| Thu 14 May 2009, 16:52 | | VLE - Value Group Limited - Reviewed Financial Results for the Year Ended |
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VLE
VLE
VLE - Value Group Limited - Reviewed Financial Results for the Year Ended
28 February 2009
VALUE GROUP LIMITED
The measurable logistics company
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507 & Share code: VLE
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
- NET PROFIT BEFORE TAXATION EXECEEDS R100 MILLION
- HEADLINE EARNINGS PER SHARE UP 90%
- CASH GENERATED BY OPERATIONS UP 46%
- DIVIDEND DECLARATION UP 114%
CONSOLIDATED INCOME STATEMENT
% Reviewed Restated
R000`s change 2009 2008
Revenue 15 1 368 117 1 185 785
Operating profit before 46 213 729 146 062
depreciation, amortisation
impairment and finance costs
Depreciation, amortisation and (75 445) (65 577)
impairment
Operating profit 72 138 284 80 485
Share of profit of associate net 673 26
of tax
Investment income 28 937 26 968
Finance costs (46 648) (41 075)
Net profit before taxation 121 246 66 404
Taxation (note 1) (36 261) (17 364)
Net profit for the year 84 985 49 040
Earnings per share (cents) (note
2)
- Basic 91 46,3 24,3
- Headline 90 48,9 25,8
- Diluted basic 47,2 24,7
- Diluted headline 49,8 26,2
CONSOLIDATED BALANCE SHEET
% Reviewed Restated
R000`s change 2009 2008
Assets
Non-current assets 681 108 639 696
Property, vehicles, plant and 654 845 619 506
equipment
Intangible assets 20 969 18 465
Deferred tax 2 639 1 603
Investments 2 655 122
Current assets 349 903 358 593
Inventory 52 742 39 838
Trade and other receivables 185 758 216 208
Bank and cash 111 403 102 547
Non-current assets held for sale 655 82
Total assets 1 031 666 998 371
Equity and liabilities
Capital and reserves 429 909 394 316
Non-current liabilities 249 842 244 746
Interest-bearing borrowings 142 814 147 636
Deferred tax 107 028 97 110
Current liabilities 351 915 359 309
Trade and other payables 272 504 294 365
Current portion of interest- 68 451 61 665
bearing borrowings
Taxation 10 960 3 279
Total equity and liabilities 1 031 666 998 371
Net asset value per share (cents) 18 240,2 203,3
CONSOLIDATED CASH FLOW STATEMENT
% Reviewed Restated
R000`s change 2009 2008
Cash flows from operating 168 858 156 814
activities
Cash generated by operations 46 225 291 154 785
Net finance costs (17 711) (14 107)
Changes in working capital (5 834) 6 767
Taxation (paid)/refunds (19 699) 9 369
Cash available from operating 182 047 156 814
activities
Dividends paid (13 189) -
Cash flows from investing (125 388) (106 858)
activities
Cash flows from financing (34 614) 7 548
activities
Net change in cash and cash 8 856 57 504
equivalents
Cash and cash equivalents at 102 547 45 043
beginning of year
Cash and cash equivalents at end 111 403 102 547
of year
SEGMENTAL ANALYSIS
General Truck rental Head office
R000`s distribution and other and other Total
Revenue - 2009 1 078 656 289 157 304 1 368 117
Operating 104 409 42 430 (8 555) 138 284
profit/(loss)
- 2009
Revenue - 2008 923 378 261 542 865 1 185 785
Operating 42 109 44 978 (6 602) 80 485
profit/(loss)
- 2008
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Ordinary
capital Treasury Re- Re- share-
and tained holders`
R000`s premium shares serves earnings equity
Balance at 28 21 229 (1 245) 369 343 267 363 620
February 2007
Treasury - 426 - - 426
shares sold
Share buy- (7 398) - - - (7 398)
back
Treasury - (11 740) - - (11 740)
shares
acquired
Profit on - - - 89 89
disposal of
treasury
shares
Share-based - - 194 85 279
payment
Net profit - - - 49 040 49 040
for the year
Balance at 29 13 831 (12 559) 563 392 481 394 316
February 2008
Share buy- (13 637) - - - (13 637)
back
Treasury - 3 945 - - 3 945
shares sold
Treasury - (24 132) - - (24 132)
shares
acquired
Loss on - - - (2 754) (2 754)
disposal of
treasury
shares
Share-based - - 209 166 375
payment
Dividends - - - (13 189) (13 189)
paid
Net profit - - - 84 985 84 985
for the year
Balance at 28 194 (32 746) 772 461 689 429 909
February 2009
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 years presented, except for the early
adoption of the revised standard IAS 16 - Property, Plant and Equipment.
