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SPG - Super Group - Reviewed results for the year ended 30 June 2010
Super Group
(Incorporated in the Republic of South Africa)
Registration number 1943/016107/06
ISIN: ZAE000011334
Share code: SPG
("Super Group" or "the Group")
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Super Group delivers solid financial performance
Profit before taxation from continuing operations increased 86,9% to R218
million
Net asset value at June 2010 up 114,7% to R2,6 billion
Trade gearing improves from 142% (30 June 2009) to a net cash position
Strong operating cash flow of R1,1 billion
Consolidated statement of financial position
30 June 2010 30 June 2009
Reviewed Audited
R`000 R`000
ASSETS
Property, plant and equipment 1 308 003 1 242 208
Full maintenance lease assets 1 391 635 1 722 246
Intangible assets 92 645 125 130
Goodwill 1 289 666 1 286 038
Investments in associates - 42 719
Investments and other non-current 27 856 15 881
assets
Deferred tax assets 238 697 229 776
Current assets 3 234 390 4 163 927
'Assets held for sale 108 832 2 285 339
'Inventories 470 021 389 950
'Trade and other receivables 1 241 121 1 304 498
'Insurance related assets 239 912 -
'Cash and cash equivalents 1 174 504 184 140
Total assets 7 582 892 8 827 925
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves attributable to 2 362 644 994 047
equity holders of Super Group Limited
Non-controlling interests 188 211 194 196
Total equity 2 550 855 1 188 243
Liabilities
Fund reserves 291 364 268 939
Deferred tax liabilities 173 103 188 143
Full maintenance lease borrowings 1 070 461 1 433 261
(including Australia)
'Non-current 72 166 893 725
'Current 998 295 539 536
Interest-bearing borrowings 1 111 922 1 960 744
'Non-current 974 415 1 523 365
'Current 137 507 437 379
Liabilities directly associated with 93 921 1 942 184
assets held for sale
Insurance related liabilities 396 485 -
Other current liabilities 1 894 781 1 846 411
Total equity and liabilities 7 582 892 8 827 925
The comparative consolidated statement of financial position has been
represented to include the non-current portion of finance lease receivables in
full maintenance lease assets. The impact amounted to a reduction of R28 895
000 in investments and other non-current assets and respective increase in full
maintenance lease assets.
Consolidated statement of comprehensive income
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Restated*
R`000 R`000
Revenue 6 991 748 7 138 572
Trading profit before depreciation 1 051 705 1 166 226
and amortisation
Depreciation and amortisation (537 761) (555 340)
Trading profit 513 944 610 886
Capital items (23 774) (63 424)
Operating profit 490 170 547 462
Net finance charges (272 598) (431 074)
Profit before taxation 217 572 116 388
Income tax (expense)/income (45 190) 1 490
Profit for the year from continuing 172 382 117 878
operations
Total loss for the year from (3 697) (1 458 549)
discontinued operations
Loss for the year from discontinued (36 792) (950 058)
operations
Fair value profit/(loss) on 33 095 (508 491)
discontinued operations
Profit/(loss) for the year 168 685 (1 340 671)
Other comprehensive income
Effect of foreign exchange (12 485) (175 687)
Revaluation of land and buildings 74 250 4 677
Hedge accounting 15 554 (19 641)
Other comprehensive income/(expense) 77 319 (190 651)
for the year (net of taxation)
Total comprehensive income/(expense) 246 004 (1 531 322)
for the year
Profit/(loss) for the year
attributable to:
Non-controlling interests - 33 936 15 050
continuing
Non-controlling interests - (2 083) (2 743)
discontinued
Equity holders of Super Group Limited 138 446 102 828
- continuing
Equity holders of Super Group Limited (1 614) (1 455 806)
- discontinued
168 685 (1 340 671)
RECONCILIATION OF HEADLINE EARNINGS
Profit/(loss) attributable to equity 136 832 (1 352 978)
holders of Super Group Limited
Capital items after tax (continuing 20 140 63 424
operations)
Profit on sale of property (1 660) (4 956)
Impairment of investments 2 431 1 630
Impairment of goodwill - 6 498
Loss on sale of businesses - 4 499
Impairment of property plant and 19 369 55 753
equipment full maintenance lease and
intangible assets
Fair value (profit)/loss discontinued (33 095) 508 491
operations
Headline profit/(loss) for the year 123 877 (781 063)
Loss for the year from discontinued 36 792 950 058
operations
Loss attributable to non-controlling (2 083) (2 743)
interests - discontinued
Adjusted headline earnings for the 158 586 166 252
year - continuing
Cents Cents
Basic earnings per share 6,4 (296,1)
Basic earnings per share (continuing 6,5 22,5
operations)
Diluted earnings per share 6,4 (296,1)
Diluted earnings per share 6,5 22,5
(continuing operations)
Headline earnings per share 5,8 (170,9)
Headline earnings per share 7,4 36,4
(continuing operations)
Diluted headline earnings per share 5,8 (170,9)
Diluted headline earnings per share 7,4 36,4
(continuing operations)
*The Hala Supply Chain Services and General Risk SA businesses have been
classified as held for sale during the current year. This has necessitated the
restatement of the comparative information in the consolidated statement of
comprehensive income in terms of IFRS.
