Super Group, a leading transport logistics and mobility group headquartered in South Africa, reported a commendable set of results for the six months ended 31 December 2015, reporting an increase in headline earnings per share (HEPS) of 21.2% to 159,2 cents, up from 131,4 cents in the comparable prior period. The majority of the Group’s businesses performed well, with the exception of SG Coal, which reported a poor set of results due to difficult trading conditions.
“We are particularly pleased with the overall performance of the Group, given the continued challenges being faced by some of the Supply Chain Africa businesses, the weakening of the Rand against all major currencies and the competitive business environment in the geographical locations in which we operate,” says Group CEO, Peter Mountford.
The period under review was marked by a number of corporate transactions, which resulted in the Group expanding its international footprint and raising nearly R1,3 billion in capital. Super Group acquired a 75% equity interest in IN tIME (Germany), undertook a Rights Offer of R900 million in October 2015 and through SG Fleet, a subsidiary of the Group, acquired 100% of NLC (Pty) Ltd (NLC) in Australia. Super Group also raised R360 million in December 2015 through an Accelerated Bookbuild to bolster the financial position of the Group following the NLC acquisition.
“We’ve been through a busy six months, but I believe that the effort has paid off, leaving the Group in a much stronger position, with offshore revenue and operating profit being approximately 37% and 52%, respectively, of Group total. We believe that it is critical to diversify our revenue and earnings streams, whilst expanding our offshore presence to ensure we have a buffer against the uncertain South African economy and emerging market tumult,” adds Mountford.
Revenue increased by 40.0% to R12,2 billion (December 2014: R8,7 billion), with the growth in revenue mainly attributable to the inclusion of Allen Ford (UK) for the full period, compared to one month in the prior period, two months of IN tIME results and, through SG Fleet Australia, one month’s results of NLC.
Operating profit increased by 23.3% to R883 million (December 2014: R716 million). The main reasons for operating profit increasing at a lower rate than revenue was the inclusion of Allen Ford (UK) for the full period at UK dealership margins and the poor performance by SG Coal, part of Supply Chain Africa. Material once-off forex gains on offshore transactions where used to off-set acquisition costs and the net positive effect on profits was R12,5 million.
Adjusting HEPS by excluding the one-off foreign exchange gain on the IN tIME forward foreign exchange contract; off-set by the acquisition costs for both the IN tIME and NLC acquisitions, the amortisation of intangibles and the Broad-Based Black Economic Empowerment-related costs, a Core HEPS of 158,5 cents was achieved, up 10.8% from the prior period’s 143,1 cents.
The increase in total assets of 49.5% to R22,9 billion from R15,3 billion at 30 June 2015, is mainly as a result of newly-acquired assets of IN tIME and NLC during the period under review. The Group’s normalised Return on Net Operating Assets, after tax and excluding the effects of acquisitions during the period, was 15.7% (December 2014: 18.9%).
Colin Brown, CFO of Super Group, commented: “The Group’s net debt position at 31 December 2015 increased to nearly R2,8 billion, mainly on the back of SG Fleet raising R1 240 million of debt to fund the NLC acquisition. As a result, the Group’s total gearing as at 31 December 2015 was 31.9% compared to the 16.8% at 30 June 2015. The level of gearing is still in line with our stated preferred maximum level of 40%. The net asset value per share increased by 22.8% for the period to 2 063 cents at 31 December 2015.”
Operating cash flow increased by a pleasing 23.2% for the period to R1 241 million (December 2014: R1 007 million) with a working capital inflow of R154 million (December 2014: R9 million).
“On the whole, the outlook for the South African economy, over the short to medium term, remains subdued and reflective of extreme currency weakness, escalating interest rates and depressed consumer spending. However, despite a slowing Chinese economy and other global macro-economic issues, the Australian and European markets do look more resilient and we expect growth to reflect general GDP trends and a relatively healthy consumer demand. Super Group will continue to explore investment opportunities internationally as well as in South Africa, which is aimed at diversifying the Group’s position as a global innovative integrated mobility solutions company,” concludes Mountford.