Comparative figures
In order to conform with the benchmark treatment of IAS 16 - Property, Plant and
Equipment, the Group now classifies all non-current assets held for sale used as
rental assets as inventory. These assets are no longer accounted for in terms of
IFRS 5 - Non-Current Assets Held for Sale and Discontinued Operations. Proceeds
from the sale of such assets are now classified as revenue in terms of IAS 18 -
Revenue with the related carrying amount disposed classified as cost of sales.
Previously the net proceeds and carrying amount of rental assets disposed were
disclosed under operating expenses.
Segmental analysis has been restated accordingly.
Certain intangible assets with a carrying amount of R4,5 million previously
classified as property, vehicles, plant and equipment have been reclassified as
intangible assets.
The effects of the reclassification are as follows:
Previously Reclassifi- Restated
stated 2008 cation
2008
Balance sheet
Non-current assets 4 661 (4 579) 82
held for sale
Inventory 35 259 4 579 39 838
Property, 623 962 (4 456) 619 506
vehicles, plant
and equipment
Intangible assets 14 009 4 456 18 465
Income statement
Revenue 1 164 528 21 257 1 185 785
Reviewed Restated
R000`s 2009 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 84 985 49 040
Loss on disposal of property, 3 263 1 812
vehicles, plant and equipment
less taxation
Impairment of intangible assets 1 488 1 236
less taxation
Headline earnings 89 736 52 088
2.2 Number of ordinary shares in
issue
- Actual 194 436 033 201 487 884
- Weighted average 183 359 591 201 550 074
- Diluted 180 039 679 198 469 487
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 the 2009 year end
results. Over the past two years, management have been focused on returning the
Group to acceptable levels of profitability. This has entailed repricing and
remodelling of certain service offerings, improving vehicle utilisation and
reducing costs in addition to targeting high growth industries. The effect of
these initiatives has been to grow the customer base while simultaneously,
improving margins and Group profitability. Even though volumes in the second
half of the 2009 year were below that of the corresponding previous period,
turnover increased by 15% from R1,186 billion to R1,368 billion.
The improved alignment of resources and planning of distribution requirements
has contributed positively to the reduction of costs while at the same time
improving infrastructure utilisation. Consequently, operating margins before
depreciation improved from 12,3% to 15,6%. Operating profit after depreciation
increased by 72% from R80,5 million to R138,3 million. The culmination of the
above has contributed to a 90% increase in headline earnings from 25,8 cents to
record earnings of 48,9 cents per share equating to R89,7 million.
Once again, the Group has demonstrated its ability to generate cash. Not only
did the Group deliver record earnings for the year but also operating cash flow
performance. Cash generated by operations improved by 46% from R154,8 million to
R225,3 million. Operating cash flows improved by R12 million due to improved
collections and working capital management. Although interest bearing debt
increased marginally, the improved cash flow funded R120 million in capital
expenditure.
SHARE BUYBACKS
Since December 2007, the Group embarked on a share buyback programme. A total of
R54,4 million was spent and was fully funded by cash flows from operating
activities. As at February 2009, 26.9 million shares were acquired at an
average cost of R2,02 each. In the 2008 financial year, 4.7 million shares were
transferred to the Value Group Share Incentive Trust in order to cover existing
option obligations which would arise in the future. Of the remaining 22.2
million shares, 11.1 million shares were cancelled in the 2009 financial year
and the balance of 11.1 million are held by a wholly owned subsidiary as
treasury shares. The value of these remaining shares at the current market price
of R2,95 per share amounts to approximately R32,6 million.
