Wrap Text
Reviewed Final Results for the year ended 30 June 2017
SUPER GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1943/016107/06
Share code SPG
ISIN ZAE000161832
("Super Group" or "the Group" or "the company")
REVIEWED FINAL RESULTS
for the year ended
30 June 2017
Results at a glance
For the year ended 30 June 2017
REVENUE EBITA
up up
15% 10%
R29.9 billion R2.3 billion
OPERATING OFFSHORE EBITA
PROFIT SHARE
up
8% 61%
R2.1 billion R1.4 billion
PROFIT BEFORE
TAX HEPS
up down
8% 1%
R1.8 billion 289 cents
CORE NAV
HEPS PER SHARE
up up
8% 9%
332 cents 2 394 cents
INTRODUCTION
Super Group reported a solid set of results for the year ended 30 June 2017 despite many challenging and competitive trading conditions being experienced
by the majority of the Group's operations, both locally and abroad. SG Fleet Australia made a significant contribution to the Group's results which includes nlc's
results for the full period and the contributions from Fleet Hire (UK) and Motiva (UK) for 11 months and seven months, respectively. SG IN tIME's results were
also included for the full period compared to eight months in the prior reporting year. Dealerships SA's results included the addition of the nine Western Cape
dealerships from September 2016 and Dealerships UK included the Essex Auto Group acquisition for a four-month period.
Super Group continued to increase its geographical footprint and concluded five strategic acquisitions during the financial year. For the year under review,
Super Group's non-South African businesses contributed 40% of revenue and 61% of earnings before interest, taxation and amortisation of
Purchase Price Allocation (PPA) intangibles (EBITA). The foreign earnings are subject to exchange rate volatility and with the strengthening of the Rand against
all the major currencies, the Group's reporting results were negatively impacted.
In the previous comparable year the earnings, after taxation and non-controlling interests, included a once-off foreign exchange profit of R98.3 million on the
SG IN tIME forward exchange contract as well as lower Broad-Based Black Economic Empowerment (B-BBEE) expenses of R12.7 million compared to the
current year's R25.6 million.
On 9 September 2016 and 31 October 2016, the JSE Limited (JSE) granted Super Group a listing of its second and third issuance, SPG002 and SPG003,
senior unsecured notes, in terms of its Domestic Medium Term Note (DMTN) Programme dated 22 October 2013. The total value of the DMTN's issued and
listed was R50 million and R154 million, respectively. The authorised DMTN programme size is R2 billion. Despite South Africa's Sovereign Credit Rating
downgrade on 3 April 2017, Standard & Poor, in an unscheduled review, upgraded Super Group's long-term and short-term credit rating to zaAA and zaA+,
respectively, on 10 August 2017.
During the year under review and subsequent to year-end, Super Group concluded transactions that are explained in more detail in the Financial Performance
section and the Divisional Review section of this document.
The B-BBEE status for Super Group Holdings Proprietary Limited for the year ended 30 June 2017 was verified as a Level 2-Contributor.
Financial performance
Group revenue increased by 15.1% to R29.9 billion (June 2016: R25.9 billion) primarily due to the inclusion of the results of nlc and SG IN tIME for the full year,
the acquisitions as well as the commendable turnaround in SG Coal's results.
EBITA was up by 10.1% to R2 292.4 million (June 2016: R2 082.5 million). The amortisation of PPA intangibles increased by 35.1% to R176.4 million
(June 2016: R130.5 million) mainly as a result of the inclusion of the results of nlc and SG IN tIME, Fleet Hire for 11 months and Motiva for seven months.
Operating profit increased by 8.4% to R2 116.1 million (June 2016: R1 952.0 million), largely due to the acquisitions and the improved performance by SG
Coal within Supply Chain Africa.
The increase in net finance costs of 10.0% to R280.0 million (June 2016: R254.7 million) is attributable to the funding of the various acquisitions, the funding
of the working capital for and the properties of the Western Cape dealerships and the Essex Auto Group as well as the FML borrowings in the SG Fleet United
Kingdom acquisitions. The average interest rate paid on borrowings was 6.2% (June 2016: 6.0%) and the average interest rate earned on cash was 3.7%
(June 2016: 3.7%).
Profit before tax increased by 8.2% to R1 836.1 million (June 2016: R1 697.3 million). The effective tax rate increased to 27.4% (June 2016: 25.8%)
primarily as a result of the increase in profits in territories that have higher corporate tax rates.
Earnings per share (EPS) and headline earnings per share (HEPS) decreased by 3.9% to 285.0 cents (June 2016: 296.6 cents) and 1.4% to 288.5 cents (June
2016: 292.6 cents), respectively, due to the impact of the increased weighted number of shares and the once-off foreign exchange profit on the SG IN tIME
forward exchange contract in the prior comparable period. Core HEPS increased by 7.8% to 332.0 cents (June 2016: 308.1 cents). Core HEPS excludes
the amortisation of PPA intangibles arising from business combinations, acquisition costs and the B-BBEE costs, after tax and non-controlling interests. Core
HEPS in the prior comparable period also excluded the once-off profit made on the foreign exchange contract. The increase of 4.8% in the weighted average
number of shares in issue was due to the rights issue and book build concluded in October 2015 and December 2015, respectively, to fund the SG IN tIME
and nlc acquisitions.
The increase in total assets of 9.1% to R24.9 billion (2016: R22.8 billion) is mainly as a result of the newly acquired assets of Fleet Hire and Motiva by SG
Fleet, the nine Western Cape dealerships, property related to the dealership transaction and the interest in Essex Auto Group during the
year under review. The Group has taken a decision to modify the calculation of net operating assets by including the interest-bearing Dealerships' floorplan
liabilities. As a consequence, the Group's Return on Net Operating Assets, after tax, was 12.2% (June 2016: 15.7%).
Super Group's net debt position at 30 June 2017 increased by 56.2% or R1 117.0 million to R3 105.7 million, with R537.6 million attributable to property and
other borrowings relating to Dealerships SA and Dealerships UK. The Group's gearing, as at 30 June 2017, was 31.5% (June 2016: 21.4%). The net
asset value per share increased by 9.0% for the year to 2 394.1 cents at 30 June 2017 (June 2016: 2 196.4 cents).
Operating cash flow increased by 17.3% for the year to R3 111.4 million (June 2016: R2 651.5 million) mainly due to the increase in earnings before
interest, taxation, depreciation and amortisation. Cash generated from operations, after working capital, increased by 10.3% to R3 194.3 million
(June 2016: R2 897.0 million).
