| Tue 4 Sep 2007, 10:00 | | SPG - Super Group - Reviewed group results for the |
|
SPG
SPG
SPG - Super Group - Reviewed group results for the year ended 30 June 2007
Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1943/016107/06)
ISIN number: ZAE000011334
Share code: SPG
("Super Group" or "the Company")
Reviewed Group Results for the year ended 30 June 2007
"We are delighted with the strong growth in operating profit to R941 million and
strategic investments made will provide added impetus to future earnings" Larry
Lipschitz
- Revenue +15%
- Operating profit +42%
- Headline earnings per share +15%
- R1,2 billion operating cash flow
- The comparative pro forma results are in respect of the 12-month period
ended 30 June 2006
Super Group is an integrated supply chain management business, operating
predominately throughout Africa and Australia. Primary operating activities
include supply chain management, retail supply chain activities, fleet
management, African transport and automotive businesses.
Commentary
Super Group changed its financial year end to 30 June in the prior financial
period. The comparative results are in respect of the fifteen month period
ending 30 June 2006.
FINANCIAL OVERVIEW
Super Group achieved growth in most of its businesses. Consolidated revenue
increased by 15% from the pro forma revenue for the 12-month period ended 30
June 2006 of R10 billion to R11,6 billion, while operating margins improved
strongly from 6,6% to 8,1%. Operating profit rose by 42% from R664 million to
R941 million. This improvement is attributable to good growth in Retail Supply
Chain, improvement in African Transport and management`s focus on containing
controllable costs.
An increase in borrowings, from the investment in Super Group Industrial
Products and the election to own rather than lease properties combined with an
increase of 250 basis points in the prime rate of interest, resulted in the
higher net finance charge of R341 million.
Headline earnings per share for the year increased by 15% from 115,1 cents for
the pro forma 12-month period to 30 June 2006 to 132,3 cents in the current
year.
The group satisfactorily converted its operating results into cash of R1,2
billion before working capital movements. Working capital was absorbed by the
new businesses required to fund revenue growth. During the year the group
invested an additional R359 million in our industrial products business, where
sustainable earnings benefits are only expected to flow over the medium term.
The supply chain management business invested in its transport and rental fleets
and the development of the second warehouse in the Super Park warehousing
facility. Investments were made in new vehicle assembly lines and distribution
facilities for the industrial products business. A further R468 million was
invested in full maintenance lease assets arising mainly from the City of
Johannesburg fleet management contract.
During the latter part of the year, the group increased its equity interest in
the Australian fleet business from 70% to 95% and settled the outstanding
purchase consideration in respect of SMB Fleet Management Pty Ltd.
At year-end, the group had cash and cash equivalents of R422 million. Net debt
amounted to R1,4 billion with gearing of 65%, after excluding full maintenance
and non-recourse debt. The group`s gearing is being actively managed within
acceptable limits with the board focused on maximising shareholder returns with
appropriate levels of debt. The corporate bond matures during June 2008 and has
been included in current interest-bearing borrowings.
As previously advised the corporate bond is an important component of the
group`s long term capital structure and accordingly a major financial
institution is in the process of facilitating the roll over of our corporate
bond.
DIVISIONAL OVERVIEW
Supply Chain Management
The Supply Chain Management businesses delivered pleasing results, achieving
operating profit growth of 17% on pro forma earnings for the 12-month period to
June 2006 and improving operating margins to 13,9%. The automotive supply chain
business continued to outperform expectations during the year. It secured a
sizeable medium-term contract with Daimler Chrysler SA for its warehousing and
primary distribution requirements. The technology consulting business continued
its strong performance with a number of innovative and integrated solutions
being deployed in various industries and countries.
Fleet Solutions
The Fleet Solutions businesses performed in line with expectations, increasing
its revenue by 22% on pro forma revenue for the 12-month period ended 30 June
2006. FleetAfrica continued with its focus on the procurement and replacement of
the City of Johannesburg`s existing fleet. The company has performed well under
the contract by maintaining exceptional vehicle uptime.
