrata. TAL remains a sub-scale business that requires volumes to achieve critical mass. The capacity of the Dry Port in Maputo has been extended, allowing economies of scale and efficiencies to enhance profitability. The business has been further expanded by obtaining a five year short distance bulk coal movement contract. There are further expectations to grow the volumes on this project.

SG Convenience is the only national distributor in South Africa in this market segment, distributing to over 12 000 outlets. SG Convenience has an established national network. The business spread is 60% to retail forecourt stores, 18% to convenience stores, 12% to the hospitality industry and 10% to other entities such as schools, hospitals, gyms and golf clubs. Amongst the major brands distributed by SG Convenience are Cadbury, Nestlé, Beacon, Energade, Acquelle, Ceres Fruits, Lipton, Pepsi and Red Bull. This business will always be a high volume, low margin business.


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African LogisticsThe African Logistics operations consist of the Group’s Sub-Saharan Africa transport interests operating primarily between South Africa, Zimbabwe, Zambia, Malawi, The Democratic Republic of the Congo (DRC) and Mozambique. The business has established itself as the preferred service provider for a number of multinationals and sales volumes are largely underpinned by contracts. Over 70% of volumes are derived from commodity-related transport. Mining equipment and supplies are transported northwards to the Zambian and DRC copper belts whilst mining products are transported southwards for exports. The balance of the business is the provision of agricultural and aid transport for governments and prominent multinational NGOs.

International (Mauritius)Super Group Commercial Trading, based in Mauritius, specialises in trade finance, commercial trading and foreign exchange management. All of Super Group’s international procurement activities are administered through this business.

Results for 2011Supply Chain South Africa Supply Chain South Africa produced a solid set of results despite the continued depressed economic climate and competitive trading environment. Revenue increased by 9,0% to R2 429 million from R2 229 million in 2010 with operating profit declining by 4,6% to R165 million from R173 million. The revenue and operating profit performances were driven by the improved volume performance in the FMCG business, a stable contribution from the Automotive and Staple Food businesses, improved vehicle utilisation within Super Rent and the Freight business securing a number of new clients, mainly in the paper and packaging areas. Sherwood International negatively impacted the overall Supply Chain South Africa’s performance due to lower margins on a number of core beverage procurement contracts and a marked decline in agricultural and mining equipment expenditure within Sub-Saharan Africa. The decline in operating profit margin from 7,8% to 6,8% is directly attributable to this business. Profit before taxation increased by a satisfactory 15,3% to R148 million from R129 million.

Within the Supply Chain South Africa business, the Automotive business had a satisfactory year with sales volumes now beginning to reflect improved vehicle sales. This business was able to renew its Goodyear contract and was successful in obtaining the Nissan Parts Distribution contract in June 2011.

The FMCG operations experienced static sales volumes as a result of the sluggish economic environment. Major contracts were renewed within this business. The USABCO and the Premier contracts have been extended for another three and five years, respectively, and new contracts have been signed with PEPSI for four other sites until 2012.

The Staple Foods business reported a modest growth in revenue compared to the previous year. The business sustained its operating performance in relation to the prior year.

Super Rent experienced an improvement in short-term rental utilisation compared to the prior year. This business has expanded its fleet in the FMCG environment as a result of additional business secured. The Tshwane City Council and Totalgaz contracts were extended.

Despite there being little growth in FMCG volumes, the Freight operation had a good year. The business acquired a number of new clients in the industrial environment and also expanded its work within the Mondi Group, in particular on the pulp distribution side.

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The VSc (Virtual Supply Chain) Solutions technology and consulting business reported a satisfactory year securing a number of annuity-based income contracts. Some of the new contracts include Perishable Products Exports Control Board (PPECB) and BOC-Linde distribution planning outside of the African environment.

The capacity utilisation within Super Park is at acceptable levels.

