Super Group Limited (SPG) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Super Group Limited 31 December 2025 Interim Results Webcast. As is customary this morning, our Group CEO, Peter Martin, will take you through the results presentation, which will be followed by a question-and-answer session. Should you have any questions, please feel free to either post them during the presentation or at the conclusion at which time Peter and Colin will address your questions. I now hand you over to Peter.

Good morning, ladies and gentlemen. Thank you for the introduction, John. The interim results presentation will commence with an overview of the group's performance for the 6 months ended the 31st of December 2025. This will be followed by an analysis of divisional performance for the continuing operations and the detailed financial results for the half year. The webcast will conclude with a summary of Super Group's outlook for the financial year ending June 2026. Super Group delivered a strong performance for the 6 months ended 31st of December 2025. Revenue from continuing operations increased by 7% to ZAR 22.68 billion, driven by solid growth in the supply chain South Africa and South African dealerships operations. EBITDA increased by 5.9% to ZAR 1.96 billion. Operating profit increased by 8.7% to ZAR 1.10 billion with the overall operating margin of 4.9%, slightly higher than the previous comparable period. Profit before taxation increased by 24.8% to ZAR 834 million. Headline earnings per share for continuing operations increased by 28% to ZAR 1.554 and earnings per share for continuing operations increased by 26.1% to ZAR 1.575. Cash generated from operating activities increased by 39.4% to ZAR 710.9 million. The group net asset value per share decreased slightly from ZAR 38.05 as at June 2025 to ZAR 37.65, while the net tangible asset value per share increased by 7.4% to ZAR 28.26. We proceed now to the divisional reviews commencing with an analysis of the divisional revenue and operating profit split. Revenue contributions for the period from the supply chain, fleet solutions and dealerships divisions were 45.9%, 2.9% and 51.2%, respectively. Operating profit contribution from the supply chain division was 61.9%, with fleet solutions and dealerships generating 13.9% and 24.2%, respectively. The group's annualized return on net operating assets for continuing operations for the half year to December 2025 was 7.7% compared to 7.6% in the prior comparable period. Group weighted average cost of capital for continuing operations is currently 9.1%. The supply chain businesses reported a 0.6% increase in operating asset returns to the 9% level indicated, mainly as a result of a stronger performance in the FMCG cluster. Fleet Africa reported a 1.3% decline in operating asset returns, largely as a result of a significant fleet replacement spend within this division. Dealerships in South Africa reported satisfactory returns on net operating assets, while the U.K. dealerships reported an improvement as a result of a better performance from the Ford passenger vehicle businesses and the introduction of a number of Asian brands to existing sites. Revenue in the supply chain division increased by 6.3% and operating profit increased by 14.9%. The Supply Chain Industrial businesses delivered a good financial performance, largely due to strong trading results within SG Freight, SG Mobility and Super Rent. This division acquired a 60% shareholding in Eastern Cape Express at a cost of ZAR 35.7 million. This company specializes in temperature-sensitive container storage and distribution. Consumer-focused businesses also delivered robust results, supported by good performances in the quick service restaurant and FMCG units. The refrigerated transport unit faced particularly challenging retail trading conditions and the operating profit declined within this business by 8% compared to the prior period. The South African commodity businesses did well to increase trading profits with coal transport revenue marginally higher than the prior comparable period. Cross-border transport business delivered a 90% reduction in trading losses, reflecting effective route optimization, marginally improved transport rates, stronger commodity trading profitability, reduced overheads and a notable easing of operational bottlenecks at South African ports. Ader, which has been incorporated into the Supply Chain segment, delivered a stellar performance with revenue increasing by 17.2% to ZAR 1.32 billion and EBITDA increasing by 225.6% to ZAR 83.3 million. Significant growth was achieved in the home delivery, commercial and logistics customer segments. The business is expected to perform strongly into the second half year. At this point, we progressed to the fleet Africa operations. Revenue within the fleet Solutions operations increased by 15.3%, mainly as a result of significant vehicle replacement activity within a number of larger customers. EBITDA and operating margins were impacted by lower ad hoc rental volumes during the period