OPERATIONAL REVIEW
General distribution segment
The major improvement in the results came about from the chemical and single and
multiparty distribution divisions where service offerings and associated costs
were priced accordingly. Revenue increased by 16,8% with operating margins
improving from 4,6% to 9,7%.
Towards the end of the financial year the coastal divisions in Port Elizabeth
and Cape Town moved to new and larger premises. These new infrastructures will
facilitate smoothing out of the operational requirements whilst at the same
time, provide a platform for further growth in the respective areas.
The newly established Express division reduced its losses and has been
restructured to break even in the new financial year.
Truck rental segment
The truck rental segment performed below expectation. Reduced vehicle
utilisations, stemming from the economic downturn, have contributed to operating
margins declining from 17,2% to 14,7%. The Group has made good progress in
disposing of older vehicles. This will align the asset base to the division`s
current vehicle infrastructure requirements.
CAPITAL COMMITMENTS
The disposal of older vehicles coupled with the vehicle replacements and
additions over the past few years has ensured that the Group operates a modern
fleet which will sustain the current level of activity within the various
divisions. Consequently capital expenditure on vehicles will be significantly
curtailed to approximately half of that spent in 2009.
Budgeted capital expenditure (excluding Materials Handling equipment) amounts to
R85 million of which R26,2 million pertains to various software and hardware
upgrades with the balance being for new vehicles. It is expected that the bulk
of this expenditure will be financed out of operating cash flows with the
balance being funded by interest bearing debt.
BBBEE ACCREDITATION
The Group is committed to the upliftment of the South African economy through
Black Economic Empowerment (BEE). BEE is not only a moral and social
responsibility, but must also support the growth and development of South
Africa. Subsequent to year end the Group is pleased to announce that it was
accredited as a level 5 BBBEE contributor.
CONTAINER HANDLING
The Group is pleased to announce the formation of the new container handling
division. This division will operate out of the new Port Elizabeth facility
which has a railway siding and is strategically located nearby the new Coega
port.
It is expected that this division will form an important link in the supply
chain to facilitate the storage and handling of containers for existing and
prospective customers.
PROSPECTS
The downturn in the South African economy has manifested itself in the level of
operational activity within the Group. The trend of reduced volumes in the
second half of the financial year has continued into the new financial year
albeit to a lesser extent. Currently, volume recovery and growth amongst the
existing customer base cannot be predicted with any certainty.
Nevertheless, the Group is well positioned to benefit from an increase in
consumer demand. The growth of the customer base subsequent to year end has
begun to yield positive results. Substantial new accounts have been procured
which should partially mitigate against volume decline. In order to improve
profitability in this difficult trading environment, management have also
focused on continued cost reduction and optimal resource utilisation.
Accordingly, management is cautiously optimistic that these initiatives will
produce comparable earnings in the new financial year.
(This statement has not been reviewed nor reported on by the Group`s auditors.)
ACKNOWLEDGEMENTS
Mr Derek Todd, an executive director, resigned effective 28 February 2009. The
Board thanks Mr Todd for his valued contribution and dedicated service to the
Group since 2002 and wishes him success in his future endeavours.
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 5)
The Board is satisfied that the Group`s profitability and generation of positive
cash flows will be sufficient to cover future operational and reduced capital
expenditure.
Accordingly, the Board has resolved to declare a dividend of
15 cents per ordinary share. This dividend is covered 3,3 times by headline
earnings and is payable as follows:
Declaration date Thursday, 14 May 2009
Last day to trade cum dividend Friday, 19 June 2009
Trading ex-dividend commences Monday, 22 June 2009
Record date Friday, 26 June 2009
Payment date Monday, 29 June 2009
Share certificates may not be dematerialised between 22 June 2009 and 26 June
2009, both days inclusive.
For and on behalf of the Board
C D Stein Chairman S D Gottschalk Chief Executive Officer
Johannesburg
14 May 2009
Value Group Limited
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack, I M Groves*, N
M Phosa, M Padiyachy *Non-executive director
Sponsor: Investec Bank Limited
Date: 14/05/2009 16:52:41 Produced by the JSE SENS Department.
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