Basis of preparation and accounting policies
The condensed consolidated financial statement for the year ended 30 June 2010
have been prepared in accordance with the Recognition and Measurement
requirements of International Financial Reporting Standards ("IFRS"), in
particular the presentation and disclosure requirements of International
Accounting Standard ("IAS") 34 Interim Financial Reporting, the AC 500 series
issued by the Accounting Practices Board, the Listings Requirements of the JSE
Limited 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 2009,
except for the standards noted that became effective on 1 January 2009: IAS 1
(Presentation of Financial Statements (revised)), IFRS 7 (Financial Instruments:
Improving Disclosures about Financial Instruments) and IFRS 8 (Operating
Segments) the adoption of the amendments to IAS 16, Property, Plant and
Equipment which permit FML lease assets sold to be classified as inventory and
profits or losses on sale to be included in headline earnings and the adoption
of the revised standard IFRS dealing with Business Combinations and related
amendments to IAS 27 Consolidated and Separate Financial Statements, which
became effective 1 July 2009. The condensed consolidated financial statements
are presented in Rand, which is Super Group`s functional and presentation
currency. The adoption of these standards has no effect on the results, nor has
it required any restatement of the results.
Independent review by the auditors
The consolidated statement of financial position at 30 June 2010 and the
restated consolidated statement of comprehensive income, statement of changes in
equity, segmental analysis and cash flows for the year ended have been reviewed
by KPMG Inc. Their unmodified report is available for inspection at the
registered office of the company.
Segmental analysis
REVENUE
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Restated*
R`000 R`000
Supply Chain - South Africa 2 228 673 2 311 149
Supply Chain - International - -
Supply Chain - African Logistics 343 612 442 382
Fleet Solutions 1 739 582 1 742 629
Dealerships 2 679 881 2 628 818
Services - 13 594
Continuing operations 6 991 748 7 138 572
Retail supply chain 1 839 058 2 568 846
Automotive 343 896 871 953
Services 349 305 695 478
Discontinued operations 2 532 259 4 136 277
Group 9 524 007 11 274 849
Segmental analysis (continued)
OPERATING PROFIT
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Restated*
R`000 R`000
Supply Chain - South Africa 172 784 158 896
Supply Chain - International 14 767 73 855
Supply Chain - African Logistics (18 882) 44 779
Fleet Solutions 272 269 282 768
Dealerships 41 655 (9 913)
Services 7 577 (2 923)
Continuing operations 490 170 547 462
Retail supply chain 37 519 (510 565)
Automotive (24 703) (601 298)
Services (8 145) (177 257)
Discontinued operations 4 671 (1 289 120)
Group 494 841 (741 658)
Segmental analysis (continued)
PROFIT BEFORE TAX
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Restated*
R`000 R`000
Supply Chain - South Africa 128 618 63 618
Supply Chain - International 28 130 100 425
Supply Chain - African Logistics (28 615) 31 391
Fleet Solutions 162 884 62 401
Dealerships 18 160 (57 083)
Services (91 605) (84 364)
Continuing operations 217 572 116 388
Retail supply chain 18 (583 502)
Automotive (32 813) (738 380)
Services 17 004 (128 327)
Discontinued operations (15 791) (1 450 209)
Group 201 781 (1 333 821)
Condensed consolidated statement of cashflow
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Audited
R`000 R`000
Cash flows from operating activities
Cash generated from operations 847 713 1 154 479
Net finance charges paid (280 242) (585 201)
Net dividend paid - (188)
Taxation paid (57 333) (95 874)
Net cash retained from operating 510 138 473 216
activities
Net cash inflow/(outflow) from 275 606 (300 089)
investing activities
Net cash inflow/(outflow) from 95 177 (51 835)
financing activities
Net increase in cash and cash 880 921 121 292
equivalents
Cash and cash equivalents at 321 350 224 797
beginning of year
Effect of foreign exchange on cash (5 013) (24 739)