concerned. Reduced operational costs more than offset this impact, and the business delivered a 4.2% increase in operating profit for the period under review. Fleet Africa remains focused on expanding its corporate client base whilst differentiating itself through excellent operational delivery and rigorous cost containment within its existing customer portfolio. Moving now to the dealerships division and commencing initially with the South African operations comprising 60 dealerships and representing most major vehicle brands. Revenue in the Dealership South African division increased by 12.7% due to a 26.7% increase in new car sales volumes and an 18.5% increase in used car sales. The growth in new car sales volumes exceeded the NAAMSA dealer market growth for the same period by 7.9% South Africa's new vehicle market delivered a strong performance in 2025, finally recovering above the 2019 pre-pandemic levels and reaching highs not seen since 2015. Revenue performance was supported by a well-diversified portfolio of value and volume brands, together with a vastly expanded representation of emerging Chinese and Indian manufacturers. The division's new car sales volumes in the emerging Chinese and Indian brands grew by 102% over the prior period and now represent 29.7% of total new vehicle sales volumes. Super Group added 3 Geely dealerships, 2 Tata and Mahindra dealerships, 1 GWM and 1 Ford dealership during this period. The group now runs 28 operations representing emerging Chinese and Indian brands. As a result of a higher proportional contribution from new vehicle sales activities, the operating margin decreased slightly to 3.5% compared to 3.6% at December 2024. Disciplined cost optimization, focused working capital management and the continued growth in the division's Asian brand network were instrumental in underpinning the robust overall performance. The dealerships U.K. division delivered an improved performance from its continuing operations. New car sales volumes increased by 40.5% compared to a national passenger market growth of 3.4%. This reflects the satisfactory volume performance from Ford dealerships, a substantial increase in sales volumes from the Omoda and Jaecoo dealerships and the addition of 3 Chery branded outlets. Ford U.K. improved its passenger market share to 5.9% from 5.6% in 2024, whilst the Ford commercial vehicles increased their share of market to 35% from 32% in the prior year. Omoda and Jaecoo enjoyed considerable sales growth and ended the calendar year with a combined market share of 2.4% from a start-up position in the prior year. The U.K. Vehicle Emissions Trading Scheme continues to play a significant role in the growth of electric vehicle sales. The overall category grew by 23.9% with plug-in electric vehicle volumes growing by 34.7% and hybrid vehicle sales increasing by 7%. Petrol and diesel vehicle sales declined by 8% and 15.6%, respectively. The VETS target has increased from 28% in 2025 to 33% in calendar 2026. Used car sales volumes decreased by 5.3%, while commercial vehicle volumes declined by 22.4%. The inclusion of the new Maxus electric vehicle is expected to improve this performance in the second half. The restructuring and consolidation of the U.K. dealerships, together with the addition of the new emerging Chinese brands has resulted in a positive operating profit growth of 50.4% over the prior comparable period and an improved operating profit margin of 1.1%. I will now provide an update of the group's discontinued operation. The disposal of SG Fleet was finalized in the previous financial year and the sale of inTime was concluded in July 2025. Following an extensive review in the previous financial year, the U.K. Hyundai and Suzuki dealerships have been closed. The U.K. Kia dealerships remain classified as assets held for sale. Results in the U.K. Automotive Logistics segment continued to deteriorate in the first half due to the depressed automotive manufacturing environment in both the U.K. and Europe. The increase in the national insurance rate and 2 statutory minimum wage increases have impacted operational costs in AMCO by GBP 1.27 million, which is not being recovered in the prevailing market environment. This position was exacerbated by the cyberattack on Jaguar Land Rover, which resulted in a 2-month shutdown of global plants. This severely impacted logistics revenue in AMCO and contributed to the trading loss in this business of ZAR 25.5 million for the 6-month period to December 2025. Following the exit from our German automotive logistics operations, the group has decided to exit its AMCO investment and is seeking a potential buyer for this business. Accordingly, AMCO has been classified as a discontinued operation and its assets and liabilities have been presented as held for sale as outlined in IFRS 5 as of the 31st of December 2025. This resulted in an impairment of ZAR 382 million to the carrying value of the assets held for sale. I now hand over to Colin Brown, who will take you through the detailed financial information.

