Overview of Super Group - Supply Chain Management ...supergroup.co.za/.../downloads/overview_of_super_group.pdf · Corporate actions • SG Fleet acquired Fleet Hire, a provider of

Overview of Super Group

2 SUPER GROUP INTEGRATED REPORT FOR THE YEAR ENDED 30 JUNE 2017

04 Highlights of the 2017 financial year 04 Vision, strategic focus and investment proposition06 Milestones along the road08 Super Group business model10 Group structure11 Five-year financial history12 Material issues14 Opportunities for the Group15 Stakeholder engagement17 Value-added Statement18 Leadership20 Chairman’s Statement24 Chief Executive Officer’s Report

3

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO

LIDATED FINANCIAL STATEM

ENTSADDITIO

NAL INFORM

ATION

SUPER GROUP INTEGRATED REPORT FOR THE YEAR ENDED 30 JUNE 2017

EBITA

10%R2.3 billion

Highlights of the 2017 financial year

Vision, strategic focus and investment proposition

OUR VISIONThe strategic vision for Super Group is to provide end-to-end supply chain solutions, fleet management and dealership services to a diversified customer base in Africa, Australia, the United Kingdom, Europe and New Zealand and to become a leading transport logistics and mobility group in the countries in which it operates.

REVENUE

15%R29.9 billion

OPERATING PROFIT

OFFSHORE EBITA SHARE

8% 61%R2.1 billion R1.4 billion

OUR STRATEGIC FOCUS Our strategic focus within the Super Group businesses is to:

Immediate• International

expansion of the core businesses through strategic and niche acquisitions

• Delivering a competitive and sustainable RNOA

One to three years• Secure long-term

contracts to support sustainable growth

• Expand Fleet Africa business into selected African countries

• Monitor the influence of Brexit on the business and realign as may be necessary

>Five years• Continue to build on world-class

competencies in supply chain, fleet management and dealerships by investing in our employees, facilities and technologies

• Provide customers with innovative business solutions and product offerings

• Continue to follow optimum corporate governance principles in order to ensure a long-term sustainable business environment


PROFIT BEFORE TAX

8%R1.8 billion

OPERATING CASH FLOW

17%R3.1 billion

NAV PER SHARE

9%2 394 cents

OUR INVESTMENT PROPOSITIONOur investment proposition for Super Group entails:

Super Group is a leading transport logistics and mobility group in South Africa and a leading fleet management solutions company in Australasia.

Certain businesses within the Group are also starting to establish themselves as leaders in their respective countries of operation.

The Group is expanding internationally and increasing its geographic footprint as well as offshore earnings. At 30 June 2017, Super Group’s revenue and EBITA from non-South African businesses comprised 40% and 61% of Group total, respectively.

The Group has a strong financial position with an acceptable level of gearing – well below 40%.

An experienced and skilled management team.

The financial strength, acumen and track record to explore growth opportunities.

CORE HEPS

8%332 cents

5

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


MARKET CAPITALISATION AT 30 JUNE

Corporate actions• Second Land Rover

dealership.• Repaid term loans and

reduced total consolidated gearing by R606 million to 27%.

• Disposal of Emerald Risk Underwriters, AutoZone and Mica.

• Winding down and disposal of SGIP businesses.

• Recapitalisation of the Group by R1.2 billion.

PerformanceReturned to profitability.

Appointments• Peter Mountford appointed

as CEO.• Colin Brown appointed

as CFO.

Performance• Super Group hits all-time

low and Founder resigns.

Corporate actions• Restructure of SG

Fleet: Introduced new minority shareholders, CHAMP Ventures and the management of SG Fleet.

• Acquired the minority interest in Fleet Africa Eastern Cape.

• Acquired Volkswagen and Audi Rustenburg dealership.

Corporate actions• Odd-lot offer successfully

completed, reducing total number of shareholders by 27%.

• Share consolidation of 10 Super Group shares of 10 cents per share into 1 Super Group share of 100 cents per share.

• Successfully unwound the Financing and Credit Facility Agreements with 21 lenders entered into in 2009.

• Entered into new Facility Agreements with two primary lenders for general banking requirements.

• Acquired Haulcon (SG Bulk), a specialised bulk dry powder and liquids distribution business, effective 1 July 2011.

• Acquired the Chrysler, Jeep and Dodge East Rand dealership.

Corporate actions• Implementation of

the B-BBEE Staff Empowerment Scheme effective 1 October 2012.

• Maiden dividend, totalling R2.2 million, was paid to 3 214 employee beneficiaries of the B-BBEE Staff Empowerment Scheme during March 2013.

• Repurchased 3.57 million shares totalling 1.13% of the issued share capital.

• Acquired a 50.1% controlling interest in Digistics, a multi-temperature procurement and food distribution business in the QSR industry effective 1 October 2012.

• Effective 1 March 2013, acquired a 75% interest in Safika Oosthuizens, a logistics services company that provides hauling of dry bulk goods such as coal, chrome and “run of mine minerals” in tipper trucks.

20102009 2011 2012 2013

Share price as at 30 June

660c

Milestones along the road

R2 160mR349m R2 586m R4 806m R7 300m

790c

1 524c

2 315c

640c


Corporate actions• SG Fleet acquired Fleet

Hire, a provider of contract hire, salary sacrifice, short-term rental and fleet management services in the UK, for a purchase price of R367.5 million effective 4 August 2016.

• Dealerships SA acquired nine Western Cape dealerships for R899.3 million, which include a strategic property, effective 1 September 2016.

• Super Group listed its SPG002 senior unsecured notes in terms of its DMTN Programme dated 22 October 2013 on 9 September 2016, to the value of R50 million and listed its SPG003 DMTN on 31 October 2016 to the value of R154 million.

• Super Group acquired a 75% interest in Legend effective 30 September 2016 for R110.5 million.

• SG Fleet also acquired Motiva effective 30 November 2016 for R249.0 million.

• Dealerships UK acquired Essex Auto Group effective 1 March 2017 for R407.0 million.

• Acquired the 49.2% minority interest in SG Coal during the financial year for R167.3 million.

Achievement• Peter Mountford was

announced as the Master Category Winner in the prestigious EY World Entrepreneur Award Southern Africa 2016 ceremony and represented Southern Africa at the EY World competition in Monte Carlo in June 2017.

Corporate actions• SG IN tIME acquired

an 89.5% interest in Ader, a Spanish courier company, effective 4 July 2017 for a purchase consideration of €11.6 million.

• Dealerships UK acquired Slough Motor Corporation effective 4 July 2017 for £24.0 million.

• On 10 August 2017 S&P upgraded Super Group’s long-term and short-term credit rating to zaAA and zaA+, respectively.

• Effective 25 August 2017, an additional 1.63% in SG Fleet was acquired for R175.9 million, increasing the Group’s holding to 54.0%. Effective 11 September 2017, SG Fleet issued 4 136 925 shares on exercise of vested options granted as long-term incentive awards under SG Fleet’s Equity Incentive Plan, diluting the Group’s holding to 53.14%.

• On 18 September 2017, Super Group acquired the remaining 45.0% minority interest in Digistics for R102.7 million.

2017 2018

Corporate actions• Super Group acquired a

75% interest in SG IN tIME, a German niche logistics group, effective 2 November 2015.

