Supply Chain

Supply Chain Africa

Strategy

Supply Chain Africa aims to be one of the leading end‑to‑end supply chain solution companies in Southern Africa. The business combines the skills of a team with many years of supply chain experience with assets, such as the Super Park distribution hub, and market‑leading technology to drive efficiencies for clients within a multidisciplinary environment. The strategic vision for Super Group is to create a focused supply chain business with above-average growth and margins, generating solid returns on invested capital.

Peter Mountford ⁽⁶²⁾

BCom, BAcc, HDip Tax, MBA (with distinction, Warwick), CA(SA)

Chief Executive Officer Supply Chain Africa

Philip Smith ⁽⁵⁵⁾

BCom, BAcc, CA(SA)

Executive Director of Super Group Trading (Pty) Ltd and Super Group Africa (Pty) Ltd

Activities

The Supply Chain Africa Division delivers an end-to-end supply chain solution through the integration of its multiple business units. Its services include:

The Supply Chain Africa business comprises the following main underlying businesses:

Name	Business
Commodity
	SG Coal is a logistics services company that provides the hauling of dry bulk goods such as coal, chrome and “run-of-mine minerals” in tipper trucks. SG Coal is a business built on more than 60 years of practical experience. The company has one of the biggest fleets of coal haulage trucks in Africa. The greatest advantage the company has in the market is its “end-to-end” supply of road maintenance vehicles, loaders and other yellow equipment. In this way it supplies the total demand of a coal mines’ coal haulage needs. Legend Logistics is a logistics services company that provides coal-hauling services to a range of clients. Super Group has an 85% and a 100% shareholding in SG Coal and Legend Logistics, respectively.
	African Logistics is the Group’s sub-Saharan African transport business, operating primarily between South Africa, Zimbabwe, Zambia, Malawi, DRC and Mozambique. Over 70% of its volumes come from commodity-related transport. It moves mining equipment and supplies north to the Zambian and DRC copper belt and transports mining products south for export. The balance of the volumes come from transporting agricultural products and aids for governments and multinational Non-Governmental Organisations. The business trades in fuel, re-tread tyres, polymers and soya meal as an add-on to transporting these commodities for its own use.

Industrial
	SG Freight is a freight, dry bulk powder and liquids distribution business. SG Freight provides a national primary and secondary haulage service across the country with deliveries also being made into Botswana, eSwatini and Namibia. 80% of all tonnage moved is through long-term, dedicated and multi-principal contracts across a blue-chip customer base. Market sectors include timber, paper and pulp, packaging, building materials, food, beverages, appliances and plastics industries. It also provides short and long-haul tanker transportation to clients in the fuel, aviation, civil engineering, mining and cement industries.
	SG Mobility is a niche supply chain management company focused on providing clients with fully integrated supply chain solutions that can respond quickly to the changing demands of the marketplace. It specialises in the management of the warehousing and outbound distribution of parts and accessories for clients in the automotive, IT, mining and pharmaceutical sectors.
	Phola Coaches is a provider of passenger transport solutions and bus charter services. The company’s core business is focused on long-term passenger transport contracts in the construction, mining, power generation and higher education sectors. LuxLiner, a subsidiary of Phola Coaches, offers safe and reliable passenger transport solutions from small groups including churches, schools, society groups, sports groups to corporates. Super Group has a controlling 75% interest in Phola Coaches.
	Super Rent is the Group’s truck hire business with a national footprint covering all major centres across South Africa. Super Rent operates a wide range of vehicles available for short- medium- or long-term hire from light utility vehicles to panel vans to trucks. The fleet includes a unique range of specialist commercial vehicles for hire including refrigerated trucks, crane trucks and passenger busses. The business also provides FML, outsourced distribution services and can assist with professional drivers and van assistants.
	MDS Group is a web-based express domestic courier company, servicing both individuals and corporates. Super Group holds a 90% interest in the business.

Industrial
	Cargo Works is a specialist overnight cargo business. Super Group holds an 80% interest in the business.
	VSc (Virtual Supply Chain) Solutions is a global supply chain consulting and technology company. The business focuses exclusively on best practices in the design, implementation and ongoing management of consulting and technology solutions across the supply chain.
	SG Agility is a freight forwarding and clearing agent that focuses on diversified industrial customers. It ensures that goods get from their point of departure to their destination in the most cost and time effective manner, and in their original condition. SG Agility helps importers to enhance product lifecycles, reduce inventory costs, and achieve greater returns on working capital. SG Agility is a joint venture between Super Group (55%) and Agility (45%).
	Zultrans is an express freight and distribution business. Super Group acquired 80% of the business effective 1 March 2020.