The Australian fleet management business performed in line with expectations,
growing revenue by 28% on pro forma revenue for the 12-month period ended 30
June 2006 and delivering R83 million operating profit. The business continues to
trade well and secured significant client gains during the year, despite
pressure on management fees. The improvement in the used vehicle market, coupled
with various key initiatives, resulted in an improvement to the residual value
risk exposure.
The group has invested a great deal of time and resources in recruiting new
executives into the fleet management businesses, both locally and abroad.
Progress has been made in the establishment of the New Zealand based fleet
management business, which will leverage off existing systems and processes.
African Transport
The business improved during the period under review despite the challenging
trading conditions in Zimbabwe. New routes have been established in other
countries and new longer-term contracts secured with customers, contributing to
the return to profitability.
Retail Supply Chain
The results of Retail Supply Chain were satisfying. The business increased
revenue by 13% on pro forma revenue for the 12-month period ended 30 June 2006
and improved operating margins from 3,1% to 5,0%.
The strategic initiatives implemented resulted in a significant improvement in
profitability within the automotive parts business, trading under the AutoZone
brand. The AutoZone Hyper concept continued to gain support and in August 2006,
this concept was extended outside South Africa with the opening of a store in
Windhoek, Namibia.
The home improvement business, trading under the Mica brand, performed well as
it capitalised on the buoyant business environment and benefited from increased
member and house brand loyalty. During the year, the Mega Mica brand, with
retail space greater than 4 000 m2, was launched into the South African market
with stores opened in Eastgate, Fourways and Lifestyle Centre. The Mica brand
was further strengthened with the opening of another 25 Mica stores. With 184
stores nationwide, Mica has the largest DIY footprint in South Africa.
Automotive
Dealerships performed in line with expectations. Improved operating margins
resulted from growth in the industrial products business and exiting
underperforming dealerships in line with the strategy of focusing on optimising
returns and sustained profitability for the business.
The industrial products business achieved strong revenue growth as the new
product ranges introduced were well accepted. This business, which assembles and
distributes commercial vehicles and industrial and yellow equipment, is expected
to benefit from high growth in the construction sector and increased government
infrastructural spending, both of which should contribute to sustained medium-
term profitability.
Services
The division, which comprises group treasury, insurance and the property
portfolio management division, performed according to expectations.
PROSPECTS
Super Group is Africa`s Logistics Giant and we will continue to expand our
logistics capability on the continent. The expected contribution from industrial
products, retail supply chain and new supply chain initiatives, as well as a
revival of market sentiment in Africa, will provide added impetus to our future
earnings. It is anticipated that the group will achieve real earnings growth in
the year ahead.
APPRECIATION
We extend our appreciation to our directors, management and staff for their
dedication and valued efforts, as well as to our advisors, financiers,
customers, suppliers and shareholders for their continuing belief in and support
of Super Group.
