| Wed 21 Oct 2009, 16:59 | | 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 2009
VALUE GROUP LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
REGISTRATION NUMBER: 1997/002203/06
SHARE CODE: VLE
ISIN: ZAE000016507
("VALUE" OR "THE COMPANY")
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2009
THE MEASURABLE LOGISTICS COMPANY
VALUE LIMITED
SUSTAINABLE EARNINGS
IMPROVED OPERATING MARGINS
GEARING REDUCED TO 41%
MAIDEN INTERIM DIVIDEND
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated
Unaudited unaudited Audited
% August August February
R000`s change 2009 2008 2009
Revenue (9) 635 603 697 506 1 368 117
Cost of sales (349 174) (397 068) (819 728)
Gross profit 286 429 300 438 548 389
Other income 2 501 2 538 2 682
Operating expenses (228 447) (242 428) (412 787)
Operating profit - 60 483 60 548 138 284
Share of (loss)/profit of (1) 138 673
associate net of tax
Investment income 11 646 15 929 28 937
Finance costs (19 051) (23 764) (46 648)
Net profit before taxation 53 077 52 851 121 246
Taxation (note 4) (18 274) (16 514) (36 261)
Net profit for the period 34 803 36 337 84 985
Other comprehensive income - - -
net of tax
Total comprehensive income 34 803 36 337 84 985
for the period
Earnings per share (cents)
(note 5)
- Basic 19,4 19,0 46,3
- Headline 2 20,4 20,1 48,8
- Diluted basic 19,2 19,7 47,2
- Diluted headline (4) 20,2 21,0 49,7
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
Unaudited unaudited Audited
% August August February
R000`s change 2009 2008 2009
Assets
Non-current assets 678 290 668 160 681 108
Property, vehicles, plant 651 973 645 009 654 845
and equipment
Intangible assets 20 810 20 426 20 969
Investments and loans 1 378 567 2 655
Deferred tax 4 129 2 158 2 639
Current assets 341 791 395 706 349 903
Inventories 52 889 42 782 52 742
Trade and other receivables 186 535 239 342 185 758
Cash and cash equivalents 102 367 113 582 111 403
Non-current assets held for 298 216 655
sale
Total assets 1 020 379 1 064 082 1 031 666
Equity and liabilities
Equity 438 428 388 854 429 909
Non-current liabilities 218 539 237 260 249 842
Interest-bearing borrowings 109 415 137 244 142 814
Deferred tax 109 124 100 016 107 028
Current liabilities 363 412 437 968 351 915
Trade and other payables 281 569 356 912 272 504
Current portion of interest- 70 958 65 372 68 451
bearing borrowings
Current tax payable 10 885 15 684 10 960
Total equity and 1 020 379 1 064 082 1 031 666
liabilities
Net asset value per share 14 243,9 213,2 240,2
(cents)
CONSOLIDATED Statement of CASH FLOWS
Restated
Unaudited unaudited Audited
% August August February
R000`s change 2009 2008 2009
Cash flows from operating 60 803 113 340 168 858
activities
Cash generated by (1) 98 597 99 733 225 288
operations
Net finance costs (7 405) (7 835) (17 711)
Changes in working capital 14 230 36 388 (5 854)
Taxation paid (17 743) (1 758) (19 698)
Cash available from 87 679 126 528 182 025
operating activities
Dividend paid (26 876) (13 188) (13 167)
Cash flows from investing (39 391) (66 814) (125 387)
activities
Cash flows from financing (30 448) (35 491) (34 615)
activities
Net change in cash and cash (9 036) 11 035 8 856
equivalents
Cash and cash equivalents 111 403 102 547 102 547
at beginning of period
Cash and cash equivalents 102 367 113 582 111 403
at end of period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Restated
Unaudited unaudited Audited
August August February
R000`s 2009 2008 2009
Ordinary share capital and premium 194 2 844 194
Balance at beginning of period 194 13 831 13 831
Share buy back - (10 987) (13 637)
Treasury shares (31 078) (27 568) (32 746)
Balance at beginning of period (32 746) (12 558) (12 558)
Treasury shares sold 1 668 - 3 945
Treasury shares acquired - (15 010) (24 133)
Share-based payment reserve 693 650 772
Balance at beginning of period 772 563 563
Share-based payment expense 147 195 375
Transfer to retained income (226) (108) (166)
Retained income 468 619 412 928 461 689
Balance at beginning of period 461 689 392 480 392 480
Transfer from share-based payment 226 108 166
reserve
Loss on disposal of treasury shares (1 224) (2 809) (2 754)
Dividend paid (26 875) (13 188) (13 188)
Total comprehensive income for the 34 803 36 337 84 985
period
Net profit for the period 34 803 36 337 84 985
Other comprehensive income for the - - -
period
Total capital and reserves 438 428 388 854 429 909
SEGMENT INFORMATION
Restated
Unaudited unaudited Audited
August August February
R000`s 2009 2008 2009
Total segment revenues 696 934 767 892 1 505 885
General distribution 517 087 560 054 1 086 181
Truck rental and other 143 742 173 231 350 348
Head office and other 36 105 34 607 69 356
Less: Inter-segment revenues 61 331 70 386 137 768
General distribution 3 948 8 082 7 525
Truck rental and other 21 370 27 759 61 191
