MAC2602 ASSIGNMENT 2 SEMESTER 2
Part A
A1: SWOT Analysis focusing on SG’s non-financial performance
Strengths (at least 2):
1. ESG framework alignment with King IV and B-BBEE standards: SG has a robust governance structure
aligned with recognized standards.
2. Investment in innovative technologies: SG uses solar-powered trailers and blockchain-enabled supply
chain tracking for better sustainability and efficiency.
3. Carbon neutrality in Australia: SG has achieved carbon neutrality in Australia.
Weaknesses :
1. Safety concerns: SG had one fatality and over 500 workplace accidents reported.
2. Uneven ESG implementation across regions: ESG implementation varies across regions, and Corporate
Social Investment (CSI) reporting lacks transparency.
Opportunities :
1. Expand carbon-neutral practices: Prospects exist to expand carbon-neutral practices.
2. Enhance ESG analytics and community engagement: SG can deepen community engagement and
enhance ESG analytics.
Threats :
1. Regulatory pressures: Increasing regulatory pressures in Australia pose risks.
2. Stakeholder scepticism regarding ESG consistency: There’s stakeholder scepticism about ESG
consistency, which could impact reputation.
A2: Legal form of SG – advantage and disadvantage
SG is a Limited company (“Super Group Limited”).
- Advantage: Limited liability protects shareholders’ personal assets.
, - Disadvantage: Compliance and regulatory requirements for a listed company can be complex and
costly.
A3: Three possible items for SG’s integrated reporting
1. ESG performance metrics: Details on ESG performance, including safety records and carbon footprint.
2. Community engagement initiatives: Information on how SG is deepening community engagement.
3. Progress on carbon-neutral practices expansion: Updates on expanding carbon-neutral practices
across operations.
Part B
B1: Impact on financial leverage and ROE
First, let’s calculate the current financial leverage and ROE.
Current financial leverage = Total Assets / Equity = 14,,000 = 2.33 times
Current ROE = 10.95% (given)
New project:
- Cost = 20 trailers * R1.2 million = R24 million
- Funded by 30% equity = R7.2 million, 70% debt = R16.8 million
New Total Assets = 14,000 + 24,000 = R38,000
New Equity = 6,000 + 7,200 = R13,200
New Long-term borrowings = 8,000 + 16,800 = R24,800
New financial leverage = 38,,200 = 2.88 times
New EBIT = 1,200 + 2,000 = R3,200
Interest expense = 300 + (24,800 * 10%) = 300 + 2,480 = R2,780
New Net Income = (3,200 – 2,780) * (1 – 0.27) = 420 * 0.73 = R306.6
Part A
A1: SWOT Analysis focusing on SG’s non-financial performance
Strengths (at least 2):
1. ESG framework alignment with King IV and B-BBEE standards: SG has a robust governance structure
aligned with recognized standards.
2. Investment in innovative technologies: SG uses solar-powered trailers and blockchain-enabled supply
chain tracking for better sustainability and efficiency.
3. Carbon neutrality in Australia: SG has achieved carbon neutrality in Australia.
Weaknesses :
1. Safety concerns: SG had one fatality and over 500 workplace accidents reported.
2. Uneven ESG implementation across regions: ESG implementation varies across regions, and Corporate
Social Investment (CSI) reporting lacks transparency.
Opportunities :
1. Expand carbon-neutral practices: Prospects exist to expand carbon-neutral practices.
2. Enhance ESG analytics and community engagement: SG can deepen community engagement and
enhance ESG analytics.
Threats :
1. Regulatory pressures: Increasing regulatory pressures in Australia pose risks.
2. Stakeholder scepticism regarding ESG consistency: There’s stakeholder scepticism about ESG
consistency, which could impact reputation.
A2: Legal form of SG – advantage and disadvantage
SG is a Limited company (“Super Group Limited”).
- Advantage: Limited liability protects shareholders’ personal assets.
, - Disadvantage: Compliance and regulatory requirements for a listed company can be complex and
costly.
A3: Three possible items for SG’s integrated reporting
1. ESG performance metrics: Details on ESG performance, including safety records and carbon footprint.
2. Community engagement initiatives: Information on how SG is deepening community engagement.
3. Progress on carbon-neutral practices expansion: Updates on expanding carbon-neutral practices
across operations.
Part B
B1: Impact on financial leverage and ROE
First, let’s calculate the current financial leverage and ROE.
Current financial leverage = Total Assets / Equity = 14,,000 = 2.33 times
Current ROE = 10.95% (given)
New project:
- Cost = 20 trailers * R1.2 million = R24 million
- Funded by 30% equity = R7.2 million, 70% debt = R16.8 million
New Total Assets = 14,000 + 24,000 = R38,000
New Equity = 6,000 + 7,200 = R13,200
New Long-term borrowings = 8,000 + 16,800 = R24,800
New financial leverage = 38,,200 = 2.88 times
New EBIT = 1,200 + 2,000 = R3,200
Interest expense = 300 + (24,800 * 10%) = 300 + 2,480 = R2,780
New Net Income = (3,200 – 2,780) * (1 – 0.27) = 420 * 0.73 = R306.6
