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SPG - Super Group Limited - Unaudited interim results for the six months ended
31 December 2010
Super Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1943/016107/06
ISIN: ZAE000011334 Share code: SPG
("Super Group" or "the Group")
Unaudited interim results
for the six months ended 31 December 2010
Highlights
- Revenue for the period increased by 10% to R3 801 million
- Operating profit of R298 million up 19%
- Profit before taxation increased by a satisfactory 123% to R216 million
- Cash generated from operations up by 57% to R375 million
- Headline earnings from continuing operations increased by 115% to R154
million
- Term Loans repaid in full, reducing consolidated gearing to 40%
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Restated* Audited
R`000 R`000 R`000
Revenue 3 800 647 3 461 622 6 991 748
Trading profit before 558 772 532 177 1 051 705
depreciation and amortisation
Depreciation and amortisation (258 046) (283 845) (537 761)
Trading profit 300 726 248 332 513 944
Capital items (2 604) 2 233 (23 774)
Operating profit 298 122 250 565 490 170
Net finance charges paid (81 745) (153 728) (272 598)
Profit before taxation 216 377 96 837 217 572
Income tax expense (43 059) (15 219) (45 190)
Profit for the period from 173 318 81 618 172 382
continuing operations
Total loss for the period from (1 697) (50 446) (3 697)
discontinued operations
Loss for the period from (5 154) (56 642) (36 792)
discontinued operations
Fair value profit on 3 457 6 196 33 095
discontinuation
Profit for the period 171 621 31 172 168 685
Other comprehensive income
Effect of foreign exchange (36 199) 36 589 (12 485)
Revaluation of land and buildings - - 74 250
Hedge accounting 930 823 15 554
Other comprehensive (35 269) 37 412 77 319
(expense)/income for the period
(net of taxation)
Total comprehensive income for 136 352 68 584 246 004
the period
Profit for the period
attributable to:
Non-controlling interests - 21 325 7 437 33 936
continuing
Non-controlling interests - - (2 113) (2 083)
discontinued
Equity holders of Super Group 151 993 74 181 138 446
Limited - continuing
Equity holders of Super Group (1 697) (48 333) (1 614)
Limited - discontinued
Profit for the period 171 621 31 172 168 685
RECONCILIATION OF HEADLINE
EARNINGS
Profit attributable to equity 150 296 25 848 136 832
holders of Super Group Limited
Capital items after tax 2 396 (2 233) 20 140
(continuing operations)
Closure costs - - (1 660)
Impairment of property, plant and 526 - 9 792
equipment and full maintenance
lease vehicles
Impairment of intangible assets 1 870 - 9 577
(Loss)/profit on sale of property - (2 233) 2 431
Fair value profit on (3 457) (6 196) (33 095)
discontinuation
Headline profit for the period 149 235 17 419 123 877
Loss from discontinued operations 5 154 56 642 36 792
Loss attributable to non- - (2 113) (2 083)
controlling interests -
discontinued
Headline earnings for the period 154 389 71 948 158 586
- continuing
Basic earnings per share (cents) 4,7 2,4 6,4
Basic earnings per share 4,7 7,0 6,5
(continuing operations) (cents)
Diluted earnings per share 4,7 2,4 6,4
(cents)
Diluted earnings per share 4,7 7,0 6,5
(continuing operations) (cents)
Headline earnings per share 4,7 1,6 5,8
(cents)
Headline earnings per share 4,8 6,8 7,4
(continuing operations) (cents)
Diluted headline earnings per 4,7 1,6 5,8
share (cents)
Diluted headline earnings per 4,8 6,8 7,4
share (continuing operations)
(cents)
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
31 December 31 December 30 June
2010 2009 2010
Unaudited Reviewed Audited
R`000 R`000 R`000
ASSETS
Property, plant and equipment 1 317 785 1 250 202 1 308 003
Full maintenance lease assets 1 142 525 1 455 313 1 391 635
Intangible assets 82 232 119 863 92 645
Goodwill 1 300 299 1 333 311 1 289 666
Investments and other non- 5 669 26 366 27 856
current assets
Deferred tax assets 253 711 239 494 238 697
Current assets 3 176 891 4 141 755 3 234 390