and cash equivalents
Cash and cash equivalents at end of 1 197 258 321 350
year
Consolidated statement of changes in equity
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Audited
R`000 R`000
Capital and reserves attributable to
equity holders of Super Group Limited
Balance at beginning of year 994 047 2 007 161
Share issues and options exercised, 1 158 727 503 642
net of expenses
Total comprehensive income for the 213 627 (1 519 736)
year attributable to equity holders
of Super Group Limited
Profit/(loss) for the year 136 832 (1 352 978)
Effect of foreign exchange (13 009) (151 794)
Revaluation of land and buildings 74 250 4 677
Hedge accounting 15 554 (19 641)
Share-based payment expenses 2 231 -
Effect of business combinations on (5 988) 2 980
equity holders of Super Group Limited
Balance at end of year 2 362 644 994 047
Non-controlling interests
Balance at beginning of year 194 196 257 777
Ordinary dividends paid to non- - (188)
controlling interests
Total comprehensive income for the 32 377 (11 586)
year attributable to non-controlling
interests
Profit for the year 31 853 12 307
Effect of foreign exchange 524 (23 893)
Increase in other reserves 903 1 102
Non-controlling interest loan 9 217 -
capitalised
Changes in non-controlling interests (48 482) (52 909)
as a result of acquisitions and
disposals
Balance at end of year 188 211 194 196
Total equity at end of year 2 550 855 1 188 243
Comprising:
Share capital 327 310 54 551
Share premium 1 893 091 1 002 131
Capital redemption reserve fund 5 486 5 486
Retained earnings 270 620 118 490
Share buyback reserve (542 609) (537 617)
General reserve 556 036 556 036
Revaluation reserve 147 792 76 926
Foreign currency translation reserve (305 442) (292 433)
Contingency reserve - insurance 14 447 30 118
Hedging Reserve (4 087) (19 641)
Non-controlling interests 188 211 194 196
Total equity at end of year 2 550 855 1 188 243
Salient features
Year ended Year ended
30 June 2010 30 June 2009
Reviewed Audited
R`000 R`000
1 Interest-bearing borrowings
comprises
Australian ring-fenced borrowings 385 463 434 334
Corporate bond - 411 997
Term loans 237 671 -
Securitisation - 258 033
Property borrowings 361 002 425 312
Other borrowings 170 986 333 153
Bank overdraft - 317 866
Interest-bearing borrowings before 1 155 122 2 180 695
reallocation to held for sale
Other interest bearing borrowings (43 200) (219 951)
directly associated with assets
held for sale
1 111 922 1 960 744
2 Share statistics
Total issued shares less treasury 3 200 530 497 950
shares (`000)
Weighted (`000) 2 141 758 457 002
Diluted (`000) 2 146 060 457 002
Net asset value per share (cents) 73,8 199,6
Net asset value per share 33,5 (58,6)
excluding goodwill (cents)
3 Capital commitments
Authorised but not yet contracted 55 069 13 960
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.
4 Related party transactions
The group, in the ordinary course of business, entered into
various sales and purchase transactions on an arm`s length
basis with related parties.
5 Subsequent events
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.
The year at a glance
The Group is pleased to announce that in spite of the difficult economic
conditions it achieved satisfactory results for the year ended 30 June 2010. The
year under review saw the finalisation of operational changes, the
implementation of stringent cost-cutting initiatives and the completion of the
disposals of AutoZone and other non-core businesses.
The Group`s embarked on a highly successful rights offer in November 2009 which
resulted in net subscription proceeds in excess of R1,1 billion. Most of the
proceeds were utilised to reduce the Group`s short term borrowings. Strong cash
flow generated within the Group`s core operations together with the proceeds
received on the disposal of non-core businesses, reduced the net trade debt
ratio from 142% at June 2009 to a net cash position, after excluding the full
maintenance leasing and Australian non-recourse borrowings. Subsequent to year
end, the Group has repaid a further R67 million of the term loans.
