| Mon 3 Mar 2008, 7:31 | | SPG - Super Group - Unaudited condensed interim fi |
|
SPG
SPG
SPG - Super Group - Unaudited condensed interim financial statements for the
six months ended 31 December 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" or "the Group")
Unaudited condensed interim financial statements for the six months ended 31
December 2007
Cash flows from operating activities up 20% to R658 million
Revenue up 8%
Operating profit up 12%
Net asset value per share up 21%
Super Group is an integrated supply chain management business, operating
predominantly throughout Africa and Australia. Our primary operating
activities include supply chain management, retail supply chain management,
fleet management, African transport and automotive businesses.
OVERVIEW
Super Group produced solid organic growth from operations for the period under
review. Consolidated revenue increased by 8% from R5,8 billion to R6,3
billion. Operating margins improved from 7,7% to 8,1% resulting in operating
profit increasing by 12% from R448 million to R504 million for the six months
ended 31 December 2007. This improvement is attributable to the realisation of
supply chain efficiencies within our businesses and additional investment in
higher margin businesses.
Slowing consumer spend, changing dynamics within the dealerships and fast
moving consumer goods (FMCG) industries together with higher interest rates
contributed to the 6% decline in headline earnings per share from 63,6 cents
to 60,0 cents for the six month period.
The group satisfactorily converted its operating results into cash of R658
million before working capital movements, equating to a cash conversion ratio
of 92%. The group invested R343 million in working capital during the period
mostly in our industrial products and Mica businesses. The industrial products
business generated strong revenue growth of 66% and its increase in working
capital is largely attributable to additional inventory required by the
business to support further sales in the second six months of the financial
year and the impact of delayed product launches. In addition, Mica`s new
central distribution centre and new member partnership stores resulted in
higher inventories and receivables. The Group expects a reduction in working
capital utilised by the industrial products business in the second six months
of this financial year.
Capital was invested in the transport and rental fleets for new supply chain
contracts and the completion of Phase 2 and Phase 3 of Super Park. Further
investment was required for an industrial products retail outlet in Centurion
and upgrades to dealerships in line with OEM standards. The Group acquired
full maintenance lease assets of R257 million, principally for the continuing
replacement program in the City of Johannesburg fleet management contract and
funding of the new United Kingdom fleet management business. This business is
an extension of our Australian fleet management business and these assets are
funded by non-recourse debt.
At 31 December 2007 the Group had net debt amounting to R1 824 million and
gearing of 77%, after excluding full maintenance and non-recourse debt. Debt
levels are generally higher in December than in June as a result of seasonal
business requirements. The increase in net debt is attributable to additional
investments in the industrial products and Mica businesses. The Group`s
gearing is being actively managed and it is expected that the return from
medium term investments with an improvement in working capital will translate
into a reduction in gearing levels.
The corporate bond (SPG1) matures during June 2008 and has been included in
current interest-bearing borrowings. A new corporate bond (SPG2) will be
issued before the end of May. The Group has secured committed facilities
exceeding R900 million and FitchRatings has recently affirmed Super Group
credit rating at Long-term A- (zaf) and Short-term F2 (zaf) with a stable
outlook.
In line with the Company`s dividend policy, no interim dividend has been
declared.
STRATEGIC INITIATIVES
Super Group`s strategy is to continue growing its logistics competency on the
African continent. The Group is taking positive steps to further align the
balance sheet with this strategy. The process is ongoing and shareholders will
be kept appraised of any significant developments.
The board had received an unsolicited expression of interest for the
dealerships division. Given the prevailing market conditions in the automotive
industry, the board is of the opinion that any potential disposal will not
currently provide the required shareholder value.
Super Group is committed to broad based economic empowerment ("BEE"). During
the period the Group entered into a broad based BEE transaction for the
disposal of 14% of the South African fleet management business. In addition,
preliminary discussions are progressing positively with potential BEE
shareholders at a Group level.
DIVISIONAL OVERVIEW
SUPPLY CHAIN DIVISION
Revenue for the six months was maintained at R1,2 billion as a result of the
strategic decision to exit low margin contracts. The automotive supply chain
and freight businesses performed well on the back of long term contracts.
During the period, Super Group was successful in securing numerous new medium
size contracts. Slowing consumer spending and changing industry dynamics
within the FMCG industry negatively affected performance in the current
period. The rental and freight businesses were relocated to Super Park to
facilitate further supply chain efficiencies. Super Group continues to invest
in small supply chain businesses which extends our range of supply chain
services.
AFRICAN TRANSPORT
The business continued to benefit from its dedicated contract business,
transport rates, new routes and improved utilisation achieving revenue growth
of 12% and an operating margin of 9,1%. The trading conditions in the region
remain challenging.
FLEET SOLUTIONS
The Fleet Solutions businesses performed in line with expectations with
revenues and operating profit increasing 20% and 15% respectively.