Assets held for sale 50 000 1 814 863 108 832
Inventories 576 529 424 958 470 021
Trade and other receivables 1 251 869 1 126 364 1 241 121
Insurance related assets 262 983 - 239 912
Cash and cash equivalents 1 035 510 775 570 1 174 504
Total assets 7 279 112 8 566 304 7 582 892
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves 2 487 264 2 200 043 2 362 644
attributable to equity holders
of Super Group Limited
Non-controlling interests 151 818 178 304 188 211
Total equity 2 639 082 2 378 347 2 550 855
Liabilities
Fund reserves 305 511 226 098 291 364
Deferred tax liabilities 171 252 188 349 173 103
Full maintenance lease 958 155 1 182 918 1 070 461
liabilities (including
Australia)
Non-current 165 067 838 940 72 166
Current 793 088 343 978 998 295
Interest-bearing borrowings 886 130 1 511 452 1 111 922
Non-current 757 649 1 389 932 974 415
Current 128 481 121 520 137 507
Liabilities directly associated 51 965 1 577 848 93 921
with assets held for sale
Insurance related liabilities 359 386 - 396 485
Other current liabilities 1 907 631 1 501 292 1 894 781
Total equity and liabilities 7 279 112 8 566 304 7 582 892
CONDENSED GROUP STATEMENT OF CASH FLOW
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Reviewed Audited
R`000 R`000 R`000
Cash flows from operating
activities
Operating cash flow 534 493 446 067 1 052 148
Working capital changes (159 639) (207 332) (204 435)
Cash generated from operations 374 854 238 735 847 713
Net finance costs paid (72 258) (177 979) (280 242)
Income tax paid (35 929) (20 496) (57 333)
Dividend paid to non- (37 727) - -
controlling interest
Net cash generated from 228 940 40 260 510 138
operating activities
Cash flows from investing
activities
Net additions to property, (78 571) (7 764) (114 640)
plant and equipment
Net disposals/(additions) to 88 697 46 076 (28 786)
full maintenance lease assets
Net additions to intangible (10 788) (5 469) (7 445)
assets
Subsidiaries/associates (5 303) 114 600 463 062
(purchased)/disposed
Proceeds on sale of investments 16 161 - 2 532
Other investing activities (58 270) 10 982 (39 117)
Net cash (outflow)/inflow from (48 074) 158 425 275 606
investing activities
Cash flows from financing
activities
Net proceeds from share issues - 1 162 592 1 163 719
Net interest-bearing borrowings (239 964) (249 872) (746 586)
repaid
Net full maintenance lease (113 560) (263 660) (321 956)
borrowings repaid
Net cash (outflow)/inflow from (353 524) 649 060 95 177
financing activities
Net (decrease)/increase in cash (172 658) 847 745 880 921
and cash equivalents
Net cash and cash equivalents 1 197 258 321 350 321 350
at beginning of the period
Effect of foreign exchange on 10 910 5 869 (5 013)
cash and cash equivalents
Cash and cash equivalents at 1 035 510 1 174 964 1 197 258
end of the period
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Reviewed Audited
R`000 R`000 R`000
Capital and reserves
attributable to equity holders
of Super Group Limited
Balance at beginning of period 2 362 644 994 047 994 047
Share issues and options 60 1 153 437 1 158 727
exercised, net of expenses
Total comprehensive income for 105 474 58 809 213 627
the period attributable to
equity holders of Super Group
Limited
Profit/(loss) for the period 150 296 25 848 136 832
Effect of foreign exchange (45 752) 32 138 (13 009)
Revaluation of land and - - 74 250
buildings
Hedge accounting 930 823 15 554
Share-based payment expenses 3 788 2 154 2 231
Effect of business combinations 15 298 (8 404) (5 988)
on equity holders of Super
Group Limited
Balance at end of period 2 487 264 2 200 043 2 362 644
Non-controlling interests
Balance at beginning of period 188 211 194 196 194 196
Ordinary dividends paid to non- (37 727) - -
controlling interests
Total comprehensive income for 30 878 9 775 32 377
the period attributable to non-
controlling interests
Profit for the period 21 325 5 324 31 853
Effect of foreign exchange 9 553 4 451 524