Thank you, Peter. Good morning to everyone on the webcast. Revenue from continuing operations increased by 7% to ZAR 22.68 billion with EBITDA up 5.9% to ZAR 1.96 billion. Depreciation and amortization increased by 2.5%, broadly in line with the growth in the value of property, plant and equipment. Operating profit increased by 8.7% to ZAR 1.1 billion, with the operating margin improving slightly to 4.9%. Net finance costs reduced by 26.4%, reflecting the interest benefit from settling ZAR 2 billion of debt following the disposal of SG Fleet. The effective tax rate for the continuing operations was 27.8%, marginally higher than the prior period. Discontinued operations recorded a loss of ZAR 460.7 million, which includes a ZAR 382 million impairment of AMCO's carrying value. Headline earnings increased by 28% to ZAR 1.554 per share, reflecting the improved operating performance and lower finance costs of the continuing operations. Moving to the statement of financial position. Lease portfolio assets increased to about ZAR 1.9 billion, driven by vehicle replacement activity within Fleet Africa. Goodwill and intangible assets declined to ZAR 3.17 billion, primarily as a result of AMCO being classified as an asset held for sale as well as the strengthening of the rand since year-end. As noted in the September presentation, the 30 June cash balance of ZAR 5.28 billion included ZAR 1.16 billion of the proceeds from the sale of SG Fleet, which had been earmarked for debt settlement and was paid in the current period. Turning to equity and liabilities. Fund reserves and provisions decreased by 27.9% to ZAR 513 million, driven mainly by the payment of employee-related provisions during the first half. Net gearing, excluding ROU lease liabilities, increased from 20.6% to 27.8%, reflecting the impact of capital expenditure and working capital movements during the period. Turning to the statement of cash flows, which reflects the combined cash flows of both the continuing and the discontinued operations. The amounts are not directly comparable to the prior period as the prior period includes SG Fleet cash flows for the full 6 months. Operating cash flow for the 6 months was ZAR 1.65 billion and cash generated from operations amounted to ZAR 1.225 billion. Net additions to property, plant and equipment, primarily related to supply chain vehicles and buildings. Looking at the remainder of the cash flow statement. The group repurchased 921,000 shares at an average price of ZAR 12.85 per share. The additional investments in existing subsidiaries related to increasing the group's shareholding in Lieben Logistics from 80% to 95%. The group closed the period with ZAR 3.6 billion in cash and cash equivalents, maintaining a strong liquidity position. Thank you. I'll now hand back to Peter to go through the outlook.

Thank you, Colin. I would like to conclude this presentation with an overview of the outlook for the remainder of this financial year to June 2026. I would also like to share some information on the group's latest acquisition. Despite the prevailing difficult trading conditions in both Southern Africa and Europe, the group expects to perform at improved earnings levels from the continuing operations in the financial year ending June 2026. The consumer supply chain and fleet lease businesses are expected to perform well, mainly as a result of a number of new customers and expanded service offerings. The South African dealership operations are expected to maintain their strong performance with revenue growth anticipated from the expanding network of emerging brands. The benefits of rationalizing the dealerships operations and cost structures across the U.K. should continue to contribute to a better earnings performance in the current financial year. Super Group is well positioned to pursue high-growth opportunities and respond effectively to macroeconomic volatility. The group remains firmly focused on scalable, high-performing operations across Sub-Saharan Africa, reinforcing its commitment to sustainable value creation. The group recently acquired a 70% shareholding in DIG, a leading plant and yellow equipment hire business at a cost of ZAR 448 million with a deferred contingent purchase consideration of up to ZAR 160 million. DIG's management will remain in place and profit warranties underpin an average annual profit after tax of ZAR 200 million over the forthcoming 2 years. The business introduces innovative management, established original equipment manufacturer relationships, a well-maintained modern diversified fleet and strategically located facilities. The acquisition complements the group's fleet solutions offering, capturing a market currently untapped by Super Group. The combined net asset value of DIG as at February 2025 was ZAR 576 million with a normalized profit after tax for this period of ZAR 191.5 million. I'd like to thank you for your attendance at this webcast. We will now address any questions arising from the presentation or related financial reports.