• SG Fleet acquired 100% of nlc (Pty) Ltd, a novated lease and consumer finance company, effective 30 November 2015.

• To part fund the SG IN tIME acquisition, Super Group concluded a fully underwritten Rights Offer raising R900 million on 12 October 2015.

• An Accelerated Bookbuild Offer was undertaken on 10 December 2015, raising R360 million to bolster the Group’s financial position.

• The GWM Southern Africa business was sold in May 2016.

• On 30 June 2016, the business of Micor was sold to SG Agility, a new joint venture between Super Group (55%) and Agility (45%).

2016

Corporate actions• Issued and listed DMTN

Programme with the first tranche totalling R471 million at the end of October 2013.

• Effective 1 March 2014, SG Convenience acquired R&H Liquor Distributors.

• SG Fleet listed on the Australian Securities Exchange on 4 March 2014.

• Effective 1 May 2014, Super Group acquired a 50.1% interest in GWM Southern Africa – its debut into vehicle distributorship.

• During the year Super Group repurchased 2 635 791 shares at an average share price of R25.05 for R66 million (0.8% of issued share capital).

2014

Corporate actions • Effective 1 July 2014,

Super Group acquired a 75% interest in Phola Coaches, a business providing passenger transport solutions for the mining, power generation and construction sectors.

• Effective 1 December 2014, Super Group acquired 100% of Allen Ford (UK), a franchised motor dealership, for a consideration of R614 million (funded in Pounds Sterling).

• Acquired the businesses of Biggest SA Trading and Ice House Liquor Merchants on 1 December 2014 and 1 April 2015, respectively.

• Dealerships SA acquired:– a Land Rover and Volvo

dealership in Nelspruit, Mpumalanga.

– a Tommy Martin GM dealership in Roodepoort, Gauteng.

• Dealerships SA also opened:– a Mazda dealership in

the East Rand.– a Hino Trucks

dealership in Isando.– a Suzuki dealership in

Midrand.

2015

R12 879mR14 130mR9 602m R9 942m

3 045c 3 153c

3 935c3 690c

7

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Super Group business modelSUPPLY CHAIN SUPPLY CHAIN AFRICA

DEALERSHIPS SA

FLEET SOLUTIONS

DEALERSHIPS

A market leader in fleet solutions within Southern Africa• Government• Corporates

FLEET AFRICA

TransportationSG FREIGHT (INCL SG BULK) This is a freight, bulk dry powder and liquids distribution business. SG Freight provides a national primary haulage service across the country with deliveries also being made into Botswana, Namibia and Mozambique.

SG COAL Provides the hauling of dry bulk goods such as coal, chrome and “run of mine minerals” in tipper trucks. It is a logistics services company that provides the hauling of coal for coal mines.

LEGEND It is a logistics services company that provides the hauling of coal for coal mines.

PHOLA COACHES A business providing passenger transport solutions for the educational, mining, power generation and construction industries.

AFRICAN LOGISTICSProvides long distance, cross-border transport, clearing and forwarding, third-party distribution and transport brokerage in sub-Saharan Africa.

Warehousing and distributionSG CONSUMERThe distribution of FMCG and staple foods from the manufacturers to wholesalers and retailers in South Africa.SUPER PARK WAREHOUSESuper Group’s bespoke warehouse facility in Johannesburg with three distribution centres across South Africa.

SG CONVENIENCEThe largest national SA distributor in the convenience distribution market segment, distributing to over 23 000 outlets (forecourts, hospitals, hotels, etc.).

SG MOBILITYThe distribution of automotive spare parts for a number of OEMs in South Africa.

DIGISTICSProcurement and food distribution business which currently distributes multi-temperature controlled product portfolios for McDonalds, KFC, King Pie and others.

The Dealerships business consists of franchised dealerships, based in the Gauteng, North West and Western Cape provinces.

55%

75%

75%


SUPER RENT

Rental of bakkies and

trucks to South African customers as well as to SG Convenience

Rental of trucks (peak season)

SG GATEWAY SERVICES

Offers some of Super Group’s

customers a one-stop

solution regarding the distribution

of their convenience

products

SUPER GROUP BRANDS DIVISIONProvides an end-to-end

and integrated brand solutions

service that represents the brand in the retail market

BUSINESS UNITSuper Group’s percentage shareholding in the business

Operational support between business units as-and-when required

SUPPLY CHAIN EUROPE

DEALERSHIPS UK

SG IN tIMEIN tIME is headquartered in Germany with 20 operating SG branches across Germany, Sweden, Hungary, Romania, the Czech Republic and Poland. It operates in the niche logistics sector of time-critical delivery services across 18 countries in Europe. SG IN tIME provides Time-critical Delivery Services in predominantly Germany and Central Eastern Europe.

SG IN tIME acquired an 89.5% interest in Ader, a major Spanish courier group, effective 4 July 2017.

International and local customised supply chain technologies, customer brokerage and forwardingVSC-SOLUTIONSImplements logistics and warehouse systems – international and local customers.

SG AGILITYFreight forwarding and clearing agent of imports and exports and warehousing freight-in-transit.

SG FLEET

Operational support between business units

Super Group is an integrated “mobility” business comprising three distinct divisions, namely Supply Chain, Fleet Solutions and Dealerships. The businesses focus on offering a comprehensive inter-related range of services, utilising connective technologies and state-of-the-art infrastructure.

ALLEN FORD (UK)Allen Ford is the second largest independently owned Ford franchise network in the UK, operating 13 franchised Ford motor dealerships and two franchised Kia dealerships in four of the key Ford franchise areas in England.

Essex Auto Group Essex Auto Group owns five Ford, two Kia, one Mazda and one Fiat dealerships in the Essex region. EAG also owns two of the properties.

Slough Motor CorporationSlough Motor Corporation owns in total six Ford dealerships and two Suzuki dealerships in Kent and Berkshire. This acquisition was done post year-end.

SG Fleet is a leading fleet service provider in Australia with operations in New Zealand and the UK. SG Fleet owns nlc, a leading novated product development and consumer finance business in Australia. Fleet Hire and Motiva, the acquired fleet management services businesses in the UK, have increased SG Fleet’s geographical presence.