Financial overview
Revenue decreased by 2,1% to R7,0 billion from the prior year`s R7,1 billion
largely as a result of the slowdown in economic activities in the industries
served by the African Logistics` business and the local fast moving consumer
goods (FMCG) market.
Operating profit decreased by 10,5% to R490,2 million, resulting in an operating
margin of 7,0% (2009: 7,7%). This was the result of the declined contributions
of African Logistics and the impact of the reduced procurement activities within
the International (Mauritius) operations. The latter was a result of the
disposal of the Super Group Industrial Products (SGIP) and Mica businesses.
These negative impacts were partly off-set by solid performances from Supply
Chain South Africa, sgfleet (Australia) and the Dealerships Division.
Net finance charges decreased by 36,8% to R272,6 million as a result of interest
rate reductions, lower borrowings and stringent working capital management.
Profit before taxation from continuing operations increased by 86,9% to R217,6
million. Headline earnings for the Group are R123,9 million for the year up from
a loss of R781 million in the prior year. Adjusted earnings per share (EPS) and
headline earnings per share (HEPS) are 6,5 cents and 7,4 cents, respectively.
The EPS and HEPS results were diluted by the issue of the additional 2,7 billion
shares in November 2009.
The Group`s operating cash flow of R1,1 billion before working capital movements
was marginally up on the prior year.
No dividends have been declared for the year ended June 2010.
Operational review
Supply Chain
The overall results from Supply Chain were below the Group`s expectations due to
the underperformance of African Logistics and the International (Mauritius)
operations.
The Supply Chain South Africa business produced a satisfactory performance in
light of the prevailing economic climate. Revenue was down 3,6% from R2 311,1
million in 2009 to R2 228,7 million. Operating profit increased by 8,7% to
R172,8 million and profit before taxation increased by 102,2% to R128,6 million.
The operating margin improved to 7,8% from 6,9% achieved in the prior year.
These results are attributable to reduced overheads and an improved performance
by the Freight and Trans Africa Logistics (TAL) businesses. The automotive
business within Supply Chain South Africa had a satisfactory year despite the
poor performance of the industry as a whole. The FMCG business experienced a
marked decline in volumes whilst the staple foods business reported a modest
growth in turnover compared to the previous year. Major contracts were renewed
within the automotive and FMCG operations, whilst new contracts were obtained in
the beverage, packaging and food sectors. Super Rent experienced a reduction in
short-term rental utilisation compared to the prior year. Subsequent to year
end, this business has expanded its fleet in the fast food distribution market.
Despite lower FMCG volumes, the Freight operation had a good year and expanded
its activities within the paper and packaging distribution sector. The VSc
(Virtual Supply Chain) Solutions technology and consulting business reported
another good year securing a number of annuity-based income contracts. The
availability of capacity within Super Park and a relatively new vehicle fleet
positions Supply Chain South Africa in a position to take advantage of growth
opportunities in the medium term. Micor was significantly impacted by the
decline in both South Africa`s imports and exports. Sherwood experienced
positive sales growth, despite lower activity in the African mining sector. TAL
showed a favourable turnaround as a result of increased volumes through the
Mohatas Dry Port terminal in Mozambique and the securing of a five year short
distance bulk coal contract. Convenience Supply Chain completed its strategic
roll-out plan to establish a national network. Revenue for this business
increased by 41,9%. This business is now profitable and is expected to make a
significant contribution to the Group in future.
Softening commodity prices resulted in a significant decrease in mining activity
and together with a decline in aid programmes seriously impacted revenue within
the African Logistics business. Revenue declined by 22,3% to R343,6 million
resulting in an operating loss of R18,9 million. Profit before taxation in 2009
was R31,4 million and this declined to a loss before taxation of R28,6 million
for the current year. Operating conditions that impacted the results included a
decline in south bound transport rates and increased overheads due to Zimbabwe
adopting a US Dollar-based economic model. Corrective action undertaken includes
discontinuing the operations in Malawi and downsizing businesses in the other
areas, reflecting in a reduction in the fleet size. In excess of 50% of the
remaining African Logistics` fleet has been replaced, reducing the average age
of the fleet. This operation is expected to deliver improved results as
infrastructure and overheads are now matched to current market conditions.
