| Tue 21 Oct 2008, 16:30 | | VLE - Value Group Limited - Unaudited interim financial results for the six |
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VLE
VLE
VLE - Value Group Limited - Unaudited interim financial results for the six
months ended 31 August 2008
VALUE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN code: ZAE000016507 Share code: VLE
THE MEASURABLE LOGISTICS COMPANY
HEADLINE EARNINGS PER SHARE UP 278%
CASH FLOWS FROM OPERATING ACTIVITIES UP 105%
UNAUDITED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2008
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
% 31 August 31 August 29 February
R000`s change 2008 2007 2008
Revenue 27 681 045 535 056 1 164 528
Operating profit 68 93 380 55 589 146 062
before depreciation,
amortisation,
impairment and
finance costs
Depreciation, (32 832) (32 747) (65 577)
amortisation and
impairment
Operating profit 165 60 548 22 842 80 485
Share of profit of 138 - 26
associate net of tax
Investment income 15 929 11 006 26 968
Finance costs (23 764) (19 523) (41 075)
Net profit before 52 851 14 325 66 404
taxation
Taxation (note 1) (16 514) (4 591) (17 364)
Net profit for the 36 337 9 734 49 040
period
Earnings per share
(cents) (note 2)
- Basic 19,0 4,8 24,3
- Headline 278 20,4 5,4 25,8
- Diluted basic 19,7 4,7 24,7
- Diluted headline 300 21,2 5,3 26,2
CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
% 31 August 31 August 29 February
R000`s change 2008 2007 2008
Assets
Non-current assets 668 160 616 974 639 696
Property, vehicles, 649 289 601 582 623 962
plant and equipment
Intangible assets 16 146 12 205 14 009
Deferred tax 2 158 3 187 1 603
Investments 567 - 122
Current assets 388 916 300 568 354 014
Inventory 35 992 16 474 35 259
Trade and other 239 342 213 917 216 208
receivables
Taxation in advance - 10 441 -
Bank and cash 113 582 59 736 102 547
Non-current assets 7 006 3 843 4 661
held for sale
Total assets 1 064 082 921 385 998 371
Equity and
liabilities
Capital and reserves 388 854 371 101 394 316
Non-current 237 260 225 389 244 746
liabilities
Interest-bearing 137 244 138 178 147 636
borrowings
Deferred tax 100 016 87 211 97 110
Current liabilities 437 968 324 895 359 309
Trade and other 356 912 267 323 294 365
payables
Current portion of 65 372 54 725 61 665
interest-bearing
borrowings
Taxation 15 684 2 847 3 279
Total equity and 1 064 082 921 385 998 371
liabilities
Net asset value per 16 213,2 184,0 203,3
share (cents)
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
% 31 August 31 August 29 February
R000`s change 2008 2007 2008
Cash flows from 105 113 340 55 378 156 814
operating activities
Cash generated by 99 733 60 132 154 786
operations
Net finance costs (7 835) (8 517) (14 107)
Changes in working 36 388 3 763 6 766
capital
Taxation (1 758) - 9 369
(paid)/refunds
Cash available from 126 528 55 378 156 814
operating activities
Dividends paid (13 188) - -
Cash flows from (66 814) (48 158) (106 859)
investing activities
Cash flows from (35 491) 7 473 7 549
financing activities
Net change in cash 11 035 14 693 57 504
and cash equivalents
Cash and cash 102 547 45 043 45 043
equivalents at
beginning of period
Cash and cash 113 582 59 736 102 547
equivalents at end of
period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
R000`s Share Treasury Reserves Retained Ordinary
capital shares earnings share-
and holders`
premium equity
Balance at 28 21 229 (1 245) 369 343 267 363 620
February 2007
Treasury shares - (2 299) - - (2 299)
acquired
Profit on disposal - - - 17 17
of treasury shares
Share-based payment - - (21) 50 29
expense
Net profit for the - - - 9 734 9 734
period
Balance at 31 21 229 (3 544) 348 353 068 371 101
August 2007
Treasury shares - 426 - - 426
sold
Share buyback (7 398) - - - (7 398)
Treasury shares - (9 440) - - (9 440)
acquired
Profit on disposal - - - 71 71
of treasury shares
Share-based payment - - 215 35 250
expense
Net profit for the - - - 39 306 39 306
period
Balance at 29 13 831 (12 558) 563 392 480 394 316
February 2008
Share buyback (10 987) - - - (10 987)
Treasury shares - (15 010) - - (15 010)
acquired
Loss on disposal of - - - (2 809) (2 809)
treasury shares
Share-based payment - - 87 108 195
expense
Dividends paid - - - (13 188) (13 188)
Net profit for the - - - 36 337 36 337
period
Balance at 31 2 844 (27 568) 650 412 928 388 854
August 2008
SEGMENTAL ANALYSIS
R000`s External Inter- Total Operating Total
revenues segment revenues profit/ assets
revenues (loss)
General distribution 551 972 8 082 560 054 48 018 474 956
Truck rental and 129 011 27 759 156 770 17 345 425 150
other
Head office and 62 34 545 34 607 (4 815) 161 252
other
31 August 2008 681 045 70 386 751 431 60 548 1 061 358
General distribution 420 253 6 322 426 575 10 209 415 280
Truck rental and 114 653 39 533 154 186 16 597 372 617
other
Head office and 150 27 611 27 761 (3 964) 119 860
other
31 August 2007 535 056 73 466 608 522 22 842 907 757
NOTES
The accounting policies adopted for the purpose of this report comply in
all material respects with International Financial Reporting Standards
(IFRS), and have been consistently applied to all periods presented.