Movement in other reserves (82) - 903
Non-controlling interest loan (9 841) - 9 217
(repaid)/capitalised
Changes in non-controlling (19 621) (25 667) (48 482)
interests as a result of
acquisitions and disposals
Balance at end of period 151 818 178 304 188 211
Total equity at end of period 2 639 082 2 378 347 2 550 855
Comprising:
Share capital 327 310 327 310 327 310
Share premium 1 893 091 1 891 964 1 893 091
Capital redemption reserve fund 5 486 5 486 5 486
Retained earnings 453 392 138 087 270 620
Share buyback reserve (542 549) (546 772) (542 609)
General reserve 556 036 556 036 556 036
Revaluation reserve 147 792 76 926 147 792
Foreign currency translation (351 194) (260 294) (305 442)
reserve
Contingency reserve - insurance 1 057 30 118 14 447
Hedging reserve (3 157) (18 818) (4 087)
Non-controlling interests 151 818 178 304 188 211
Total equity at end of period 2 639 082 2 378 347 2 550 855
SEGMENTAL ANALYSIS
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Reviewed Audited
R`000 R`000 R`000
REVENUE
Supply Chain 1 408 710 1 290 973 2 572 285
- South Africa 1 224 360 1 109 967 2 228 673
- International - - -
- African Logistics 184 350 181 006 343 612
Fleet Solutions 913 478 856 816 1 739 582
- Fleet Africa 505 856 489 065 976 363
- Sg Fleet (Australia) 407 622 367 751 763 219
Dealerships 1 478 459 1 307 774 2 679 881
Services - 6 059 -
Continuing operations 3 800 647 3 461 622 6 991 748
Discontinued operations 11 122 1 625 594 2 532 259
Group 3 811 769 5 087 216 9 524 007
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Restated* Audited
R`000 R`000 R`000
OPERATING PROFIT
Supply Chain 107 369 99 652 168 669
- South Africa 94 852 84 619 172 784
- International 1 218 13 607 14 767
- African Logistics 11 299 1 426 (18 882)
Fleet Solutions 147 250 119 939 272 269
- Fleet Africa 74 545 60 487 122 620
- Sg Fleet (Australia) 72 705 59 452 149 649
Dealerships 28 182 19 576 41 655
Services 15 321 11 398 7 577
Continuing operations 298 122 250 565 490 170
Discontinued operations (11 922) (5 901) 4 671
Group 286 200 244 664 494 841
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Restated* Audited
R`000 R`000 R`000
PROFIT BEFORE TAX
Supply Chain 97 088 75 997 128 133
- South Africa 83 319 57 193 128 618
- International 7 345 22 330 28 130
- African Logistics 6 424 (3 526) (28 615)
Fleet Solutions 109 064 54 239 162 884
- Fleet Africa 51 231 21 700 58 768
- Sg Fleet (Australia) 57 833 32 539 104 116
Dealerships 16 202 6 290 18 160
Services (5 977) (39 689) (91 605)
Continuing operations 216 377 96 837 217 572
Discontinued operations (3 791) (41 912) (15 791)
Group 212 586 54 925 201 781
Basis of preparation and accounting policies
The condensed consolidated interim financial statements for the six month
period ended 31 December 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 standards as issued by the Accounting Practices Board or its
successor, 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 2010, except for the standards
noted that became effective on 1 July 2010, Amendments to IFRS 2 - Share-based
Payment, Amendments to IFRS 3 - Business Combinations, IAS 27 - Consolidated
and Separate Financial Statements and the improvements to IFRS that became
effective on 1 January 2010, IFRS 5 - Non-current Assets Held for Sale and
Discontinued Operations, IFRS 8 - Operating Segments, IAS 1 - Presentation of
Financial Statements, IAS 7 - Statement of Cash Flows, IAS 17 - Leases and IAS
36 - Impairment of Assets.
The adoption of these standards has no effect on the results, nor has it
required any restatement of the results.
The condensed consolidated financial statements are presented in Rand, which
is Super Group`s functional and presentation currency.
These unaudited results for the six month period ended 31 December 2010 have
not been reviewed or audited by the Group`s auditors. This interim report
should be read in conjunction with the annual financial statements for the
year ended 30 June 2010.