The results reported by Micor were stable, despite being impacted by the decline in industrial exports. Revenue streams have been steady on the back of new business generation in freight forwarding and clearing. The business is operationally geared for higher revenues, but remains economically exposed to local import and export trends as well as government spend. The business maintained operating margins and reported a modest 3,0% increase in overall profit before taxation.

Sherwood International had an extremely difficult year with a decline in revenue as a result of the stagnant economic environment. Operating margins were massively impacted by lower recoveries on the business’ core SABMiller Exports and Mubex contracts. Significant cost cutting initiatives continue to be a focus area and revenue should improve next year on the back of the recently concluded African Electrification procurement contract in Ghana. The business reported a breakeven profit before taxation for the year.

TAL reported a satisfactory increase in operating profit and a 21% increase in profit before taxation compared to the prior year.

SG Convenience continued to grow revenue across its established national network. Revenue increased by 42,1%. This business is achieving improved margins as a result of its national bottom end distribution strategy. Operating profits grew by 61% and profit before taxation by 91% over the 2010 performance.


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African LogisticsRevenue increased by 4,8% to R360 million from R344 million primarily as a result of increased South-bound activity. Improved commodity prices and mining activity also contributed to the overall African Logistics results. The low level activity in North-bound aid, food and mining equipment still continues to impact revenue growth. The business unit returned to an operating profit position of R17 million from an operating loss of R19 million due to the material decline in maintenance costs and improved efficiencies. African Logistics has benefited from the vehicle replacement programme implemented over the past 14 months whereby in excess of 60% of the fleet has been replaced. Profit before taxation amounted to R7 million from a loss before taxation of R29 million in the previous year. Continued capital expenditure reduced the average vehicle age from 12 to eight years. The operation is better poised to deliver improved returns in the next two years.

International (Mauritius)This business has been downsized to meet the new business requirements. Revenue, for the first time, of R3 million was reported because of AutoZone being a third party, an operating profit of R1 million and a profit before taxation of R14 million, all in line with expectations.

SustainabilitySignificant progress has been made in regard to the continued implementation of sustainability initiatives within the Supply Chain businesses. During the year, a Sustainability Committee was formed to focus on driving Super Group’s sustainability activities.

• Since setting the initial targets in 2010, Supply Chain South Africa has achieved a total reduction in emissions of 7%. As a result of this significant reduction Supply Chain South Africa re-set its emissions reduction target in 2012 with an aim to achieve a further 7% reduction to emission.

• Application of low energy lighting across the Group’s warehouse facilities is expected to reduce electrical consumption on these sites by 40% and provide a fourteen month payback on the related capital expenditure. Further electrical savings are being vigorously explored across all operations.

• A revised Code of Conduct which details the core principles and values of the Supply Chain Division when dealing with colleagues, customers and suppliers was implemented in the year. This Code of Conduct includes Super Group’s expectations and requirements in regard to both the environment and across business sustainability issues.

• Ongoing community involvement through our participation in a number of East Rand and KwaZulu-Natal aid programmes. Orientation remains on the support of the elderly and children in the direct communities in which the business operates.

• Supply Chain staff have been instrumental in a number of direct feeding, blanket and clothing initiatives which remain at the core of this division’s community awareness strategy

Outlook for 2012The Supply Chain Division is a core competency within Super Group and forms an essential component of the Group around which the refocused strategy has been built. The strategic vision for Super Group is to create a focused supply chain business with above-average growth and margins, generating superior returns on invested capital. This necessitated certain short-term consolidation and restructuring of the division and will be followed by a growth plan to scale-up the division through a combination of organic and acquisitive means.

Supply Chain South Africa Historically, Supply Chain South Africa has generated above-average returns through a combination of higher margins (driven by greater efficiencies from the leverage of strategic assets and technology) and improved asset efficiency (via asset management and asset financing). This has been achieved, despite transport and logistics being a competitive and traditionally low-margin sector. Super Group will continue

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to focus on the appropriate niche segments of the market where growth and margin opportunities remain, for example the pharmaceutical industry. The organic expansion strategy is to explore new areas of distribution that include bulk commodities and document storage. Subsequent to year-end the Group acquired the majority shareholding in Haulcon, a specialised bulk dry powder and liquids distribution business at a total cost of R28 million.