The Group`s interim results have been prepared in accordance with IAS 34:
Interim Financial Reporting. The accounting policies and methods of
computation applied in the preparation of the interim results are
consistent with those applied in the preparation of the annual financial
statements for the year ended 29 February 2008.
Unaudited Unaudited Audited
31 August 31 August 29 February
R000`s 2008 2007 2008
1. Taxation
Adjustment included in
taxation:
- Secondary tax on companies 1 369 - -
- Tax rate adjustment - - (3 440)
2. Headline earnings
2.1
Reconciliation between basic
and
headline earnings
Basic earnings 36 337 9 734 49 040
Loss on disposal of 2 725 1 283 1 812
property, vehicles, plant
and equipment less taxation
Impairment of intangible - - 1 236
asset
Headline earnings 39 062 11 017 52 088
2.2 Number of ordinary shares in
issue
- Actual 195 630 746 205 599 040 201 487 884
- Weighted average 191 688 006 202 661 311 201 550 074
- Diluted 184 020 269 207 350 559 198 469 487
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
The Board is pleased to announce an exceptional improvement in interim
results for the six months ended 31 August 2008. Management`s strategy to
target growth industries, and to re-price and remodel certain service
offerings, has contributed significantly to this improvement. Organic
growth arising from services undertaken for new customers and additional
services undertaken for existing customers contributed to a 27% increase in
revenue from R535,1 million to R681 million. The expanded customer base has
and continues to be diversified further across various industries. These
two factors have contributed to improved utilisation of both infrastructure
and vehicle resources. Consequently, operating margins before depreciation
increased from 10,4% to 13,7%. Operating profit after depreciation
increased by 165% from R22,8 million to R60,5 million. Overall, revenue
growth and the associated effects of margin improvements have contributed
to the 278% increase in headline earnings from 5,4 cents to 20,4 cents per
share.
Once again, the Group delivered solid operating cash flow performance.
Major emphasis was placed on working capital management which contributed
to cash flows from operating activities improving by 105% from R55,4
million to R113,3 million. These operating cash flows, together with the
proceeds on disposal of vehicles, were utilised to fund R87,4 million of
capital expenditure and settle R6,7 million of interest-bearing debt.
In addition, R30 million was spent on share buybacks during the period.
OPERATIONAL REVIEW
General distribution segment
The major improvement in the results came about from the break bulk and
chemical distribution divisions where pricing was adjusted to match the
services provided. In addition, the volume growth from the expanded
customer base contributed to the 31% growth in revenue and the improvement
in the operating margin from 2,4% to 8,7%. The results were however
negatively affected by the reduced losses incurred in the newly established
express division.
Truck rental segment
The truck rental division performed below expectation. Reduced vehicle
utilisations due to diminishing revenues in certain branches had an adverse
effect on the division`s profitability, with operating margins falling from
14,5% to 13,4%. A further restructuring exercise will commence in January
2009 to ensure correct fleet allocation nationally in order to improve
utilisations. Excess older vehicles will be sold.
In addition, the segment`s results were also negatively affected by losses
incurred in the car rental division which has been significantly scaled
down.
INFORMATION TECHNOLOGY
As previously reported in the 2008 year end results, all systems are now
functional. The Group is actively investing in upgrading its software and
hardware infrastructure which will provide a platform to manage the growth
and activity levels in the years ahead. Certain existing systems will be
phased out once new solutions go live.
CAPITAL COMMITMENTS
Currently, approved capital expenditure amounts to R78,5 million, of which
R46,5 million pertains to new vehicle requirements for replacements and
contracted business. The balance is required for increasing warehousing
capacity at the Durban facility and various IT software and hardware
upgrades. It is expected that this expenditure will be funded out of a
combination of interestbearing borrowings and cash flows from operations.
Subsequent to period end, the Group spent an additional R7,8 million on
share buybacks which were all funded out of cash flows from operations.
PROSPECTS
During the last two years, the 5% increase in the prime interest rate has
had a marked impact on consumer disposable income. Inflationary pressures
resulting from associated price increases have exacerbated the situation,
which has resulted in reduced market demand due to consumers opting to
purchase necessities and affordable items. This trend was evident in the
August 2008 volumes which were below those of August 2007.
Nevertheless, the combined activity from the increased customer base should
ensure that volumes are at least equivalent to that achieved in the same
period last year. Accordingly, although the remaining six months` volume
growth may be static, the positive effects arising from the re-alignment of
resources and infrastructure utilisation should contribute to earnings for
the current financial year exceeding those achieved for the previous year.
ACKNOWLEDGEMENTS
Mr Garth Igesund, an executive director, resigned effective 1 August 2008.
The Board thanks him for his valued contribution and dedicated service to
the Group since 1999 and wishes him success in his future endeavours.
DIVIDENDS
The Group paid a dividend of 7 cents per ordinary share in July 2008. It is
the Group`s policy to pay a single dividend annually. Accordingly, no
interim dividend has been declared.
For and on behalf of the Board
C D Stein Chairman S D Gottschalk Chief Executive Officer
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack,
I M Groves*, N M Phosa, D?A?Todd, M Padiyachy *Non-executive director
Johannesburg
21 October 2008
Sponsor: Investec Bank Limited
Date: 21/10/2008 16:30:12 Produced by the JSE SENS Department.
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