REVENUE
30 June 2017
South Africa 60%
United Kingdom 24%
Australia 8%
Europe 7%
Africa and other 1%
EBITA
30 June 2017
South Africa 39%
United Kingdom 10%
Australia 41%
Europe 9%
Africa and other 1%
REVENUE
to June
R'm
19 818 25 949 29 874
15 16 17
Supply Chain 35%
Fleet Solutions 12%
Dealerships 53%
EBITA
to June
R'm
1 547 2 083 2 292
15 16 17
Supply Chain 30%
Fleet Solutions 50%
Dealerships 20%
OPERATING PROFIT
to June
R'm
1 501 1 952 2 116
15 16 17
Supply Chain 27%
Fleet Solutions 51%
Dealerships 22%
PROFIT BEFORE TAX
to June
R'm 1 362 1 697 1 836
15 16 17
Supply Chain 27%
Fleet Solutions 55%
Dealerships 18%
Contribution indicated as a percentage of Group excl. services
Divisional review
SUPPLY CHAIN
Change Year ended Year ended
R'000 % 30 June 2017 30 June 2016
Revenue 10 342 101 9 421 638
Supply Chain Africa 4.0 8 344 186 8 021 631
Supply Chain Europe Nm 1 997 915 1 400 007
EBITA 676 631 648 015
Supply Chain Africa (3.2) 482 163 497 905
Supply Chain Europe Nm 194 468 150 110
Operating profit 568 686 555 398
Supply Chain Africa (2.3) 448 528 459 056
Supply Chain Europe Nm 120 158 96 342
Operating margin (%)
Supply Chain Africa 5.4 5.7
Supply Chain Europe 6.0 6.9
Profit before tax 491 770 457 869
Supply Chain Africa 6.0 413 665 390 154
Supply Chain Europe Nm 78 105 67 715
Net operating assets 5 796 941 5 922 863
Supply Chain Africa 5.9 3 455 840 3 263 231
Supply Chain Europe (12.0) 2 341 101 2 659 632
Nm: Not meaningful
The majority of Supply Chain Africa's businesses delivered satisfactory performances with the exception of SG Consumer, SG Convenience and African
Logistics. Both SG Consumer and SG Convenience reported a severe decline in revenue and profits on the back of lower volumes, primarily due to the
consumer being under pressure, as well as the competitive environment. In addition, SG Convenience's results were negatively impacted by the loss of the
Monster energy drink distribution contract in July 2016 as a consequence of The Coca-Cola Company investing in Monster USA. African Logistics performed
poorly as a direct result of the loss-making SuperLinks Business, which was closed in 4Q2017. SG Coal delivered an excellent performance compared to the
prior year. Phola Coaches performed very well over the reporting period on the back of new and extended contracts. VSc Solutions also reported solid results.
SG Freight, Super Rent, SG Mobility and Digistics reported reasonable results under challenging trading conditions. Despite the competitive environment and
difficult conditions, Supply Chain Africa managed to secure a number of contracts across its businesses, however, margin pressure is being experienced when
tendering for new or even existing contracts. During the year, Super Group acquired the remaining 49.2% of its shareholding in SG Coal for R167.3 million.
Supply Chain Europe's results of SG IN tIME, a Time-critical Delivery Services company headquartered in Germany, was negatively impacted by the
strengthening of the Rand against the Euro on profit before tax to an amount of R7.5 million. In Euro-terms, SG IN tIME reported good growth on the back of
a sales volume increase of 7.2% in the 2H2017. The results are not comparable as only eight months' results were included for the year ended 30 June 2016.
The amortisation of PPA intangibles for the period amounted to R74.3 million. Subsequent to year-end, SG IN tIME acquired an 89.5% interest in Ader, a
Spanish courier and express transport operator, for EUR11.6 million. Ader, founded in 1992, has 17 offices throughout Spain and 15 operations in the Eurozone.
Ader specialises in the provision of dedicated and exclusive transport and logistics solutions. SG IN tIME was encouraged by a large OEM to establish a
direct presence in Spain in order to service the increase in locally manufactured parts volumes in the Iberian environment. Ader has been SG IN tIME's local
network partner in Spain for 15 years.
FLEET SOLUTIONS
Change Year ended Year ended
R'000 % 30 June 2017 30 June 2016
Revenue 3 609 213 2 935 788
Fleet Africa (14.9) 623 357 732 716
SG Fleet 35.5 2 985 856 2 203 072
EBITA 1 149 610 963 003
Fleet Africa (10.0) 146 921 163 301
SG Fleet 25.4 1 002 689 799 702
Operating profit 1 086 376 931 541
Fleet Africa (10.0) 146 921 163 301
SG Fleet 22.3 939 455 768 240
Operating margin (%)
Fleet Africa 23.6 22.3
SG Fleet 31.5 34.9
Profit before tax 983 245 840 207
Fleet Africa (9.0) 129 284 142 103
SG Fleet 22.3 853 961 698 104
Net operating assets 4 549 427 3 762 966
Fleet Africa 3.6 993 739 959 276
SG Fleet 26.8 3 555 688 2 803 690
Fleet Africa delivered an expected decline in results despite having improved margins. This decline largely reflects the termination of the City of Johannesburg
Red Fleet contract in the previous financial year. The Transnet and other major contract performed well. The implementation of the City of Tshwane
emergency vehicles contract commenced during the year under review with the roll-out of the fleet ongoing as the fire engines are commissioned. The National
Department of Transport maintenance contract for 14 000 vehicles has only recently commenced, albeit at a slow pace. Fleet Africa, with the backing of
General Motors and Co-op Bank, has secured its first government FML contract in Kenya. Significant new tenders are currently being submitted with regard
to further opportunities in Kenya being pursued which should bode well for this business going forward.
SG Fleet reported an excellent set of results maintaining good momentum across all of its businesses, in what has been a very competitive environment.
The results were boosted by the inclusion of nlc's results for the full period as well as Fleet Hire (UK) and Motiva (UK) results for 11 months and seven months,
respectively. Major developments during the year included the roll-out of the New South Wales Government contract, which was won at the end of the
previous financial year. The strengthening of the Rand against the Australian Dollar negatively impacted Super Group's profit before tax to
an amount of R25.3 million (June 2016: positively impacted the results by R56.2 million).
DEALERSHIPS
Change Year ended Year ended
R'000 % 30 June 2017 30 June 2016
Revenue 15 915 299 13 583 928
Dealerships SA 36.7 9 074 861 6 637 676
Dealerships UK (1.5) 6 840 438 6 946 252
EBITA 468 525 388 291
Dealerships SA 37.0 288 101 210 303
Dealerships UK 1.4 180 424 177 988
Operating profit 463 344 381 853
Dealerships SA 37.0 288 101 210 303
Dealerships UK 2.2 175 243 171 550
Operating margin (%)
Dealerships SA 3.2 3.2
Dealerships UK 2.6 2.5
Profit before tax 327 648 293 510
Dealerships SA 18.8 210 683 177 310
Dealerships UK 0.7 116 965 116 200
Net operating assets 2 263 572 1 001 951
Dealerships SA Nm 1 000 715 162 116
Dealerships UK 50.4 1 262 857 839 835
Nm: Not meaningful
Dealerships SA reported very good results despite local market conditions and include the nine Western Cape dealerships, consisting of primarily Mercedes-Benz
dealerships and a property, acquired effective 1 September 2016. During the year, Dealerships added six passenger, four commercial and one Super Group Wholesale
(a new concept dealership) dealerships to its stable, totalling 54 dealerships at 30 June 2017. Despite the NAAMSA dealer market reporting a 7.9% decline in new
vehicle sales for the year ended 30 June 2017 Dealerships new vehicle sales increased by 4.5% with used vehicle sales increasing by a satisfactory 15.7%. The
Parts and Services business continued to perform well. Dealerships SA maintained its operating margin at 3.2%.