Significant new contracts are under tender, however, stringent competition is putting pressure on margins and emphasis will always remain on optimising service efficiencies and reducing overall operating costs.

African LogisticsAs a result of the vehicle replacement programme for African Logistics, the newer and more cost efficient fleet will contribute to a significantly improved performance in the next year. The business is well positioned to benefit from any economic recovery in Zimbabwe. It is expected that current margins will improve in the short to medium term due to the improved commodity cycle and fleet replacement activity.

Although operating in different geographical markets to Supply Chain South Africa, African Logistics will continue to leverage the division’s competitive advantages, via scale benefits and market-leading technology, into neighbouring African markets. African Logistics is currently well positioned in attractive transport corridors and will continue to focus on higher margin opportunities, especially in beneficiated product transport markets. Fundamental to any strategy will be ongoing efforts to address operational difficulties created by poor infrastructure, especially in Zambia and the DRC.

International (Mauritius)The International (Mauritius) business continues to be viable and will continue to handle the international procurement for AutoZone. It is expected that this business will deliver an improved performance next year as a result of expanded activity within its core client.


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ActivitiesFleetAfrica FleetAfrica is a leading provider of fleet solutions in Southern Africa with a reputation for market leading skills in the management of commercial and specialised fleets. The business provides flexible, turn-key fleet management solutions which are designed to meet the specific transport and vehicle management needs of its customers. Specialised skills and the latest technology are used to offer improved risk management through off-balance sheet financing, better fleet utilisation, improved efficiencies and cost savings. Additional value-added services are provided including driver, fuel and tyre management; accident and insurance administration; fleet optimisation and route planning; vehicle tracking and recovery and access to FleetAfrica’s call centre and national repair network

Sg fleet (Australia)Sg fleet (Australia) is a leading fleet services provider in Australia managing nearly 75 000 vehicles for a significant number of leading corporate and public sector entities in Australia. Sg fleet (Australia) offers a complete range of fleet management and novated leasing products in Australia. In addition,

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Revenue 8,1 1 880 896 1 739 582 1 742 629

– FleetAfrica 7,7 1 051 717 976 363 1 034 395– Sg fleet (Australia) 8,6 829 179 763 219 708 234

Operating profit 31,6 358 222 272 269 282 768

– FleetAfrica 21,9 149 528 122 620 189 730– Sg fleet (Australia) 39,5 208 694 149 649 93 038

Operating margin (%) 19,0 15,7 16,2

– FleetAfrica 14,2 12,6 18,3– Sg fleet (Australia) 25,2 19,6 13,1

Profit before income tax 77,0 288 375 162 884 62 401

– FleetAfrica 84,7 108 548 58 768 33 493– Sg fleet (Australia) 72,7 179 827 104 116 28 908

Kamogelo Mmutlana (37)Chief Executive Officer FleetAfricaBTech (Industrial Engineering), Management Advancement Programme; MAP (Wits Business School)After completing his Industrial Engineering degree, Kamogelo (Kamo) joined the processing and distribution division of the South African Post Office (SAPO) and was quickly promoted as production manager of a mail centre. He held various managerial positions after leaving SAPO and in 2003, Kamo started his career in the automotive industry. He joined BMW SA (Pty) Limited as a General Manager of Africa Sales and Government Affairs. In 2004 he was head-hunted by FleetAfrica and joined as a Commercial Director. Within 18 months, Kamo was appointed by Super Group as the CEO of Super Group Equipment (SGE), an entity he was tasked to launch, with the purpose of creating a new industrial equipment brand. In February 2008 Kamo was appointed CEO of FleetAfrica and in October 2009 appointed to the Super Group Executive Committee.