75%

52.37%

55%

50.1%

%%%

9

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Group structure

51% 49%

80%Ordinary

100%

20%Class B

SG Tsogo Empowerment

Trust

SG Tsogo (SGTS)

Super Group Holdings (SGH)

52.37%

75%

SupplyChain SA

FleetAfrica

DealershipsSA

SGFleet

Services(Mauritius)

IN tIME

Supply Chain Europe

(SG IN tIME)

AfricanLogistics

DealershipsUK

(Allen Ford)

International Operations (Bluefin)

SG International Holdings Ltd

(UK)

AS AT 30 JUNE 2017


Five-year financial history

13 14 15 16 17

MARKET CAPITALISATION (R million)

7 30

0

9 60

2

9 94

2

14 1

30

12 8

79

13 14 15 16 17

CORE HEPS (cents)

221

260 28

3 308 33

2

13 14 15 16 17

OPERATING PROFIT (R million)

1 13

4 1 34

5

1 50

1

1 95

2 2 11

6

13 14 15 16 17

REVENUE (R million)

11 7

18

14 2

97 19

818

25 9

49

29 8

74

For the year ended 30 June 2017 2016 2015 2014 2013

Profit informationRevenue R’m 29 874 25 949 19 818 14 297 11 718EBITA R’m 2 292 2 083 1 547 1 284 1 150EBITA margin % 7.7 8.0 7.8 9.0 9.8Operating profit (EBIT) R’m 2 116 1 952 1 501 1 345 1 134Operating profit (EBIT) margin % 7.1 7.5 7.6 9.4 9.7Profit after taxation R’m 1 333 1 259 1 040 938 816Headline earnings R’m 1 005 972 809 728 616Financial position Total assets R’m 24 873 22 798 15 291 12 171 10 557Total equity R’m 9 855 9 302 5 933 5 221 4 284Total liabilities R’m 15 018 13 496 9 358 6 950 6 273Net operating assets R’m 13 495 11 589 6 856 5 409 4 712Gearing % 31.5 21.4 16.8 1.7 3.7Operating cash flow R’m 3 111 2 652 2 123 2 005 1 442Asset management Return on total assets % 9.3 9.8 10.9 11.8 12.2Return on equity % 12.4 15.6 17.4 18.7 19.4RNOA (after tax) % 12.2 15.7 18.7 20.1 22.5Share statistics Basic EPS cents 285.0 296.6 264.4 249.2 220.0Basic HEPS cents 288.5 292.6 265.0 248.7 212.7Basic core HEPS cents 332.0 308.1 282.6 260.0 220.6Diluted EPS cents 282.9 291.3 258.2 241.9 211.7Diluted HEPS cents 286.4 287.3 258.8 241.4 204.7Diluted core HEPS cents 329.6 302.6 276.0 252.4 212.3Stock exchange statistics Market value per share – At year-end cents 3 690 3 935 3 153 3 045 2 315– Highest (year to 30 June) cents 4 350 4 450 3 801 3 071 2 699– Lowest (year to 30 June) cents 3 324 2 881 2 819 2 165 1 400Closing earnings yield % 7.8 7.5 8.4 8.2 9.2Closing PE ratio times 12.8 13.4 11.9 12.2 10.9Market capitalisation – close R’m 12 879 14 130 9 942 9 602 7 300Shares in issue less treasury shares ’000 349 013 346 671 298 839 297 039 289 415Weighted number of shares ’000 348 355 332 387 305 088 292 565 289 394Diluted weighted number of shares ’000 350 906 338 447 312 440 301 422 300 775

11

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


BACKGROUNDBased on the Group’s approach to managing a sustainable business, its strategic objectives, stakeholder engagement and risk management, the Group has identified material risks or issues that could potentially affect the business. The Risk Committee is responsible for the overall monitoring, assessing and mitigating of risks within Super Group. In addition, the Group ensures that sufficient insurance is in place.

THE RISK CATEGORIESSuper Group classifies the risks that have a material impact on the Group into six strategic categories: Strategic, Human Resources, Financial, Operations, Compliance and IT.The risk categories can be described as follows:

THE RISK IDENTIFICATION PROCESSEach division is responsible for identifying, assessing and recording risks and monitoring procedures aimed at mitigating them. The Group Audit and Risk Officer facilitates risk sessions with each division and ensures that the risks identified have been correctly assessed. Risks are assessed based on the potential impact on the business, financial position and reputation. A scale of 1 to 5 is used where 1 is “Minor” and 5 “Catastrophic”. Risks are also assessed on the likelihood of the risk occurring after taking into account controls in place to mitigate them. A scale of 1 to 5 is used, where 1 is “Rare” and 5 is “Almost certain”. A risk rated 5 means the controls in place will not prevent the risk from occurring due to factors outside the Group’s control.

The GRMC sets out the risk policy detailing the objectives, scope, approach and roles and responsibilities. The GRMC meets three times a year and is chaired by a non-executive director. The membership of this Committee comprises two non-executive directors, the CEO and CFO. The Group Audit and Risk Officer, the Group Legal Manager and the CIO are invited to the meeting.

The Board reviews the list of strategic and critical risks regularly as required by King IV and also approves the risk tolerance of the Group.

StrategicThe strategic risk considers the brand and reputation of the Group, the Group’s strategy, initiatives, communication and investor relations.

ComplianceCompliance risks are those that consider the adherence to and compliance with governance, legal and regulatory issues.

Financial The financial risks pertain to the accounting, reporting structures and tax of the Group.

ITIT risks contemplate the application development, availability, continuity and the data integrity of the Group’s IT systems.

Operational Operational risks are associated with sales and marketing, customer service, production and delivery.

Human Resources

The Human Resources risks are associated with capacity requirements, employment of skills, compensation and benefits as well as the culture of the organisation.

Material issues


MANAGEMENT AND MITIGATION OF MAJOR RISKS TO THE GROUP Risk

Context

Mitigating factors

Multinational relationships and a highly competitive local market hinder growth in Supply Chain

Multinational companies operating in South Africa use suppliers of services who are contracted on a global basis.

Continuous focus on customer service and service delivery at all levels.

The continual requirement from customers to cut costs.

Expanding the competitive product offerings to the market.Acquisition of businesses operating in targeted areas of the market that complement the Group’s existing offerings.

African socio-economic environment, including commodity cycles

Understanding the commodity and capital investment cycles.

Management in Zimbabwe closely monitors trends and cycles.Drive costs and revenue initiatives to support the achievement of financial targets.

Changing regulatory environment

Compliance with a wide range of regulatory requirements including licensing, consumer protection, new legislation and AARTO regulations.

The development of new revenue models.Specialist regulatory and Government relations consultants that understand the legislative and regulatory environment.The Group Company Secretary, who is also the Group’s Compliance Officer, is responsible for monitoring all changes to the legal and governance framework.

B-BBEE Code changes and requirements

The B-BBEE Code changes and requirements in respect of procurement make the attainment of the Procurement Score very difficult in cases where a large portion of procurement is from multinationals, especially OEM’s.

The Group is engaging with other companies who are similarly impacted to explore solutions to this problem.

Customer concentration

The Group faces intensive competition in all the markets in which it operates.

Continued efforts to achieve new business.

The ability to compete depends on the Group’s network, quality of service and the use of market leading technologies.

A wide range of services at competitive prices.Continued efforts to offer more value to customers.Continual development of IT-based logistics solutions to improve control and monitoring of the Supply Chain by its customers.

General political, economic and industry

Current economic conditions remain uncertain, different sectors of the economy are experiencing varying fortunes.

Where possible, the Group passes the cost of fuel price, toll fee and wage increases to the customers through generally accepted escalation arrangements.

Infrastructure projects in Southern Africa are not moving to the development stage as quickly as expected.

The Group maintains a conservative Statement of Financial Position and preserves its resources to meet the challenges of the economy and the industry.

Impact of labour unrest on the logistics industry and industries serviced by the Group.

The Group has a Human Resources function that manages labour force challenges.

Retention of critical management and skills

The skills shortage in South Africa makes it imperative for the Group to retain and develop key management and specialist skills.

The Group focuses on career development, fair reward and education and training to develop its people.The Group looks to promote from within and ensures that succession planning is implemented in all the business units.