FleetAfrica`s operating margins declined to 22,4% as margin pressure in the
Government sector continued. The Company continues to perform well under the
City of Johannesburg contract. Vehicles under management increased 4% to 56
100.
The Australian fleet management business grew revenue by 11% and improved
operating margins to 16,9%. The Australian business continues to trade well
with the New Zealand and the newly opened United Kingdom fleet management
businesses, performing in line with expectation. Vehicles under management
increased 5% to 55 400. During the period, the Group reduced its equity
interest in the Australian business to 66,5%.
RETAIL SUPPLY CHAIN
The Retail Supply Chain businesses continue to improve. The division increased
revenue by 5% and improved operating margins to 5,4%. AutoZone achieved
revenue growth of 7% and returned to historic profitability levels as the
benefits of strategic initiatives minimized the effect of slowing consumer
spending and intense competitor activity.
The home improvement business, trading under the Mica brand, performed well
increasing like-for-like revenue by 20%. It benefited from new store openings
and increased member and exclusive brand loyalty. During the period under
review, Super Group invested an additional R80 million in member store
partnerships in new stores and developing its central distribution centre that
will further enhance Mica`s supply chain efficiencies and improve inventory
optimisation. With 166 stores nationwide, Mica has the largest footprint of
any DIY and hardware retailer in South Africa. The strong demand for Mica
stores is being dampened by the availability of suitable sites.
AUTOMOTIVE
The dealerships business was impacted by the 12,5% decline in passenger
vehicle sales and the introduction of the National Credit Act. Revenue
declined 4% and operating margins declined to 1,4%.
The industrial products business benefited from the growth in the construction
sector and increased infrastructural spending. In particular, the heavy
commercial vehicle and cranes businesses recorded strong revenue growth. To
date, the business has sold over 1 000 units of the Powerstar range of extra
heavy vehicles and intends to launch a second commercial vehicle product range
in the next few months.
SERVICES
The division performed according to expectations. The insurance business
showed good growth in premiums written but this was partly offset by higher
than expected claims.
PROSPECTS
The Group remains positive about its long term prospects and it is focused on
driving sustained growth. The growth drivers are firmly embedded in all the
core businesses. The Group continues to pursue its ambition of being Africa`s
Logistics Giant.
The full benefits of strategic initiatives implemented in previous financial
years are being adversely impacted by lower GDP growth resulting from higher
interest rates, recent disruptions to electricity supply and slower consumer
spending. The Group`s business portfolio is partly shielded by way of
geography and diversification of its activities. Given no further
deterioration in the macro-economic climate the Group should achieve a similar
performance in the next six months.
On behalf of the board
Larry Lipschitz Dheven Dharmalingam
Chief Executive Officer Group Financial Director
CONSOLIDATED BALANCE SHEETS
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 1 640 152 1 359 853 1 503 174
equipment
Full maintenance lease 1 807 939 1 505 336 1 655 333
assets
Intangible assets 237 522 218 344 231 916
Goodwill 1 350 872 1 084 407 1 338 335
Investments in associates 83 538 11 441 21 191
Investments and other non- 164 568 126 572 167 554
current assets
Deferred tax assets 86 851 81 175 81 551
5 371 442 4 387 128 4 999 054
Current assets 4 142 895 3 883 735 4 256 668
Inventories 1 395 487 1 253 537 1 186 551
Trade and other receivables 2 404 683 1 942 788 2 387 680
Cash and cash equivalents 342 725 687 410 682 437
Total assets 9 514 337 8 270 863 9 255 722
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves
attributable to equity
holders of
Super Group Limited 2 239 133 1 841 687 2 175 869
Minority interest 193 167 151 728 94 194
Total equity 2 432 300 1 993 415 2 270 063
Liabilities
Fund reserves 275 496 252 916 241 975
Deferred tax liabilities 230 765 188 457 223 054
Interest-bearing borrowings 4 014 211 3 420 969 3 758 524
Non-current 2 278 086 2 700 143 2 032 160
Current 1 736 125 720 826 1 726 364
Other current liabilities 2 561 565 2 415 106 2 762 106
Total equity and liabilities 9 514 337 8 270 863 9 255 722
CONSOLIDATED INCOME STATEMENTS
6-month 6-month Year
period ended period ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 6 252 881 5 787 262 11 575 046
Operating expenses (5 533 669) (5 177 189) (10 277 075)
excluding capital items
Trading profit before
depreciation, amortisation
and recoupments 719 212 610 073 1 297 971
Depreciation, amortisation (214 093) (151 791) (340 915)
and recoupments
Trading profit 505 119 458 282 957 056
Capital items (1 202) (9 872) (15 801)
Operating profit 503 917 448 410 941 255
Share of profit of 1 175 4 051 4 708
associates (net of
taxation)
Net finance costs (224 984) (171 088) (340 932)
Profit before income tax 280 108 281 373 605 031
