| Tue 11 May 2010, 14:13 | | VLE - Value group limited - Reviewed financial results and cautionary |
|
VLE
VLE
VLE - Value group limited - Reviewed financial results and cautionary
announcement
For the year ended 28 February 2010
THE MEASURABLE LOGISTICS COMPANY
VALUE GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1997/002203/06
Share code: VLE
ISIN: ZAE000016507
- HEADLINE EARNINGS UP 7%
- SUSTAINABLE MARGIN IMPROVEMENT
- RESILIENT CASH FLOWS
REVIEWED FINANCIAL RESULTS AND CAUTIONARY ANNOUNCEMENT
FOR THE YEAR ENDED 28 FEBRUARY 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated
% Reviewed Audited
R000`s change 2010 2009
Revenue 1 351 611 1 368 117
Cost of sales (754 764) (819 728)
Gross profit 9 596 847 548 389
Other income 4 637 2 682
Operating expenses (459 112) (412 787)
Operating profit 142 372 138 284
Share of (loss)/profit of associate (13) 673
net of taxation
Investment income 17 412 28 937
Finance costs (31 167) (46 648)
Net profit before taxation 128 604 121 246
Taxation (note 2) (37 234) (36 261)
Net profit for the year 91 370 84 985
Other comprehensive income net of - -
taxation
Total comprehensive income for the 8 91 370 84 985
year
Earnings per share (cents) (note 3)
- Basic 50,8 46,3
- Headline 7 52,4 48,8
- Diluted basic 50,3 47,2
- Diluted headline 4 51,9 49,7
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated
% Reviewed Audited
R000`s change 2010 2009
Assets
Non-current assets 736 026 681 108
Property, vehicles, plant and 704 506 654 845
equipment
Intangible assets 25 716 20 969
Investments and loans 2 518 2 655
Deferred tax 3 286 2 639
Current assets 328 047 349 903
Inventories 43 250 52 742
Trade and other receivables 179 915 185 758
Cash and cash equivalents 104 882 111 403
Non-current assets held for sale 152 655
Total assets 1 064 225 1 031 666
Equity and liabilities
Equity 485 006 429 909
Non-current liabilities 209 432 249 842
Interest-bearing borrowings 98 375 142 814
Deferred tax 111 057 107 028
Current liabilities 369 787 351 915
Trade and other payables 283 486 272 504
Current portion of interest-bearing 73 250 68 451
borrowings
Current tax payable 13 051 10 960
Total equity and liabilities 1 064 225 1 031 666
Net asset value per share (cents) 11 267,8 240,2
CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Restated
Audited
R000`s 2010 2009
Cash flows from operating activities 166 049 168 858
Cash generated by operations 220 309 225 288
Net finance costs (13 755) (17 711)
Changes in working capital 28 924 (5 854)
Taxation paid (31 761) (19 698)
Cash available from operating 203 717 182 025
activities
Dividends paid (37 668) (13 167)
Cash flows from investing activities (134 409) (125 387)
Cash flows from financing activities (38 161) (34 615)
Net change in cash and cash (6 521) 8 856
equivalents
Cash and cash equivalents at 111 403 102 547
beginning of year
Cash and cash equivalents at end of 104 882 111 403
year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Restated
Reviewed Audited
R000`s 2010 2009
Ordinary share capital and premium 194 194
Balance at beginning of year 194 13 831
Share buy back - (13 637)
Treasury shares (28 323) (32 746)
Balance at beginning of year (32 746) (12 558)
Treasury shares sold 4 423 3 945
Treasury shares acquired - (24 133)
Share-based payment reserve 746 772
Balance at beginning of year 772 563
Share-based payment expense 258 375
Transfer to retained income (284) (166)
Retained income 512 389 461 689
Balance at beginning of year 461 689 392 480
Transfer from share-based payment 284 166
reserve
Loss on disposal of treasury shares (3 244) (2 754)
Dividends paid (37 710) (13 188)
Total comprehensive income for the 91 370 84 985
year
Net profit for the year 91 370 84 985
Other comprehensive income for the - -
year
Total capital and reserves 485 006 429 909
SEGMENT INFORMATION
Restated
Reviewed Audited
R000`s 2010 2009
Total segment revenue 1 485 609 1 505 885
General distribution 1 073 095 1 086 181
Truck rental and other 333 153 350 348
Head office and other 79 361 69 356
Less: Inter-segment revenue 133 998 137 768
General distribution 3 449 7 525
Truck rental and other 51 471 61 191
Head office and other 79 078 69 052
External segment revenue 1 351 611 1 368 117