The long-term effect of Brexit on the UK and Eurozone economies

The uncertainty regarding the Brexit vote as to the timing of implementation and the renegotiation of trade agreements between the UK and Eurozone countries.

The Group continues to monitor developments closely.

High risk Medium risk Low risk

13

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Opportunities for the Group

ACQUISITIONS OF COMPLEMENTARY BUSINESSES, BOTH IN SOUTH AFRICA AS WELL AS INTERNATIONALLY• The Group focuses on well-run operations within its core sectors and those sectors that have

been identified as complementary to its existing businesses.• An acquisition must be at an acceptable and sustainable earnings multiple with a satisfactory RNOA.• Super Group is starting to appear on the international investor radar screen with the recent

acquisitions made in the United Kingdom and Europe as well as significant business operations in Australasia.

OPPORTUNITIES FOR FLEET SOLUTIONS• In Australia, SG Fleet leverages its range of offerings to offer fleet management solutions at

competitive prices and excellent service.• Under the leadership of Fleet Africa’s new CEO, Bonisile Makubalo, this business continues

to expand both its corporate and government customer base by securing new FML contracts.• Fleet Africa has concluded a business opportunity in East Africa and there are further potential

opportunities in this region.

EXPANDING DEALERSHIPS’ VEHICLE BRAND REPRESENTATION• Super Group is constantly assessing dealerships in order to expand both its brand representation

and geographic footprint.• Dealerships UK managed to secure key Ford dealerships in Essex, Kent and Berkshire as well

as adding Mazda and Suzuki to its brand representation.


Stakeholder engagement

AS PROMOTED BY KING IV, INCLUSIVE STAKEHOLDER ENGAGEMENT IS ENCOURAGED WHEREBY THE BOARD CONSIDERS THE LEGITIMATE INTERESTS AND EXPECTATIONS OF STAKEHOLDERS ON THE BASIS THAT IS IN THE BEST INTERESTS OF THE COMPANY, AND NOT MERELY AS AN INSTRUMENT TO SERVE THE INTERESTS OF THE SHAREHOLDERS.

One-on-one meetingsResults road shows

SENS announcementsPress releases

Site visitsIn-house publications

Team meetingsIntranet and internet

Tip-off line (Be Heard)Host functions and attend conferences

Participation in industry associationsAttend product launchesInteract with trade unionsCommunity participation

Shareholders, investors and media

JSE

Financial institutions

Customers and clients

The communityEmployees

National, provincial and local

government

Industry associations

Trade unions

Suppliers

For further details on the specific engagement with each of the stakeholder categories, as well as determining materiality when assessing the risks associated with Super Group’s business, see the Corporate Governance Report on the website.

The Companies Act also requires a company to embrace engagement with its shareholders, employees, unions, communities and consumers. Super Group has an established Group Social and Ethics Committee that monitors and assists with stakeholder engagement.Stakeholders are also considered when assessing the materiality of issues.Super Group believes that open and transparent communication with stakeholders is important and uses many avenues to facilitate the engagement with its stakeholders on a regular and constructive manner. There are various internal functions within the Group to ensure that the needs and requirements of all stakeholders are addressed. Super Group has a dedicated Human Resources department, a Group Social and Ethics Committee and investor relations function to ensure that stakeholder engagement is executed.

15

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


SUPER GROUP’S PARTNERSHIP WITH RAYS OF HOPE, A COMMUNITY-BASED NON-PROFIT ORGANISATION THAT OPERATES IN ALEXANDRA TOWNSHIP, REACHED A NEW LEVEL WITH THE OFFICIAL HANDOVER OF TWO TOYOTA QUANTUM VEHICLES AT THE COMPANY’S HEAD OFFICE.

Sihle Mooi, Rays of Hope’s Executive Director, said that the availability of such vehicles is of significant value to the organisation. “We take pride in our relationship with Super Group and this vehicle sponsorship is immensely valuable. We need to move people around every day, such as transporting 70 children to and from our Homework Club; volunteers doing Home-Based Care; learners to and from Sparrow School in Melville each day; people and supplies from our home office at Rosebank Union Church to various points in Alex. In the past we did not have sufficient transport available and often had to hire vehicles, which was very costly.”

Peter Mountford, Super Group CEO, explained his company’s rationale behind the sponsorship. “We are proud of this relationship with Rays of Hope. The work they do in Alex is excellent and matches our corporate social investment philosophy. We supported Rays of Hope’s Cycle Tour of Hope for two years and are now sponsoring these vehicles, which we know will make a huge contribution to the organisation in terms of the cost as well as ability to transport the children to the schools and other related activities.”

Rays of Hope has been operating in Alex since 1991 through seven projects which focus on orphaned and vulnerable children, education and work readiness. Over 2 000 people are impacted on a monthly basis. Sihle explained that the mission of Rays of Hope is to partner with Alex for lasting change. “We do not believe in quick fixes, but in walking the distance with people. We believe that in successfully bridging the gap between Sandton and Alex, we are creating a model for the rest of South Africa to follow.”

He also underlined the reasons why corporates like Super Group obtain value by partnering with Rays of Hope. “After working there for more than 25 years, we have an unrivalled reputation in Alex, because we consciously foster long-term relationships with the Alex communities. We have excellent corporate governance, contributions from companies are tax deductible and we are a Level 1 BEE organisation.”

Eight young children from an Alex crèche came to the handover and performed an energetic dance routine for the guests before piling into their new Toyota Quantums, smiling broadly and exchanging high-fives with everyone.

The late May sun shone brightly on the proceedings, the staff drove back to Alex in their new vehicles with the children waving happily through the windows; a new chapter in the partnership between Super Group and Rays of Hope has begun.

Super Group’s partnership with Rays Of Hope reaches a new high

SHOWCASE Corporate Social Initiative


A MEASURE OF THE WEALTH CREATED BY SUPER GROUP, FOR VARIOUS STAKEHOLDERS, IS THE AMOUNT SPENT ON THE COST OF GOODS AND SERVICES PROVIDED, THE REMUNERATION PAID TO ITS EMPLOYEES, MONEY PAID TO PROVIDERS OF EQUITY AND DEBT, TAXES PAID TO GOVERNMENT AND CAPITAL REINVESTED IN THE GROUP. Year ended Year ended 30 June 2017 30 June 2016 R’000 % R’000 %

Revenue 29 873 856 25 949 004Goods and services provided (21 687 692) (18 891 447)

Total wealth created 8 186 164 7 057 557

Allocated as folllows:Wealth distributed 5 115 424 62.5 4 136 322 58.6

Employees 3 286 394 40.1 2 793 987 39.6Provider of equity capital 339 987 4.2 272 798 3.9Providers of debt 288 673 3.5 252 892 3.5Governments 1 200 370 14.7 816 645 11.6

Reinvested in the Group 3 070 740 37.5 2 921 235 41.4

Total wealth distributed 8 186 164 100.0 7 057 557 100.0

Number of employees 10 797 9 539Wealth created per employee 758 740Wealth distributed per employee 304 293Revenue per employee 2 767 2 720

Value-added Statement

Providers of debt

Governments

Reinvested in the Group

Providers of equity capital

Employees

3.514.7

37.5

4.2

40.1Wealth

distributed(%)