On behalf of the board
Larry Lipschitz Dheven Dharmalingam
Chief Executive Officer Group Financial Director
4 September 2007
Consolidated balance sheets
30 June 30 June
2007 2006
Reviewed Audited
R`000 R`000
ASSETS
Property, plant and equipment 1 503 174 1 247 150
Full maintenance lease assets 1 655 333 1 351 538
Intangible assets 231 916 188 661
Goodwill 1 338 335 1 060 902
Investments in associates 21 191 6 151
Investments and other non-current 167 554 131 674
assets
Deferred tax assets 81 551 73 212
Current assets 4 256 668 3 883 661
Inventories 1 186 551 1 120 832
Trade and other receivables 2 387 680 1 861 946
Investments held for sale - 40 312
Cash and cash equivalents 682 437 860 571
Total assets 9 255 722 7 942 949
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves attributable to 2 175 869 1 754 857
equity holders of Super Group Limited
Minority interest 94 194 142 819
Total equity 2 270 063 1 897 676
Liabilities
Fund reserves 241 975 200 893
Deferred tax liabilities 223 054 198 234
Interest-bearing borrowings 3 758 524 3 147 805
Non-current 2 032 160 2 572 312
Current 1 726 364 575 493
Other current liabilities 2 762 106 2 498 341
Total equity and liabilities 9 255 722 7 942 949
Consolidated income statements
15-month
Year ended period ended
30 June 2007 30 June 2006
Reviewed Audited
R`000 R`000
Revenue 11 575 046 12 363 153
Trading profit before depreciation, 1 297 971 1 195 359
amortisation and recoupments
Depreciation, amortisation and (340 915) (306 381)
recoupments
Trading profit 957 056 888 978
Capital items (15 801) (77 826)
Operating profit 941 255 811 152
Net finance charges paid (340 932) (275 029)
Share of profit of associates (net 4 708 5 544
of taxation)
Profit before income tax 605 031 541 667
Income tax expense (121 321) (110 511)
Profit for the period 483 710 431 156
Attributable to minority 29 380 32 298
shareholders
Attributable to equity holders of 454 330 398 858
Super Group Limited
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to equity
holders of
Super Group Limited 454 330 398 858
Capital items 15 801 77 826
Closure costs 6 877 9 242
Costs incurred on unsuccessful 5 321 7 793
acquisition
Impairment of investments - 34 091
Impairment of goodwill and 3 603 26 700
intangible assets
Headline earnings for the period 470 131 476 684
Basic earnings per share (cents) 127,9 111,8
Diluted earnings per share (cents) 120,2 106,8
Headline earnings per share (cents) 132,3 133,6
Diluted headline earnings per share 124,3 127,6
(cents)
Dividends per ordinary share paid - 40,0 37,0
IAS 10 (cents)
The disclosure of headline earnings is a requirement of the JSE Limited and is
not a recognised measure under IFRS. It has been calculated in accordance with
the South African Institute of Chartered Accountants` circular issued in this
regard.
Consolidated cash flow statements
15-month
Year ended period ended
30 June 2007 30 June 2006
Reviewed Audited
R`000 R`000
Cash flows from operating activities
Operating cash flow before working 1 202 993 1 284 850
capital changes
Working capital changes (364 373) (137 796)
Cash generated from operations 838 620 1 147 054
Net finance charges paid (346 342) (280 829)
Net dividend paid (147 065) (128 165)
Income tax paid (98 764) (72 583)
Net cash retained from operating 246 449 665 477
activities
Cash flows from investing activities
Cost of business acquisitions, net (313 910) (235 899)
of cash acquired
Disposal of associate net of 30 418 -
acquisition
Additions to property, plant and
equipment and intangible
assets - net of disposals (361 726) (757 274)
Additions to full maintenance lease (467 623) (231 423)
assets - net of disposals
(Increase)/decrease in investments (16 814) 16 568
and loans
Net cash outflow from investing (1 129 655) (1 208 028)
activities
Cash flows from financing activities
Net proceeds/(costs) on share 10 527 (139 422)
purchases, share issues and options
exercised
Increase in interest-bearing 280 683 464 850
borrowings
Increase in full maintenance lease 161 541 157 589
borrowings
Net cash inflow from financing 452 751 483 017
activities
