Super Group Limited · JSE:SPG
Super — H1 2009 Earnings Presentation
61 slides from Super's earnings presentation, Mar 17, 2009
Slide 1: Financial results for the six months ended 31 December 2008
Financial results for the six months th ended d d 31 December 2008
Slide 2: Projections, Pro Forma Information and Forward Looking Statements
PROJECTIONS, PRO FORMA INFORMATION AND FORWARD LOOKING STATEMENTS This presentation may contain certain forward-looking statements concerning Super Group’s operations, business strategy, financial condition, growth and plans and expectations. These statements include without limitation, those concer
Slide 3: Agenda
Agenda » Headlines › Operational › Strategic › Financial » Financial results » Divisional review › Supply pp y Chain Management g › Retail Supply Chain › Automotive › Fleet Solutions » Group prospects » Appendix 3/17/2009 3
Slide 4: Headlines
Headlines
Slide 5: Operational headlines
Operational headlines » Satisfactory performance from continuing businesses Supply Chain Management • Profitable in tough trading conditions Retail Supply Chain • Strong performance from AutoZone • Underperformance from Mica Automotive A t ti • Dealerships impacted by economic slowdown and credit cr
Slide 6: Strategic headlines
Strategic headlines » Strategic reorganisation › Appointed additional board members - 2 independent non-execs and CFO › New management team and focus › Discontinued Super Group Industrial Products (SGIP) › Disposing of non-core assets - Pursuing opportunities with focus on maximising shareholder val
Slide 7: Strategic headlines
Strategic headlines » Implementing financial reorganisation › Fully underwritten recapitalisation of the Group to amount of R1 billion - Rights offer of 45 cents per ordinary share › Restructuring existing debt facilities - Aligning short and long term debt with lenders and stakeholders to improve l
Slide 8: Financial headlines
Financial headlines Continuing operations maintained margins in challenging economic conditions HEPS from continuing operations 15.5 cents • Normalised HEPS 36.8 cents Net debt reduced by R687 million to R3.089bn Gearing reduced to 51% from 72% at June 2008 • Despite free-funding R 130m FML assets C
Slide 9: Financial results
Financial results lt
Slide 10: Financial results: Continuing operations
Financial results » Continuing operations Maintained margins in challenging economic conditions 31 December 31 December 2008 2007 % ch unaudited dit d unaudited dit d Revenue R 5 662m R 5 656m 0.1 EBITDA R 650m R 654m (0.6) EBITDA margin 11.5% 11.6% Trading profit R 425m R 455m (6.6) Trading margin
Slide 11: Financial results: Discontinued operations
Financial results » Discontinued operations Super Group Industrial Products » Equipment Commercial Vehicle and Cargolite businesses Equipment, 31 December 31 December 30 June 2008 2007 2008 unaudited dit d unaudited dit d audited dit d Revenue R 303m R 597m R 886m Trading loss (R 74m) (R 10m) (R 300
Slide 12: Interest bearing borrowings (Rm)
Financial results » Interest bearing borrowings (Rm) Net Interest bearing borrowings declined by R687m » Rights issue cash and improvement in working capital reduces net debt 31 December 31 December 30 June 2008 2007 2008 unaudited unaudited audited Corporate bond 415 897 414 Securitisation 259 - 25
Slide 13: Financial ratios
Financial results » Financial ratios Significant improvement in trading gearing to 51% 50% of current borrowings relate to FML 31 December 31 December 30 June 2008 2007 2008 unaudited unaudited audited Net debt / equity ratio* 51% 82% 72% Interest cover for continuing operations EBITDA / net finance
Slide 14: Cash flow (Rm)
Financial results » Cash flow (Rm) Significant improvement in working capital driven by a firm focus on cash management over the interim period end 31 December 31 December 2008 2007 unaudited dit d unaudited dit d Cash and cash equivalents at beginning of period 225 422 Cash C h generated t dbby ope
Slide 15: Cash flow (Rm)
Financial results » Cash flow (Rm) 31 December 31 December 2008 2007 unaudited unaudited Cash available for investment 545 345 Capital expenditure » Property plant and equipment and intangible assets (58) (255) » Full maintenance lease assets (122) (257) Other net investing activities (62) 14 Net ca
Slide 16: Divisional review
Divisional atl 1> , — - - } a <a 4 yas = + . E =. Te , ae -S + * review
