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VLE
VLE
VLE - Value Group - Reviewed financial results for the year ended
29 February 2008
VALUE GROUP LIMITED
THE MEASURABLE LOGISTICS COMPANY
(Incorporated in the Republic of South Africa)
Registration number: 1997/002203/06
Share code: VLE
ISIN code: ZAE000016507
("Value" or "the company")
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
HEADLINE EARNINGS PER SHARE UP 169%
CASH GENERATED BY OPERATIONS UP 34% TO R154,8 MILLION
REVENUE UP 13%
DECLARATION OF DIVIDEND
CONSOLIDATED INCOME STATEMENT
% Reviewed Audited
R000`s change 2008 2007
Revenue 13 1 164 528 1 033 985
Operating profit before depreciation,
amortisation
and finance costs 43 146 062 102 340
Depreciation and amortisation (65 577) (69 301)
Operating profit 80 485 33 039
Share of profit of associate net of 26 -
tax
Investment income 26 968 14 788
Finance costs (41 075) (26 039)
Net profit before taxation 66 404 21 788
Taxation (note 1) (17 364) (7 428)
Net profit for the year 49 040 14 360
Earnings per share (cents) (note 2)
- Basic 24,3 7,1
- Headline 169 25,8 9,6
- Diluted basic 24,7 6,9
- Diluted headline 26,2 9,3
CONSOLIDATED BALANCE SHEET
% Reviewed Audited
R000`s change 2008 2007
Assets
Non-current assets 639 696 603 242
Property, vehicles, plant and 623 962 589 566
equipment
Intangible assets 14 009 12 167
Deferred tax 1 603 1 509
Investments 122 -
Current assets 354 014 246 946
Inventory 35 259 17 977
Trade and other receivables 216 208 173 465
Taxation in advance - 10 461
Bank and cash 102 547 45 043
Non-current assets held for sale 4 661 2 493
Total assets 998 371 852 681
Equity and liabilities
Capital and reserves 394 316 363 620
Non-current liabilities 244 746 212 732
Interest-bearing borrowings 147 636 129 839
Deferred tax 97 110 82 893
Current liabilities 359 309 276 329
Trae and other payables 294 365 221 908
Current portion of interest-bearing 61 665 53 291
borrowings
Taxation 3 279 1 130
Total equity and liabilities 998 371 852 681
Net asset value per share (cents) 13 203,3 179,8
CONSOLIDATED CASH FLOW STATEMENT
% Reviewed Audited
R000`s change 2008 2007
Cash flows from operating activities 156 814 61 669
Cash generated by operations 34 154 785 115 419
Net finance costs (14 107) (11 251)
Changes in working capital 6 767 (17 657)
Taxation refund/(paid) 9 369 (24 842)
Cash flows from investing activities (106 858) (118 598)
Cash flows from financing activities 7 548 47 999
Net change in cash and cash 57 504 (8 930)
equivalents
Cash and cash equivalents at 45 043 53 973
beginning of year
Cash and cash equivalents at end of 102 547 45 043
year
SEGMENTAL ANALYSIS
General Truck rental Head office
R000`s distribution and other and other Total
Revenue - 2008 923 378 240 285 865 1 164 528
Operating 42 109 45 714 (7 338) 80 485
profit/(loss) -
2008
Revenue - 2007 780 867 252 982 136 1 033 985
Operating (6 977) 47 453 (7 437) 33 039
profit/(loss) -
2007
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Ordinary
capital and Treasury Retained shareholders`
R000`s premium shares Reserves earnings equity
Balance at 28 41 439 (5 214) 368 330 716 367 309
February 2006
Treasury shares - 3 969 - - 3 969
sold
Loss on - - - (1 967) (1 967)
disposal of
treasury shares
Share-based - - 167 - 167
payment
Foreign - - (166) 158 (8)
currency
translation
differences
Capital (20 210) - - - (20 210)
distribution
and share buy-
back
Net profit for - - - 14 360 14 360
the year
Balance at 28 21 229 (1 245) 369 343 267 363 620
February 2007
Treasury shares - 426 - - 426
sold
Share buy-back (7 398) - - - (7 398)
Treasury shares - (11 740) - - (11 740)
acquired
Profit on - - - 89 89
disposal of
treasury shares
Share-based - - 194 85 279
payment
Net profit for - - - 49 040 49 040
the year
Balance at 29 13 831 (12 559) 563 392 481 394 316
February 2008
NOTES
The accounting policies adopted for the purpose of this report comply in all
material respects with International Financial Reporting Standards (IFRS) with
IAS34 and have been consistently applied to all years presented.
Reviewed Audited
R000`s 2008 2007
1. Taxation
Adjustment included in taxation:
- Tax rate adjustment (3 431) -
2. Headline earnings
2.1 Reconciliation between basic and
headline earnings
Basic earnings 49 040 14 360
Loss on disposal of property,
vehicles, plant and equipment less
taxation
1 812 1 572
Impairment of intangible asset 1 236 3 442
Headline earnings 52 088 19 374
2.2 Number of ordinary shares in issue
- Actual 205 599 040 207 599 040
- Weighted average 201 550 074 201 495 411
- Diluted 198 469 487 208 402 942
COMMENTARY
INTRODUCTION
Value Group Limited and its subsidiaries provide a comprehensive range of
tailored logistical solutions throughout southern Africa. The major operating
divisions specialise in providing a diversified range of distribution services,
clearing and forwarding, warehousing, fleet management, forklift and commercial
vehicle rental and leasing.
