| Wed 20 Oct 2010, 15:28 | | VLE - Value Group Limited - Unaudited interim financial results for the six |
|
VLE
VLE
VLE - Value Group Limited - Unaudited interim financial results for the six
months ended 31 august 2010
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507
Share code: VLE
The measurable logistics company
Value Group Limited
REVENUE UP 17%
HEADLINE EARNINGS PER SHARE
EXCLUDING BEE COSTS UP 7%
BEE TRANSACTION SUCCESSFULLY IMPLEMENTED
UNAUDITED INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 31 AUGUST 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
% August August February
R000`s change 2010 2009 2010
Revenue 17 740 766 635 603 1 351 611
Cost of sales (416 709) (349 174) (754 764)
Gross profit 13 324 057 286 429 596 847
Other income 2 633 2 501 4 637
Operating expenses (268 500) (228 447) (459 112)
Once-off BEE equity (13 201) - -
transaction costs
Operating profit (26) 44 989 60 483 142 372
Share of profit/(loss)
of associate net
of taxation 10 (1) (13)
Investment income 10 929 11 646 17 412
Finance costs (14 758) (19 051) (31 167)
Net profit before 41 170 53 077 128 604
taxation
Taxation (note 2) (16 510) (18 274) (37 234)
Net profit for the 24 660 34 803 91 370
period
Other comprehensive - - -
income net of taxation
Total comprehensive 24 660 34 803 91 370
income for the period
Earnings per share
(cents) (note 3)
- Basic earnings 13,7 19,4 50,8
- Headline earnings (28) 14,6 20,4 52,4
- Adjusted headline 7 21,9 20,4 52,4
earnings
- Diluted basic 14,9 19,2 50,3
earnings
- Diluted headline (21) 15,9 20,2 51,9
earnings
- Adjusted diluted 18 23,8 20,2 51,9
headline earnings
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
% August August February
R000`s change 2010 2009 2010
Assets
Non-current assets 808 734 678 290 736 026
Property, vehicles, 771 874 651 973 704 506
plant and equipment
Intangible assets 28 813 20 810 25 716
Investments and loans 2 690 1 378 2 518
Deferred tax 5 357 4 129 3 286
Current assets 334 781 341 791 328 047
Inventories 61 146 52 889 43 250
Trade and other 238 506 186 535 179 915
receivables
Cash and cash 35 129 102 367 104 882
equivalents
Non-current assets 146 298 152
held for sale
Total assets 1 143 661 1 020 379 1 064 225
Equity and liabilities
Equity 442 225 438 428 485 006
Non-current 267 852 218 539 209 432
liabilities
Interest-bearing 153 439 109 415 98 375
borrowings
Deferred tax 114 413 109 124 111 057
Current liabilities 433 584 363 412 369 787
Trade and other 343 585 281 569 283 486
payables
Current portion of 75 997 70 958 73 250
interest-bearing
borrowings
Current tax payable 14 002 10 885 13 051
Total equity and 1 143 661 1 020 379 1 064 225
liabilities
Net asset value per 10 268,4 243,9 267,8
share (cents)
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
August August February
R000`s 2010 2009 2010
Cash flows from operating 44 286 60 803 166 049
activities
Cash generated by operations 98 742 98 597 220 309
Net finance costs (3 829) (7 405) (13 755)
Changes in working capital (18 242) 14 230 28 924
Taxation paid (14 274) (17 743) (31 761)
Cash available from operating 62 397 87 679 203 717
activities
Dividend paid (18 111) (26 876) (37 668)
Cash flows from investing (110 160) (39 391) (134 109)
activities
Cash flows from financing (3 879) (30 448) (38 461)
activities
Net change in cash and cash (69 753) (9 036) (6 521)
equivalents
Cash and cash equivalents at 104 882 111 403 111 403
beginning of period
Cash and cash equivalents at 35 129 102 367 104 882
end of period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
August August February
R000`s 2010 2009 2010
Ordinary share capital and 10 841 194 194
premium
Balance at beginning of period 194 194 194
Shares issued 73 003 - -
Shares issue expenses (2 356) - -
Share buy back (60 000) - -
A shares 10 - -
Balance at beginning of period - - -
Shares issued 10 - -
Treasury shares (100 715) (31 078) (28 323)
Balance at beginning of period (28 323) (32 746) (32 746)
Treasury shares sold 621 1 668 4 423
Treasury shares acquired (73 013) - -
Share-based payment reserve 12 894 693 746
Balance at beginning of period 746 772 772
Share-based payment expense 12 359 147 258
Transfer to retained income (211) (226) (284)