*Restatement
The comparative results have been represented in accordance with IFRS 5, in
line with the classifications of Hala and General Risk SA businesses as
discontinued operations. The reviewed results presented for the six month
period ended 31 December 2009 have been restated to reflect the operations
classified as discontinued at 30 June 2010. The comparative results have also
been restated in the segmental analysis to reflect the way that management
reported these segments for the periods ended 30 June 2010 and 31 December
2010.
SALIENT FEATURES
Six month Six month
period ended period ended Year ended
31 December 31 December 30 June
2010 2009 2010
Unaudited Reviewed Audited
R`000 R`000 R`000
1. Interest-bearing borrowings
Australia ring-fenced 381 783 432 059 385 463
borrowings
Securitisation - 255 870 -
Property borrowings 364 757 364 690 361 002
Term loans - 374 639 237 671
Other borrowings 191 555 233 798 170 986
Interest-bearing borrowings and 938 095 1 661 056 1 155 122
bank overdraft before
reallocation to held for sale
Other interest-bearing (51 965) (149 604) (43 200)
borrowings directly associated
with assets held for sale
886 130 1 511 452 1 111 922
2. Share statistics
Total issued less treasury 3 200 530 3 200 530 3 200 530
shares (`000)
Weighted (`000) 3 200 589 1 059 141 2 141 758
Diluted (`000) 3 205 284 1 062 142 2 146 060
Net asset value per share 77,7 68,7 73,8
(cents)
Net asset value excluding 37,1 27,1 33,5
goodwill per share (cents)
3. Capital commitments
Authorised but not yet 34 777 29 820 55 069
contracted for capital
commitments, excluding full
maintenance lease assets.
Capital commitments will be
funded from normal operating
cash flows and the utilisation
of existing borrowings
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 the 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.
COMMENTARY
Overview of results
All the Divisions within Super Group have delivered good results for the six
month period to December 2010 despite the challenging economic conditions
still prevailing across all of its markets. Strategies concentrating on
improving operational efficiencies and cost containment have borne fruit and
the successes are reflected in the increased operating margins reported by
each of the Divisions.
Headline earnings per share from continuing operations of 4,8 cents are in
line with the Group`s expectations. Cash flow generated from operations of
R374,9 million enabled the Group to reduce net borrowings by a further R199,1
million over the period concerned. The Group repaid all of its Term Loans
during this six month period and consolidated gearing is at an acceptable 40%
compared to 54% as at June 2010. The unrestricted gearing ratio, which
excludes Full Maintenance Leasing borrowings and restricted cash, has reduced
to 18% (June 2010: 26%).
The Supply Chain Division continued to be impacted by poor trading volumes.
However SG Convenience, the Group`s national distributor of food and household
supplies to forecourts and smaller trading stores, exceeded expectations in
terms of both sales and profit growth. The fleet replacement strategy within
the African Logistics operations has mitigated historically high maintenance
costs in this business, which returned to profitability on the back of lower
operational costs and a modest increase in regional tariffs.
Fleet Solutions reported solid financial results and Fleet Africa completed
the roll-out of the new vehicle fleet in the Eastern Cape as well as extending
the City of Johannesburg (CoJ) Red Fleet contract during this period. Sg Fleet
(Australia) also reported strong results with improved operating profits as a
result of higher volumes and an improved Australian economic environment.
The Dealerships Division reflected revenue growth that is similar to that
reported in the Industry with new vehicle sales increasing by 25,8%. Used
vehicle sales were disappointing and declined by 6%, largely as a result of
reduced stock availability. Overall the Dealerships Division reported a strong
increase in operating profit and a substantial escalation in pre-taxation
profits.
Financial performance
Revenue increased by 10% to R3,8 billion from the prior period`s R3,5 billion
largely as a result of volume increases in Supply Chain South Africa`s
businesses, strong revenue growth of 7% reported by the Fleet Solutions
business and increased new vehicle sales by Dealerships.
Operating profit increased by a healthy 19% to R298,1 million, reflecting an
operating margin of 7,8% (December 2009: 7,2%). The improved results could be
attributed to the return to profitability by African Logistics within the
Supply Chain Division, complemented by the solid performances from the Fleet
Solutions and Dealerships Divisions.