Robbie Blau (42)Chief Executive Officer Sg fleet (Australia)BComm, LLB (Cum Laude), HDip Tax Law Robbie articled as a Commercial Lawyer at Werksmans Attorneys South Africa, where he also worked for five years. He became an executive assistant to the Operations Director of SABMiller for a year. Robbie founded Nucleus Corporate Finance in 1999 and remained its Managing Director until he moved to Australia in July 2006. During his time at Nucleus, he became increasingly involved with Super Group on an almost executive basis, running a number of strategic projects for the executive team in addition to managing all of Super Group’s corporate advisory work. On emigrating to Australia in July 2006, he formalised his role as CEO of Sg fleet (Australia).

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Sg fleet (Australia) operates subsidiaries in New Zealand and the United Kingdom. These businesses offer comprehensive fleet management and contract hire services in their chosen markets.

The Sg fleet (Australia) business had another successful year which included the renewal of several customer contracts as well as being awarded a large utility contract, a large parastatal contract and a number of significant corporate contracts including large novated opportunities.

Sg fleet (Australia) continued to innovate and market products in the leasing space including a leading toll management product, an iPhone application and in vehicle management systems.

Results for 2011FleetAfrica Revenue increased by 7,7% to R1 052 million from the previous year’s R976 million. This has been largely due to the effect of the successfully completed up-fleet and vehicle replacement in respect of the Eastern Cape Provincial Government (ECPG) contract during the year. Operating profit is up 21,9% compared to the previous period due to overhead cost containment and a reduction in depreciation on full maintenance lease (FML) assets in line with the estimated market values. Profit before taxation has risen by a healthy 84,7% due to a reduction in borrowing costs and the repayment of debt. FleetAfrica has ended the year on a strong balance sheet position with a healthy net cash balance. Future maintenance expenses have been adequately provided, ensuring that any planned maintenance costs are satisfactorily covered by the fund.

The business was awarded the Sekhukhune Municipality contract for the supply of 75 vehicles on a FML basis. The City of Johannesburg (COJ) Vanilla Fleet (cars, bakkies, emergency services vehicles and yellow vehicles) contract was extended for a further six months to December 2011 following the renewal of the COJ Red Fleet (fire engines) contract, which entails the Emergency Services vehicles of COJ, for a period of three years in line with the provisions contained in the outsource services agreement.

During the year FleetAfrica successfully negotiated the purchase of the minority shareholding in FleetAfrica Eastern Cape. This enables FleetAfrica to consolidate 100% of the earnings from this entity.

FleetAfrica achieved a Level 1 BBBEE Contributor Rating during the year. This rating is critical in light of the market in which FleetAfrica operates, namely government, municipal and parastatal.

Awards received during the year:• South Africa’s No 1 Empowered Transport Company of the year at the Metropolitan Oliver Empowerment

Awards• Kamogelo Mmutlana, CEO of FleetAfrica, was awarded Top Black Businessman of the Year at the

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Sg fleet (Australia)Sg fleet (Australia) posted an increase in revenue of 8,6% to R829 million mainly as a result of a number of new and renewed contracts mainly for the Western Australia Government (8 000 units) and the award of several large corporate contracts (e.g. Country Energy of 5 000 units). Operating profit and profit before taxation were up by 39,5% and 72,7%, respectively. This result also reflects the benefit of improved vehicle residual values.

Tight credit conditions have remained a concern over the reporting period. There is a definite trend towards some loosening of credit over the following period. The uncertain economic environment has meant that converting large corporate opportunities has taken longer than has been experienced in the past.

There is a growth in the number of fleets that are considering outsourcing to specialist providers, and a growing market awareness and acceptance of Fleet Management Organisation industry products/services. This is in line with international trends. This is across large and mid-size corporates as well as government entities at all levels and utility companies.