Income tax for the period (53 249) (54 061) (121 321)
Profit for the period 226 859 227 312 483 710
Attributable to minority 13 880 11 626 29 380
shareholders
Attributable to equity 212 979 215 686 454 330
holders of Super Group
Limited
Reconciliation of headline
earnings
Profit attributable to 212 979 215 686 454 330
equity holders of Super
Group Limited
Capital items 1 202 9 872 15 801
Closure costs 1 202 1 214 6 877
Costs incurred on - 5 188 5 321
unsuccessful acquisition
Impairment on goodwill and - 3 470 3 603
intangible assets
Headline earnings for the 214 181 225 558 470 131
period
Basic earnings per share 59,7 60,8 127,9
(cents)
Diluted earnings per share 56,5 57,9 120,2
(cents)
Headline earnings per 60,0 63,6 132,3
share (cents)
Diluted headline earnings 56,8 60,6 124,3
per share (cents)
Dividend per ordinary 40,0 40,0 40,0
share - 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
6-month 6-month Year
period ended period ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating
activities
Operating cash flow before 658 100 549 330 1 202 993
working capital changes
Working capital changes (343 495) (222 748) (364 373)
Cash generated from 314 605 326 582 838 620
operations
Net finance charges paid (206 073) (129 721) (346 342)
Net dividend paid (144 468) (140 456) (147 065)
Taxation paid (41 865) (27 876) (98 764)
Net cash retained from (77 801) 28 529 246 449
operating activities
Cash flows from investing
activities
Proceeds/(cost) of business
disposals/(acquisitions),
net of cash acquired 74 304 (16 260) (313 910)
(Purchase)/disposal of (61 173) 39 232 30 418
associates
Additions to property, plant
and equipment and
intangible assets - net of (254 497) (250 082) (361 726)
disposals
Additions to full
maintenance lease assets -
net of disposals (257 261) (210 523) (467 623)
Decrease/(increase) in 1 272 3 598 (16 814)
investments and loans
Net cash outflow from (497 355) (434 035) (1 129
investing activities 655)
Cash flows from financing
activities
Net proceeds on share
purchases, share issues and
options exercised 9 017 14 200 10 527
Increase in interest-bearing 77 049 51 527 280 683
borrowings
Increase/(decrease) in full 162 533 (38 648) 161 541
maintenance lease borrowings
Net cash inflow from 248 599 27 079 452 751
financing activities
Net decrease in cash and (326 557) (378 427) (430 455)
cash equivalents
Cash and cash equivalents at 422 488 841 882 841 882
beginning of period
Effect of foreign exchange
on cash and cash
equivalents (2 981) 75 11 061
Net cash and cash 92 950 463 530 422 488
equivalents at end of period
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
6-month 6-month Year
period ended period ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
Capital and reserves
attributable to equity
holders of Super Group
Limited
Balance at beginning of 2 175 869 1 754 857 1 754 857
period
Share issues and options 3 438 16 950 9 974
exercised, net of expenses
Effect of foreign exchange
on equity holders of
Super Group Limited (10 107) 82 29 098
Profit attributable to 212 979 215 686 454 330
equity holders of Super
Group Limited
Other movements in reserves (1 847) (3 106) 69 554
Ordinary dividends (141 199) (142 782) (141 944)
Balance at end of period 2 239 133 1 841 687 2 175 869
Minority shareholders
Balance at beginning of 94 194 142 819 142 819
period
Ordinary dividends paid to (3 577) (2 328) (3 460)
minority shareholders
Profit attributable to 13 880 11 626 29 380
minority shareholders
Effect of foreign exchange 1 171 (631) 7 425
on minority shareholders
Changes in minority
shareholders as a result
of acquisitions and 87 499 242 (81 970)
disposals
Balance at end of period 193 167 151 728 94 194
Total equity at end of 2 432 300 1 993 415 2 270 063
period
Comprising:
Share capital 47 297 47 297 47 297
Share premium net of 511 229 511 229 511 229
treasury shares
Retained earnings 1 761 695 1 465 010 1 699 543
Share buyback reserve (536 743) (535 955) (540 181)
General reserve 556 036 556 036 556 036
Revaluation reserve 80 223 13 976 83 097
Foreign currency translation (209 166) (228 075) (199 059)
reserve
Contingency reserve - 28 562 12 169 17 907
insurance
Minority interest 193 167 151 728 94 194
Total equity at end of 2 432 300 1 993 415 2 270 063
period
SALIENT FEATURES
6-month 6-month Year
period ended period ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
1. Interest-bearing
borrowings comprise:
Non-recourse borrowings 442 176 273 182 417 703
Full maintenance lease 1 474 360 1 127 208 1 321 936
borrowings
Bond and other 1 443 813 1 379 802 1 349 835
Property borrowings 404 087 416 897 409 101
Bank overdraft 249 775 223 880 259 949
4 014 211 3 420 969 3 758 524
2. Share statistics
Total issued less 357 318 354 929 356 497
treasury shares (`000)
Weighted (`000) 356 939 354 872 355 275
Diluted (`000) 377 236 372 203 378 094
Net asset value per 626,6 518,9 610,3
share (cents)
Net asset value per 248,6 213,4 234,9
share excluding goodwill
(cents)
3. Capital commitments
Authorised, but not yet
contracted for capital
commitments, excluding
full maintenance lease
assets
44 143 99 201 228 758
Capital commitments will be funded from normal operating cash flows and
the utilisation of existing borrowing facilities.