Slide 17: Divisional review
Divisional review Super Group Supply Chain Retail Automotive Fleet Solutions Management Supply Chain Division Division Division Division South Africa AutoZone Dealerships FleetAfrica Africa Mica Industrial Products FleetAustralia S i Services Division Di i i 3/17/2009 17
Slide 18: Divisional review: contribution to trading profit
Divisional review Contribution to trading profit from continuing operations for six months to 31 December 2008 and 31 December 2007 3/17/2009 18
Slide 19: Supply Chain Management division
Supply pp y Chain Management division » South Africa » African Transport
Slide 20: Supply Chain Management: South Africa
Supply Chain Management » South Africa 31 December 31 December 30 June ((Rm)) 2008 2007 2008 Revenue 1 216 1 212 2 588 Trading profit 173 169 336 » Trading margin 14.2% % 13.9% % 13.0% % » Revenue › Depressed consumer spend resulted in nominal decline in volumes › FMCG revenue impacted by decision n
Slide 21: South Africa: Review of operations
South Africa » Review of operations » Automotive Supply Chain performed in line with expectations › Renewed existing contracts and secured additional business » FMCG experienced difficult trading conditions › Lower client volumes in highly competitive industry › Benefiting from non-renewal of loss m
Slide 22: South Africa: Review of operations
South Africa » Review of operations » Technology and consulting performing in line with expectations › Successful implementation of transport management systems and processes to seven countries » Retail forecourt and convenience store showed good sales growth and starting to show benefits of economi
Slide 23: South Africa: Prospects
South Africa » Prospects » Difficult trading conditions will continue › Automotive supply chain – continuing good performance › FMCG – market conditions remain difficult with lower volumes continuing › Freight – moderate growth from reduced operating costs and efficiency gains from new fleet › Renta
Slide 24: Supply Chain Management: African Transport
Supply Chain Management » African Transport 31 December 31 December 30 June p ((Rm)) African Transport 2008 2007 2008 Revenue 261 135 287 Trading profit 31 12 30 » Trading margin 11.9% 8.9% 10.5% » Strong organic USD revenue and trading profit growth › Rand depreciated by 21% against USD » Good volu
Slide 25: African Transport: Prospects
African Transport » Prospects » Growth expected › Reduced demand for commodities resulting from global economic slowdown › Good regional prospects from fuel and food products › Aggressive A i growth th rate t will ill slow l iin nextt six i months th » Suspended fleet replacement and expansion progr
Slide 26: Retail Supply Chain division
Retail Supply Chain division » AutoZone » Mica
Slide 27: Retail Supply Chain: AutoZone
Retail Supply Chain » AutoZone 31 December 31 December 30 June AutoZone ((Rm)) 2008 2007 2008 Revenue 857 820 1 650 Trading profit 51 44 85 » Trading margin 6.0% 5.4% 5.2% » Revenue growth of 5% › Selective approach to focus on higher margin product categories › Retained market share in highly compe
Slide 28: AutoZone: Prospects
AutoZone » Prospects » Industry growth sustainable by vehicle sales growth from 2004 › Vehicles entering the AutoZone parts profile (older than 5 years) » Selective S l ti revenue growth th driven di by b › Launch of AutoPro and Elpar Preferred Workshops › Additional Additi l expansion i off product
Slide 29: Retail Supply Chain: Mica
Retail Supply Chain » Mica 31 December 31 December 30 June Mica ((Rm)) 2008 2007 2008 Revenue 422 522 1 076 Trading profit - 29 50 » Trading margin - 5.6% 4.7% » Revenue declined 19% › Negatively impacted by declining consumer spend › Enforced brand and financial compliance from member stores and st
Slide 30: Mica: Review of operations
Mica » Review of operations » Normalised trading margin 2.6% › Once O off ff costs t off R11m R11 relating l ti tto store t closure l costs t and d store t pre-opening i expenses » Retained market leadership position in DIY and hardware › “Favourite DIY/Hardware” retailer for 10th year in Star Reade
Slide 31: Mica: Prospects
Mica » Prospects » Revenue impacted by › Declining consumer spend › Consolidation phase after store growth and enforcing member compliance » Improvement in operating margins › Reduction in overhead costs › Improved member loyalty › Selling corporate stores to members » Improvement in working capital
