| Tue 9 Nov 2004, 9:04 | | Results For The Six Months Ended 30 September 04 |
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Super Group Limited - Unaudited Results For The Six Months Ended 30 September
2004
Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1943/016107/06)
ISIN number ZAE000011334
Share code: SPG
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004
- HEADLINE EARNINGS PER SHARE + 20%
- REVENUE + 19%
- TRADING INCOME + 25%
COMMENTARY
Super Group delivered solid growth from operations for the period under review.
Revenue increased by 19% to R4 billion and an improvement in trading margins
from 7,8% to 8,2% resulted in trading income increasing to R326 million.
Headline earnings per share increased 20% from 49,7 cents to 59,4 cents.
The businesses generated cash of R389 million before working capital movements.
A further R273 million was invested in working capital mainly in supply chain
and fleet solutions trade receivables, the prepayment of expenses and inventory.
Dealerships invested in inventory for new stores and the increase in the
automotive parts inventory has resulted in improved product availability to
support the strong seasonal demand. Cash was invested in assets required for new
supply chain contracts and to ensure that the business is able to meet the
growing demand for integrated supply chain management solutions. Effective 1
June 2004, Super Group acquired 70% of FleetAustralia, a leading provider of
fleet management solutions in Australia.
In August 2004, Super Group concluded an empowerment transaction resulting in it
being the most empowered company in all the industries in which it operates.
This initiative has resulted in Peu Group, a black wholly-owned private company,
together with previously disadvantaged employees, acquiring an equity holding of
25,1% in Super Group. In terms of this transaction, FleetAfrica is now a wholly-
owned subsidiary of Super Group and additional shares were issued resulting in
the group receiving R300 million cash.
The balance sheet of the group remains strong. In June 2004, Super Group raised
a R900 million four-year corporate bond to ensure that assets required to
support future growth could be funded by medium-term debt. Included in long-term
liabilities is R186 million relating to loans raised from Australian banks and
financial institutions. The loans are secured solely by the assets of
FleetAustralia and the banks have no recourse to Super Group and the remaining
subsidiaries. At 30 September 2004, Super Group had net debt, excluding full
maintenance leasing and Australian ring-fenced debt, of R303 million.
DIVISIONAL OVERVIEW
Supply Chain Division
Supply Chain Management business produced solid growth. Revenue increased 130%
and trading income increased 33% resulting in trading margins of 13,5%. The
decline in trading margin is attributable to a change in business mix resulting
from acquisition of lower margin businesses and start-up costs relating to new
supply chain contracts. If the current period`s results are adjusted for
businesses acquired during the previous twelve months, then trading margins of
18,3% were achieved. Super Group continued to successfully roll over expiring
contracts and extend the scope of services within clients. Super Group has
recently been awarded one of the largest South African supply chain contracts to
date valued at R850 million over a five-year period.
Fleet Solutions, comprising FleetAfrica and FleetAustralia, performed very well
increasing trading income as a result of new contracts and operating
efficiencies coming to the fore. Interest paid in the Fleet Solutions business
amounted to R22 million. FleetAfrica performed in line with expectations. The
acquisition of FleetAustralia has been well received by the Australian market.
The strong management team is committed to growing the recently launched
FleetAustralia brand and is excited about the new growth opportunities. Since
acquisition the fleet under management has increased from 25 000 vehicles to 30
000 vehicles.
Cross-border Transport business maintained US Dollar earnings despite the
challenging trading conditions within the various regions. Trading margins
increased from 6,9% to 8,0% as a result of improved efficiencies within our
African businesses.
Automotive Division
Automotive Parts continued to gain market share and produced strong results. The
growth in revenue was negatively affected by the strong Rand exchange rate. The
higher trading margins are attributable to improved procurement and operating
efficiencies.
Dealerships produced acceptable returns with margins being negatively affected
by the weakness in the used vehicle sales values. The continued weakness in used
vehicle market prompted a decision to close Extreme 16 and an additional R24
million has been provided for these closure costs. The site will be occupied by
a traditional franchise dealership model with new vehicle sales, parts and
servicing.
SERVICES
This division comprises group treasury and insurance and performed to
expectations. The strong revenue growth resulted from increased insurance
activities, however the re-insurance costs of such risks resulted in no material
increase in trading income.
ACQUISITION OF MICA PLUS
The conditions precedent on the acquisition of Mica Plus have recently been
fulfilled. Mica is a profitable business whose intention is to become the first
choice destination for consumers in the DIY home improvement industry. It is the
leading brand in the DIY market in South Africa and is also represented in the
UK, Namibia, Botswana, Zimbabwe and Mozambique. The 195 member-owned stores,
which are entrepreneurially managed by competent owners, have not been acquired
by Super Group.