20172016

3.511.6

41.4

3.9

39.6

17

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


LeadershipEXECUTIVE DIRECTORS

Executives and non-executives

Gender

87% Male13% Female

PETER MOUNTFORD (59)BCom, BAcc, HDip Tax, MBA, CA(SA) Chief Executive Officer

Appointed 29 July 2009

Peter is a qualified Chartered Accountant with an MBA from Warwick University. His business experience includes the role of Managing Director of SAB Diversified Beverages which included SAB’s Supply Chain Services and Logistics interests. He was previously the Managing Director of Super Group’s Logistics and Transport Division until June 2002, after which he joined Imperial Holdings Limited (Imperial). Over the six years to April 2008 he fulfilled the role of CEO of the Consumer Logistics Division at Imperial. He re-joined Super Group in May 2008 as Managing Director of the Supply Chain Division. Peter was appointed CEO on 29 July 2009. Peter is also a Director of the Road Freight Association. Peter is the Master Category Winner of the EY World Entrepreneur Award Southern Africa 2016.

COLIN BROWN (48)BCompt (Hons), MBL, CA(SA)Chief Financial Officer

Appointed 28 February 2010

Colin is a Chartered Accountant and has an MBL from the UNISA School of Business Leadership. Colin provided support services to the Group’s treasury activities from June 2009 to February 2010, and was subsequently appointed to the Board as CFO. Prior to that, Colin was CFO and a member of the Board of Celcom Group Limited, a business in the mobile phone industry and previously listed on the Alternative Exchange (AltX) of the JSE. Colin has also held the Financial Director position at EDS Africa Limited and Fujitsu Services South Africa, both multinational companies in the IT services industry.

NIGEL REDFORD (63)BAcc, CA(SA)Group Company SecretaryAppointed 31 March 2010

Nigel is a Chartered Accountant. Nigel spent ten years at Dimension Data and held a number of financial and operational positions within the Dimension Data Group. He has also held the Financial Director positions at High Performance Systems, Hewlett Packard South Africa, Technology Application Group (a division of Datakor) and Compusons. Nigel joined Super Group in April 2009, providing his services to the Group’s finance function to March 2010. He was subsequently appointed the Group Company Secretary for Super Group.

NON-EXECUTIVEGROUP COMPANY SECRETARY

EXECUTIVE

6

262% White38% Black

Race

Deal Committee

1 Super Group Holdings

6Remuneration Committee

2 Group Risk Committee

3 Group Social and Ethics Committee

4 Group Audit Committee

5

BOARD COMPOSITION STATISTICS

1 63 4 1 63 4


NON-EXECUTIVE DIRECTORS

PHILLIP VALLET (71)BA, LLBChairman of the company

Appointed 1999

Phillip qualified as a lawyer in 1971. He is the senior partner and CEO of Fluxmans Attorneys, specialising in corporate law. Phillip joined the Board in 1999. From April 2009 to 29 July 2009 he acted as interim CEO until the appointment of Peter Mountford to the position. Phillip retained certain executive functions relating to the corporate actions and disposals up to end August 2009. He assumed the position as Non-executive Chairman of the company effective 1 November 2009.

JOHN NEWBURY (75)Independent Non-executive Director

Appointed 1 November 2009

John is an experienced industrialist whose expertise has him serving on the boards of and chairing a number of listed and unlisted companies. John is the Chairman of Tracker Connect (Pty) Ltd. John`s business career spans five decades with a significant focus on the motor industry. He served as CEO of Nissan South Africa for 17 years, until retirement in 2000. John is a Non-executive Director at Dimension Data Holdings plc, Blue Bulls Company and National Airways Corporation (Pty) Ltd.

DAVID ROSE (75)BCom, BA, CA(SA), F.Inst. DirectorsIndependent Non-executive Director

Appointed December 2008

David is a Chartered Accountant and an independent consultant. David is a Non-executive Director, Chairman of Super Group’s Audit Committee, Risk Committee and the Group’s Social and Ethics Committee. He is also Chairman of the Audit and Risk Committee of Primeserv Limited. He spent 41 years with Fisher Hoffman, a major national firm of Chartered Accountants. He became a partner of the firm in 1970 and was Managing Partner of the Johannesburg office as well as Chairman of the National Practice from 1991 to 1998. From 2002 to 2007 he served as CEO of International Financial Services (Pty) Ltd (now Stonehage Fleming Financial Services (Pty) Ltd).

VALENTINE CHITALU (53)ACCA (UK), M.Phil (UK)Independent Non-executive Director

Appointed December 2008

Valentine is an entrepreneur in Zambia and Southern Africa, specialising in Private Equity and General Investments. In the early part of his career, he worked at KPMG London Office. Valentine was previously CEO at the Zambia Privatisation Agency where he was responsible for the divestiture of over 240 enterprises. He later worked for CDC Group Plc, both in London and Lusaka, and is currently a Non-executive Director of the CDC Group Plc; a Fund-of-Funds Group based in London. Valentine holds several other board positions in Zambia, Australia and the United Kingdom. He is currently Chairman of Zambian Breweries, MTN (Zambia) Limited and the Phatisa Group, a Pan African Private Equity Fund Manager. Valentine is a UK Qualified Accountant and holds a Masters Degree in Development Economics from Cambridge University in the United Kingdom.

MARIAM CASSIM (35)BCom (Hons), CA(SA), MBA (Cum Laude)Independent Non-executive Director


Mariam Cassim was appointed as an Independent Non-executive Director with effect from 1 July 2015. Until recently Ms Cassim held a number of senior positions at Telesure Investment Holdings as well as Thebe Investment Corporation, and currently holds the position of Managing Executive: Financial Services and Insurance at Vodacom. She has notable board experience having served previously on the main board as well as subcommittees of listed as well as unlisted companies. A recipient of various academic awards, both local and international, Ms Cassim is a Chartered Accountant (SA) and was singled out by the South African Institute of Chartered Accountants (SAICA) as a finalist in the 35-under-35 most outstanding young chartered accountants in the country. She has an MBA (cum laude) from the University of Cape Town’s Graduate School of Business.

DR ENOS BANDA (52)BA (Hons) Financial Accounting, LLM (distinction), Doctor of JurisprudenceIndependent Non-executive Director


Enos Banda is the CEO of African Phoenix Investments Limited, a JSE listed investments holding company. He was country head for global bank, Credit Suisse First Boston, and later, Head of sub-Saharan Africa for HSBC Corporate and Investment Bank. He has served as Chairman of the South African National Electricity Regulator and Chairman of the Municipal Infrastructure Investment Unit of the South African Government. He has practised law in both the United States and in South Africa. He is admitted to the New York Law Bar and he is an Advocate of the Supreme Court of South Africa. He is a Senior Associate and Faculty Member of the University of Cambridge Institute on Sustainability Leadership and a member of the Board of the South Africa Washington Internship Programme. Enos has sat on a number of boards of listed and unlisted international and domestic companies.

