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Value Group Limited - Interim Report For The Six Months Ended 31 August 2003 And
Release Date: 28/10/2003 17:16:00 Code(s): VLE
Value Group Limited - Interim Report for the six months ended 31 August 2003 and
Withdrawal of Cautionary Announcement
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN Code: ZAE000016507
Share Code: VLE
Value delivers strong performance
- 12% increase in revenue
- 36% increase in earnings attributable to ordinary shareholders
- 26% increase in headline earnings per share
INTERIM REPORT
for the six months ended 31 August 2003
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
August August February
Figures in R"000s % change 2003 2002 2003
Revenue 12 249 548 222 938 514 039
Operating income
before depreciation,
finance costs and
abnormal items 11 47 946 43 357 105 302
Depreciation (24 849) (21 881) (44 674)
Operating income 23 097 21 476 60 628
Investment income 388 342 1 278
Finance costs (5 523) (8 478) (14 533)
Net income before
abnormal item 17 962 13 340 47 373
Abnormal item (note 2) - - 1 631
Net income before
taxation 17 962 13 340 49 004
Taxation (note 3) (6 594) (4 984) (15 960)
Earnings attributable
to ordinary
shareholders 36 11 368 8 356 33 044
Earnings per share
(cents) (note 4)
- Basic 5,5 4,0 15,9
- Headline 26 4,9 3,9 14,2
- Diluted basic 5,4 4,0 15,8
- Diluted headline 4,9 3,8 14,1
CONSOLIDATED BALANCE SHEET
Assets
Non-current assets 281 939 243 370 235 858
Property, vehicles, plant
and equipment 276 984 240 336 231 265
Deferred tax 1 133 338 386
Investments and loans 3 822 2 696 4 207
Current assets 123 175 119 533 115 931
Inventory 14 701 11 931 7 348
Trade and other receivables 73 688 82 951 68 005
Taxation in advance - 3 852 614
Bank and cash 34 786 20 799 39 964
Total assets 405 114 362 903 351 789
Equity and liabilities
Capital and reserves 176 325 146 497 171 185
Non-current liabilities 107 363 111 903 83 590
Interest bearing borrowings 69 951 88 394 48 729
Deferred tax 37 412 23 509 34 861
Current liabilities 121 426 104 503 97 014
Trade and other payables 89 224 77 934 81 244
Current portion of interest
bearing borrowings 28 193 26 136 15 722
Taxation 4 009 326 -
Bank overdraft - 107 48
Total equity and liabilities 405 114 362 903 351 789
Net asset value per share
(cents) 84,9 70,6 82,4
CONSOLIDATED CASH FLOW STATEMENT
Cash flows from operating
activities 29 253 37 856 122 677
Cash flows from investing
activities (68 553) (15 428) (29 658)
Cash flows from financing
activities 34 079 (18 247) (68 326)
Net change in cash and cash
equivalents (5 221) 4 181 24 693
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Share capital 208 208 208
Share premium 41 231 41 231 41 231
Accumulated profits 134 886 105 058 129 746
Balance at beginning of year 129 746 96 702 96 702
Earnings attributable to
ordinary shareholders 11 368 8 356 33 044
Dividend paid (6 228) - -
Total capital and reserves 176 325 146 497 171 185
NOTES
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 item
Write-up of carrying value of
loan to share incentive trust - - 1 631
3. Taxation
Taxation includes secondary
taxation on companies 778 - -
The comparative figures
include a write down of
deferred tax assets which
as a result of the Group
rationalisation no longer met
the criteria for recognition
4. Earnings per share
4.1 Reconciliation between
basic and headline earnings
Basic earnings 11 368 8 356 33 044
Abnormal item - - (1 631)
Profit on disposal of
property, vehicles, plant and
equipment less taxation (1 157) (341) (1 864)
Headline earnings 10 211 8 015 29 549
4.2 Number of ordinary
shares in issue
- Weighted average 207 599 040 207 599 040 207 599 040
- Diluted 209 058 018 209 058 018 209 058 018
COMMENTARY AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Value Group Limited and its subsidiaries provide a comprehensive range of
logistical services encompassing all activities within the supply chain,
including warehouse and fleet management and full maintenance leasing. The major
operating divisions comprise break bulk and single party distribution, forklift
and commercial vehicle rental and leasing.
1. FINANCIAL REVIEW
The board is pleased to report good results for the six months ended August
2003. Operating income before depreciation increased from R43,4 million to R47,9
million notwithstanding the charge of R2 million expensed in refurbishing and
rebranding the fleet. The Group"s investment in replacing old fleet resulted in
depreciation increasing from
R21,9 million to R24,8 million. Finance charges were reduced from R8,5 million
to R5,5 million, a direct result of the R16,4 million reduction in interest
bearing debt from August 2002 and the decrease in prime overdraft rates over the
period.
Earnings attributable to ordinary shareholders increased by 36% from R8,4
million to R11,4 million on an increase in revenue of 12%. Headline earnings per
share increased by 26% to 4,9 cents per share.
Cash flows from operating activities reduced from R37,9 million to R29,3
million. This was due to the last day in the reporting period being a Sunday and
thus hampering collections, in addition to the Group"s payment of its maiden
dividend. Nevertheless, cash flow generation remained strong. Investment in new
assets totalled R81,7 million of which R33,7 million was financed out of
interest bearing debt and the balance of R48 million financed out of a
combination of cash flow and proceeds from disposal of vehicles.
2. REVIEW OF OPERATIONS
Visual prominence of the Group"s rebranding has achieved the objective of
informing the market of the diversity of logistics services offered by each
division within the Group. Market response to these changes has been extremely
positive.
All business units performed according to expectation. Services offered to new
customers and increased volumes from existing customers resulted in organic
growth emanating principally from the logistics division.
The rationalisation of the Group"s subsidiaries into Value Logistics Limited has
reduced administration costs and will continue to yield trade benefits.
3. DEVELOPMENTS
Building of the new centralised warehouse and distribution facility will
commence shortly. The expected date of completion is November 2004.
Significant expenditure has been incurred in rebranding and promoting Renta-
Bakkie. A national advertising campaign is currently underway. The Group
envisages that this division will capture niche market share and contribute to
bottom line growth.
The Group"s substantial investment in upgrading and replacing its fleet bodes
well for containing vehicle operating costs. The completed fleet replacement
programme will support the utilisation of the positive cash flows to reduce
interest bearing debt.
4. PROSPECTS
Historically, demand for the Group"s services in the remaining six months of the
financial year increases due to enhanced customer spending. In the absence of
unforeseen circumstances, the aforementioned developments in conjunction with
the resultant efficient utilisation of resources should ensure that real growth
in earnings levels for the 2004 year will be achieved.
5. DIVIDENDS
The Group"s maiden dividend of 3 cents per share was paid in June 2003. It is
the Group"s policy to pay a dividend annually. Accordingly, no interim dividend
has been declared.
6. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the cautionary announcement that accompanied the
recent trading update published on SENS on 16 October 2003. With the publication
of these interim results, the cautionary announcement is withdrawn.
For and on behalf of the board
C D Stein S D Gottschalk
Chairman Chief executive officer
Johannesburg
28 October 2003
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), D C Marais (Deputy CEO),
B E Goldie, C L Sack, G J Igesund, I M Groves*, N M Phosa
*Non-executive director