Head office and other 36 013 34 545 69 052
External segment revenues 635 603 697 506 1 368 117
General distribution 513 139 551 972 1 078 656
Truck rental and other 122 372 145 472 289 157
Head office and other 92 62 304
Business segment results
General distribution 50 863 48 018 104 409
Truck rental and other 13 683 16 630 42 430
Head office and other (4 063) (4 100) (8 555)
Business segment results 60 483 60 548 138 284
Share of (loss)/profit of associate (1) 138 673
net of tax
Investment income 11 646 15 929 28 937
Finance costs (19 051) (23 764) (46 648)
Net profit before taxation 53 077 52 851 121 246
Total segment assets
General distribution 447 221 474 956 436 426
Truck rental and other 429 342 425 150 442 663
Head office and other 138 309 161 251 147 283
Total segment assets 1 014 872 1 061 357 1 026 372
Investments and loans 1 378 567 2 655
Deferred tax 4 129 2 158 2 639
Total assets 1 020 379 1 064 082 1 031 666
NOTES
1. Basis of preparation
The accounting policies adopted for the purpose of this report comply in all
material respects with International Financial Reporting Standards (IFRS). The
Group`s interim results have been prepared in accordance with IAS 34: Interim
Financial Reporting. The basis for the preparation of the interim results are
consistent with those applied in the preparation of the annual financial
statements for the year ended 28 February 2009, except for the changes required
by IAS 1: Presentation of Financial Statements, IFRS 8: Operating Segments and
Circular 3/2009: Headline Earnings.
2. Adoption of Circular 3/2009: Headline Earnings
Headline earnings have been adjusted in terms of Circular 3/2009 issued in
August 2009. Gains and losses on sale of assets initially held for rental, now
transferred to inventory, are now included in the calculation of headline
earnings. Gains and losses were previously excluded in the calculation of
headline earnings in terms of Circular 8/2007. See note 5.1 below for the effect
of the adjustment.
3. Changes in classification
Comparative figures have been restated in order to conform with the benchmark
treatment of IAS 16: Property, Plant and Equipment. The revision to IAS 16
requires that where an entity in its normal course of business, routinely sells
items of Property, Plant and Equipment that are held for rental to others, the
carrying amount of these items of Property, Plant and Equipment are classified
as inventories when they cease to be rented and become held for sale.
Previously these items of Property, Plant and Equipment were classified as Non-
current assets held for sale. Proceeds from the sale of these items of Property,
Plant and Equipment are now classified as revenue in terms of IAS18:Revenue,
with the related carrying amount disposed classified as cost of sales.
Previously the net of proceeds and carrying amount was disclosed under operating
expenses. Segmental information has been restated accordingly. Certain
intangible assets with a carrying amount of R4,3 million previously classified
as property, vehicles, plant and equipment have been reclassified as intangible
assets. The effects of the change in classification are as follows:
Previously
stated Restated
August Reclassi- August
R000`s 2008 fication 2008
Statement of financial
position
Non-current assets held for 7 006 (6 790) 216
sale
Inventories 35 992 6 790 42 782
Property, vehicles, plant and 649 289 (4 280) 645 009
equipment
Intangible assets 16 146 4 280 20 426
Statement of comprehensive
income
Revenue 681 045 16 461 697 506
Cost of sales (379 892) (17 176) (397 068)
Operating expenses (243 143) 715 (242 428)
Restated
Unaudited unaudited Audited
August August February
R000`s 2009 2008 2009
4. Taxation
Included in taxation:
- Secondary tax on companies 2 857 1 369 1 369
5. Headline earnings
5.1 Reconciliation between basic
and headline earnings
Basic earnings 34 803 36 337 84 985
Loss on disposal of property, 1 825 2 268 2 972
vehicles, plant and equipment
less taxation
- Previously stated 1 825 2 725 3 263
- Adjustment: Circular - (457) (291)
3/2009
Impairment of intangible - - 1 488
assets less taxation
Headline earnings 36 628 38 605 89 445
5.2 Number of ordinary shares in
issue
Actual 194 436 033 195 630 746 194 436 033
Weighted average 179 144 770 191 688 006 183 359 591
Diluted 181 363 853 184 020 269 180 039 679
6. Supplementary information
Depreciation 30 102 29 321 62 334
Amortisation of intangible 4 999 3 511 11 044
assets
Impairment of intangible - - 2 067
assets
Depreciation, amortisation 35 101 32 832 75 445
and impairment
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 supply chain services,
which encompass distribution, transport, clearing and forwarding, warehousing,
fleet management, forklift and commercial vehicle rental and leasing.