Dealerships UK, being the 100% interest in Allen Ford (UK), delivered an excellent set of results, in Great British Pound (GBP) terms. The strengthening of the
average Rand against the GBP had a severe negative impact on the profit before tax of the Group of R32.0 million (June 2016: positively impacted results by
R24.3 million). Strong overall vehicle sales growth of 17.9% (2016: 3.2%) was shown, with new vehicle sales growth of 16.7% (2016: 2.4%) and used vehicle
sales growth of 20.4% (2016: 4.9%) being achieved during the year. The Ford and Kia operations all performed above market sales benchmarks and the
contribution from services was satisfactory. The results include Essex Auto Group's results for four months. Essex Auto Group was acquired effective 1 March
2017 for R407.0 million and consists of five Ford (one being the flagship in Basildon), two Kia, one Mazda and one Fiat dealerships. On 4 July 2017, Dealerships
UK acquired Slough Motor Corporation, which owns six Ford and two Suzuki dealerships in Kent and Berkshire, for GBP24.0 million.
SERVICES
The Services segment includes the Corporate, Insurance and the Mauritius operations. The Services segment performed well on the back of the solid
performance by Treasury together with other recoveries.
OUTLOOK
Super Group's position as an innovative, integrated mobility solutions company remains compelling and the Group is committed to the growth of its core
businesses, both organically and through strategic and focused acquisition opportunities, locally and internationally.
Supply Chain Africa continues to focus on retaining its existing client and customer base, as well as securing new long-term contracts at acceptable
margins. Given the competitive trading environment, this is one of the major challenges faced by this business. African Logistics has been streamlined and
although it remains a tough environment, it is well positioned for any growth going forward.
Supply Chain Europe has concluded the Ader acquisition and similar opportunities in Western and Eastern Europe will be explored.
Fleet Africa secured a new fleet management contract in East Africa with the potential of similar contracts in this region being concluded. Fleet Africa is now
the sole distributor of the E-1 fire engine, a premium brand, which will positively contribute to the business' product offering.
SG Fleet continues to grow through acquisitions as well as organically. Its focus will remain on securing meaningful contracts, both with Government and
corporates. Product innovation and differentiated service propositions are also key in expanding the Group's presence in the UK and New Zealand.
The Dealerships SA business is anticipating difficult trading conditions to continue as consumers remain under pressure. The interest rate cut announced in
July 2017 is not expected to make a significant difference.
Dealerships UK is expecting a slowdown in growth in the new vehicle market given the uncertainty pertaining to the effect of Brexit and the speculation
regarding the change in government policies on shifting diesel technology used towards the latest cleaner Euro 6 diesel standard. Since April 2017, there has
been a marked decline in new vehicle registrations. The acquisitions of Essex Auto Group and Slough Motor Corporation are complementary to Allen Ford's
existing businesses.
No final dividend for the year ended 30 June 2017 has been declared.
The Reviewed Condensed Consolidated Financial Statements will be available on the Group's website after 08:30 on Tuesday, 29 August 2017. The presentation
to the investor community can be viewed on the Group's website after 12:00. Copies of the full announcement are available on request from Nigel Redford,
Company Secretary, nigel.redford@supergrp.com. The Group's website is www.supergroup.co.za.
On behalf of the Board
P Vallet P Mountford
Chairman of the company Chief Executive Officer
28 August 2017
Sandton
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The Condensed Consolidated Financial Statements for the year ended 30 June 2017 are prepared in accordance with the requirements of the JSE Limited
(JSE) Listings Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The JSE Listings Requirements require
preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as
issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 - Interim Financial Reporting.
The accounting policies applied in the preparation of the Condensed Consolidated Financial Statements are in terms of IFRS and are consistent with those
applied in the previous Condensed Consolidated Financial Statements. The definitions of capital items, core headline earnings and related adjustments are
included in the accounting policies in the June 2016 Annual Financial Statements. There were no standards and amendments to standards with a material
impact on the Condensed Consolidated Financial Statements that are relevant to and became effective for the first time in Super Group's financial year
commencing 1 July 2016. These Condensed Consolidated Financial Statements for the year ended 30 June 2017 have been reviewed by KPMG Inc., who
expressed an unmodified review conclusion. The Auditor's Report does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the Auditor's engagement they should obtain a copy of the
Auditor's Report together with the accompanying financial information from the issuer's registered office.
The Condensed Consolidated Financial Statements are presented in Rand, which is the company's functional currency and the Group's presentation currency,
rounded to the nearest thousand.
These results have been compiled under the supervision of the Chief Financial Officer, Colin Brown, CA(SA), BCompt (Hons), MBL.
Condensed Consolidated Statement
of Comprehensive Income
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
Revenue 29 873 856 25 949 004
Depreciation and amortisation (excluding amortisation of PPA intangibles) (750 697) (656 822)
Operating expenditure - excluding capital items (26 813 272) (23 219 796)
Operating (expenditure)/income - capital items (17 474) 10 134
EBITA 2 292 413 2 082 520
Amortisation of PPA intangibles (176 360) (130 517)
Operating profit 2 116 053 1 952 003
Finance costs (441 171) (394 921)
Interest received and income from equity-accounted investees 161 171 140 264
Profit before income tax 1 836 053 1 697 346
Income tax expense (503 322) (438 594)
Profit for the year 1 332 731 1 258 752
Profit for the year attributable to:
Non-controlling interests (NCI) 339 987 272 798
Equity holders of Super Group 992 744 985 954
1 332 731 1 258 752
Other comprehensive income
Items which will be reclassified to profit or loss: (414 073) 369 120
Translation adjustment (418 503) 380 342
Effective portion of hedge 6 897 (15 645)
Tax effect of effective portion of hedge (2 467) 4 423
Items which will not be reclassified to profit or loss: (15 363) 78 742
Revaluation of land and buildings (9 148) 101 979
Tax effect and change in capital gains tax inclusion rate of revaluation of land and buildings (6 215) (23 237)
Other comprehensive income for the year (net of tax) (429 436) 447 862
Total comprehensive income for the year (net of tax) 903 295 1 706 614
Total comprehensive income for the year attributable to:
Non-controlling interests 220 604 407 791
Equity holders of Super Group 682 691 1 298 823
903 295 1 706 614
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to equity holders of Super Group 992 744 985 954
Capital items after tax (Refer note 8 in salient features) 12 416 (13 495)
Headline earnings for the year 1 005 160 972 459
RECONCILIATION OF CORE HEADLINE EARNINGS
Headline earnings for the year 1 005 160 972 459
Acquisition costs after tax and NCI 42 075 71 890
FEC gain on acquisition after tax and NCI - (98 283)
B-BBEE costs after tax and NCI 25 644 12 733
Amortisation of PPA intangible assets arising on business combinations after tax and NCI 83 704 65 348
Core headline earnings for the year 1 156 583 1 024 147
Earnings per share (cents)
Basic 285.0 296.6
Diluted 282.9 291.3