Supply Chain South Africa grew its revenue by 10%, operating profit by 12%,
profit before taxation by 46% and marginally increased its operating margin to
7,7% (December 2009 was 7,6%). The performance of Supply Chain South Africa
was driven by the stabilisation of volumes in the core Automotive contracts,
modest volume increases in the FMCG businesses, a strong performance by SG
Convenience as well as service efficiencies and productivity attained
throughout this Division.
African Logistics reported a modest revenue increase of 2%. The new fleet
reduced operating costs within this Division and together with other cost
saving initiatives, operating profit increased by an impressive 692% and
operating margin increased to 6,1% from the 0,8% reported in the corresponding
period.
In the Fleet Solutions Division, Fleet Africa had revenue growth of 3%,
operating profit growth of 23% and profit before taxation increase of 136%
mainly as a result of the fleet replacement process within the Eastern Cape
contract and new contracts secured.
Sg Fleet (Australia) performed very well, reporting an increase of 11% in
revenue, 22% in operating profit and 78% in profit before taxation. These
results are due to several months of record sales origination, which is
partially attributable to a number of large sale and leaseback transactions.
Fleet maintenance costs were lower and the business earned additional interest
income driven by improved cash flow from the positive residual value cycle.
The business retained the Western Australian government contract and was
awarded a contract with a large energy company.
Dealerships delivered a very pleasing performance by increasing revenue by
13%, operating profit by 44% and profit before taxation by 158%. Operating
margin also increased to 1,9%, just shy of the targeted 2,0% set for the 2011
financial year end. The growth reported stems from the market growth in new
vehicle sales, with Super Group mirroring the industry trend. Strong operating
cash generation was shown by this Division and Dealerships successfully
acquired the Land Rover dealership in Vereeniging.
Net finance charges decreased by 47% to R81,7 million as a result of interest
rate reductions, lower borrowings and stringent working capital management.
Profit after taxation increased by 112% to R173,3 million. Headline earnings
for the interim period are R149,2 million. Earnings per share and headline
earnings per share are not comparable with the prior period`s results due to
the issue of the additional 2,7 billion shares in November 2009.
The Group`s operating cash flow of R534,5 million, before working capital
movements, was up 20% on the prior period.
The statement of financial position is reflecting a strong balance sheet for
the Group, with consolidated gearing and unrestricted gearing at acceptable
levels. The net tangible asset value of the Group is 34,5 cents, up 13% from
the 30,6 cents at 30 June 2010.
Board of Directors
In terms of the King III Report, a company should appoint a Lead Independent
Director where the Chairman of the company is not deemed to be independent in
terms of the JSE Listings Requirements. Super Group appointed Mr John Newbury
as Lead Independent Director effective 23 November 2010.
Prospects
Super Group has a clear strategy in place with its primary focus being on the
expansion of the Group, organically and through selected complementary
strategic market initiatives.
Emphasis will continue to be placed on the improvement of operational
efficiencies, whilst the training and development of staff remains fundamental
to ensuring sustainable solutions across all markets in which the Group
operates.
Super Group is well positioned for revenue growth in both its supply chain and
mobility activities and there are currently no underperforming Divisions
within the Group. The repayment of the Term Loans well ahead of scheduled
timing, reflects the strong cash flow generation over the past eighteen months
and the Board`s commitment to restoring financial credibility.
The local economy remains pedestrian and continues to moderate volume activity
in our Southern African Supply Chain operations. Nevertheless, the Group is
optimally positioned across all its businesses for any improvement in economic
activity and the delivery of organic growth within our core markets.
No interim dividend has been declared by Super Group for the six months ended
December 2010.
For more information pertaining to the interim results, the presentation to
the investor community can be viewed on the Group`s website,
www.supergroup.co.za, from Thursday, 24 February 2011.
On behalf of the Board
P Vallet P Mountford
Non-Executive Chairman Chief Executive Officer
Sandton
22 February 2011
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 (Proprietary) Limited
www.supergroup.co.za
Date: 22/02/2011 17:00:02 Supplied by www.sharenet.co.za
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