FINANCIAL REVIEW
During the past year, management has been focused on returning the company to
acceptable profitability levels. This entailed repricing and remodelling of
certain services, improving vehicle utilisation and reducing costs. The effect
of these initiatives, coupled with the increase in volumes in the second half of
the financial year, has been to significantly improve margins and the
profitability of the Group. Turnover, generated from a more diversified customer
base in respect of both the number of customers and the industry served,
increased by 13% from R1,034 billion to R1,165 billion. Operating margins before
depreciation improved from 9,9% to 12,5%. Operating profit after depreciation
improved by 144% from R33 million to R80,5 million. These margin improvements
and internal cost optimisations contributed to a 169% increase in headline
earnings from 9,6 cents to 25,8 cents per share.
Strong operating cash flows were generated by the Group. These were aided by the
substantial and continuous focus on working capital management. Cash generated
by operations improved by 34% from R115,4 million to R154,8 million. These cash
flows, together with the proceeds on disposal of vehicles, funded R132,1 million
of capital expenditure as well as the costs associated with the increase in
interest rates and debt levels. In addition, R16,7 million of the cash flows
were utilised to fund the share repurchase programme.
OPERATIONAL REVIEW
GENERAL DISTRIBUTION SEGMENT
The largest improvement in the results came about in the break bulk logistics
division where pricing was adjusted to match the services provided. Certain
supply chain processes were reengineered to curtail infrastructure cost
increases. Consequently, operating profit in the general distribution segment
improved. This operating profit was, however, negatively affected by losses
incurred in both the newly established Express courier division as well as the
chemical distribution division.
Management are currently addressing all pricing and operating costs and are
committed to achieving meaningful returns in both business units in the new
financial year.
Truck rental segment
The truck rental division performed to expectation. The division has been
restructured to ensure correct fleet allocation nationally and allow further
improvement on utilisation. The segments results were negatively affected by
the car rental division which performed poorly. Two large truck rental
customers were converted into single party distribution accounts and were thus
reclassified into the general distribution segment. Despite the resultant
decrease in the segments revenue and operating profit, operating margins
increased.
INFORMATION TECHNOLOGY
The Group has and will continue to invest in its improved operational IT systems
to facilitate further reporting, customer integration and the reducing of
administrative and operational costs. The finance modules of the integrated IT
system are functional, yet the anticipated benefits have not materialised due to
the inability to implement the full integrated solution. Consequently,
management has decided to implement a new IT solution that best fits the Group`s
requirements. This proven solution will initially integrate procurement,
workshops and finance in order to provide more accurate and timely costing
information on fleet maintenance and Group procurement. Contracts are in
progress and once finalised, the implementation process will commence.
CAPITAL COMMITMENTS
Capital expenditure is carefully evaluated based on the needs of operations and
the required return thereon. Currently, capital expenditure approved amounts to
R91,2 million, of which R82,2 million pertains to new vehicle requirements
mainly for existing contracted business and replacements where required. Most of
this expenditure will be funded out of cash flows from operations.
Subsequent to the year end, the Group spent an additional R11 million on share
repurchases which were all funded out of cash flows.
PROSPECTS
The recent increases in prime overdraft rates to curb inflation will have an
effect on the Group`s borrowing costs and on consumer disposable income. This
has been exacerbated by large increases in the price of fuel which affects our
customer`s product costs to the consumer. These inflationary pressures are
expected to dampen consumer demand. Consequently, it is possible that volume
growth amongst the existing customer base may be small or even reduced.
During the 2008 financial year, management was focused on correcting the issues
that led to the poor performance of the Group in the prior financial year.
Subsequent to year end trading conditions have been favourable and thus further
improvement in the 2009 financial results is anticipated. This is expected to be
achieved not only from the initiatives undertaken in the past financial year,
but also due to management`s objective of growing the business organically in
order to leverage off a portion of the existing infrastructure cost base and
thereby counteracting the effects of possible slow or negative volume growth.
AUDIT OPINION
Charles Orbach & Company have reviewed these results. Their unqualified review
opinion is available for inspection at the company`s registered office.
DECLARATION OF DIVIDEND (NUMBER 4)
The Board is satisfied that ongoing improvement in the Group`s profitability and
generation of positive cash flows will be sufficient to cover future operational
and capital expenditure. Accordingly, the Board has resolved to declare a
dividend of 7 cents per ordinary share. This dividend is covered 3,7 times by
earnings and is payable as follows:
Declaration date Friday, 16 May 2008
Last day to trade cum dividend Friday, 27 June 2008
Trading ex-dividend commences Monday, 30 June 2008
Record date Friday, 4 July 2008
Payment date Monday, 7 July 2008
Share certificates may not be dematerialised or rematerialised between 30 June
2008 and 4 July 2008, both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
16 May 2008
Sponsor: Investec bank Limited
Date: 16/05/2008 16:00:12 Produced by the JSE SENS Department.
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