Headline earnings per share (cents)
Basic 288.5 292.6
Diluted 286.4 287.3
Core headline earnings per share (cents)
Basic 332.0 308.1
Diluted 329.6 302.6
Condensed Consolidated Statement
of Financial Position
30 June 2017 30 June 2016
Reviewed Audited
R'000 R'000
ASSETS
Non-current assets 14 558 691 12 862 527
Property, plant and equipment 4 216 737 3 431 286
Investment property 149 800 143 200
Full maintenance lease assets 1 613 868 1 144 622
Intangible assets 1 270 627 1 400 757
Goodwill 6 990 630 6 333 276
Investments and other non-current assets 103 649 124 904
Deferred tax assets 213 380 284 482
Current assets 10 314 060 9 935 093
Inventories 3 399 158 3 053 994
Trade receivables 3 034 492 2 610 871
Sundry receivables 1 153 277 1 142 318
Cash and cash equivalents 2 727 133 3 127 910
Total assets 24 872 751 22 797 620
EQUITY AND LIABILITIES
Capital and reserves
Capital and reserves attributable to equity holders of Super Group 8 355 814 7 614 120
Non-controlling interests 1 499 521 1 687 673
Total equity 9 855 335 9 301 793
Liabilities
Non-current liabilities 6 120 815 5 765 635
Fund reserves 523 008 536 175
Non-controlling interest put options and other liabilities 268 078 402 749
Full maintenance lease borrowings 672 189 523 619
Interest-bearing borrowings 3 977 826 3 627 830
Provisions 57 860 92 008
Deferred tax liabilities 621 854 583 254
Current liabilities 8 896 601 7 730 192
Non-controlling interest put option liability 102 665 -
Full maintenance lease borrowings 337 009 102 174
Interest-bearing borrowings 845 837 863 046
Trade and other payables 7 234 455 6 491 231
Income tax payable 112 251 54 925
Provisions 264 384 218 816
Total equity and liabilities 24 872 751 22 797 620
Condensed Consolidated Statement
of Cash Flows
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
Cash flows from operating activities
Operating cash flow 3 111 395 2 651 508
Working capital inflow 82 925 245 471
Cash generated from operations 3 194 320 2 896 979
Finance costs paid (441 915) (387 018)
Interest received 152 498 142 029
Income tax paid (409 559) (552 678)
Dividend paid to non-controlling interest (222 407) (186 481)
Net cash generated from operating activities 2 272 937 1 912 831
Cash flows from investing activities
Additions to property, plant and equipment (958 110) (591 167)
Additions to full maintenance lease assets (625 453) (562 897)
Additions to intangible assets (44 574) (36 912)
Proceeds on disposal of property, plant and equipment 224 116 270 564
Proceeds on disposal of full maintenance lease assets 317 096 277 616
Proceeds on disposal of assets held-for-sale - 48 065
Net acquisition of businesses (net of cash acquired) (1 794 057) (1 848 874)
Dividends received from equity-accounted investees 10 882 18 048
Other investing activities 40 748 19 902
Net cash outflow from investing activities (2 829 352) (2 405 655)
Cash flows from financing activities
Share issues net of expenses - 1 226 950
Cash outflow on share options (1 830) (570)
Additional investment in existing subsidiary (95 074) (81 447)
Interest-bearing borrowings raised 1 766 608 3 211 923
Full maintenance lease borrowings raised 396 010 259 642
Interest-bearing borrowings repaid (1 253 827) (2 997 858)
Full maintenance lease borrowings repaid (522 571) (229 707)
Net cash inflow from financing activities 289 316 1 388 933
Net (decrease)/increase in cash and cash equivalents (267 099) 896 109
Cash and cash equivalents at beginning of the year 3 127 910 2 122 908
Effect of foreign exchange on cash and cash equivalents (133 678) 108 893
Cash and cash equivalents at end of the year 2 727 133 3 127 910
Condensed Consolidated Statement
of Changes in Equity
Share Non-
Stated Share Share Other Retained buyback controlling Total
Capital capital premium reserves earnings reserve Total Interest equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2015 - Audited - 315 334 1 746 798 846 378 2 547 444 (434 003) 5 021 951 910 729 5 932 680
Changes in equity for the 2016 year
Other comprehensive income - - - 312 869 - - 312 869 134 993 447 862
Translation adjustment - - - 239 980 - - 239 980 140 362 380 342
Effective portion of hedge - - - (8 160) - - (8 160) (7 485) (15 645)
Tax effect of effective portion of hedge - - - 2 307 - - 2 307 2 116 4 423
Revaluation of land and buildings - - - 101 979 - - 101 979 - 101 979
Tax effect of revaluation of land and buildings - - - (23 237) - - (23 237) - (23 237)
Profit for the year - - - - 985 954 - 985 954 272 798 1 258 752
Total comprehensive income for the year - - - 312 869 985 954 - 1 298 823 407 791 1 706 614
Realisation of revaluation reserve through depreciation - - - (1 236) 1 236 - - - -
Shares issued for cash - 33 751 833 658 - - 32 591 900 000 - 900 000
Share issue expenses - rights offer - - (29 562) - - - (29 562) - (29 562)
Transfer to stated capital 2 899 979 (349 085) (2 550 894) - - - - - -
Book build shares issued for cash1 360 000 - - - - - 360 000 - 360 000
Share issue expenses - bookbuild (3 488) - - - - - (3 488) - (3 488)
Share-based payment reserve movement - - - - 38 414 - 38 414 5 543 43 957
Share options exercised - - - - (92 769) - (92 769) (6 182) (98 951)
B-BBEE good leaver options exercised2 - - - - (5 960) - (5 960) - (5 960)
Movement in treasury shares - - - - - 104 341 104 341 - 104 341
Dividends paid to NCI - - - - - - - (186 481) (186 481)
Deferred tax recorded directly in equity on movement in options - - - - 20 234 - 20 234 1 518 21 752
NCI put option movement - - - - (126 306) - (126 306) - (126 306)
Transactions with equity partners - nlc - - - - 156 664 - 156 664 204 296 360 960
Transactions with equity partners - SG Coal - - - - (19 238) - (19 238) 104 446 85 208
Transactions with equity partners - SG Fleet - - - - (8 984) - (8 984) (2 463) (11 447)
NCI recognised in respect of subsidiaries acquired - IN tIME - - - - - - - 248 476 248 476
Balance at 30 June 2016 - Audited 3 256 491 - - 1 158 011 3 496 689 (297 071) 7 614 120 1 687 673 9 301 793
Changes in equity for the 2017 year
Share Non-
Stated Share Share Other Retained buyback controlling Total
Capital capital premium reserves earnings reserve Total Interest equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Other comprehensive income - - - (310 053) - - (310 053) (119 383) (429 436)
Translation adjustment - - - (297 010) - - (297 010) (121 493) (418 503)
Effective portion of hedge - - - 3 612 - - 3 612 3 285 6 897
Tax effect of effective portion of hedge - - - (1 292) - - (1 292) (1 175) (2 467)
Revaluation of land and buildings - - - (9 148) - - (9 148) - (9 148)
Tax effect and change in capital gains tax inclusion
rate of revaluation of land and buildings - - - (6 215) - - (6 215) - (6 215)
Profit for the year - - - - 992 744 - 992 744 339 987 1 332 731
Total comprehensive income for the year - - - (310 053) 992 744 - 682 691 220 604 903 295
Realisation of revaluation reserve through depreciation - - - (84) 84 - - - -
Share-based payment reserve movement - - - - 38 529 - 38 529 4 413 42 942
Share options exercised - - - - (86 560) - (86 560) (464) (87 024)
B-BBEE good leaver options exercised(2) - - - - (10 681) - (10 681) - (10 681)
Movement in treasury shares - - - - - 95 875 95 875 - 95 875
Dividends paid to NCI - - - - - - (222 407) (222 407)
Deferred tax recorded directly in equity on movement in options - - - - (31 116) - (31 116) (2 211) (33 327)
NCI put option movement - - - - 7 586 - 7 586 - 7 586
Transactions with equity partners - SG Fleet(3) - - - - (32 738) - (32 738) (9 657) (42 395)
Transactions with equity partners - Motiva(3) - - - - 6 459 - 6 459 10 128 16 587
Transactions with equity partners - Fleet Hire(3) - - - - 13 478 - 13 478 18 817 32 295
Transactions with equity partners - SG Coal(3) - - - - 58 171 - 58 171 (225 476) (167 305)
NCI recognised in respect of subsidiary acquired - Legend(3) - - - - - - - 18 101 18 101
Balance at 30 June 2017 - Reviewed 3 256 491 - - 847 874 4 452 645 (201 196) 8 355 814 1 499 521 9 855 335
(1) A bookbuild is an offer of shares to selected investors of the company.