Slide 32: Automotive division
Automotive division » Dealerships » Industrial Products
Slide 33: Automotive: Dealerships
Automotive » Dealerships 31 December 31 December 30 June p ((Rm)) Dealerships 2008 2007 2008 Revenue 1 499 1 898 3 651 Trading profit 10 34 73 » Trading margin 0.7% 1.8% 2.0% » Deteriorating industry conditions and dealership closures resulted in revenue declining › Good growth in parts and service
Slide 34: Dealerships: Review of operations
Dealerships » Review of operations » Volumes declined significantly › New unit sales declined 28%; used vehicle revenue declined 9% » Cost reduction programme › 25% reduction in headcount › Further cost reductions to compensate for lower volumes » Exited 1 underperforming dealership and suffered ann
Slide 35: Dealerships: Prospects
Dealerships » Prospects » Volume and margin pressure remain › Further weakening in new passenger vehicle market expected › Aggressive cost control › C h managementt Cash » Growth in Parts and Service should continue › Record new vehicle sales in prior year 3/17/2009 35
Slide 36: Automotive: SGIP
Automotive » SGIP 31 December 31 December 30 June Industrial Products ((Rm)) 2008 2007 2008 Revenue 424 755 1 196 Continuing operations 121 158 310 Discontinued operations 303 597 886 Trading profit / (loss) Continuing operations 7 9 1 Discontinued operations (74) (10) (300) » Continuing operations
Slide 37: SGIP: Discontinued operations
SGIP » Discontinued operations » Performance in line with guidance » Senior management has been replaced » Appointed Deloitte Consulting to assist with value maximization » Super Group Commercial Vehicles › Assembling last CKD kits into trucks › Trading T di until til di disposall off b business i c
Slide 38: Fleet Solutions division
Fleet Solutions division » FleetAfrica » FleetAustralia
Slide 39: Fleet Solutions: South Africa
Fleet Solutions » South Africa 31 December 31 December 30 June South Africa ((Rm)) 2008 2007 2008 Revenue 516 449 953 Trading profit 98 101 206 » Trading margin 19.0% 22.5% 21.6% » Revenue increased by 15% › Optimisation of revenue and CPIX increases in terms of COJ contract › Vehicles under managem
Slide 40: South Africa: Prospects
South Africa » Prospects » Extended ECPG contract » Potential fleet outsourcing opportunities of 2 500 vehicles » Well W ll positioned iti d ffor large l new governmentt outsource t contracts t t » Resolving funding challenge to capitalise on current and future potential business 3/17/2009 40
Slide 41: Fleet Solutions: Australia
Fleet Solutions » Australia 31 December 31 December 30 June Australia ((Rm)) 2008 2007 2008 Revenue 359 248 573 Trading profit 52 42 94 » Trading margin 14.5% 16.9% 16.4% » Revenue growth of 29% in AUD › 15% organic growth » Margins M i d declined li d › Good finance margins on novated off the back
Slide 42: Australia: Review of operations
Australia » Review of operations » Fleet increased 28% to 71 100 units › 17% organic growth » Successfully bedded down acquisition of Commercial Fleet Business from NAB » Residual values under pressure due to global auto market and major players exiting floorplan market » Operating leasing performin
Slide 43: Australia: Prospects
Australia » Prospects » Operating leasing significant opportunities › New client wins from competitors › Government activity increasing as a result of reduced budgets » Commercial fleet growth › Si ifi Significant t opportunities t iti h hampered dbby th the availability il bilit off funding f di ff
Slide 44: Group prospects
Group prospects t
Slide 45: Next 6 months trading
Next 6 months trading » Supply Chain Management and African Transport › South S Africa f trading conditions expected to further f deteriorate in economic slowdown › African Transport good growth impacted by downturn in commodity cycle » Retail Supply Chain › Autozone less affected by consumer downtu
Slide 46: Conclusion and next steps
Conclusion and next steps » Recapitalisation and debt restructuring will place the Group on a firm footing › Strengthened Balance Sheet and Liquidity › Regain confidence from key stakeholders » Focusing on core supply chain competency › Strengthen management team › Sale of non-core assets › Exiting
Slide 47: Thank you
Thank you Questions?