Right. We do have some questions. The first question is from [ Witt Peter. ] How has the Tata demand been since opening? These 2 Tata dealerships in Edenvale and Rustenburg are very new openings. So it's probably early to comment on the success in relation there too. However, we have sold 82 new vehicles since the opening of those dealerships late in calendar 2025. And then Marang Morudu, Northstar. You've done a lot of good work in optimizing your portfolio of assets in the group. How happy are you with the current composition? What is the rationale for retaining Ader given your reduced scale in supply chain Europe? Marang, yes, the decisions around rationalization of Europe were not about scale at all. They were about the sectors that the businesses were operating in. And we were increasingly disappointed with the European automotive logistics environment. And hence, after many years of negative growth, we exited inTime. And we're seeing a lot of headwinds, particularly in the U.K. where the VETS legislation now requires that this year, calendar 2026, that 32% of vehicles are plug-in battery vehicles. And that's problematic in many ways. And the industry is in a depression. We've seen a cyberattack on Jaguar Land Rover, that's at a particular point in time, and hopefully, that will recover. So we have decided to exit automotive logistics, and that is not the space that Ader is in. Ader is performing very, very well in consumer -- the consumer courier and e-commerce environment. Marang Morudu on Dealerships SA. How do you view the mix of Chinese and Indian brands going forward? Is there a margin mix impact from lower price point vehicles? Was the impact mainly driven by the new versus used car mix? We are very positively disposed to obviously, the Chinese and Indian brands. I think today, we sit with 32 at the half year, we sat with 28. They're certainly heading to be well over 30% of the total sales within Super Group. And we will continue to optimize those brands across existing sites. The price point issue or the gross margin issue is all about the new versus used car sales mix. The margins are not necessarily lower on the more affordable vehicles. Rowan Goeller, Super Group appears to switch focus from acquisitive growth. Questions have gone. Sorry about that. The questions have gone. Super Group appears to have switched focus for acquisitive growth from international to South Africa. That is correct, Rowan. Our focus is on the organic growth of the Sub-Saharan African businesses complemented by strategic acquisitions within that market. Rowan, can you comment on succession matters at Super Group, please? Yes, we do have a succession plan in place. We've got excellent management in various sectors within the supply chain division, fleet lease operations and in dealerships. So we do have a comprehensive succession plan in place. Jandre, Peter sir, can you please give some guidance on CapEx going forward and what normalized CapEx looks like, especially with the new DIG acquisition and other portfolio changes? Colin, do you want to answer that?

Sure. So on the normal property, plant and equipment, we expect ZAR 1 billion of CapEx in the second half. The first half was ZAR 1.2 billion. In relation to the lease operating CapEx, which is in the working capital line, the first half was ZAR 316 million. We expect the second half to be between ZAR 200 million and ZAR 250 million. We don't expect any significant CapEx on the DIG acquisition for the remainder of this financial year and actually for next year unless there's further client growth.

Okay. Junaid of Laurium Capital -- Junaid Bray of Laurium Capital, Laurium Capital. Sorry, the questions are just coming up. Congrats on the results. Thanks, Junaid. For the U.K. dealerships, what do you expect the margin to get back to? Junaid, we would like to see the margin in the U.K. dealerships at over 2%, certainly heading up to close to 2.5%, and that certainly is our target. [indiscernible] from Visio. How long do you anticipate the replacement cycle in Fleet Solutions? Will it continue into 2027? In a more normalized CapEx environment, how much free cash flow can Super Group generate? Colin, do you want to have a look at that?