General distribution 1 069 646 1 078 656
Truck rental and other 281 682 289 157
Head office and other 283 304
Business segment results
General distribution 103 715 104 409
Truck rental and other 45 456 42 430
Head office and other (6 799) (8 555)
Business segment results 142 372 138 284
Share of (loss)/profit of associate net of (13) 673
taxation
Investment income 17 412 28 937
Finance costs (31 167) (46 648)
Net profit before taxation 128 604 121 246
Total segment assets
General distribution 491 990 436 426
Truck rental and other 426 321 442 663
Head office and other 140 110 147 283
Segment assets 1 058 421 1 026 372
Investments and loans 2 518 2 655
Deferred tax 3 286 2 639
Total assets 1 064 225 1 031 666
NOTES
1. Statement of compliance
The financial results have been prepared in accordance with International
Financial Reporting Standards and in the manner required by the Companies Act of
South Africa and are presented in accordance with IAS 34: Interim Financial
Reporting. The basis for the preparation of the financial results is consistent
with that 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.
The previously reported audited headline earnings and audited diluted headline
earnings have been restated 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 on assets initially held for rental were previously excluded in the
calculation of headline earnings in terms of Circular 8/2007.
As
previously
Restated stated
2009 2009
Headline earnings per share (cents) 48,8 48,9
Diluted headline earnings per share 49,7 49,8
(cents)
The Group`s auditors, Charles Orbach &
Company have reviewed these results.
Their unqualified review opinion is
available for inspection at the company`s
registered office.
Restated
Restated Audited
R000`s 2010 2009
2. Taxation
Secondary tax on companies included in 3 346 1 369
taxation
3. Headline earnings
3.1 Reconciliation between basic and headline
earnings
Basic earnings 91 370 84 985
Loss on disposal of property, vehicles, 2 852 2 972
plant and equipment less taxation
- Previously stated 2 852 3 263
- Adjustment: Circular 3/2009 - (291)
Impairment of intangible assets less - 1 488
taxation
Headline earnings 94 222 89 445
3.2 Number of ordinary shares in issue
- Actual 194 436 033 194 436 033
- Weighted average 179 717 904 183 359 591
- Diluted 181 643 617 180 039 679
4. Supplementary information
Depreciation 64 447 62 334
Amortisation of intangible assets 9 499 11 044
Impairment of intangible assets - 2 067
Depreciation, amortisation and impairment 73 946 75 445
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 results despite the effects of the recessionary
economic environment. Although turnover in the first 6 months was down on the
prior period, the growth of the customer base in the second 6 months had a
marked effect on volume and turnover recovery. This contributed to turnover
being only marginally down from R1,368 billion in 2009 to R1,351 billion in
2010. Of particular importance was the continued focus on resource allocation
and cost control which contributed positively to increasing gross profit margins
from 40% to 44% and operating margins from 10,1% to 10,5%. The culmination of
the above contributed to net profit before tax increasing by 6% from R121,2
million to R128,6 million.
The reduction in interest bearing debt from R211,3 million to R171,6 million
contributed to reducing net finance costs to R13,8 million and increasing
headline earnings by 7% from 48,8 cents to 52,4 cents per share. Headline
earnings` growth was partially negated by increased STC costs arising from the
declaration of a final and maiden interim dividend.
Substantial focus on working capital management contributed significantly to the
Group`s generation of cash from operating activities. Although debtor
collections were hampered due to the last day of the financial year falling on a
Sunday, cash flows remained strong. These cash flows funded the Group`s dividend
outflows of R37,7 million, R133,8 million of capital expenditure and R39,7
million reduction of interest bearing debt.
The Group`s balance sheet remains financially sound with net asset value
increasing by 11,5% from 240,2 cents to 267,8 cents per share.