There have been no significant changes in the rental and other
commitments and contingent liabilities disclosed at 30 June 2007 in the
Group`s annual financial statements.
Other than the matters disclosed, the directors are not aware of any matter or
circumstance arising subsequent to the balance sheet date up to the date of
this report.
4. Basis of preparation and accounting policies
The condensed consolidated interim financial statements for the six-month
period ended 31 December 2007 have been prepared in compliance with the
Listing Requirements of the JSE Limited, International Financial Reporting
Standards (IFRS), IAS 34 Interim Financial Reporting 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
year ended 30 June 2007 except for the adoption of the amendments to IAS 34,
IAS 17 (revised) and IAS 33 (revised), IFRS 7, IFRIC 10, IFRIC 11, IFRIC 12,
and IFRIC 13. 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.
IFRS 7: Financial Instruments: Disclosures and the amendment to IAS 1
Presentation of Financial Statements: Capital disclosures (effective 1 January
2007) require extensive disclosures about the significance of financial
instruments for an entity`s financial position and performance, and
qualitative disclosures on the nature and extent of risks. The adoption of
this accounting statement had no material impact on the results of the Group
or disclosure in this interim report.
The condensed consolidated financial statements have been prepared in
accordance with the historic cost convention except for certain financial
instruments and land and buildings which are stated at fair value.
The condensed consolidated financial statements are presented in Rand, which
is Super Group`s functional and presentation currency.
This interim report should be read in conjunction with the annual financial
statements for the year ended 30 June 2007.
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. Selected ratios
Trading margin (%) 8,1 7,9 8,3
Operating margin (%) 8,1 7,7 8,1
Gearing - excluding FML and 77,0 81,0 65,0
non-recourse borrowings (%)
CURRENCY ANALYSIS - PROFIT BEFORE TAX
Six-month Six-month Year
period ended period ended ended
31 December 31 December 30 June
2007 2006 2007
Unaudited Unaudited Audited
% % %
Australian dollar 8 9 8
US dollar and other 22 19 17
Rand 70 72 75
100 100 100
SEGMENTAL ANALYSIS
Revenue Trading profit
6-month 6-month Year 6-month 6-month
ended
30 June
period period period period
ended ended ended ended
31 31 31 31
December December December December
2007 2006 2007 2007 2006
Unaudited Unaudited Audited Unaudited Unaudited
R`000 R`000 R`000 R`000 R`000
Supply 1 212 383 1 221 325 2 350 469 168 573 175 261
Chain
Management
African 135 232 120 391 245 912 12 270 (4 126)
Transport
Fleet 697 528 579 650 1 201 211 142 612 128 852
Solutions
Retail 1 347 759 1 279 577 2 556 711 72 689 65 851
Supply
Chain
Automotive 2 653 143 2 382 014 4 873 523 93 031 79 317
Services 206 836 204 305 347 220 15 944 13 127
Group 6 252 881 5 787 262 11 575 046 505 119 458 282
SEGMENTAL ANALYSIS
Trading profit Operating profit
Year 6-month 6-month Year
ended period ended period ended ended
30 June 31 December 31 December 30 June
2007 2007 2006 2007
Audited Unaudited Unaudited Audited
R`000 R`000 R`000 R`000
Supply 330 964 168 573 172 182 326 461
Chain
Management
African 9 145 12 270 (4 126) 9 145
Transport
Fleet 259 464 142 612 123 664 254 143
Solutions
Retail 129 308 72 689 65 851 128 972
Supply
Chain
Automotive 203 085 91 829 77 712 197 444
Services 25 090 15 944 13 127 25 090
Group 957 056 503 917 448 410 941 255
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
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.
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*#, D. Dharmalingam, B. Tshili* *Non-
executive #Independent
Group Company Secretary
D. de Quintal
Also available on www.supergrop.com
Sandton
3 March 2008
Sponsor:
Deutsche Securities (SA)(Proprietary) Limited
Date: 03/03/2008 07:31:20 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.