(2) A good leaver is an employee who participated in the Broad-Based Black Economic Empowerment Scheme whose employment was terminated due to their death, retrenchment,
retirement or sale of the subsidiary or business which employed the participant.
(3) Refer to business combinations note.
Operating segments
Super Group Supply Chain Africa Supply Chain Europe
Year ended Year ended Year ended Year ended Year ended Year ended
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
Reviewed Audited Reviewed Audited Reviewed Audited
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 29 873 856 25 949 004 8 344 186 8 021 631 1 997 915 1 400 007
South Africa 17 855 966 15 148 437
Australia 2 458 924 2 103 987
Europe 1 997 915 1 400 007
United Kingdom 7 305 555 7 000 543
Africa and other 255 496 296 030
Depreciation and amortisation (excluding
amortisation of PPA intangibles) (750 697) (656 822) (345 737) (348 666) (12 183) (7 527)
Net operating expenditure - excluding capital items (26 813 272) (23 219 796) (7 495 960) (7 181 221) (1 791 128) (1 241 550)
Operating (expenditure)/income - capital items (17 474) 10 134 (20 326) 6 161 (136) (820)
EBITA 2 292 413 2 082 520 482 163 497 905 194 468 150 110
Amortisation of PPA intangibles (176 360) (130 517) (33 635) (38 849) (74 310) (53 768)
Operating profit 2 116 053 1 952 003 448 528 459 056 120 158 96 342
Net finance charges (280 000) (254 657) (34 863) (68 902) (42 053) (28 627)
Profit before tax 1 836 053 1 697 346 413 665 390 154 78 105 67 715
Super Group Supply Chain Africa Supply Chain Europe
As at As at As at As at As at As at
30 June 2017 30 June 2016 30 June 2017 30 June 2016 30 June 2017 30 June 2016
Reviewed Audited Reviewed Audited Reviewed Audited
R'000 R'000 R'000 R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 4 216 737 3 431 286 1 977 777 1 861 987 39 127 40 212
Investment property 149 800 143 200 - - - -
Full maintenance lease assets 1 613 868 1 144 622 - - - -
Intangible assets 1 270 627 1 400 757 55 763 84 658 480 190 604 686
Goodwill 6 990 630 6 333 276 636 891 588 890 1 675 097 1 831 111
Investments and other non-current assets 103 649 124 904 74 599 26 650 - -
Current assets
Inventories 3 399 158 3 053 994 343 237 419 052 2 226 1 089
Trade receivables 3 034 492 2 610 871 1 185 153 1 250 495 368 624 388 433
Sundry receivables 1 153 277 1 142 318 701 576 680 690 18 079 12 223
Intercompany trade receivables - - 9 458 13 329 - -
SEGMENT ASSETS 21 932 238 19 385 228 4 984 454 4 925 751 2 583 343 2 877 754
South Africa 9 615 265 8 354 934
Australia 4 306 841 4 491 484
Europe 2 583 343 2 877 754
United Kingdom 4 689 747 3 045 401
Africa and other 737 042 615 655
LIABILITIES
Non-current liabilities
Long-term borrowings 4 650 015 4 151 449 511 512 440 762 765 205 901 147
Non-controlling interest put options and
other liabilities 268 078 402 749 40 152 124 825 138 353 189 616
Fund reserves 523 008 536 175 - - - -
Long term provisions 57 860 92 008 - 2 078 2 701 2 631
Current liabilities
Short-term borrowings 1 182 846 965 220 278 465 212 448 3 840 4 581
Non-controlling interest put options 102 665 - 102 665 - - -
Trade and other payables and provisions 7 498 839 6 710 047 1 413 372 1 578 286 239 541 215 491
Intercompany trade payables - - 30 231 44 057 - -
SEGMENT LIABILITIES 14 283 311 12 857 648 2 376 397 2 402 456 1 149 640 1 313 466
South Africa 5 773 673 5 151 302
Australia 3 183 838 3 316 687
Europe 1 149 640 1 313 466
United Kingdom 3 929 392 2 814 108
Africa and other 246 768 262 085
Net capex 1 086 925 594 731 414 111 160 748 16 484 14 507
South Africa 825 766 362 661
Australia 63 887 47 345
Europe 16 484 14 507
United Kingdom 127 283 77 489
Africa and other 53 505 92 729
Net operating assets * 13 495 267 11 589 310 3 455 840 3 263 231 2 341 101 2 659 632
* The definition of net operating assets has been amended to include interest-bearing floorplan liabilities. The prior year amounts have been repurposed with this amendment.
Fleet Africa SG Fleet Dealerships SA Dealerships UK Services and intercompany
eliminations
Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Reviewed Audited Reviewed Audited Reviewed Audited Reviewed Audited Reviewed Audited
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
623 357 732 716 2 985 856 2 203 072 9 074 861 6 637 676 6 840 438 6 946 252 7 243 7 650
(172 620) (156 075) (167 272) (80 892) (15 631) (32 153) (21 060) (17 377) (16 194) (14 132)
(303 816) (413 340) (1 815 332) (1 322 939) (8 766 587) (6 395 161) (6 638 954) (6 750 887) (1 495) 85 302
- - (563) 461 (4 542) (59) - - 8 093 4 391
146 921 163 301 1 002 689 799 702 288 101 210 303 180 424 177 988 (2 353) 83 211
- - (63 234) (31 462) - - (5 181) (6 438) - -
146 921 163 301 939 455 768 240 288 101 210 303 175 243 171 550 (2 353) 83 211
(17 637) (21 198) (85 494) (70 136) (77 418) (32 993) (58 278) (55 350) 35 743 22 549
129 284 142 103 853 961 698 104 210 683 177 310 116 965 116 200 33 390 105 760
Fleet Africa SG Fleet Dealerships SA Dealerships UK Services and intercompany
eliminations
As at As at As at As at As at As at As at As at As at As at
30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
Reviewed Audited Reviewed Audited Reviewed Audited Reviewed Audited Reviewed Audited
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
1 200 1 732 42 624 31 054 704 889 351 595 666 091 355 400 785 029 789 306
- - - - - - - - 149 800 143 200
961 113 967 547 652 755 177 075 - - - - - -
- - 674 373 640 887 - - 51 533 65 196 8 768 5 330
87 822 87 822 3 441 719 3 226 787 554 978 159 705 594 123 438 961 - -
- - - - - - - - 29 050 98 254
- 174 113 515 57 365 1 275 363 773 756 1 664 817 1 802 558 - -
90 548 125 141 680 701 449 933 299 055 134 677 394 566 223 822 15 845 38 370
71 886 26 065 132 552 85 488 27 676 7 152 35 171 94 753 166 337 235 947
592 4 703 - - 1 167 701 - - (11 217) (18 733)
1 213 161 1 213 184 5 738 239 4 668 589 2 863 128 1 427 586 3 406 301 2 980 690 1 143 612 1 291 674
385 882 444 265 1 625 079 1 393 844 200 000 - 463 339 606 431 698 998 365 000
- - 20 002 28 341 31 713 44 999 - - 37 858 14 968
40 841 83 955 482 167 452 220 - - - - - -
- - 55 159 78 772 - - - - - 8 527
66 132 51 394 524 444 215 433 - - 303 356 - 6 609 481 364
- - - - - - - - - -
114 047 91 159 1 625 230 1 305 531 1 829 861 1 218 909 2 143 444 2 140 856 133 344 159 815
7 465 6 800 - - 838 1 562 - - (38 534) (52 419)