OPERATIONAL REVIEW
General distribution segment
The segment performed well despite the decline in volumes in the first half of
the financial year. Revenue was marginally down from R1,079 billion to R1,070
billion. Operating margins of 9,7% were consistent with that of the previous
year, which resulted in flat operating profit of R103,7 million.
Truck rental segment
The economic downturn had a profound effect on the poor vehicle utilisations and
activity levels experienced in the first half of the financial year. Turnover
reduced from R289,2 million in 2009 to R281,7 million in 2010. Nevertheless, a
substantial amount of management time and effort was spent on improving the
segment`s profitability. Management changes, defleeting of excess older vehicles
and renewed focus on selling the services have contributed positively to the
profitability of the segment. Operating profit increased by R3 million over the
previous year with operating margins improving from 14,7% to 16,1%.
Capital commitments
The Group has and will continue to invest heavily in upgrading its vehicle, IT
and depot infrastructure. These resources will provide the platform for the
future sustainable growth of the Group.
Budgeted capital expenditure for the 2011 financial year amounts to R215,1
million comprising R106,9 million for vehicle additions and replacements, R77,6
million for materials handling equipment and the balance of R30,5 million
pertaining to IT infrastructure and application upgrades. The bulk of this
expenditure will be funded by interest bearing debt with the balance being
funded by operating cash flows.
BBBEE UPDATE AND CAUTIONARY ANNOUNCEMENT
The Group is committed to the growth and development of the South African
economy and its people through Black Economic Empowerment (BEE). Various
initiatives have been implemented to address inequalities of the past while
simultaneously ensuring sustainability into the future.
The Group has entered into discussions relating to a BEE transaction in terms of
which the Group proposes to facilitate equity ownership by Dr Nakedi Mathews
Phosa, Mano Padiyachy, both directors of Value Group, as well as selected black
employees in terms of an employment empowerment scheme ("the proposed BEE
transaction"). The proposed BEE transaction will be subject to shareholder
approval and approval by the JSE.
The Group will publish a detailed announcement relating to the proposed BEE
transaction in due course. Shareholders are advised that the proposed BEE
transaction may have a material effect on the price of the company`s securities.
Accordingly, shareholders are advised to exercise caution when dealing in the
company`s securities until a detailed announcement is made.
CHANGE IN DIRECTORATE FROM EXECUTIVE TO NON-EXECUTIVE
Dr Nakedi Mathews Phosa has tendered his resignation as an executive director
due to his current commitments. The Board would like to thank Dr Phosa for the
valuable contributions he has made as an executive director. Dr Phosa will
become a non-executive director of the Group effective 11 May 2010.
PROSPECTS
Management is focused on growing the Group organically and through acquisitions.
Subsequent to year end, the Group procured new accounts which will contribute to
increased volumes and activity while leveraging off the upgraded infrastructure
base. In addition, increased synergies between business divisions has yielded
supply chain opportunities which have generated new revenue streams.
Various potential acquisitions have been evaluated but did not meet the Group`s
criteria. Management continues to explore acquisition opportunities which best
fits the Group`s strategy and operational activities.
Lastly, realignment of costs to operational activity undertaken over the last
year has and will continue to yield margin improvements. Accordingly, the Group
is well positioned to benefit from improved consumer demand and associated
volume growth from its existing and new customer base. Volumes in the current
year have increased over the comparative period. Operational performance over
the last two months has been in line with management`s expectations. Excluding
the costs associated with the pending BEE deal, management is cautiously
optimistic that headline earnings will increase in the 2011 financial year. This
forecast has not been reviewed nor reported on by the Group`s auditors.
DECLARATION OF FINAL DIVIDEND (NUMBER 7)
The Board has resolved to declare a final dividend of 10 cents per ordinary
share. This dividend is covered 3,2 times by second half headline earnings and
is payable as follows:
Declaration date Tuesday, 11 May 2010
Last day to trade cum dividend Friday, 18 June 2010
Trading ex-dividend commences Monday, 21 June 2010
Record date Friday, 25 June 2010
Payment date Monday, 28 June 2010
Share certificates may not be dematerialised or rematerialised between 21 June
2010 and 25 June 2010, both days inclusive.
For and on behalf of the Board
C D Stein Chairman S D Gottschalk Chief Executive Officer
Johannesburg
11 May 2010
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: 11/05/2010 14:13:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