1

1

2

2

5

5

3

3

4 5

2

6

19

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Chairman’s Statement

KING IVAdoption of the new principles

R8.0 millionCSI Spend

zaAAS&P Long-term

Credit Rating upgrade

Phillip ValletC

Chairman of the company

SUPER GROUP CONTINUES TO BUILD ON ITS VISION TO BE A LEADING TRANSPORT AND MOBILITY GROUP IN THE COUNTRIES IN WHICH IT OPERATES.

INTRODUCTIONThe Group has achieved a solid set of results for the year ended 30 June 2017. This is despite unrelentingly difficult and uncertain economic and political conditions, both locally and abroad.

Super Group’s vision is to be a leading transport logistics and mobility group in the countries in which it operates. This vision is being realised under the capable leadership of Peter Mountford and his team, through a blend of strategic acquisitions and organic growth. The Group continues to focus on providing end-to-end supply chain solutions, fleet management and dealership services to customers in Africa, Australia, the United Kingdom, Europe and New Zealand.


THE GLOBAL AND LOCAL TRADING ENVIRONMENTGlobally and locally it has been a year of political and economic uncertainty. Globally, contributing factors included the change of administration in the United States of America, elections in several European countries and continued uncertainty around the impact of Brexit. For the South African economy, it has been a tumultuous period. Heightened political uncertainty and the resultant downgrade in South Africa’s Sovereign Credit Rating have had a ripple effect on the economy. According to a PSG Report, it is estimated that R350 billion has left South Africa over the past 18 months and I believe that this trend is set to continue as long as our current political landscape persist.

New technologies in logistics are playing a major role in improving both productivity and meeting customers’ growing needs in terms of being able to monitor the movement of their inventories. Super Group continues to invest in the development of innovative technology and across its various businesses, has state-of-the-art systems to provide customers with more visibility. Following the Truck Conference & Expo 2017 “Beyond smart trucks, the next evolution of Internet of Things”, it is expected that the future of logistics will see entire supply chain systems linked to Internet-related Apps. From driverless vehicles to the “Internet of Things”, together with the global telematics market exploding in terms of connectivity and growth, there is no doubt that a new era has begun for this industry. Trucking is no stranger to this sort of change; indeed, many fleets are leading the way in terms of how to increase benefits from such technology and solutions. Big data offers unprecedented access to real-time information, with the potential to reduce vehicle downtime, improve safety and increase efficiencies. For more information on this subject, visit www.supergroup.co.za/Media/News/Internet of Things set to transform global logistics space.

Super Group is pleased to announce that, despite South Africa’s Sovereign Credit Rating being downgraded on 3 April 2017, Standard & Poor’s (“S&P”), in an unexpected review on 10 August 2017, upgraded Super Group’s long-term and short-term credit rating to zaAA and zaA+, respectively.

Super Group Holdings Proprietary Limited, which houses Super Group’s South African businesses, is a Level 2 B-BBEE Contributor and the Group will continue to place emphasis on promoting race diversity as well as gender transformation when making new appointments within the Group.

21

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Chairman’s Statement > continued

The German logistics industry and, especially the automotive industry, have been impacted by the fallout from the Volkswagen emissions scandal that occurred in 2015, manufacturing recalls on a number of diesel brands during the year and the recently announced allegation of collusion between the large OEM’s pertaining to using industry committee meetings to agree on costs, suppliers, technologies and even the prices of diesel emission treatment systems.

During the year, the Australian economic environment continued to lack direction, and this was duly reflected in wavering consumer sentiment.Within our industry, the environment stabilised as the year progressed, with some of the aggressive tactics seen at the turn of the calendar year being less prevalent towards the end of the reported period. Residual values remained strong, with manageable fluctuations in certain vehicle segments.

NAAMSA continues to report declines in new vehicle sales, reflective of the continuing pressure under which South African consumers find themselves.

The immediate impact of the UK vote to leave the EU was not as severe as many expected. Growth in new vehicle registrations has been positive up until March 2017, but the uncertainty pertaining to Brexit and the change in government’s policies on shifting diesel technology used towards the latest cleaner Euro 6 diesel standard, have impacted growth negatively. On the positive side, in a survey done in 2016, the biggest selling model in the UK was the Ford Fiesta, with the Ford Focus in third place.

GOVERNANCE AND SUSTAINABILITYSuper Group maintains high standards of corporate governance and has adopted the new corporate governance requirements, as set out in King IV, published in 2016, when compiling the Integrated Report for the year ended 30 June 2017. The Board and its Committees continue to play an important role in enhancing good corporate governance and review sustainable practices throughout the Group in order to ensure compliance with all corporate governance- and sustainability-related requirements and regulations.

THE RECENT MODEST STRENGTHENING OF THE GLOBAL ECONOMY IS A WELCOME CHANGE TO THE NEGATIVE EXPECTATIONS IN RECENT YEARS. GLOBAL GROWTH IS FORECAST TO IMPROVE TO 2.9% IN 2017 COMPARED TO THE 2.5% GROWTH ACHIEVED IN 2016.


can help develop an actual, implementable and bespoke solution for our customer’s requirements is creating a unique competitive position for us in what undoubtedly is the future direction of fleet management, both locally and internationally. The addition of a telematics solution creates a clear uplift in profitability, so SG Fleet believes that this trend will provide them with healthy additional growth over a long-time period.

Europe is expected to continue its modest recovery into 2018, with the data released in the first half of 2017 giving the Group reason for optimism. Business confidence in Germany exceeded market expectations when it reached a six-year high in April 2017 and again in May 2017. The defeat of populist anti-Euro parties in two EU countries has reduced political uncertainty in the Euro-block. Brexit is regarded as the most significant economic demerger between major economies since World War II. Michael Barnier, a European Commission Brexit negotiator, painted a bleak picture of a post-Brexit world, which will see high customs duties, burdensome controls and higher transport costs for the UK. As all Ford vehicles in the UK are imported from Germany, the full impact of Brexit continues to remain uncertain.

Super Group’s future strategy is to continue to explore investment opportunities internationally and in South Africa to maintain our position as an innovative, integrated mobility solutions company.

APPRECIATIONOn behalf of the Board, I would like to extend our appreciation to our CEO, Peter Mountford, the Super Group leadership team and all our employees for contributing to the Group’s continued success under difficult and challenging trading conditions.

To my fellow Board members, thank you for your support and commitment throughout the year.

Phillip ValletChairman of the company20 September 2017

The Group takes stakeholder engagement seriously and we endeavour to maintain transparency in all our dealings with our various stakeholder groups. Super Group, as at 30 June 2017, employed a total of 10 797 employees across its various businesses and strives to be the “employer of choice”. We meet regularly with various stakeholders in as much as open communication is critical to our long-term success.

Our Corporate Governance and Sustainability Reports, available on the company’s website, set out our principles and policies in more detail.

BOARD CHANGESThere were no changes to the Board during the financial year under review. However, Super Group has a policy where, in the ordinary course, non-executive directors retire from the Board at the age of 75. Both David Rose and John Newbury qualify this year but they have agreed to remain on the Board until suitable replacements are appointed.

OUTLOOKThe recent modest strengthening of the global economy is a welcome change to the negative expectations in recent years. Global growth is forecast to improve to 2.9% in 2017 compared to the 2.5% growth achieved in 2016.