Consumer
	Super Group acquired a 65% interest in Lieben Logistics effective July 2019 and an additional 2.4% in January 2020. Lieben Logistics is a diversified logistics and supply chain management company focused on transportation services to clients in an assortment of industries including retail, meat, fresh produce and other cold-chain goods. Lieben Logistics also transports dry goods for its extensive client base. It operates from depots and satellite offices in Cape Town, Port Elizabeth, East London, Durban and Johannesburg.
	Super Group acquired a 51% interest in GLS effective July 2019. GLS is a leading supplier of returnable packaging solutions and outsourced equipment services to optimally manage, store and progress products through different supply chain operations.
	Digistics is a procurement and food distribution business, distributing multi-temperature-controlled product portfolios for McDonalds, KFC, King Pie, Corner Bakery, Pizza Hut, Burger King, Starbucks and other QSR’s.
	SG Gateway Services is an integrated end-to-end solution for FMCG brands to efficiently reach all sectors of the South African FMCG landscape, whether it is to Formal Retail, Wholesale or Convenience. In partnership with SG Convenience and SG Consumer, the business operates multiple sites and delivers nationally. In conjunction with various other Super Group divisions, the business offers all services integrated into one solution from importation, clearing, warehousing, distribution, sales & merchandising, key account management, promotions, market intelligence and a variety of other complementary services. SG Gateway Services customises its experience in outsourced value and supply chain management, in order to improve its clients’ competitiveness, from inbound logistics, to warehouse storage and handling, to outbound distribution, sales and merchandising, debtors’ management, key account management and brand activation.
	SG Consumer provides end-to-end supply chain solutions for the FMCG industry. The business specialises in the primary and secondary distribution, warehousing and debtors’ administration of products ranging from foodstuffs, personal hygiene, detergents, plastic ware and beverage and confectionery type products. Core services entail primary transport from factory through to full warehousing functionality and distribution to customers. These services are performed whilst utilising state-of-the-art warehouse management, route planning and vehicle monitoring technologies.
	SG Convenience is the largest player in South Africa’s convenience distribution market, distributing to over 9 000 outlets nationwide. The Group has a 20 000m2 distribution centre at Super Park in Johannesburg and a 16 000m2 warehouse in Cape Town. The Port Elizabeth, Durban, Nelspruit and George distribution centres have sufficient space to meet current demand. The business spread of SG Convenience is as follows: 65% to retail forecourt stores, 11% to retail shops and convenience stores, 15% to the hospitality industry and 9% to other entities such as schools, hospitals, gyms, golf clubs, hotels and resorts. SG Convenience is the only true multi-temperature convenience distribution company in South Africa, sourcing brands and products of only the highest quality. The business warehouses, packages and delivers frozen, chilled and ambient products, all in one delivery, anywhere in South Africa. As the unified link between manufacturer, retailer and customer, SG Convenience serves as a one-stop shop for its customers and principals.

Results for 2020

Supply Chain Africa’s results were positively impacted by the inclusion of the Lieben Logistics and GLS results for the full financial year. The majority of Supply Chain Africa’s operations were designated as essential service providers during the Covid-19 lockdown period.

The consumer-facing businesses performed well during the first half of the financial year, despite a weak economy. However, this positive performance was offset by the negative impact of the national lockdown on Supply Chain Africa’s businesses exposed to the industrial, QSR, restaurant, tourism and liquor industries. As a result, an impairment of R77.5 million was made against the Convenience operations. Lieben Logistics and GLS showed strong resilience during the lockdown period.

The industrial businesses were essentially unable to operate during the initial Covid-19 lockdown period. The remaining goodwill of Phola Coaches of R34.2 million was impaired in the first half of the year and a bad debt provision of R21.5 million was made in the second half of the year.

The commodities businesses in South Africa started to see a decline in local demand from November 2019 due to an increase in load shedding and maintenance being done to the power infrastructure. Although coal mines were regarded as essential service providers, due to lower electricity usage as a result of reduced manufacturing activities during Level 5 and Level 4 lockdown periods, there was a sharp reduction in the demand for coal. One of SG Coal’s major mining customers went into business rescue in January 2020 and, as a result, a bad debt provision of R69.4 million has been raised. The African commodities businesses performed well, benefiting from an increase in commodity trading profits.

