interim results presentation - super group ltd · super group interim results for the six months...

INTERIM RESULTS PRESENTATION

For the six months ended 31 December 2019

2SUPER GROUP INTERIM RESULTS for the six months ended 31 December 2019

DISCLAIMER

The financial information pertaining to Super Group Limited’s (Super Group’s) results are exactly as published on SENS in terms of the JSE Limited’sListings Requirements.

This presentation contains certain pro forma financial information which has been prepared for illustrative purposes only. The directors areresponsible for compiling the pro forma ratios and financial information which have not been reviewed nor audited by Super Group’s externalauditors.

This presentation may contain certain "forward-looking statements" regarding beliefs or expectations of Super Group, its directors and other members of its senior management about Super Group’s financial condition, results of operations, cash flow, strategy and business and the transactions described in this presentation. Forward-looking statements include statements concerning plans, objectives, goals, strategies, futureevents or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "project", "will", "may", "should" and similar expressions identify forward-looking statements but are not the exclusive means of identifying such statements. Such forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Super Group and are difficult to predict, that may cause the actual results, performance, achievements or developments of Super Group or the industry in which it operates to differ materially from any future results, performance, achievements or developments expressed by or implied from the forward-looking statements. Each member of Super Group expressly disclaims any obligation or undertaking to provide or disseminate any updates or revisions to any forward-looking statements contained in this announcement.

AGENDA

RESULTS AT A GLANCE

DIVISIONAL REVIEWS

SUPPLY CHAIN

FLEET SOLUTIONS

DEALERSHIPS

UNAUDITED INTERIM RESULTS

PROSPECTS


For the six months ended 31 December 2019

RESULTS AT A GLANCE

CASH GENERATED FROM OPERATIONS

R2.1bn

2018 R1.5bn – up 38%

EBITA

R1.3bn

2018 R1.4bn – down 8%

NET ASSET VALUE

R12.7bn

June 2019 R12.6bn – up 1%

OPERATING PROFIT

R1.2bn

2018 R1.3bn – down 9%

HEADLINE EARNINGS

R552m

2018 R630m – down 12%

REVENUE

R18.9bn

2018 R19.4bn – down 3%


INDUSTRY REVIEWS

R’million Southern Africa International

Supply Chain The consumer-facing businesses performed strongly despite low

levels of consumer spending and high unemployment rates

The industrial operations continued to be impacted by low

economic growth, poor manufacturing volumes and disruption

due to Eskom load-shedding

Commodity transport businesses faced a decline in local demand

and margin pressures

German automotive manufacturing volumes at a 23-year low

Despite the highly competitive courier and express markets,

Spain performed adequately

Fleet Solutions A number of FML contracts have been secured from State-

owned Companies (SOC), parastatals and municipalities

Fleet Africa performed strongly on both FML and Managed

Maintenance solutions

Australian retail vehicle deliveries declined in this period

Novated lease market activity was negatively impacted by

reduced private new car sales

The UK experienced a weakness in demand for short-term

rentals and a challenging residual value environment

New Zealand secured a large contract despite muted business

confidence

Dealerships Tough trading conditions

NAAMSA new vehicle sales: 2.1%

The UK new general dealership market: 1.7%

Political uncertainty continued to have a negative impact during

reporting period


CORPORATE ACTIONS CONCLUDED DURING THE PERIOD

Business Description Interest DateConsideration

R’million

Supply Chain

Africa

Acquired LiebenLogistics (Lieben) and Baleka Freight

Acquired GLS Supply Chain Equipment (GLS)

65.0%

03/07/19

(498.8)

51.0% (96.4)

Supply Chain

EuropeAcquired Trans-Logo-Tech (TLT) 80.0% 05/07/19 (183.9)

Corporate Acquired 2,000,000 SG Fleet shares for a total cost of AUD 5,379,414 59.9% 31/12/19 (54.2)

Corporate Capital raised in terms of Domestic Medium Term Note Programme - 15/10/19 750.0


INTERNATIONAL VS SOUTH AFRICAN OPERATIONS

Super Group’s international operations contributed 45% (Dec 2018: 49%) to revenue and 46% (Dec 2018: 50%) to operating profit