Slide 48: Appendix
rs O C © O. ol <
Slide 49: Financial overview: Revenue, continuing operations
Financial overview » Revenue – continuing operations (R billion) 12 0 12.0 2.4 10.5 9.0 5.8 5.8 Annualised 12 months to 7.5 5.2 31 Dec 2008 R10 692m 4.4 6.0 3.8 2.8 4.5 3.0 2.3 3.0 2.0 5.8 5.7 5.7 4.8 1.7 4.0 32 3.2 33 3.3 1.5 2.6 1.9 2.2 1.3 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 200
Slide 50: Financial overview: Trading profit, continuing operations
Financial overview » Trading profit – continuing operations (Rm) 1000 900 149 800 700 499 Annualised 426 12 months to 31 Dec 2008 600 R851m 368 500 347 354 400 283 300 255 206 186 458 455 157 425 200 372 260 291 221 100 150 166 176 117 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 # 15 mo
Slide 51: Financial overview: Operating cash flow, continuing operations
Financial overview » Operating cash flow – continuing operations (Rm) 1 400 1 200 367# 1 000 Annualised 12 months to 31 Dec 2008 800 R1 274m 1 254 1 111* 600 918 821 691 720 576 600 400 485 529 200 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 Half 2009 # 15 month period ended 30 June 2006 * Restat
Slide 52: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 % ch u aud ted unaudited u aud ted unaudited Revenue 5 662 5 656 0.1 Trading T di profit fit b before f d depreciation, i ti amortisation ti ti 653 655 - and recoupments Depreciation, amortisation and recoupments (228) (200) 14.0 Depreciation » Inc
Slide 53: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 unaudited unaudited % ch Trading profit 425 455 (6.6) Capital items (3) (1) • Closure costs and costs incurred on disposal - (1) • Profit on sale of property 6 - • Impairment of property plant and equipment (9) - Operating profit 422 454 (7.0) 3/17
Slide 54: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 unaudited unaudited % ch Operating profit 422 454 (7.0) Net finance charges (344) (182) (89.0) Increase in net finance charges » Increase of 180 basis points in average interest rate » Investment in FML assets of R 642m in 18 months » FV adjustment
Slide 55: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 unaudited unaudited % ch Profit before taxation 81 273 (70.3) Income tax expense (8) (53) Income tax expense » Effective tax rate decreased from 19.5% to 10.3% » Reduction R d ti iin statutory t t t tax t rate t Profit for the period from continuin
Slide 56: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 unaudited unaudited % ch Profit for the period from continuing operations 73 220 (66.8) L Loss ffor th the period i d ffrom di discontinuing ti i operations ti (423) (53) Trading loss (130) (53) p Impairment of g goodwill ((45)) - Fair value loss o
Slide 57: Income statement (Rm)
Financial results » Income statement (Rm) 2008 2007 unaudited unaudited (Loss) / profit for the period (350) 167 Attributable to minority shareholders 11 14 Profit attributable to minority shareholders » AutoZone › shareholding increase by 2.5% to 95% » Australia › reduced shareholding to 66 66.5% 5
Slide 58: Currency analysis: Continuing operations operating profit
Financial results » Currency analysis – Continuing operations Operating p g profit p 3/17/2009 58
Slide 59: Balance sheet (Rm)
Financial results » Balance sheet (Rm) 2008 2007 2008 ASSETS unaudited unaudited audited Property, plant and equipment 925 1 640 957 Full maintenance lease assets 1 925 1 808 2 027 Intangible assets 217 238 251 Goodwill 1 445 1 351 1 575 Investments in associates 87 84 70 Investments and other non-c
Slide 60: Balance sheet (Rm)
Financial results » Balance sheet (Rm) 2008 2007 2008 EQUITY AND LIABILITIES reviewed unaudited reviewed Capital and reserves 2 324 2 297 2 265 » Capital and reserves attributable to equity holders of Super Group 2 086 2 104 2 007 » Minority interest 238 193 258 Liabilities Fund reserves 310 276 342
Slide 61: Interest-bearing debt
Financial results » interest-bearing debt 4000 1,403 3500 1,755 3000 1,336 1 015 1,015 1,334 2500 576 2000 456 442 418 1,797 1500 1,618 1,474 , 273 1,322 1000 1,127 500 0 H1 2007 F2007 H1 2008 F2008 H1 2009 FML Non‐recourse debt Other 3/17/2009 61