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Value Group Limited - Audited Financial Results For The Year Ended 28
February 2002
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
Share Code: VLE ISIN: ZAE000016507
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2002
CONSOLIDATED INCOME STATEMENT
%
Figures in R`000s 2002 Change 2001
Revenue 420,234 29 325,747
Operating income before
depreciation, finance costs
and abnormal items 71,526 65,537
Depreciation 43,836 62 26,981
Operating income 27,690 (28) 38,556
Investment income 421 72
Finance costs 14,540 5,963
Net income before abnormal items 13,571 (58) 32,665
Abnormal items (note 2) 2,477 (1,432)
Net income before taxation 16,048 (49) 31,233
Taxation (note 3) 5,561 10,060
Earnings attributable to
ordinary shareholders 10,487 21,173
Basic earnings per share (cents) 5,1 (50) 10,2
Headline earnings per share (cents) 3,9 (64) 10,7
CONSOLIDATED BALANCE SHEET
Figures in R`000s 2002 2001
Assets
Non-current assets 250,806 211,489
Property, vehicles, plant and
equipment 243,668 205,444
Deferred tax 4,442 1,248
Investments and loans 2,696 4,797
Current assets 117,757 101,919
Total assets 368,563 313,408
Equity and liabilities
Capital and reserves 138,141 127,654
Non-current liabilities 122,675 96,687
Interest-bearing 99,718 70,170
Non-interest-bearing - 6,025
Deferred tax 22,957 20,492
Current liabilities 107,747 89,067
Interest-bearing 29,391 15,202
Non-interest-bearing 78,356 73,865
Total equity and liabilities 368,563 313,408
Actual number of shares in issue 207 599 040 207 599 040
Tangible net asset value
per share (cents) 66,5 61,5
CONSOLIDATED CASH FLOW STATEMENT
Figures in R`000s 2002 2001
Cash flows from operating
activities 60,665 48,570
Cash flows from investing
activities (10,363) (106,994)
Cash flows from financing
activities (34,882) 62,152
Net increase in cash and
cash equivalents 15,420 3,728
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Figures in R`000s 2002 2001
Share capital 208 208
Share premium 41,231 41,231
Accumulated profits 96,702 86,215
Balance at beginning of year 86,215 65,042
Earnings attributable to
ordinary shareholders 10,487 21,173
Total capital and reserves 138,141 127,654
NOTES
Figures in R`000s 2002 2001
1. Accounting policies
The accounting policies adopted for
the purpose of this report comply in
all material respects with South African
statements of Generally Accepted
Accounting Practice and are
consistent with the policies adopted
in the previous year.
2. Abnormal items
Profit on disposal of portion of
Port Elizabeth and East London
operations 4,714 -
Write-down of carrying value
of loan to share incentive trust (2,237) (3,573)
Negative goodwill arising from
acquisition of business amortised - 2,141
2,477 (1,432)
3. Taxation
Taxation includes a write down of a
deferred tax asset which has not
met the criteria for recognition.
4. Reconciliation between basic and
headline earnings
Basic earnings 10,487 21,173
Abnormal items (2,477) 1,432
Loss/(Profit) on disposal of fixed
assets less taxation 30 (483)
Headline earnings 8,040 22,122
INTRODUCTION
Value Group Limited (the "Group") provides a comprehensive range of
transport, distribution and logistical services, including full distribution
contracts, warehouse management, full maintenance leasing and break bulk
distribution.
1. Financial Commentary
The Group is pleased to announce revenue growth for its financial year
to end February 2002. During the year under review, the Group made a
significant purchase and also undertook major restructuring and improvements
in operational efficiencies.
Group revenue increased by 29% from R325.7 million to R420.2 million,
due to additional turnover derived from the acquisition of Fleet Holdings
(Proprietary) Limited (3Fleetrent}) and continued contributions from Rent-a-
Bakkie and Freightpak. The reduced profitability of the Group can however be
attributed to increased finance charges resulting from the purchase of
Fleetrent for a cash consideration of R2.25 million, in addition to the debt
of R77.4 million. The reduced profitability is also as a result of costs
associated with the integration of the new company and increased overheads
required to absorb additional turnover.
Integration of the new fleet into the existing fleet was costly which
resulted in the company taking a significant increase in depreciation
upfront, which reduced operating income, but provides improved prospects for
the year ahead. Depreciation increased by 62.5% from R27 million to R43.8
million. As a result, operating income declined by 28% from R38.6 million to
R27.7 million and headline earnings per share by 64% to 3.9 cents.
The decline in operating profit before depreciation from 20.1% in 2001
to 17% was as a result of servicing a larger infrastructure and staff
complement. Management are pleased to announce that they do not anticipate a
further decline in operating margins in the foreseeable future.
The interim net loss before abnormal items of R3.9 million has been
absorbed, highlighted by a net profit before abnormal items of R13.6 million
for the year. Despite the higher debt:equity ratio, the company is able to
service the interest an capital repayments utilising its strong operating
cash flow. In the past year cash flow from operating activities increased by
24.9% to R60.7 million. Consequently, the company was able to reduce debt by
R34.9 million during the year under review.
Management is committed to reducing the level of debt in the forthcoming
year.
Attributable earnings amounting to R10.5 million resulted in an increase
in tangible net asset value from 61.5c per share to 66.5c per share.
2. Review of business
- Change in management
The Board is pleased to announce the appointment of two directors to the
main Board, Clive Sack as the financial director and Garth Igesund as an
executive director, effective 10 May 2002.
On 30 April 2002, Jacques Desmidt resigned from the Board for personal
reasons. Desmidt has been a Board member of Value Group Limited since August
1998 and his experience, wisdom, valuable input and guidance given to the
Board of Value Group Limited will be missed.
- Ongoing operations
Value Logistics now has a national footprint in South Africa and is
delivering highly efficient service levels. Freightpak, which is operating
profitably, has moved into new specialised distribution facilities in
Durban. This will improve efficiencies and is expected to boost revenue
growth.
3. Prospects
The widely known Rent-a-Bakkie brand will be re-launched in the Gauteng
area followed by a roll out nationally. The new concept is geared towards
individual and small business casual rental. This credit card transaction
driven business will expose the Group to a new market and positively
contribute to future cash flows.
Capital expenditure of R22 million has been incurred subsequent to the
financial year-end, which will be partly used to finance new vehicles to
service new business in the sub-Saharan African region.
The Value Group is now well positioned to take full advantage of the
South African and regional markets, providing an asset based support for
logistical services.
The company`s re-branding exercise more accurately reflecting the
business focus of logistics, is ongoing. This, together with restructuring,
improved operational efficiencies and cost cutting, should show improved
results in the forthcoming financial year. Consequently, finalizing the
integration of Fleetrent into the Group, the termination of non-profitable
contracts, together with the rationalization of staff and vehicles, means
that the Group is in a position to maximize the utilization of its fleet to
enhance bottom-line growth.
4. Dividend
In line with past practice, the group will continue to retain earnings
to fund its growth programme and to extinguish debt. Therefore no dividend
has been declared.
For and on behalf of the board.
CD Stein SD Gottschalk DC Marais
(Chairman) (Chief Executive Officer) (Deputy Chief Executive Officer)
15 May 2002
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), D C Marais (Deputy
CEO), B E Goldie,C L Sack (FD), G J Igesund * Non-executive director
Date: 16/05/2002 08:42:05 AM Produced by the SENS Department