Operating profit per countryRevenue per country

25%55%

10%8% 2%

13%

54%30%

3%

The Europe segment reported an operating loss for the period under review

Africa and otherSouth Africa

United Kingdom

Australia

Europe


NET OPERATING ASSETS AND RNOA

4 596

6 564

2 638

3 475

1 0061 271

3 509 3 561

1 2441 554 1 690

2 276

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

HY19 HY20 HY19 HY20 HY19 HY20 HY19 HY20 HY19 HY20 HY19 HY20

SC Africa SC Europe Fleet Africa SG Fleet Dealerships SA Dealerships UK

The Group’s RNOA for the six months ended December 2019 was 10.0% (Dec 2018: 11.6%)Group WACC is 8.8%

RNOA% 12.8 12.0 2.6 0.4 9.2 9.2 19.3 16.2 19.7 16.6 10.7 9.5

WACC% 12.0 2.9 12.0 5.6 12.0 4.7

DIVISIONAL REVIEWSPeter Mountford

SUPPLY CHAIN


SUPPLY CHAIN AFRICA

Revenue Operating profit

Revenue increased by 4.4% mainly attributable to:

the inclusion of Lieben and GLS

market share gains by Digistics

The majority of the new consumer and industrial contracts were only effective end of October 2019

Operating profit decreased by 2.0% (excl IFRS 16: 4.3%) largely due to:

a sharp decline in the commodity businesses’ profitability

a drop in commodity trading (fuel, tyres etc.) in Zimbabwe

an impairment of goodwill of R34.2 million for Phola Coaches

Operating profit margin decreased from 7.9% to 7.4%

4 657

5 923 6 184

4 827

5 3689 484

11 291

0

2 000

4 000

6 000

8 000

10 000

12 000

Jun 2018 Jun 2019 Jun 2020

First half

Second half

262

469 459

393

510

655

979

0100200300400500600700800900

1 0001 100

Jun 2018 Jun 2019 Jun 2020

Revenue (R’m) Operating profit (R’m)


SUPPLY CHAIN AFRICA

Commodity businesses

Consumer and Industrial businesses

Operating profit per sector

Revenue per sector

46.8% 53.2%

28.1%

71.9%

55.7% 44.3%

44.3% 55.7%

December 2018December 2019


SUPPLY CHAIN EUROPE

Revenue Operating (loss)/profit

Revenue decreased by 1.1% and in Euro-terms, by 1.0%

The decrease was mainly as a result of declines in:

new vehicle production volumes in Germany - down 8.4% compared to December 2018

transport activities – down 19.8% since 1 July 2019

Operating profit decreased by 152.7% after an amortisation charge on PPA intangibles of R42.8 million, to an operating loss

The severe decrease in the profitability of the business was due to the sharp fall in automotive sales volumes

The business closed one satellite branch and one trans-shipment point during December 2019

Revenue (R’m) Operating profit/(loss) (R’m)

1 608 1 512 1 495

1 4951 355

3 1032 867

0

500

1 000

1 500

2 000

2 500

3 000

3 500

First half

Second half

63

33

(18)

71

134

39

-20

30

80

130

Jun 2018 Jun 2019 Jun 2020Jun 2018 Jun 2019 Jun 2020

FLEET SOLUTIONS


FLEET AFRICA

316 315

394

305

383621

698

0

200

400

600

800

Jun 2018 Jun 2019 Jun 2020

First half

Second half

61 63

83

56 55

117 118

0

50

100

150

200

Jun 2018 Jun 2019 Jun 2020



Revenue increased by 25.3% on the back of:

securing new FML and Managed Maintenance contracts; and

extended one of its major contracts during the period

Operating profit increased by a pleasing 30.9%

The operating profit margin increased from 20.1% to 21.0%

The business is strongly focused on further growing its South African and Kenyan business base


SG FLEET


Revenue decreased by 1.5% due to:

the conversion of an add-on insurance product from an up-front to annuity-based portfolio

a softness in novated lease activities

SG Fleet continued to report a decline in consumer sentiment, resulting in:

lower new vehicle retail sales

poor novated lease credit activity levels

Operating profit decreased by 19.9% (18.3% in AUD-terms)

The operating profit margin decreased from 17.9% to 14.6%

The decline was signalled in the June 2019 results on the back of the introduction of the annuity profiled insurance products

