Supergroup

21/08/2012

Super Group’s revenue boosted by new business

Super Group, a broad supply chain management company, says it has achieved "excellent" results for the year ended June, following growth in both earnings and cash flow from operations.

Group revenue shot up 30.2%, with all businesses, other than its Fleet Africa unit, reporting significant increases in sales, including a 20% increase in new vehicle sales within the company’s dealership operations.

The group says growth in revenue was largely a result of new business generated in the Supply Chain SA division and SG Fleet business, which mainly operates in Australia, but is also expanding in New Zealand and the UK.

Group profit before tax rocketed 80.3%, reflecting the benefits of improved operational profitability and lower net finance costs, the group said.

"We are in a net cash position now — with cash generation across all the businesses," Super Group CEO Peter Mountford said on Monday.

A reduction in net finance costs saw a further R1bn reduction in net borrowings over the year, with net cash of R429m at the end of June.

The group also said "vigorous management" of working capital saw net cash generated from operations shoot up 90% to R1.8bn in the year.

While the Supply Chain SA business reported strong sales volume growth on the back of new contracts, a "highly competitive" operating environment meant growth in operating profit in the division lagged its gross revenue growth.

Super Group said the dealerships division continued to experience healthy volume growth in new vehicle sales, exceeding industry statistics.

Mr Mountford said the SG Fleet unit was now reaching "critical mass" in the New Zealand and UK markets, and along with new contracts in Australia, had curtailed overall maintenance costs, while enforcing stringent control of overheads.

It is one of the top fleet service providers in Australia, managing more than 66,000 vehicles for corporate and public sector clients.

"It has been a fantastic year in Australia," Mr Mountford said.

Group operating profits increased by 51.8% to R929.6m in the year, with an overall operating margin of 9.1%, up from 7.8% last year.

Super Group attributed this mainly to the return to profitability of its African logistics operations, on improved fleet utilisation and operating efficiencies, along with an "excellent performance" in the fleet technology solutions division, which uses hardware and software to optimise customer operations.

Fleet Africa’s revenue and operating profit were hit by the expiry of the group’s Eastern Cape provincial government contract at the end of January, and the City of Johannesburg contract in February, Mr Mountford said.

That meant the increase in operating profit of 63.3% in the division was negatively influenced by "end-of-life" contracts, the group said, despite the unit continuing to expand across a number of smaller private sector fleet management contracts.

Mr Mountford said Super Group expected to receive a "portion" of the new City of Johannesburg contract, but this was supposed to have been awarded in February, and had still not been given out.

Source: Mark Allix, Business Day