Super Group invests R2.1bn in acquisitions

Super Group invested R2.1 billion in several additions and acquisitions in the year to June to ensure future growth for the JSE-listed transport and mobility group.

The group has had a strategy of expanding its international footprint to buffer against the uncertain South African economy and emerging market turmoil.

Chief executive Peter Mountford previously said the group did not have a set target for its geographical diversity but would not be uncomfortable at “a 70% non-South African to 30% South African positioning”.

In line with its strategy, several acquisitions were concluded in the year under review.

The group acquired an 80% interest in Cargo Works, a specialist overnight cargo business, for R49.5 million in July last year.

It also acquired the minority interest in Legend Logistics for R174.5 million, which resulted in this business becoming a wholly-owned subsidiary, while the group’s Dealerships SA business acquired Orbit Motors in October last year for R1.1 million.

Fleet

Super Group’s effective shareholding in SG Fleet, which has its headquarters in Australia and has operations in New Zealand and the UK, increased to 59.2% from 57% in the year.

This was the result of Super Group taking up 3.9 million shares in the dividend reinvestment plan, which amounted to R147.5 million, and purchasing an additional 4.36 million shares for about R106.2 million.

After the end of the financial year and effective from July this year, Super Group acquired a 65% interest in Lieben Logistics for R498.8 million and a 51% interest in GLS Supply Chain Equipment for R96.3 million. These acquisitions will form part of the Supply Chain Africa segment.

Supply Chain Europe’s inTime logistics company in July this year also acquired an 80% interest in Trans-Logo-Tech for R184.3 million.

Despite these acquisitions, Super Group chief financial officer Colin Brown said the group’s net debt position at end-June was R3 042.3 million, resulting in a net debt-to-equity ratio of 24.1%, an improvement from the 25.1% at end-June last year.

‘Pleased’

Mountford said they were pleased with the strong financial results achieved by the group in the year to June given the protracted poor economic climate in South Africa and political uncertainties in the various countries in which Super Group operates.

He said the strong results were largely attributable to the robust performances in the sub-Saharan commodity-facing businesses but also reflected solid performances by the industrial, technology, ‘digistics’ and vehicle rental businesses in Supply Chain Africa.

Mountford said the Supply Chain Europe operations performed poorly as expected in Germany because of a depressed automotive market and SG Fleet’s performance was also under pressure because of a range of external and legislative changes the businesses within this division had to negotiate during the first half of the year.

He said Fleet Africa secured new full maintenance lease contracts, extended a large existing state-owned enterprise contract and concluded its joint venture agreement with Co-Op Bank in Kenya to end the year in a strong position.

Dealerships SA outperformed the National Association of Automobile Manufacturers of South Africa vehicle sales statistics.

And despite ongoing Brexit uncertainty, Dealerships UK delivered a solid performance.

Super Group on Monday reported a 6.2% increase in group revenue to R37.9 billion in the year to June from R35.7 billion in the previous year.

Mountford attributed this growth primarily to the significant volume increase in Supply Chain Africa’s businesses.

Operating profit increased by 7% to R2.6 billion from R2.4 billion, with the group’s operating margin improving to 6.9% from 6.8%.

Profit before tax rose by 7.3% to R2.26 billion from R2.1 billion. Headline earnings per share increased by 12.5% to 360.8c from 373.8c.

No dividend for the year was declared.

Mountford said the lack of meaningful economic stimulus in the South African market and the uncertain global macro-events, such as Brexit, US-China trade wars and legislative changes, continue to impact negatively across all geographies in which the group operates.

Despite the tough trading environment, Super Group would continue to maximise and explore business opportunities to unlock shareholder value, he said.

Shares in Super Group rose 3.23% on Monday to close at R28.75.