Retained income 519 195 468 619 512 389
Balance at beginning of period 512 389 461 689 461 689
Transfer from share-based 211 226 284
payment reserve
Profit/(loss) on disposal of 45 (1 224) (3 244)
treasury shares
Dividends paid (18 110) (26 875) (37 710)
Total comprehensive income for 24 660 34 803 91 370
the period
Net profit for the period 24 660 34 803 91 370
Other comprehensive income for - - -
the period
Total capital and reserves 442 225 438 428 485 006
SEGMENT INFORMATION
Unaudited Unaudited Audited
August August February
R000`s 2010 2009 2010
Total segment revenues 802 304 696 934 1 485 609
General distribution 596 085 517 087 1 073 095
Truck rental and other 163 528 143 742 333 153
Head office and other 42 691 36 105 79 361
Less: Inter-segment revenues 61 538 61 331 133 998
General distribution 1 299 3 948 3 449
Truck rental and other 17 589 21 370 51 471
Head office and other 42 650 36 013 79 078
External segment revenues 740 766 635 603 1 351 611
General distribution 594 786 513 139 1 069 646
Truck rental and other 145 939 122 372 281 682
Head office and other 41 92 283
Business segment results
General distribution 45 099 50 863 103 715
Truck rental and other 15 594 13 683 45 456
Head office and other (15 704) (4 063) (6 799)
Business segment results 44 989 60 483 142 372
Share of profit/(loss) of
associate net
of taxation 10 (1) (13)
Investment income 10 929 11 646 17 412
Finance costs (14 758) (19 051) (31 167)
Net profit before taxation 41 170 53 077 128 604
Total segment assets
General distribution 533 360 447 221 487 784
Truck rental and other 516 896 429 342 430 583
Head office and other 85 358 138 309 140 054
Total segment assets 1 135 614 1 014 872 1 058 421
Investments and loans 2 690 1 378 2 518
Deferred tax 5 357 4 129 3 286
Total assets 1 143 661 1 020 379 1 064,225
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 2010.
Unaudited Unaudited Audited
August August February
R000`s 2010 2009 2010
2. Taxation
Secondary tax on 1 891 2 857 3 346
companies included in
taxation
3. Headline earnings
3.1 Reconciliation
between basic and
headline earnings
Basic earnings 24 660 34 803 91 370
Loss on disposal of 1 695 1 825 2 852
property, vehicles,
plant and equipment
less taxation
Headline earnings 26 355 36 628 94 222
Once-off BEE equity 13 201 - -
transaction costs
less taxation
Adjusted headline 39 556 36 628 94 222
earnings
3.2 Number of ordinary
shares of R0,001 each
in issue
Actual 198 627 386 194 436 033 194 436 033
Weighted average 180 417 830 179 144 770 179 717 904
Diluted 165 910 895 181 363 853 181 643 617
3.3
Number of A shares of
R0,001 each in issue
Actual 10 429 010 - -
4. Supplementary
information
Depreciation 34 142 30 102 64 447
Amortisation of 6 191 4 999 9 499
intangible assets
Depreciation and 40 333 35 101 73 946
amortisation
COMMENTARY
Introduction
Value Group Limited ("the Group") 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 acceptable results in a period influenced by a protracted
Transnet strike and the World Cup soccer tournament. Turnover increased by 17%
from R635,6 million to R740,8 million, a direct result of additional volumes
emanating from new customers. Volumes from the existing customer base remained
partially static. Volume fluctuations resulted in the additional use of
subcontractors on the long haul routes. The associated costs were further
impacted and prolonged by the withdrawal of a number of the Group`s trailers
from operations in order to modify and upgrade the configurations. Accordingly,
margins were negatively affected. Although gross profit percentage reduced from
45,1% to 43,7%, gross profit increased by 13% from R286,4 million to
R324,1 million. Operating expenses increased by R40,0 million predominantly
attributable to increased employment costs. Net profit after tax of R24,7
million was subject to an effective tax rate of 40%. This was due to the once-
off BEE equity transaction costs of R13,2 million which cannot be deducted for
tax purposes. Consequently and as expected, headline earnings per share
decreased by 28% from 20,4 cents to 14,6 cents per share. Excluding the once-off
costs associated with the BEE equity transaction, adjusted headline earnings
improved by 7% to 21,9 cents per share.