1 600

2 543 2 505

1 563

2 610

3 163

5 153

0

1 000

2 000

3 000

4 000

5 000

6 000

Jun 2018 Jun 2019 Jun 2020

First half

Second half

493 455365

516457

1 009912

0

200

400

600

800

1 000

1 200

Jun 2018 Jun 2019 Jun 2020


DEALERSHIPS


DEALERSHIPS SA


Revenue decreased by 2.1% mainly as a result of:

a decline in premium luxury vehicle sales

the closure of a metro dealership

Dealerships SA tracked new vehicle industry trends, reporting a 3% decline in new vehicle sales (existing operations), while used vehicle sales showed marginal growth of 1%

Consistent performance from Parts and Services

Operating profit increased by a marginal 1.0%

Operating profit margin also increased from 3.9% to 4.0% mainly as a result of the adoption of IFRS 16 impact

Overall profitability was underpinned by:

operational efficiencies and cost containment, as well as

a strong contribution from Aftersales and F&I departments

Revenue (R’m)

5 0174 156 4 069

4 340

3 978

9 357

8 134

0

2 000

4 000

6 000

8 000

10 000

Jun 2018 Jun 2019 Jun 2020

First half

Second half

167 161 162

156 150

323 311

0

50

100

150

200

250

300

350

Jun 2018 Jun 2019 Jun 2020

Operating profit (R’m)


DEALERSHIPS UK


The revenue decreased by 15.5% (in GBP-terms by 16.3%) largely due to the change in the Ford parts wholesale model and a decline in the privilege retail sales

The parts wholesale model impacted revenue to the amount of R187.9 million

Ford and Kia new vehicle sales in the UK were down 1.3% and 1.0%, respectively, for the period

Parts and Services continued to perform well

Operating profit increased by 2.7% and in GBP-terms, by 1.7%

The operating profit margin increased from 2.3% to 2.8%, again mainly due to the adoption impact of IFRS 16

Given the prevailing economic circumstances, the Dealerships UK’s overall performance remained robust

The Rand weakened against the average GBP by 0.9% for the period under review, resulting in an increase of R0.7 million in reported profits


4 765 4 9854 213

5 160 4 720

9 925 9 705

0

2 000

4 000

6 000

8 000

10 000

12 000

Jun 2018 Jun 2019 Jun 2020

First half

Second half

111 116 119

116

154227

270

0

50

100

150

200

250

300

Jun 2018 Jun 2019 Jun 2020

UNAUDITED INTERIM RESULTSColin Brown


REVENUE AND EBITA ANALYSIS (EXCL. SERVICES AND CORPORATE)

December 2018December 2019

EBITA per division

Revenue per division

55,7% 44,3%

22%

33%22%

13%

38%

31%

10%

6%

13% 34%

35%

9%

5%

12%

5%

30%

21%13%

26%

8%

Fleet Africa

SG Fleet

Dealerships SA

Dealerships UK

Supply Chain Africa

Supply Chain Europe

30%

8%

2%13%

21%

26%33%

8%

2%13%

22%

22%

38%

2%6%

31%

13%

10%

34%

5%5%

35%

12%

9%


STATEMENT OF COMPREHENSIVE INCOME

R’million31 Dec 2019

UnauditedIFRS 16

adjustment31 Dec 2019

Pro forma31 Dec 2018

UnauditedChange %

(excl IFRS16)

Revenue 18 863.5 - 18 863.5 19 441.6 (3.0)

EBITA 1 278.9 (59.2) 1 219.7 1 388.0 (12.1)

Amortisation of PPA intangibles (93.2) - (93.2) (89.7) 3.9

Operating profit 1 185.7 (59.2) 1 126.5 1 298.3 (13.2)

Net finance charges (409.1) 82.0 (327.1) (270.9) 20.7

Interest received and income from equity-accounted investments 116.1 - 116.1 91.4 27.0

Profit before tax 892.7 22.8 915.5 1 118.8 (18.2)

Income tax expense (263.2) (320.1)

Profit for the period 629.5 798.7


STATEMENT OF FINANCIAL POSITION

Assets – R’million31 Dec 2019

Unaudited30 Jun 2019

Audited Change %

FIXED ASSETS 20 218.1 16 470.3 22.8

Property, plant and equipment 6 608.6 6 077.3 8.7

Right-of-Use assets 2 257.3 - -

Investment property 164.2 164.2 -

Full maintenance lease assets 1 717.1 1 551.6 10.7

Goodwill and intangible assets 9 208.5 8 454.8 8.9

Investments and other non-current assets (incl. deferred tax) 262.4 222.4 18.0

CURRENT ASSETS 13 041.8 13 810.3 (5.6)

Inventories 3 948.4 4 488.9 (12.0)