Super Group believes that its success in the automotive parts industry can be
replicated in the hardware industry. Super Group`s extensive supply chain
capabilities and expertise will assist Mica in achieving operating efficiencies
and growing its footprint in South Africa and sub-Saharan Africa.
ACCOUNTING POLICIES
The unaudited results for the six months under review have been prepared in
accordance with AC127, Interim Financial Reporting. The interim statements have
been prepared in accordance with, and comply with, Statements of Generally
Accepted Accounting Practice in South Africa. Except for as set out below, the
principal accounting policies are consistent with those applied for the
financial year ended 31 March 2004. The following exception should be noted:
AC140: Business Combinations has been applied which necessitates a
discontinuation of the amortisation of goodwill from 1 April 2004, subject to
the requirements of AC128: Impairment of Assets. The effect of this change in
accounting policy is a reduction in amortisation charged to the income statement
of R38 million. Headline earnings are not affected as the amortisation of
goodwill is added back in the calculation of headline earnings.
PROSPECTS
Super Group should continue to achieve real earnings growth in 2005 driven by:
- improving operational efficiencies in all the businesses;
- continued market share growth and improving the supply chain efficiencies in
Automotive Parts;
- continuing to extend Super Group`s service offering within existing clients`
supply chains and acquiring new clients by offering them strategically
competitive supply chains - the supply chain pipeline of potential new contracts
remains full; and
- other major fleet outsourcing contracts.
APPRECIATION
Appreciation is extended to directors, management and staff for their efforts.
Our advisors, financiers, customers and suppliers are similarly thanked. Our
shareholders are thanked for their belief in and support of Super Group.
DIVIDENDS
In line with the company`s dividend policy, no interim dividend has been
declared.
On behalf of the board
Larry Lipschitz Keith Grunow
Chief Executive Officer Group Financial Director
9 November 2004
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. Vallet* (Chairman), S. Abrahams* (Deputy Chairman),
L. Lipschitz (Chief Executive Officer), R. Ballentine, L. Bergman*, G. Cohen*¹,
B. Greenstone*, K. Grunow, L. Johnston, P. Malungani*, M. Vico*¹
From 5 November 2004, the board of directors comprises:
P. Malungani* (Chairman), P. Vallet* (Deputy Chairman), L. Lipschitz (Chief
Executive Officer), R. Ballentine, L. Bergman*, G. Cohen*¹, B. Greenstone*, K.
Grunow, S. Abrahams*, L. Johnston, M. Vico*¹, D. Dharmalingam, P. Smith, P.
Granat, B. Shongwe*, B. Tshili*
* non-executive ¹ Zimbabwean Austrian
Group Company Secretary
J. van Es
Also available on the internet: www.supergrp.com
CONSOLIDATED CASH FLOW STATEMENTS
6 months 6 months 12 months
30 September 30 September 31 March
2004 2003 2004
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating activities
Operating income before working
capital changes 388 623 322 664 719 840
Working capital changes (272 706) (175 015) (119 746)
Cash generated from operations 115 917 147 649 600 094
Net interest paid (74 346) (48 663) (90 596)
Net dividend paid (114 118) (77 002) (85 679)
Taxation paid (7 902) (28 207) (83 381)
Net cash (outflow)/inflow from
operating activities (80 449) (6 223) 340 438
Cash flows from investing activities
Net (cost)/proceeds on (acquisition)/disposal
of subsidiaries, operations
and associates (377 653) 3 460 (247 928)
Investments and loans 9 436 (105 361) (14 809)
Additions to operating fixed assets
- net of disposals (161 919) (70 051) (57 622)
Additions to full maintenance lease assets
- net of disposals (96 759) (77 676) (384 863)
Net cash outflow from investing
activities (626 895) (249 628) (705 222)
Cash flows from financing activities
Net proceeds/(cost) of share
issues/(repurchases) 263 293 (59 995) (13 655)
Increase/(decrease) in
interest-bearing debt 977 205 (18 766) 20 075
(Decrease)/increase in full maintenance
lease liabilities (53 100) 74 503 351 034
Net cash inflow/(outflow) from
financing activities 1 187 398 (4 258) 357 454
Net increase/(decrease) in cash and
cash equivalents 480 054 (260 109) (7 330)
Cash and cash equivalents at beginning