Net decrease in cash and cash (430 455) (59 534)
equivalents
Cash and cash equivalents at 841 882 902 038
beginning of period
Effect of foreign exchange on cash 11 061 (622)
and cash equivalents
Net cash and cash equivalents at end 422 488 841 882
of period
Consolidated statement of changes in equity
15-month
Year ended period ended
30 June 2007 30 June 2006
Reviewed Audited
R`000 R`000
Capital and reserves attributable to
equity holders of Super Group
Limited
Balance at beginning of period 1 754 857 1 809 008
Share issues/(repurchases) and 9 974 (140 451)
options exercised, net of expenses
Effect of foreign exchange on equity 29 098 (194 555)
holders of Super Group Limited
Profit attributable to equity 454 330 398 858
holders of Super Group Limited
Other movements in reserves 69 554 14 259
Ordinary dividends (141 944) (132 262)
Balance at end of period 2 175 869 1 754 857
Minority shareholders
Balance at beginning of period 142 819 110 987
Ordinary dividends paid to minority (3 460) (5 608)
shareholders
Profit attributable to minority 29 380 32 298
shareholders
Effect of foreign exchange on 7 425 495
minority shareholders
Changes in minority shareholders as
a result of acquisitions
and disposals (81 970) 4 647
Balance at end of period 94 194 142 819
Total equity at end of period 2 270 063 1 897 676
Comprising:
Share capital 47 297 47 297
Share premium 511 229 511 229
Retained earnings 1 699 543 1 387 678
Share buyback reserve (540 181) (550 155)
General reserve 556 036 556 036
Revaluation reserve 83 097 17 082
Foreign currency translation reserve (199 059) (228 157)
Contingency reserve - insurance 17 907 13 847
Minority interest 94 194 142 819
Total equity at end of period 2 270 063 1 897 676
Segmental Analysis
Revenue Trading profit
12 months 15 months 12 months 15 months
ended ended ended ended
30 June 30 June 30 June 30 June
2007 2006 2007 2006
Reviewed Audited Reviewed Audited
R`000 R`000 R`000 R`000
2 350 469 2 779 621 Supply Chain Management 330 964 348 485
245 912 365 814 African Transport 9 145 (21 966)
1 201 211 1 214 554 Fleet Solutions 259 464 307 508
2 556 711 2 806 547 Retail Supply Chain 129 308 87 142
4 873 523 4 918 997 Automotive 203 085 152 314
347 220 277 620 Services 25 090 15 495
11 575 12 363 Group 957 056 888 978
046 153
Segmental Analysis (continued)
Operating profit
12 months 15 months
ended ended
30 June 30 June
2007 2006
Reviewed Audited
R`000 R`000
Supply Chain Management 326 461 336 585
African Transport 9 145 (27 966)
Fleet Solutions 254 143 291 415
Retail Supply Chain 128 972 87 142
Automotive 197 444 142 572
Services 25 090 (18 596)
Group 941 255 811 152
Abridged Pro Forma Income Statements
12-month
period ended
Year ended 30 June 2006
30 June 2007 Pro forma
Reviewed Unaudited %
R`000 R`000 change
Revenue 11 575 046 10 044 704 15
Trading profit 957 056 740 125 29
Operating profit 941 255 663 537 42
Operating margin (%) 8,1 6,6 23
Headline earnings 470 131 410 961 14
Headline earnings per 132,3 115,1 15
share (cents)
Diluted headline earnings 124,3 109,5 14
per share (cents)
Pro forma financial results for the 12-month period ended
30 June 2006 was extracted from the audited results for the
15-month period ended 30 June 2006.
Salient Features
Year ended 15-month
30 June 2007 period
ended
Reviewed 30 June 2006
R`000 Audited
R`000
1. Interest-bearing borrowings
comprise:
Non-recourse borrowings 417 703 267 600
Full maintenance lease borrowings 1 321 936 1 143 785
Corporate bond 899 363 895 880
Property borrowings 409 101 316 987
Bank overdraft 259 949 18 689
Other borrowings 450 472 504 864
3 758 524 3 147 805
2. Share statistics
Total issued less treasury shares 356 497 354 861
(`000)
Weighted (`000) 355 275 356 695
Diluted (`000) 378 094 373 576
Net asset value per share (cents) 610,3 494,5
Net asset value per share excluding 234,9 195,6
goodwill (cents)
3. Capital commitments
Authorised, but not yet contracted 228 758 361 382
for capital commitments, excluding
full maintenance lease assets
Capital commitments will be funded from normal operating cash flows and the
utilisation of existing borrowing facilities.