614 367 677 573 4 332 081 3 474 141 2 062 412 1 265 470 2 910 139 2 747 287 838 275 977 255
224 545 191 341 138 898 98 742 157 077 15 130 111 138 75 767 24 672 38 496
993 739 959 276 3 555 688 2 803 690 1 000 715 162 116 1 262 857 839 835 885 327 901 530
Business combinations
Nature of Operating Interest Purchase price
Subsidiaries and businesses acquired business segment Date acquired acquired (%) R'000
Fleet Hire Holdings Limited (Fleet Hire) Fleet SG Fleet 4 August 2016 100 (367 458)
management
Western Cape Dealerships Dealerships Dealerships SA 1 September 2016 100 (899 301)
ABF Legend Logistics Proprietary Limited (Legend) Logistics Supply Chain 30 September 2016 75 (110 547)
Africa
Motiva Group Limited (Motiva) Fleet SG Fleet 30 November 2016 100 (249 004)
management
Essex Auto Group Limited (EAG) Dealerships Dealerships UK 1 March 2017 100 (406 988)
Purchase price (2 033 298)
Western Cape
Fleet Hire Dealerships Legend Motiva EAG Total
Net cost on acquisition of businesses R'000 R'000 R'000 R'000 R'000 R'000
Fair value of assets acquired and liabilities
assumed at date of acquisition:
Assets
Property, plant and equipment (4 845) (211 615) (96 531) (1 165) (254 663) (568 819)
Intangible assets (82 802) - (12 364) (64 086) - (159 252)
Full maintenance lease assets (124 552) - - (439 711) - (564 263)
Goodwill (335 509) (399 794) (56 244) (180 678) (201 681) (1 173 906)
Deferred tax asset - (2 966) - - - (2 966)
Inventories (9 681) (618 693) (2 189) (7 098) (688 668) (1 326 329)
Trade and other receivables (82 160) (4 504) (51 472) (63 071) (1 001) (202 208)
Provision for impairment of trade receivables 2 852 - 3 469 - - 6 321
Taxation receivable (309) - - (983) - (1 292)
Cash and cash equivalents (19 455) - (18 277) (53 890) (58 382) (150 004)
(656 461) (1 237 572) (233 608) (810 682) (1 204 395) (4 142 718)
Liabilities
Fund reserves 45 141 - - 26 407 - 71 548
Interest-bearing borrowings - - 45 650 - 56 687 102 337
Full maintenance lease borrowings 124 202 - - 425 337 - 549 539
Deferred tax liabilities 12 784 - 13 841 15 209 16 635 58 469
Trade and other payables 103 887 335 563 41 498 91 708 724 085 1 296 741
Income tax payable - - 3 803 - - 3 803
Provisions 2 989 2 708 168 3 017 - 8 882
289 003 338 271 104 960 561 678 797 407 2 091 319
Fair value of net assets acquired (367 458) (899 301) (128 648) (249 004) (406 988) (2 051 399)
Less: Non-controlling interest - - 18 101 - - 18 101
Purchase price (367 458) (899 301) (110 547) (249 004) (406 988) (2 033 298)
Deferred contingent purchase consideration - - 35 547 - - 35 547
Equity shares of SG Fleet transferred 32 295 - - 16 587 - 48 882
Cash consideration transferred (335 163) (899 301) (75 000) (232 417) (406 988) (1 948 869)
Cash acquired 19 455 - 18 277 53 890 58 382 150 004
Cash outflow (315 708) (899 301) (56 723) (178 527) (348 606) (1 798 865)
The acquisition of Fleet Hire and Motiva will bolster the United Kingdom SG Fleet division. The Group performed a purchase price allocation exercise on Fleet
Hire and Motiva whereby intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of
customer contracts and relationships of R82.8 million and R62.0 million for Fleet Hire and Motiva respectively.
The acquisition of the Western Cape dealerships will allow the Group to expand its Mercedes Benz dealerships footprint.
The acquisition of Legend will bolster the Supply Chain Africa division. The Group performed a purchase price allocation exercise on Legend whereby
intangible assets acquired were separately valued. The valuation, using projected financial information, led to the recognition of R12.4 million in respect of
customer contracts.
The acquisition of EAG will expand the Group's dealership footprint in the United Kingdom.
The non-controlling interests have been calculated using the present ownership instruments' proportionate share in the recognised amounts of the acquiree's
identifiable net assets.
Goodwill has been recognised on the acquisition of Fleet Hire, Western Cape Dealerships, Legend, Motiva and EAG amounting to R335.5 million, R399.8 million,
R56.2 million, R180.7 million and R201.7 million respectively.
Goodwill is attributable mainly to the skills and technical talent of the workforce and synergies expected to be achieved from integrating the acquired
businesses into the Group's various operations. None of the goodwill is expected to be deductible for tax purposes.
The acquisition related costs of R42.0 million relating to these acquisitions are included in the consolidated statement of comprehensive income.
The values identified in relation to the acquisitions are provisional as at 30 June 2017.
Western Cape
Impact of the acquisitions on the Fleet Hire Dealerships Legend Motiva EAG Total
results of the Group R'000 R'000 R'000 R'000 R'000 R'000
From the dates of acquisition, the
acquired businesses contributed:
Revenue * 2 541 507 375 426 169 361 1 186 727 4 273 021
Profit after tax and amortisation of
PPA intangibles (excluding acquisition
related costs) * 20 910 43 641 12 079 21 455 98 085
Attributable profit to equity holders of
Super Group(1) * 20 910 32 731 6 326 21 455 81 422
(1) Profit after tax, after non-controlling interest (excluding acquisition related costs)
* Due to the significant integration activities it is not practical to derive a meaningful revenue and profit contribution
Impact of the acquisitions on the Western Cape
results of the Group Fleet Hire Dealerships Legend Motiva EAG Total
- had they occurred on 1 July 2016 R'000 R'000 R'000 R'000 R'000 R'000
From 1 July 2016 the businesses would
have contributed:
Revenue * 3 028 121 480 803 292 463 2 461 199 6 262 586
Profit after tax and amortisation of
PPA intangibles (excluding acquisition
related costs) * 24 039 56 421 15 736 36 284 132 480
Attributable profit to equity holders of
Super Group(1) * 24 039 42 316 8 241 36 284 110 880
(1) Profit after tax, after non-controlling interest (excluding acquisition related costs)
* Due to the significant integration activities it is not practical to derive a meaningful revenue and profit contribution
Dealerships
SA
Net proceeds on disposal of business R'000
Fair value of assets and liabilities disposed were:
Property, plant and equipment 255
Inventories 10 061
Trade and other payables (5 486)
Provisions (22)
Cash inflow 4 808
The Group disposed of Nissan and Renault the Glen effective 1 March 2017 for R4.8 million.