of period 268 355 282 948 282 948
Movement in foreign currency
translation reserve (1 613) (6 321) (7 263)
Cash and cash equivalents at the end
of the period 746 796 16 518 268 355
CONSOLIDATED INCOME STATEMENTS
6 months 6 months 12 months
30 September 30 September 31 March
2004 2003 2004
Unaudited Unaudited % Audited
R`000 R`000 change R`000
Revenue 3 955 634 3 330 909 18,8 7 072 796
Operating income before depreciation
and amortisation 441 240 369 190 19,5 836 811
Depreciation and
amortisation 115 382 109 217 253 904
Trading income 325 858 259 973 25,3 582 907
Forward exchange contract
losses 4 496 10 092 (55,4) 20 628
Loss on closure of
business (net) 24 224 - -
Operating income 297 138 249 881 18,9 562 279
Net interest cost 73 856 48 769 102 940
Income from associates -
net of taxation 2 832 4 791 9 667
Profit before taxation 226 114 205 903 9,8 469 006
Taxation 47 026 38 329 87 274
Profit after taxation 179 088 167 574 6,9 381 732
Minority interests 6 685 17 071 31 239
Net profit for the period 172 403 150 503 14,6 350 493
Number of shares in issue (`000)
- Effective 365 726 322 861 316 796
- Weighted 330 854 315 905 308 723
- Diluted 346 506 329 861 308 723
Earnings per share (cents) 52,1 47,6 9,5 113,5
Headline earnings per
share (cents) 59,4 49,7 19,5 123,8
Diluted earnings per
share (cents) 49,8 47,6 4,6 113,5
Dividend per ordinary share (cents) as
per AC107 32,0 28,0 28,0
CALCULATION OF HEADLINE EARNINGS
Net profit for the period 172 403 150 503 350 493
Adjusted for:
Loss on closure of
business (net) 24 224 - -
Amortisation of goodwill - 6 410 31 639
Headline earnings 196 627 156 913 25,3 382 132
CONSOLIDATED BALANCE SHEETS
30 September 30 September 31 March
2004 2003 2004
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Property, vehicles and
equipment 566 095 519 025 450 315
Full maintenance lease
assets 1 148 828 865 841 1 111 137
Goodwill 782 824 108 011 385 739
Investments and loans 278 938 411 816 280 340
Deferred tax assets 94 086 77 008 85 354
Current assets 2 899 807 1 718 575 2 154 358
Total assets 5 770 578 3 700 276 4 467 243
EQUITY AND LIABILITIES
Capital and reserves
Share capital and reserves 1 590 648 1 095 672 1 239 054
Compulsorily convertible
debentures - 80 500 42 151
Shareholders` interest 1 590 648 1 176 172 1 281 205
Minority interests 52 097 77 869 76 932
Liabilities
Fund reserves 135 653 112 738 111 485
Deferred tax liabilities 138 573 154 533 140 522
Interest-bearing debt
- Long-term 1 169 570 108 334 185 060
- Long-term - full maintenance
lease liabilities 738 169 564 796 797 066
- Short-term 65 289 82 077 79 694
- Short-term - full maintenance
lease liabilities 181 484 131 227 175 687
Current liabilities 1 699 095 1 292 530 1 619 592
Total equity and liabilities 5 770 578 3 700 276 4 467 243
Net tangible asset value per
share (cents) 220,9 305,9 269,4
Net asset value per share
(cents) 434,9 339,4 391,1
STATEMENTS OF CHANGES IN SHAREHOLDERS` EQUITY
6 months 6 months 12 months
30 September 30 September 31 March
2004 2003 2004
Unaudited Unaudited Audited
R`000 R`000 R`000
Balance at beginning
of period 1 281 205 1 200 005 1 200 005
AC133 adjustment - (24 421) (37 400)
Share issues/(expenses)/
(repurchase of shares) 263 293 - (54 416)
Foreign currency translation (11 648) (62 237) (91 448)
Net profit for the period 172 403 150 503 350 493
Ordinary dividends (114 605) (87 678) (86 029)
Balance at the end of
the period 1 590 648 1 176 172 1 281 205
SEGMENTAL ANALYSIS
6 months 6 months 12 months
30 September 30 September 31 March
2004 2003 2004
Unaudited Unaudited % Audited
R`000 R`000 change R`000
Revenue
Supply Chain Management 868 793 378 140 130 1 350 946
Cross-border Transport 261 096 350 301 (25) 493 391
Fleet Solutions 338 956 304 475 11 548 164
Automotive Parts 747 798 718 104 4 1 418 261
Dealerships 1 622 175 1 516 398 7 3 146 713
Services 116 816 63 491 84 115 321
3 955 634 3 330 909 19 7 072 796
Trading income*
Supply Chain Management 117 023 88 077 33 253 697
Cross-border Transport 20 864 24 047 (13) 46 854
Fleet Solutions 88 468 54 685 62 102 020
Automotive Parts 40 689 36 780 11 70 400
Dealerships 47 270 47 380 0 85 377
Services 11 544 9 004 28 24 559
325 858 259 973 25 582 907
Operating income before forward exchange contract losses and loss on closure
of business
Sponsor
Deutsche Securities (SA) (Proprietary) Limited