The estimated impact of Covid-19 on revenue and profit before tax was approximately R745.7 million and R216.8 million, respectively. Direct Covid-19 related costs amounted to about R21.8 million. IFRS 16 increased operating profit by R32.5 million and decreased profit before tax by R9.0 million.

The revenue and operating profit split by key industries:

Environment, sustainability and governance

Refer to the ESG Report.

Outlook for 2021

Supply Chain Africa is expecting trading conditions across all its businesses to remain challenging. However, despite these challenges, the Group expects a recovery in the Supply Chain Africa’s Industrial and Consumer businesses. The underlying businesses have already been implementing numerous measures to reduce costs and preserve cash and further cost-saving initiatives will be implemented during the new financial year.

The 2021 financial year remains uncertain given the extent of the lockdown measures imposed by Government in an already fragile economy. However, any recovery from the Covid-19 lockdown together with cost rationalisation, will improve profitability.

Supply Chain Europe

Supply Chain Europe strives to be one of the leading time-critical and integrated supply chain management solutions businesses in Europe.

Strategy

Supply Chain Europe’s strategy is to be one of the leading time-critical delivery service and courier businesses in Europe.

Torsten Prelle ⁽⁵⁶⁾

Diplom-Kaufmann

Chief Executive Officer inTime

Activities

inTime is a logistics company headquartered in Germany. inTime has 13 (2019: 19) operating branches across Germany, Sweden, Hungary, Romania, the Czech Republic, Poland and the UK. It operates in the niche logistics sector of time-critical delivery services across 45 countries in Europe. Customers are in the automotive, electronics, hazardous goods, life sciences, temperature controlled engineering industries. The business owns proprietary dispatching software that optimises transport capacity utilisation. Super Group has a 75% equity interest in inTime.

inTime has an 88% interest in Ader, a Spanish courier and express transport operator. Ader has 18 (2019: 18) offices throughout Spain. Ader specialises in the provision of dedicated and exclusive transport and logistics solutions.

inTime acquired an 80% interest in TLT, effective 5 July 2019. TLT is a Fifth Party Logistics provider focusing on organisational consulting and support, material flow planning, logistics, production, development and engineering services.

Results for 2020

Supply Chain Europe inTime’s results continued to be negatively impacted by severe declines in Germany’s new vehicle production volumes, which were down 23.0%, resulting in the company’s transport activities dropping by 25.4% and kilometers travelled declining by 27.1% during the financial year. The German automotive manufacturing volumes were already at a 23-year low before the outbreak of Covid-19, with the pandemic further exacerbating the already weak performance. In addition, Covid-19 has resulted in the automotive OEMs closing their plants for up to two months, which affected inTime directly. As a result, revenue in Euro-terms declined by 7.4% and operating profit by 293.1%.

inTime closed three satellite branches and two trans-shipment points during the year under review, which resulted in once-off closure costs of R10.4 million. The impairment test of goodwill and intangible assets resulted in an impairment of R599.4 million during the second half of the year.

The estimated impact of Covid-19 on revenue and profit before tax was approximately R322.4 million and R96.9 million, respectively. Direct Covid-19 related costs amounted to about R4.2 million. IFRS 16 decreased revenue by R22.2 million, increased operating profit and profit before tax by R58.0 million and R13.6 million, respectively.

Ader and TLT delivered a commendable set of results, however, the various lockdown regulations in the countries where Supply Chain Europe operates, have negatively impacted their delivery volumes.

The weakening of the average Rand against the Euro exacerbated the loss before tax, mainly due to the impairment, by R50.1 million for the year under review.

Environment, sustainability and governance

Refer to the ESG Report.

Outlook for 2021

Supply Chain Europe’s inTime will continue to be impacted by the short supply of new vehicles. German automotive volumes starting to recover, albeit at a slow rate. Supply Chain Europe’s businesses are starting to see the benefits of the efforts to streamline the operations and should perform more strongly next year. Low economic growth is expected across the EU on the back of the devastating impact of Covid-19 and the trade conflict between the USA and China.

inTime will continue to focus on streamlining its operations, cost-containment initiatives and will only explore other opportunities in Europe if it makes commercial sense.