SG Fleet SG Coal Total
Net costs on increase in existing shareholding in subsidiaries R'000 R'000 R'000
Non-controlling interest (9 657) (225 476) (235 133)
Effect of transactions between equity partners on equity (32 738) 58 171 25 433
Purchase price (42 395) (167 305) (209 700)
Reduction of SG Coal receivable - 114 626 114 626
Cash outflow (42 395) (52 679) (95 074)
During the year the Group purchased an additional 0.42% in SG Fleet for
R42.4 million and the NCI of 49.17% in SG Coal for R167.3 million.
Fleet Hire Motiva Total
Net proceeds on decrease in existing shareholding in SG Fleet R'000 R'000 R'000
Non-controlling interest 18 817 10 128 28 945
Effect of transactions between equity partners on equity 13 478 6 459 19 937
32 295 16 587 48 882
Equity shares of SG Fleet transferred on purchase of Fleet Hire (32 295) - (32 295)
Equity shares of SG Fleet transferred on purchase of Motiva - (16 587) (16 587)
Cash inflow - - -
SG Fleet issued 1,239,043 shares to the sellers of Fleet Hire and Motiva as part payment for the acquisitions, resulting in a dilution of 0.25% of the
Group's shareholding.
Salient features
Year ended Year ended
30 June 30 June
2017 2016
Reviewed Audited
R'000 R'000
1. INTEREST-BEARING BORROWINGS
SG Fleet interest-bearing borrowings 1 592 338 1 479 144
Asset-based finance 789 977 653 210
Corporate bond 206 881 478 398
Acquisition borrowings - Allen Ford and EAG 420 102 466 667
Acquisition borrowings - IN tIME 769 045 905 727
Property and other borrowings 1 045 320 507 730
4 823 663 4 490 876
During the year, the Group settled the SPG001 Corporate bond of R471.0 million and issued the SPG002 and
SPG003 Corporates bonds of R50.0 million and R154.0 million respectively. Property and other borrowings
increased as a result of the property acquisitions in the Dealerships SA and Dealerships UK operating segments.
2. SHARE STATISTICS
Total issued less treasury shares ('000) 349 013 346 671
Weighted number of shares ('000) 348 355 332 387
Diluted weighted number of shares ('000) 350 906 338 447
Net asset value per share (cents) 2 394.1 2 196.4
3. CAPITAL COMMITMENTS
Authorised but not yet contracted for capital commitments,
excluding full maintenance lease assets. 913 103 555 355
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 arms' length basis with related parties.
Certain management of subsidiary companies sub-contracts vehicles to the Group. Sales, purchases and management fees received amounted to
R82.4 million (2016: R5.1 million), R48.7 million (2016: R27.0 million) and R2.7 million (2016: R1.2 million) respectively for these services. These transactions
were entered into in the normal course of business under terms and conditions that were no more favourable than those arranged with third parties.
Net amounts owing by key employees of this subsidiary was Rnil (2016: R0.04 million).
The Group utilises Fluxmans Attorneys, a director-related entity, to assist with corporate law advisory services in respect of various transactions and several
other corporate and labour matters. These transactions are performed on an arm's length basis.
The Group encourages its employees and key management to purchase goods and services from Group companies. These transactions are generally
conducted on terms no more favourable than those entered into with third parties on an arm's length basis although in some cases nominal discounts are
granted. Transactions with key management personnel are conducted on similar terms. No abnormal or non-commercial credit terms are allowed and no
impairments were recognised in relation to any transactions with key management personnel during the year nor have they resulted in any non-performing
debts at year-end. Similar policies are applied to key management personnel at subsidiary level who are not defined as key management personnel at
Group level.
5. SUBSEQUENT EVENTS
Acquisition of Servicios Empres. Ader S.A
Effective 4 July 2017, SG IN tIME acquired 89.5% of the shares of Servicios Empres. Ader S.A (Ader) for a purchase consideration of EUR11.6 million.
The principal place of business and the majority of operations of Ader are performed in Spain and the Eurozone, with 17 offices throughout Spain and
15 operations in the Eurozone. Ader specialises in the provision of dedicated and exclusive transport and logistics solutions. Ader will be included in the Supply
Chain Europe operating segment. The Group is in the process of determining the initial accounting and purchase price allocation of Ader and will provide
updated information in the unaudited interim results for the 6-month period ending 31 December 2017.
Acquisition of Bestodeck Limited
Effective 4 July 2017, the Group acquired 100% of the shares of Bestodeck Limited (Bestodeck), the holding company of Slough Motor Company Limited
(SMC), and seven freehold properties upon which the dealerships are located, for a purchase consideration of GBP24.0 million. SMC currently operates six Ford
and two Suzuki dealerships in the United Kingdom. SMC will be included in the Dealerships UK operating segment. The Group is in the process of determining
the initial accounting and purchase price allocation of SMC and will provide updated information in the unaudited interim results for the 6-month period ending
31 December 2017.
Other than the matters disclosed, the directors are not aware of other matters or circumstances arising subsequent to the reporting date up to the date of
this report, which will materially affect these results.
6. SIGNIFICANT EVENTS
SG Fleet Group Limited acquisition of Fleet Hire Holdings
SG Fleet Group Limited, acquired Fleet Hire Holdings effective 4 August 2016 for a purchase price of R367.5 million. The statement of financial position
as at 30 June 2017 has been impacted by increases in full maintenance lease assets of R92.8 million, intangible assets of R68.7 million, goodwill of
R306.5 million, trade and other receivables of R52.1 million, fund reserves of R41.1 million, full maintenance lease borrowings of R90.9 million, trade and
other payables of R77.4 million as a result of this acquisition. Trading relating to the 11 months ended 30 June 2017 has been included in the Statement of
Comprehensive Income.
SG Fleet Group Limited acquisition of Motiva Group Limited
SG Fleet Group Limited acquired Motiva Group Limited effective 30 November 2016 for a purchase price of R249.0 million. The statement of financial
position as at 30 June 2017 has been impacted by increases in full maintenance lease assets of R363.2 million, intangible assets of R58.2 million, goodwill
of R174.6 million, trade and other receivables of R66.5 million, trade and other payables of R90.4 million, fund reserves of R23.2 million and full maintenance
lease borrowings of R336.0 million as a result of the acquisition. Trading relating to the 7 months ended 30 June 2017 has been included in the Statement
of Comprehensive Income.
Western Cape dealerships acquisition
The Group acquired the Western Cape dealerships business from Sandown Motor Holdings (Pty) Ltd effective 1 September 2016 for a purchase price
of R899.3 million. The statement of financial position as at 30 June 2017 has been impacted by increases in goodwill of R399.8 million, inventories of
R457.5 million, trade and other receivables of R124.5 million and trade and other payables of R621.7 million as a result of the acquisition. Trading relating to
the 10 months ended 30 June 2017 has been included in the Statement of Comprehensive Income.
Essex Auto Group Limited acquisition
The Group acquired Essex Auto Group Limited effective 1 March 2017 for a purchase price of R407.0 million. The statement of financial position as at 30 June
2017 has been impacted by increases in Property, plant and equipment of R266.0 million, goodwill of R212.7 million, inventories of R518.3 million, trade and
other receivables of R64.5 million and trade and other payables of R639.6 million as a result of the acquisition. Trading relating to the 4 months ended 30 June
2017 has been included in the Statement of Comprehensive Income.
