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Super Group: Solid year, but challenges abound

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SIMON BROWN: I’m chatting with Colin Brown, CFO at Super Group, about the results for the year ending in June. Revenue up 30.6%, Heps up 23.3%, and a dividend of 80 cents versus 63 cents.

Colin, I appreciate the time. My sense is these results almost make it look like it was an easy year, but I suspect that’s not the case. In the first half – which of course was the six months to December 2022 – we were still having quite marked supply-chain challenges.

COLIN BROWN: Yes, it does seem like an easy year, but it does have a lot of challenges throughout the group, being the South African economy with its challenges with load shedding, with interest rates, with inflation. And that goes across through to the European environment where we continue to have challenges around supply-chain availability of vehicles. But our businesses have done very well throughout this period. They’d be very happy with the results.

SIMON BROWN: You mentioned – and certainly vehicles were an issue – you’ve got a fair bit of vehicle business in all the regions, some of it is fleet management, some of it dealerships. You’re still finding supply chains maybe tight, better than they were at the worst of 2021 but still tight out there.

COLIN BROWN: Yes, it is still tight. We are finding that [with] the volume movers there’s better access to inventories, but [for] some of the premium vehicles there’s more challenge with access to vehicles. There has been in Australia a strong availability of EV vehicles. So across the board much better than the first half, but we still do have some challenges in certain of the OEMs [original equipment manufacturers].

SIMON BROWN: Well, [with] some of the growth, I mean supply chain both local and in Europe, a strong period. Is that sort of existing customers? Is it base effect, or are you winning big contracts?

COLIN BROWN: We are. We have won some big contracts. We normally don’t go into specific names, but in our consumer and SG Convenience businesses within South Africa we have had some strong growth, also in the chilled and frozen areas. We’ve had a lot of strong growth in our quick-service restaurants. We’ve seen some volume upticks. So overall it’s a combination of winning new contracts, winning market share, and overall the volumes on clients has been quite static or slightly up.

SIMON BROWN: Looking at the split between South Africa and the rest of the world, it’s about 54% revenue, 56% at operating profit. Your acquisitions are mostly offshore these days. Is that a number you’re looking to grow and become more significant beyond our borders?

COLIN BROWN: We have done an acquisition just after year-end of the Amco Group in the UK, which is a supply-chain management operation, and that will increase our offshore earnings.

But during the year we did do three or four acquisitions in South Africa. We’ve seen a lot of opportunities in South Africa so there’s no specific focus on any specific geography. We look at all the opportunities that come our way and [whether] they fit our strategic fit. If [any] make commercial sense to us, then we will pursue it.

SIMON BROWN: I hear you. If the numbers work then it’s a good deal.

There was some new debt raised in the year. You’re still well within your debt covenant. Obviously there’s a higher interest-rate environment. As you’re raising new debt is it coming in at higher rates? Are they markedly higher or just a little?

COLIN BROWN: When we raise debt, we are raising it at market-related rates and it’s the margin which is important. We’ve been raising debt at good margins. Our recent auction that we did on the corporate bond market was the best margin we have had in many years. So we are out there raising debt at competitive rates. What we do do is we pass on the interest-rate impact to most of our clients or all of our clients in the fleet businesses and a lot of our clients in supply chain. So we are able to mitigate the impact of interest-rate volatility through our client contracts.

SIMON BROWN: You mentioned SG Fleet, Australia, New Zealand, also operations in the UK. Is that corporate and government or is there some private in that as well?

COLIN BROWN: It’s a whole range. They are the biggest player in Australia and we have all these states and the federal government, and then a lot of private clients as well, including both, where we provide vehicles to the clients’ employees, and then also their corporate fleets. So it’s across the board.

SIMON BROWN: We’ll leave it there. Colin Brown, CFO of Super Group, I really appreciate the time today.

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Read: Super Group’s profits up nearly 25%

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