The Australian economy continues to operate at “two speeds”. The resource boom in the west continues unabated. However, the Eastern Seaboard is slowing down due to the subdued property sector, compressed consumer spending and uncertainty surrounding a number of impending government policies, including the taxation of “carbon emissions”. Uncertainty over possible interest rate hikes in the second half of the year is also affecting consumer confidence.

The used car market has continued to perform strongly over the period in question which is expected to continue over the coming months. We have seen slight improvements in the used commercial vehicle market in the period in question. This is helped by the resources boom in the West.

The automotive industry has been affected by the Japanese tsunami and earthquake in that there has been an inability to deliver ordered vehicles timeously as a result of production interruptions in Japan. We expect this interruption to work its way through the system by December 2011.

In addition, a change to the fringe benefits tax legislation has caused a temporary interruption in the novated leasing market. This temporary interruption is outweighed by the increased opportunities that this legislative change presents.

Hybrid and fuel efficient vehicles appear to be gaining more traction amongst our clients. We are actively participating in any electric vehicle activity in the Australian market so that we are at the forefront of delivering this solution to our clients at the appropriate time.

Awards and recognition received during the year:• Energex formal award for Customer Service• Endorsement and advocacy by a number of new clients for services and performance in introducing

services.

SustainabilityFleetAfricaAs part of the extended corporate governance structure in FleetAfrica, the executive plan to form a separate sustainability forum in order to provide specific focus on this important aspect of the business. Progress has been made in order to more accurately determine carbon emissions and resource utilisation within the business. There has been specific focus in the current year in sourcing vehicles which meet the carbon emission criteria as well as reducing fuel consumption. The business has embarked on a programme of replacing all existing lighting in the head office building with energy efficient alternatives.

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As part of the sustainability forum a corporate responsibility policy will form the back-bone to this committee. Participation and donations to various educational initiatives have been undertaken during the year.

Sg fleet (Australia)Significant progress has been made in regard to the continued implementation of sustainability initiatives for Sg fleet (Australia). During the year a Sustainability Committee was formed to focus on driving Sg fleet (Australia’s) sustainability activities. The key achievements of the Sustainability Committee for 2010/11 were:• Since setting the initial targets in 2008, Sg fleet (Australia) has achieved a total reduction in emissions

of 15% (based on total emission per 1 000 fleet managed vehicles). As a result of this significant reduction, Sg fleet (Australia) re-set its emissions reduction target in 2010/11 with an aim to achieve a further 7% reduction to emission, making the total emissions reduction target 20% by 2020 (based on the initial 2008 emission).

• Introduction of a Code of Conduct which details the core principles and values of Sg fleet (Australia) when dealing with colleagues, customers and suppliers. This Code of Conduct includes Sg fleet (Australia’s) expectations and requirements in regard to the environment and sustainability.

• Ongoing community involvement through our participation in the Kidney Car Rally raising awareness for Kidney Health in Australia, World Vision sponsorship and support to the various disaster appeals resulting from the Queensland floods and New Zealand earthquakes.

• Participation in the Electric Vehicle trial in conjunction with the Victorian State Government to investigate the viability of this new technology and the effects of sourcing and using different types of power to run electric vehicles.

In preparation for the new financial year the Sustainability Committee is working on developing a Corporate Responsibility Policy.

Outlook for 2012FleetAfricaFleetAfrica is in a strong position to grow its current customer base and start to de-risk itself from the dependency on its two main contracts. The business has a healthy pipeline of opportunities and approaches have been made from other government departments and municipalities to present value propositions. Competitive pricing and an increase in tender volumes should secure potential new business for FleetAfrica.

Sg fleet (Australia)Sg fleet (Australia) restructured by introducing Champ Ventures as a 49,9% shareholder. The Champ Ventures deal brings to the table access to a large and reputable corporate con

integrated report 2011 - sharedata online › data › 002471 › pdfs › suprgrp_ar_jun11.pdf ·...

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