In June 2017, the International Monetary Fund reduced its expectation for economic growth in South Africa to 0.5% for 2017. The difficult market conditions are expected to persist through the second half of 2017 and into 2018 as the effects of the Sovereign Credit Rating downgrade and political uncertainty continue to be felt. Despite a degree of uncertainty, as well as political risks, the Rand exchange rate has been relatively resilient. The unexpected interest rate cut of 0.25%, announced by the South African Reserve Bank on 20 July 2017, will hopefully counter to a certain extent the country’s deteriorating growth.

In Australia, telematics penetration has accelerated significantly during the reported period and that trend continues unabated, helped by the trials SG Fleet conducts. Our ability to demonstrate how telematics

23

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Chief Executive Officer’s Report

7Strategic local and offshore acquisitions

61%of EBITA

earned offshore

23%Five-year CAGR

of market capitalisation

Peter MountfordChief Executive Officer

SUPER GROUP’S STRATEGY IS ROBUST AND WITH ITS HEALTHY BALANCE SHEET, THE GROUP CONCLUDED FIVE STRATEGIC BUSINESS ACQUISITIONS DURING THE 2017 FINANCIAL YEAR, WITH TWO FURTHER ACQUISITIONS POST YEAR-END.

INTRODUCTION The financial year ended 30 June 2017 has been a challenging period on many fronts. The SG Fleet and Dealerships businesses, both locally and in the UK, performed exceptionally well, with Supply Chain Africa’s major businesses being negatively impacted by prevailing tough economic conditions. Supply Chain Europe, in Euro-terms, reported satisfactory results, and Fleet Africa, as expected, reported a decline in results despite having improved margins. The foreign earnings are subject to exchange rate volatility and with the strengthening of the Rand against all the major currencies, especially the Great British Pound and Euro, the Group’s reporting results were negatively impacted.

In the previous comparable year the earnings included, after taxation and non-controlling interests, a once-off foreign exchange profit of R98.3 million on the SG IN tIME forward exchange contract as well as lower B-BBEE expenses of R12.7 million compared to the current year’s R25.6 million.

During the 2017 financial year, the Group expanded its geographic footprint and market share with SG Fleet’s acquisition of Fleet Hire and Motiva, providers


of contract hire, salary sacrifice, short-term rental and fleet management services in the UK. These acquisitions established SG Fleet in the Top 20 fleet management service providers in the UK market. Locally, the Group acquired nine Western Cape dealerships, primarily Mercedes-Benz dealerships, and a strategic property from Sandown Motor Holdings, effective 1 September 2016. Effective 30 September 2016, Super Group acquired a 75% interest in Legend for a purchase price of R110.5 million. Dealerships UK acquired Essex Auto Group effective 1 March 2017 for R407.0 million. During the year, Super Group also acquired the 49.2% minority interest in SG Coal for R167.3 million.

As a result of the various strategic acquisitions made, the non-South African businesses contributed 40% and 61% to revenue and EBITA, respectively, for the year under review. These acquisitions made during the year are referenced in more detail in the Divisional Review section.

On 9 September 2016 and 31 October 2016, the JSE granted Super Group a listing of its second and third issuance, SPG002 and SPG003, senior unsecured notes, in terms of its Domestic Medium Term Note Programme dated 22 October 2013. The total value of the DMTN’s issued and listed was R204 million. The authorised DMTN programme size is R2 billion.

I am pleased to announce that Fleet Africa appointed Mr Bonisile Makubalo as CEO on 1 June 2017. Bonisile was the Chief Operations Officer of the Taxi Financing business of Transaction Capital prior to joining Super Group and he has already demonstrated his capabilities by concluding a FML contract in East Africa.

As a result, we managed to realise one of the Group’s stated opportunities as set out in the 2016 Integrated Report.

FINANCIAL PERFORMANCEGroup revenue increased by 15.1% to R29.9 billion (June 2016: R25.9 billion) primarily due to the inclusion of nlc and SG IN tIME for the full year, the acquisitions as well as the commendable turnaround in SG Coal’s results.

EBITA was up by 10.1% to R2 292.4 million (June 2016: R2 082.5 million). The amortisation of PPA intangibles increased by 35.1% to R176.4 million (June 2016: R130.5 million) mainly as a result of the inclusion of the results of nlc and SG IN tIME, Fleet Hire for 11 months and Motiva for seven months.

Operating profit increased by 8.4% to R2 116.1 million (June 2016: R1 952.0 million), largely due to the acquisitions and the improved performance by SG Coal within Supply Chain Africa.

The increase in net finance costs of 10.0% to R280.0 million (June 2016: R254.7 million) is attributable to the funding of the various acquisitions, the funding of the working capital for and the properties of the Western Cape dealerships and the Essex Auto Group as well as the FML borrowings in the SG Fleet United Kingdom acquisitions. The average interest rate paid on borrowings was 6.2% (June 2016: 6.0%) and the average interest rate earned on cash was 3.7% (June 2016: 3.7%).

Profit before tax increased by 8.2% to R1 836.1 million (June 2016: R1 697.3 million). The effective tax rate increased to 27.4% (June 2016: 25.8%) primarily as a result of the increase in profits in territories that have higher corporate tax rates.

EPS and HEPS decreased by 3.9% to 285.0 cents (June 2016: 296.6 cents) and 1.4% to 288.5 cents (June 2016: 292.6 cents), respectively, due to the impact of the increased weighted number of shares and the once-off foreign exchange profit on the SG IN tIME forward exchange contract in the prior comparable period. Core HEPS increased by 7.8% to 332.0 cents (June 2016: 308.1 cents). Core HEPS in the prior comparable period also excluded the once-off profit made on the foreign exchange contract. The increase of 4.8% in the weighted average number of shares in issue was due to the rights issue and book-build concluded in October 2015 and December 2015, respectively, to fund the SG IN tIME and nlc acquisitions.

The increase in total assets of 9.1% to R24.9 billion (2016: R22.8 billion) is mainly as a result of the newly acquired

25

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Chief Executive Officer’s Report > continuedassets of Fleet Hire and Motiva by SG Fleet, the nine Western Cape dealerships, property related to the dealership transaction and the interest in Essex Auto Group during the year under review. The Group has taken a decision to modify the calculation of net operating assets by including the interest-bearing Dealerships’ floorplan liabilities. As a consequence, the Group’s RNOA, after tax, was 12.2% (June 2016: 15.7%).

Super Group’s net debt position at 30 June 2017 increased by 56.2% or R1 117.0 million to R3 105.7 million, with R537.6 million attributable to property and other borrowings relating to Dealerships SA and Dealerships UK. The Group’s gearing, as at 30 June 2017, was 31.5% (June 2016: 21.4%). The net asset value per share increased by 9.0% for the year to 2 394.1 cents at 30 June 2017 (June 2016: 2 196.4 cents).

Operating cash flow increased by 17.3% for the year to R3 111.4 million (June 2016: R2 651.5 million) mainly due to the increase in earnings before interest, taxation, depreciation and amortisation. Cash generated from operations, after working capital, increased by 10.3% to R3 194.3 million (June 2016: R2 897.0 million).

The Group would rather re-invest the cash generated in its operations in acquisitions or to repurchase shares and therefore no dividend for the year ended 30 June 2017 has been declared.