Full details of the group`s business combinations for the year, additions and
disposals of property, plant and equipment, as well as commitments and
contingent liabilities, will be included in the group`s financial statements.
The group has no material contingent liabilities.
4. Basis of preparation and accounting policies
The condensed consolidated preliminary financial statements for the 12-month
year ended 30 June 2007 have been prepared in compliance with the Listings
Requirements of the JSE Limited, International Financial Reporting Standards
(IFRS) and the South African Companies Act, 1973, as amended.
The accounting policies applied in the presentation of the condensed
consolidated financial statements are consistent with those applied for the 15-
month period ended 30 June 2006 except for the adoption of the amendments to
IAS 21 (revised) and IAS 39 (revised), IFRIC 4, IFRIC 7 and IFRIC 8. The
adoption of these revised standards and interpretations have not had a material
impact on the reported results. Consequently, no adjustments have been made to
previously reported figures.
5. Related-party transactions
The group, in the ordinary course of business, entered into various sale and
purchase transactions on an arm`s length basis at market rates with related
parties.
6. Currency analysis - profit before income % %
tax
Australian Dollar 8 13
US Dollar and other 17 14
Rand 75 73
100 100
7. Review by external auditors
The condensed consolidated preliminary financial statements for the year ended
30 June 2007 have been reviewed by our auditors, KPMG Inc. Their unmodified
review report is available for inspection at the registered office of Super
Group Limited.
Other notes
Corporate governance
The group subscribes to sound corporate governance structures and processes and
complies with the JSE Limited`s Listing Requirements. The group strives to
continually improve reporting to shareholders.
Social Responsibility
Super Group is recognised for its corporate social investment activities.
Management remains committed to supporting social responsibility projects and is
mindful of the needs in this regard. Initiatives embarked upon continue to
contribute to broader skills development and sourcing of appropriately qualified
staff on an ongoing basis.
People Transformation
The passion and commitment of our people continues to be a key success factor.
By recognising that it is because of our people that Super Group is assured of
success, we have introduced additional initiatives in the current year to
harness the internal strength within our group.
Dividend declaration 2007
Notice is hereby given that a cash dividend of 40 cents (2006 dividend of 40
cents per share) per ordinary share, has been declared in respect of the
financial year ended 30 June 2007, payable to shareholders recorded as such in
the register at the close of business on the record date. The salient dates are:
Last date to trade shares cum dividend
Thursday, 20 September 2007
Shares commence trading ex dividend Friday, 21 September 2007
Record date
Friday, 28 September 2007
Payment date
Monday, 1 October 2007
Share certificates may not be dematerialised or rematerialised between Friday,
21 September 2007 and Friday, 28 September 2007, both dates inclusive. On
Monday, 1 October 2007, the dividend will be electronically transferred to the
bank accounts of all certified shareowners who utilise this facility. In all
other instances of certificated holders, cheques dated 1 October 2007 will be
posted on or about that date. Shareholders who have dematerialised their shares
will have their accounts credited on
1 October 2007.
Registered Office: 27 Impala Road, Chislehurston, Sandton, 2196 Private Bag
X9973, Sandton, 2146
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited
Ground Floor, 70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown 2107"
Directors: P. Malungani (Chairman), P. Vallet (Deputy Chairman), L. Lipschitz
(Chief Executive Officer), S. Abrahams#,
L. Bergman#*, D. Dharmalingam, L. Johnston, P. Smith,
B. Tshili
Non-executive * Austrian #Independent
Group Company Secretary: D. de Quintal
Sandton
04 September 2007
Sponsor: Deutsche Securities (SA) (Proprietary) Limited
Date: 04/09/2007 10:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