The Group remains adequately funded with a debt:equity ratio of 52%, which is
within the target range of 40% to 60%. Net asset value per share increased by
10% to R2,68 per share.
Cash generated by operations remained consistently strong at R98,7 million.
Cash flows were utilised to fund increased inventory levels on spare parts and
materials handling equipment. Cash flows and positive cash balances were
utilised to fund the R60,0 million voluntary share repurchase in August 2010.
16,7 million shares were acquired and were subsequently cancelled.
Notwithstanding the R57,8 million increase in interest bearing debt, the balance
of the Group`s investment in capital expenditure of R125,0 million was
internally funded.
Operational review
General distribution segment
Segment revenue increased by 15,9% from R513,1 million to
R594,8 million. Growth arose predominantly from an increased customer base.
Operating margins reduced from 9,9% to 7,6% mainly attributable to the
requirement for additional subcontractors. The use of subcontractors is expected
to continue albeit to a lesser extent.
A new business was set up known as Value Specialised Logistics (VSL). The Group
invested R21,3 million in vehicles with an additional R20,8 million invested
subsequently. VSL will, through the use of its specialised vehicles, focus on
the logistical movement of mining and abnormal loads within South Africa and the
neighbouring countries. The business commenced trading towards the end of the
reporting period.
Truck rental segment
Renewed management focus in the truck rental business saw revenue increasing by
19,2% from R122,4 million to R145,9 million. Truck rental has become highly
competitive with rates under severe pressure in order to improve low vehicle
utilizations. Although operating margins reduced from 11,2% to 10,7%, operating
income increased by 14% to R15,6 million. The defleeting process is ongoing with
168 older vehicles having been disposed of during the period.
Capital commitments
Currently, vehicle and materials handling capital expenditure amounting to
R107,2 million has been approved and will be funded out of interest bearing
debt. R45,3 million of this capital expenditure is required for materials
handling long term contracts. Accordingly, interest bearing debt levels will
increase over the short term.
BBBEE UPDATE
Over the past few years the Group has been committed to achieving BBBEE across
all 7 pillars of the BEE scorecard. Various initiatives were implemented to
address the inequalities of the past whilst simultaneously ensuring
sustainability into the future. During this period, shareholder and JSE approval
was obtained which facilitated up to a 15% equity ownership by Dr Nakedi Mathews
Phosa and Mr Mano Padiyachy, both directors of Value Group Limited, as well as
selected black employees in terms of an empowerment trust. Subsequent to the
implementation of this transaction, the Group was accredited as a level 4 BBBEE
contributor.
Prospects
The Group has and will continue to invest in its asset infrastructure to expand
into new industry verticals in order to increase and diversify its annuity based
revenue.
The second half of the Group`s financial year is characterised by increased
trading activity. Subsequent to the end of the interim period, volume and
activity levels improved. Accordingly, excluding the once-off BEE equity
transaction costs, management is cautiously optimistic that headline earnings
for the 2011 financial year will be stable. This forecast has not been reviewed
nor reported on by the Group`s auditors.
DECLARATION OF INTERIM DIVIDEND (NUMBER 8)
The Board has resolved to declare an interim dividend of 6 cents per ordinary
share. This dividend is covered 3,6 times by adjusted headline earnings and is
payable as follows:
Declaration date Wednesday, 20 October 2010
Last day to trade cum dividend Friday, 14 January 2011
Trading ex-dividend commences Monday, 17 January 2011
Record date Friday, 21 January 2011
Payment date Monday, 24 January 2011
Share certificates may not be dematerialised or rematerialised between 17
January 2011 and 21 January 2011, both days inclusive.
For and on behalf of the Board
C D Stein Chairman S D Gottschalk Chief Executive Officer
Johannesburg
20 October 2010
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
Sponsor: Investec Bank Limited
Date: 20/10/2010 15:28:01 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.