With the disposal of the SGIP and Mica businesses, activity within International
(Mauritius) decreased and as a result operating profit declined by 80,0% to
R14,8 million and profit before taxation decreased by 72,0% to R28,1 million.
Fleet Solutions
The Fleet Solutions Division reported a nominal decline of 0,2% in revenue to R1
739,6 million culminating in an operating profit of R272,3 million, a decrease
of 3,7% on the prior year. The operating margin decreased to 15,7% (2009:
16,2%).
Revenue reported by Fleet Africa decreased by 5,6% from R1 034,4 million in 2009
to R976,4 million in 2010, mainly due to interest rate reductions which are
passed on to customers. Operating profit was down by 35,4% to R122,6 million due
to the lower finance cost recoveries and an increase in maintenance costs.
Nevertheless, profit before taxation rose by a satisfactory 75,5% to R58,8
million as a result of the lower finance costs paid. Cash flow generated from
this operation was strong.
Sgfleet (Australia) posted an increase in revenue of 7,8% to R763,2 million
mainly as a result of a number of new contracts. Operating profit and profit
before taxation were up by 60,8% and 260,2%, respectively. This result also
reflects the benefit of improved vehicle residual values.
Dealerships
Despite the depressed vehicle market that continued during 2010, Dealerships
increased its revenue by 1,9% to R2 679,9 million and returned to an operating
profit of R41,7 million (2009: Operating loss of R9,9 million). These results
can be attributed to the intensive cost cutting initiatives implemented within
this division. This division, in the face of higher utility and employee costs,
increased its operating profit margin to 1,6%. Profit before taxation improved
to R18,2 million from a loss before taxation of R57,1 million. This division
also reported positive cash flows from operations, despite inventories being up
12% as at June 2010.
Services
Services reported an operating profit of R7,6 million in the 2010 financial
year, compared to an R2,9 million operating loss in the 2009 financial year.
This is mainly as a result of head office being able to fully recover
administrative expenses from the continuing operations during 2010 and
significant cost cutting at the corporate office level. The loss before taxation
of R91,6 million is attributable to finance costs on the historic debt structure
prior to November 2009.
Discontinued operations
The discontinued businesses, which include AutoZone, Mica, Emerald Insurance,
Hala, Herman`s Truck & Accident and the remaining SGIP operations, reported a
loss after taxation for the year of R3,7 million.
Corporate actions
Since the interim results, the following corporate actions were concluded. On 24
December 2009, it was announced that agreement had been reached in terms of
which Emerald Insurance Company Limited sold its 38% interest in Emerald Risk
Transfer (Pty) Limited to a wholly-owned subsidiary of Santam Limited for a
total consideration of R38 million less R400 000 costs. The transaction fell
outside the ambit of being categorised in terms of the JSE Listings
Requirements.
Super Group concluded an agreement on 21 February 2010 to dispose of its 33,3%
interest in Hala Supply Chain Saudi Arabia (Hala) for a purchase consideration
of 15 million Saudi Riyals (approximately R31,2 million).
The disposal of AutoZone was concluded before year end for a net consideration
of R415 million, of which R35 million is deferred.
Prospects
The Group has been through a period of rationalisation and with its restructured
balance sheet, is positioned to optimise performance despite the challenging
economic environment.
Super Group has a clear strategy in place. The primary focus will be to expand
the Group, organically and through strategic acquisitions, into a leading supply
chain and mobility group. Super Group is committed to restoring credibility with
both the financial markets and its shareholders.
On behalf of the Board
P Vallet P Mountford
Non-Executive Chairman Chief Executive Officer
Sandton
18 August 2010
Directors: Executive: P Mountford (Chief Executive Officer) and
C Brown (Chief Financial Officer)
Non-Executive: P Vallet (Chairman), N Davies*,
J Newbury*, V Chitalu*# and D Rose*
* Independent # Zambian
Company Secretary: N Redford
Registered Office:27 Impala Road, Chislehurston, Sandton, 2195.
Transfer Secretaries:Computershare Investor Services (Pty) Limited (Registration
number 2000/007239/07), 70 Marshall Street, Johannesburg 2001 (PO Box 61051,
Marshalltown, 2107)
Sponsor: Deutsche Securities (SA) (Proprietary) Limited
Also available on www.supergroup.co.za
Date: 18/08/2010 17:05:04 Supplied by www.sharenet.co.za
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