Financial review
The Group produced commendable interim results despite the tough economic
climate. Although turnover reduced by R61,9 million, headline earnings increased
marginally from 20,1 cents per share to 20,4 cents per share. This exceptional
result was achieved by continued focus on cost reduction and optimal resource
utilisation whilst simultaneously, increasing the customer base. These
initiatives produced a positive and sustainable improvement in gross profit
margins from 43% to 45%. Consequently operating margins increased from 8,7% to
9,5% resulting in an operating profit of R60,5 million.
Comprehensive income of R34,8 million was less than that of the previous period
due to the increased secondary tax on companies expense arising on the final
dividend paid.
The Group`s statement of financial position remains strong with the reduced
debt: equity ratio of 41% being well within the target range of 40% to 60%. In
addition trade receivable collection periods reduced to 40 days (excluding the
effects of clearing and forwarding). Net asset value per share increased by 14%
to R2,44 per share.
Cash generated by operations reduced marginally to R98,6 million. This positive
cash flow was utilised not only to pay the increased dividend, but also fund the
Group`s R40,8 million investment in capital assets in addition to reducing
interest bearing debt by R30,9 million.
OPERATIONAL REVIEW
General distribution segment
The segment performed well given the difficulties associated with reduced
volumes. Turnover reduced by 7% to R513,1 million. Management have been
innovative in order to bring about sustainable cost reductions which contributed
to operating profit margins improving from 8,7% to 9,9%. Operating profit
increased by 5,9% from R48,0 million to R50,9 million.
Truck rental segment
Due to the economic downturn, the truck rental segment was characterised by poor
vehicle utilisations and little growth in customer base and business activity.
This had an adverse effect on margins which reduced from 11,4% to 11,2%. The
process of defleeting the older vehicles is ongoing with over 230 vehicles
disposed of during the period. Appropriate action has been taken by management
to improve the segment`s profitability in the short to medium term.
Capital commitments
The Group`s prior years` substantial investment in vehicle replacements and
additions, and the disposal of older vehicles has ensured that the Group
operates a more modern fleet. Consequently, vehicle capital expenditure has been
significantly reduced.
Currently, approved vehicle capital expenditure amounts to R44 million, which
will be funded out of a combination of interest bearing debt and cash flows.
Prospects
The Group continues to grow market share by actively cross selling all service
offerings to existing and new customers.
The sustainable realignment of costs to operational activity bodes well for the
continued profitability of the Group. As a result thereof margins have improved.
The Group is therefore very well positioned to benefit from an upturn in the
economy and associated increased consumer spend. Subsequent to interim period
end, volumes and activity levels improved. Accordingly, management is optimistic
that earnings for the current financial year will be comparable to those
achieved in the previous financial year. (This statement has not been reviewed
nor reported on by the Group`s auditors.)
DECLARATION OF MAIDEN INTERIM DIVIDEND
The Board is confident and satisfied that the Group`s ongoing 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 its maiden interim dividend of
six cents per share. This dividend is covered 3,4 times by headline earnings and
is payable as follows:
Declaration date Wednesday, 21 October 2009
Last day to trade cum dividend Friday, 4 December 2009
Trading ex-dividend commences Monday, 7 December 2009
Record date Friday, 11 December 2009
Payment date Monday, 14 December 2009
Share certificates may not be dematerialised or rematerialised between 7
December 2009 and 11 December 2009, both days inclusive.
For and on behalf of the Board
C D Stein Chairman
S D Gottschalk Chief Executive Officer
Johannesburg
21 October 2009
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06) ISIN: ZAE000016507 Share code: VLE
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: 21/10/2009 16:59:02 Produced by the JSE SENS Department.
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