Trade, sundry and tax receivables 5 715.6 5 744.2 (0.5)

Cash and cash equivalents 3 377.8 3 577.2 (5.6)

TOTAL ASSETS 33 259.9 30 280.6 9.8


STATEMENT OF FINANCIAL POSITION (continued)

Equities and liabilities – R’million31 Dec 2019

Unaudited30 Jun 2019

Audited Change %

Total equity 12 702.4 12 613.0 0.7

Fund reserves and provisions 928.5 875.9 6.0

Deferred tax liabilities 655.1 530.7 23.4

Interest-bearing borrowings 6 277.6 5 741.8 9.3

FML borrowings 974.7 877.7 11.1

Right-of-Use lease liabilities 2 639.7 - -

Non-controlling interest put options and other liabilities 328.4 101.2 224.5

Trade and other payables (incl tax payable) 8 753.5 9 540.3 (8.2)

TOTAL EQUITIES AND LIABILITIES 33 259.9 30 280.6 9.8


NET BORROWINGS (EXCLUDING ROU)

December 2019 June 2019

Borrowings

Africa

United Kingdom

Australia

14.7%

15.3%

70.0%

R’millionBorrowings

31 Dec 2019Cash

31 Dec 2019

Net borrowings/(cash)

31 Dec 2019

Net borrowings/(cash)

30 June 2019Change

%

Africa 5 079.5 (2 073.8) 3 005.7 2 718.2 10.6

United Kingdom 1 065.7 (253.6) 812.1 554.8 46.4

Australia 1 107.1 (922.9) 184.2 170.9 7.7

Europe - (127.5) (127.5) (401.6) (68.3)

Total 7 252.3 (3 377.8) 3 874.5 3 042.3 27.4

13.7%

17.4%

68.9%


Investing R1.7 billion for the future

3 577 3 378

1 960 101

246 8

(283)(325)

(119)

(634)(335)

(714) (46)(58)

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CASH FLOW MOVEMENT


KEY FINANCIAL DATA

* Free cash flow is calculated by reducing cash generated from operations with income tax paid, net maintenance capex and tax on net finance costs

Closing currency rate movement between 30 June 2019 and 31 December 2019: Change %

AUS Dollar 0.5

Euro 2.1

Pound Sterling 3.7

US Dollar 0.6

31 December 2019 31 December 2018

Return on Equity 11.0% 12.8%

Return on Net Operating Assets 10.0% 11.6%

Group Weighted Average Cost of Capital 8.8% 9.5%

Net debt to equity (excl IFRS 16) 30.1% 25.2%

Net debt to EBITDA ratio (excl IFRS 16) 1.1 0.8

Net interest cover (excl IFRS 16) 8.5x 10.3x

Free cash flow* R1 476m R957m

Total unutilised funding facilities (excluding Corporate bond) R5 572m R5 169m

PROSPECTSPeter Mountford


PROSPECTS

R’million Southern Africa International

Supply Chain Commodities cycles in South Africa and sub-Saharan Africa

expected to remain volatile

Negative macroeconomic factors expected to hamper

meaningful growth

New contracts in the consumer logistics industry to benefit

consumer-facing businesses for the remainder of the year

Supply Chain Europe’s businesses going through an extensive process of

cost reduction and operational rationalisation and to take decisive action:

regional consolidation of depots in terms of Hannover centre, involving

closure of one further branch and two trans-shipment points

digitisation and administration processes to reduce overheads

strategic expansion into new business areas, such as the agricultural

equipment and e-commerce platforms

Fleet Solutions New Government, SOC and parastatal tender pipeline

promising

East Africa opportunities remain positive

Positive performance expected for the remainder of 2020 on

the back of new contract implementation

The Australian market, particularly in the novated lease space, is

expected to remain challenging

The expansion of the Corporate business model to counter some of the

headwinds in the Consumer space

SG Fleet’s objective is to achieve greater penetration for a widening

range of technology-driven, high value-add products and services

Dealerships Continued downward trend forecasted for dealerships market

given slow economic growth

Further interest rate cuts unlikely to have a material impact

given burgeoning unemployment levels

Markets expected to stabilise at current levels pending finalisation of

Brexit trade agreements

Market conditions, both locally and globally, for FY2020 expected to remain challenging

THANK YOU

Further information available on www.supergroup.co.za

interim results presentation - super group ltd · super group interim results for the six months...

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