Exchange rate movements
The Group operates in foreign countries which use currencies other than presentation currency. The main currencies used in the Group's foreign operations
are Australian Dollar, US Dollar, Euro and the Great British Pound. The strengthening of the Rand against these currencies has had an effect on the Group's
financial statements and has resulted in a foreign currency translation adjustment of R418.5 million decreasing total equity.
The table below reflects the movement in the exchange rates from the prior reporting periods:
30 June 30 June %
2017 2016 Change
Average currency rate to the South African Rand:
Australian Dollar 10.25 10.49 (2.3)
US Dollar 13.61 14.51 (6.2)
Euro 14.84 16.10 (7.8)
Great British Pound 17.27 21.46 (19.5)
Closing currency rate to the South African Rand:
Australian Dollar 10.07 10.98 (8.3)
US Dollar 13.07 14.73 (11.3)
Euro 14.95 16.34 (8.5)
Great British Pound 17.04 19.61 (13.1)
The non-South African operations account for 58% (June 2016: 58%) and 60% (June 2016: 60%) of the Group's total assets and liabilities respectively.
The non-South African operations generated 40% (June 2016: 42%) and 61% (June 2016: 60%) of the Group's revenue and operating profit respectively.
The non-South African operations revenue, operating profit and profit before tax increased in the current year by 12%, 10% and 9% respectively.
Hierarchy
Level 2 Level 3
7. Fair value R'000 R'000 Valuation technique
Property, plant and equipment - Land, 2 120 365 Valuation performed by Onyx valuation services in June 2017.
buildings and leasehold improvements The valuation model considers the present value of net cash flows
to be generated from these properties, taking into account expected
rental growth rate, void period, occupancy rate, lease incentive
costs such as rent-free periods and other costs not paid by tenants.
The expected net cash flows are discounted using risk-adjusted
discount rates. Among other factors, the discount rate estimation
considers the quality of a building and its location (prime vs
secondary), tenant credit quality and lease terms.
Investment properties 149 800
Deferred contingent purchase consideration 60 000 Due to the sale of the GWM business in 2016 and the related profit
receivable - GWM warranties not being met, the amount receivable is certain as at
30 June 2017 according to the purchase agreement and has been
assessed as recoverable.
Deferred contingent purchase consideration 24 501 An obligation exists at acquisition date resulting from the possibility
payable - Legend of the acquiree's aggregate profit after tax for the three year
period ending 30 June 2019 exceeding R60 million. The deferred
contingent purchase consideration is calculated by applying 75%
to every R1 excess over the R60 million aggregate profit after tax.
The present value of this obligation is determined using
a pre-tax discount rate of 9.5%. The date of exercise is the second
business day after the aggregate profit after tax is agreed.
FEC Assets 1 378 The fair values are based on broker quotes. Similar contracts are
traded in an active market and reflect the actual transactions in
similar instruments.
FEC Liabilities 4 343
Digistics put option 102 665 This put option has been based on the average non-controlling
interest non-proportionate share of the profit after tax for the last
3 financial years preceding 1 October 2017, adjusted for dividends
paid, at a price earnings ratio of 6,5.
Hierarchy
Level 2 Level 3
7. Fair value (continued) R'000 R'000 Valuation technique
Legend put option 29 744 This put option is calculated as the fair value of the business at
exercise date of the option, by present valuing the free cash flows
for a ten-year period post the date of exercise. The present value is
determined by using a pre-tax discount rate of 9.5%. The option can
be exercised on 1 October 2019.
IN tIME put option 138 375 This put option is calculated as the fair value determined by using
the average audited EBITDA for the 3 years preceding the put
option exercise date at a price earnings multiple of 7.5, adjusted for
net debt. The present value has been determined using a pre-tax
discount rate of 7.7%. The put option can be exercised from
30 June 2020 to 30 June 2025.
The carrying value of all other financial instruments approximates the fair value of the financial instruments as at 30 June 2017.
Movement in level 3 financial instruments measured at fair value
The following table shows a reconciliation from the opening to closing balances of level 3 financial instruments carried at fair value:
30 June 2017
Reviewed
Property, plant and equipment - Land and buildings and leasehold improvements R'000
Opening balance 1 474 689
Net additions 260 956
Acquisition of businesses 446 492
Revaluation of land and buildings - through equity (9 148)
Other (52 624)
2 120 365
Investment properties
Opening balance 143 200
Fair value adjustment recognised in profit or loss 6 600
149 800
30 June 2017
Reviewed
GWM Legend R'000
Financial asset/(liability) - Deferred contingent purchase consideration R'000 R'000 Total
Opening balance 57 462 - 57 462
Subsidiary acquired - Legend - (35 547) (35 547)
Fair value adjustment to profit and loss 2 538 11 046 13 584
60 000 (24 501) 35 499
Financial assets - Put option liabilities
Opening balance 302 990
Movement through statement of changes in equity (32 206)
Subsidiary acquired - Legend 36 802
Fair value adjustment (44 388)
Forreign currency translation (24 620)
270 784
Sensitivity analysis:
Deferred contingent purchase consideration
The significant assumptions included in the fair value measurement of the deferred contingent purchase consideration for Legend is based on the projected
earnings that is not observable in the market. The following table shows how the fair value of the Legend payable would change if the projected earnings
assumption was increased by 100bps:
Increase in
Fair value liability
R'000 R'000
Legend - Deferred contingent purchase consideration payable 25 177 676
Due to the sale of the GWM business in 2016 and the related profit warranties not being met, the amount receivable is certain as at 30 June 2017 according
to the purchase agreement and has been assessed as recoverable.
Put options
The significant assumption included in the fair value measurement of the put option liabilities relates to the projected earnings that is not observable in the
market. The following table shows how the fair value of the liabilities would change if the earnings assumption was increased by 100bps:
Increase in
Fair value liability
R'000 R'000
Digistics 102 665 *
Legend 29 997 253
IN tIME 141 918 3 543
* The put option value has been finalised.
30 June 2017 30 June 2016
Reviewed Audited
R'000 R'000
8. CAPITAL ITEMS
Impairment of property, plant and equipment and intangible assets 20 604 19 715
(Reversal of impairment)/impairment of equity-accounted investee (1 305) 22 620
Impairment of goodwill 4 521 -
Profit on sale of business - (39 629)
Fair value adjustment to investment property (6 600) (4 000)
Loss/(profit) on sale of property, plant and equipment 254 (8 840)
Capital items before tax and NCI 17 474 (10 134)
Tax effect of capital items (5 064) (2 297)
NCI effect of capital items 6 (1 064)
Capital items after tax and NCI 12 416 (13 495)
Corporate Information
Directors
Executive: P Mountford (Chief Executive Officer) and C Brown (Chief Financial Officer)
Non-executive: P Vallet* (Chairman of the company), Dr E Banda*, M Cassim*, V Chitalu*#, J Newbury* and D Rose*
*Independent #Zambian
Company Secretary
N Redford
Registered office
27 Impala Road, Chislehurston, Sandton, 2196
Transfer secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
(PO Box 61051, Marshalltown, 2107)
Sponsor
Deutsche Securities (SA) Proprietary Limited
(Registration number 1995/011798/07)
3 Exchange Square, 87 Maude Street, Sandton, 2196
Investor Relations
Keyter Rech Investor Solutions CC
(Registration number 2008/156985/23)
5 2nd Road, Hyde Park, 2196
www.supergroup.co.za
Date: 28/08/2017 03:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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