Directors’ responsibilities and approval

For the year ended 30 June 2020

Responsibilities

The Board is required by the Companies Act to maintain adequate accounting records and is responsible for the content and integrity of the Annual Financial Statements of Super Group and related financial information included in this Integrated Report and published on the Group’s website www.supergroup.co.za. It is its responsibility to ensure that the Annual Financial Statements fairly present the financial position of the Company and the Group at the end of the financial year and the results of their operations and cash flows for the year then ended, in conformity with IFRS and the requirements of the Companies Act. The External Auditor is engaged to express an independent opinion on the Annual Financial Statements.

The Annual Financial Statements have been audited by the independent accounting firm, KPMG Inc., which was given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders, the directors and its committees. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate.

The Annual Financial Statements are prepared in accordance with IFRS and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet this responsibility, the directors set standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group.

While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management that the system of internal controls provides reasonable assurance that the financial records may be relied on for the preparation of the Annual Financial Statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the Group’s cash flow forecast for the year ending 30 June 2021 and, in the light of this review and the current financial position, they are satisfied that the Company and Group have or have access to adequate resources to continue in operational existence for the foreseeable future.

Going concern statement

Performance

As reflected in Super Group’s results, most of the Group’s businesses have seen a significant impact on volumes due to lockdown restrictions. Severe losses of revenue and reductions in profits during the lockdown were experienced in Dealerships UK, Dealerships SA, Supply Chain Africa, Supply Chain Europe and SG Fleet.

For the 2021 financial year, a steady recovery in revenue on the back of easing Covid-19 restrictions and a recovery in economies in which the Group operates, is expected. In addition, it is also expected that the Group’s operations will deliver an improvement in operating profit and free cash flow generation. While many of the markets experienced an increase in activities since lockdown restrictions were eased, further lockdowns from the second wave of the Covid-19 pandemic will negatively impact the Group’s operations and performance.

Solvency and liquidity

As at 30 June 2020, the Consolidated Statement of Financial Position reflects total equity of R13 026 million. The Group has various funding facilities across the divisions, with adequate headroom across the different types of funding. As at 30 June 2020, the Group had R4 628 million in cash and cash equivalents, of which R2 720 million was held in wholly-owned subsidiaries. In addition, the Group had unutilised borrowing capacity of R5 281 million at 30 June 2020, of which R1 600 million relates to committed liquidity facilities.

The Group has externally imposed capital requirements in terms of debt covenants. The covenants, which exclude the SG Fleet operations and exclude IFRS 16 — Leases, requires the Group to maintain a net debt to EBITDA ratio of no more than 2.5 times and an EBITDA to net interest expense ratio of no less than 2.7 times. At 30 June 2020, the Group’s net debt to EBITDA ratio was 1.26 times and the net interest cover ratio was 5.8 times. This leaves the Group with significant headroom to sustain any further lockdown restrictions. Super Group has tested the possibility of the Group not meeting debt covenants if the countries in which the Group operates had to be subjected to the same lockdown restrictions that were instituted in April 2020. In this unlikely scenario, the forecast did not indicate a breach of debt covenants for at least a four month period.

In addition, capital expenditure for the 2021 financial year will be limited to essential and committed expenditure. The focus for the immediate future will be operating cash flows aided by strict working capital management. These measures, all within management control and not impeding the Group’s ability to meet client demands, will provide greater liquidity and financial flexibility.

Conclusion

On the basis outlined above, the directors consider it appropriate for the going concern basis to be adopted in preparing the Annual Financial Statements.

The Annual Financial Statements of the Group and Company were approved by the directors on 9 November 2020 and were signed on their behalf by