DIVISIONAL REVIEWSRevenue contributions for the year to June 2017 reflect that the Dealerships division generates 53% of the Group’s turnover, the same as the previous year. The revenue contributions for the Supply Chain business segment was down to 35% (2016: 36%), with the Fleet Solutions segment up at 12% (2016: 11%).

The EBITA contributions from the Fleet Solutions operations increased to 50% (2016: 48%), Dealerships remaining stable at 20% and the Supply Chain business contribution declining in comparison by 2% from 32% in 2016 to 30% in 2017.

The decline in revenue and EBITA contributions for the Supply Chain division was mainly as a result of the poor results reported by SG Consumer, SG Convenience and African Logistics, as well as SG IN tIME’s results in Rand-terms.

Revenue30 June 2017 (%)

EBITA30 June 2017 (%)

For a comprehensive overview of each division and business, refer to pages 32 to 50 of this Integrated Report.

SUBSEQUENT EVENTSEffective 4 July 2017 SG IN tIME acquired an 89.5% interest in Ader, a Spanish courier and express transport operator, for €11.6 million. Since starting in 1992, Ader has grown into a business with 17 offices throughout Spain and 15 operations in the Eurozone, 120 employees and annual revenue of about €40 million. The company’s current owner and founder, Emilio Ropero, has stepped down and Torsten Prelle, CEO of SG IN tIME, joined the management board of Ader. We were encouraged by a large OEM to establish a direct presence in Spain in order to service the increase in locally manufactured parts volumes in the Iberian environment and since Ader has been SG IN tIME’s local network partner in Spain for 15 years, it made sense to acquire them. SG IN tIME now has an established and direct presence in Spain.

Dealerships UK acquired Slough Motor Corporation effective 4 July 2017 for £24.0 million. SMC owns six Ford dealerships and two Suzuki dealerships in Kent and Berkshire.

Effective 25 August 2017, Bluefin Investments Limited acquired an additional 1.63% in SG Fleet for R175.9 million, increasing the Group’s holding to 54.0%. Effective 11 September 2017, SG Fleet issued 4 136 925 shares on exercise of vested options granted as long-term incentive awards under SG Fleet’s Equity Incentive Plan, diluting the Group’s holding to 53.14%.

Super Group acquired the remaining 45.0% minority interest in Digistics, on 18 September 2017, for R102.7 million.

GOVERNANCE AND SUSTAINABILITY INITIATIVESSuper Group, across both our African and international operations, invests in our employees through individual development, equality and performance-based advancement to ensure that we maintain a balanced and highly skilled workforce. Super Group is also committed to high standards of honesty, integrity, behaviour and ethics in dealing with all stakeholders. All directors and employees of the Group are encouraged to subscribe to the Super Group Code of Ethics and Business Conduct, which requires them to maintain high personal ethical standards and to act in good faith and in the best interests of the Group.

Super Group recognises the essential need to actively contribute to the social upliftment of previously disadvantaged communities. Although we have invested in numerous projects, set out in more detail in the Divisional Review of each business, I would like to single out our partnership with Rays of Hope, a community-based non-profit organisation that operates in the Alexandra Township. On 22 May 2017, we donated two Toyota Quantum vehicles to them. Rays of Hope transports 70 children to and from their Homework Club; volunteers doing Home-Based Care; learners to and from Sparrow School in Melville each day; as well as people and supplies from their home office at Rosebank Union Church to various points in Alexandra. We are proud of this relationship as the work they do in Alexandra is excellent and matches our corporate social investment philosophy.

The Group continues to focus on environmentally friendly business practices. Many of these initiatives make good business sense in that they form part of the Group’s continuing drive to improve efficiencies. The Group continues to ensure that its vehicles are properly maintained and not overloaded. Along with continuous driver training, this ensures that carbon emissions from all vehicles meet manufacturers’ specifications.

REVENUE 30 June 2017

8%7%

1%

24%60%

EBITA 30 June 2017

10%

9%1%

41%39%

South AfricaUnited KingdomAustraliaEuropeAfrica and other

South AfricaUnited KingdomAustraliaEuropeAfrica and other


THE GROUP CONTINUES TO FOCUS ON ENVIRONMENTALLY FRIENDLY BUSINESS PRACTICES. MANY OF THESE INITIATIVES MAKE GOOD BUSINESS SENSE IN THAT THEY FORM PART OF THE GROUP’S CONTINUING DRIVE TO IMPROVE EFFICIENCIES.

For more detail on the Group’s corporate governance and sustainability practices, refer to the Group’s website.

PROSPECTS AND STRATEGYSuper Group is expecting significant headwinds for the remainder of 2017, with muted growth prospects anticipated for its Southern African operations. The outlook for Australia, UK and Europe is more positive, except for the uncertainty around the impact Brexit might have on trade agreements between the UK and the Eurozone.

Supply Chain Africa continues to focus on retaining its existing client and customer base, as well as securing new long-term contracts at acceptable margins. Given the competitive trading environment, this is one of the major challenges faced by this business. African Logistics has been streamlined and although it remains a tough environment, it is well positioned for any growth going forward.

Supply Chain Europe has concluded the Ader acquisition and similar opportunities in Western and Eastern Europe will be explored.

Fleet Africa secured a new fleet management contract in East Africa with the potential of similar contracts in this region being concluded. Fleet Africa is now the sole distributor of the E-1 fire engine, a premium brand, which will positively contribute to the business’ product offering.

SG Fleet continues to grow through acquisitions as well as organically. Its focus will remain on securing meaningful contracts, both with Government and corporates. Product innovation and differentiated service propositions are also key in expanding the Group’s presence in the UK and New Zealand.

The Dealerships SA business is anticipating difficult trading conditions to continue as consumers remain under pressure. The interest rate cut announced in July 2017 is not expected to make a significant difference.

Dealerships UK is expecting a slowdown in growth in the new vehicle market given the uncertainty pertaining to the effect of Brexit and the speculation regarding the change in government policies on shifting diesel technology used towards the latest cleaner Euro 6 diesel standard. Since April 2017, there has been a marked decline in new vehicle registrations. The acquisitions of Essex Auto Group and Slough Motor Corporation are complementary to Allen Ford’s existing businesses.

Super Group’s position as an innovative, integrated mobility solutions company remains compelling and the Group is committed to the

growth of its core businesses, both organically and through strategic and focused acquisition opportunities, locally and internationally.

ACKNOWLEDGEMENTS I would like to thank my fellow Board members and Exco for their support and collaboration during a challenging year. I also wish to thank our employees for all their hard work and commitment towards making Super Group the great company that it is. Your contribution has laid a foundation for sustainable earnings growth going forward.

To our shareholders, customers, suppliers, advisers and business partners, thank you for your ongoing support.

Peter MountfordChief Executive Officer20 September 2017

27

OVERVIEW

OF SU

PER G

RO

UP

GRO

UP PERFORM

ANCESTATUTO

RY REPORTS

SUMM

ARISED CONSO


ENTSADDITIO

NAL INFORM

ATION


Documents

Overview of Super Group - Supply Chain Management ...supergroup.co.za/.../downloads/overview_of_super_group.pdf · Corporate actions • SG Fleet acquired Fleet Hire, a provider of