3 New Discoveries From Super Group Ltd’s Annual General Meeting Investors Should Know

Super Group Ltd (SGX: S10) held its annual general meeting yesterday. I made the trek down and noted that it was an event attended by around 50 investors. Some interesting questions were asked during the meeting by shareholders.

Here are three things I learnt.

Huge increase in account receivables is not a worry

Account receivables for Super Group jumped by 19% in 2015 even when revenue fell 5.6%. In general, such a phenomenon can be a yellow flag for a company.

But according to what Super Group shared during the AGM, this is not a source of concern. It had happened due to the volatile currency market and customers were delaying payments in the hopes of getting better exchange rates. Super Group does not expect any increase in the credit risks it’s facing.

Tax expense alert!

Super Group’s tax expense in 2015 jumped by 68% even though its operating profit had declined. The effective tax rate had increased from just 12% in 2014 to 25% in 2015.

According to the company, this was due to the expiry of a certain tax holiday that was enjoyed by its subsidiary in the past. Management also claimed that the company is already working to extend the tax incentive for its subsidiary going forward.

Brewing up new products

A takeaway I got from the AGM is that Super Group seems to be trying to diversify its business away from price sensitive products.

The company’s newly-launched Essenso premium instant coffee product under its consumer branded business and the development of higher-end food ingredient products, such as Botanical Herbal Extracts and Nutritional Oil Powders, are some examples of how the company is looking to move towards higher margin products.

Foolish Summary

2015 was not a good year at all for Super Group. A volatile currency situation and a much higher tax rate had partly led to the company’s net profit coming in at just S$47 million, the lowest level in the last five years. Meanwhile, revenue had declined, as mentioned earlier.

But, if we look deeper underneath the hood, the company appears to be working to improve the situation. One bright spot is Super Group’s proactive move toward higher margin products.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Super Group