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Unitrans - Announcement Of Results For The Six Months Ended 31 December 2003
Release Date: 24/02/2004 13:23:37 Code(s): UTR
Unitrans - Announcement of results for the six months ended 31 December 2003
UNITRANS LIMITED
Registration number 1967/003403/06
JSE Share Code: UTR
ISIN: ZAE000007670
("Unitrans")
Announcement of results for the six months ended 31 December 2003
Highlights
* Revenue up 20,8%
* Headline earnings per share up 15,1%
* Strong organic growth
The board of directors of Unitrans announces the following unaudited
consolidated results:
ABRIDGED CONSOLIDATED INCOME STATEMENT
Audited
twelve
Unaudited months
Six months ended % ended
R 000 31.12.03 31.12.02 increase 30.06.03
Revenue 4 414 454 3 653 880 20,8 7 391 890
Operating income 318 883 289 348 561 386
before depreciation
Depreciation of (98 473) (93 861) (175 802)
property, vehicles
and equipment
Operating income 220 410 195 487 12,8 385 584
after depreciation
Investment income 3 662 3 877 6 138
Profit/(loss) on 382 647 (585)
disposal of property,
vehicles and
equipment
Goodwill amortisation (7 564) (8 220) (17 585)
Net finance costs (24 761) (20 748) (53 560)
Profit before 192 129 171 043 12,3 319 992
taxation
Income taxation (53 631) (52 512) (90 668)
expense
Profit after taxation 138 498 118 531 16,9 229 324
Share of associate (755) (332) (4 252)
and joint ventures
losses
Minority interests (6 756) (6 173) (9 206)
Net profit for the 130 987 112 026 16,9 215 866
period
Weighted average 76 527 76 272 76 278
number of ordinary
shares in issue
("000"s)
Weighted average 439 289 205
number of ordinary
shares that would be
issued on the
conversion of all the
dilutive potential
ordinary shares
("000"s)
Weighted average 76 966 76 561 76 483
number of shares for
purposes of
calculating diluted
earnings per share
("000"s)
Earnings per share
- basic (cents) 171,2 146,9 16,5 283,0
- fully diluted 170,2 146,3 282,2
(cents)
Headline earnings per
share
- basic (cents) 180,7 157,0 15,1 306,6
- fully diluted 179,7 156,4 305,8
(cents)
Note: earnings per
share is calculated
on the weighted
number of shares in
issue
Determination of
Headline earnings
Net profit for the 130 987 112 026 215 866
period
Adjustments:
- (Profit)/loss on (382) (647) 585
disposal of property,
vehicles and
equipment
- Goodwill 7 564 8 220 17 585
amortisation
138 169 119 599 234 036
Taxation payable on 129 168 (175)
profit on disposal of
property, vehicles
and equipment
Headline earnings 138 298 119 767 15,5 233 861
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Audited
R 000 31.12.03 31.12.02 30.06.03
Assets
Non-current assets 1 251 096 1 110 599 1 200 305
Property, vehicles and 1 015 426 836 520 934 926
equipment
Goodwill 55 229 55 456 48 057
Investment in associate and 77 428 96 816 87 182
joint ventures
Deferred taxation asset 5 910 6 752 10 716
Other non-current assets 97 103 115 055 119 424
0 0 0
Net advances (after providing 159 842 378 533 261 146
for doubtful debts)
Less liabilities related to (159 842) (378 533) (261 146)
advances
Current assets 1 540 232 1 399 034 1 299 315
Inventories 622 511 639 210 708 487
Trade and other receivables 692 216 670 786 524 248
Cash and bank balances 225 505 89 038 66 580
Total assets 2 791 328 2 509 633 2 499 620
Equity and liabilities
Interest of shareholders of 1 225 286 1 111 039 1 195 071
Unitrans Limited
Share capital and premium 404 898 404 857 404 874
Reserves 820 388 706 182 790 197
Minority interests 39 408 37 614 38 567
Non-current liabilities 160 835 161 153 159 397
Deferred taxation liabilities 131 540 127 352 132 878
Long-term provisions 6 376 12 221 9 706
Vendors for businesses 16 023 14 593 12 023
acquired
Interest-bearing borrowings 6 896 6 987 4 790
Current liabilities 1 365 799 1 199 827 1 106 585
Trade and other payables 758 427 837 988 804 448
Floorplan creditors 176 071 109 471 198 678
Provisions 5 264 1 290 5 560
Taxation 26 356 52 877 46 530
Vendors for businesses 6 000 0 1 188
acquired
Short-term borrowings 393 681 198 201 50 181
Total equity and liabilities 2 791 328 2 509 633 2 499 620
Number of shares in issue 77 074 76 293 76 420
Net asset value per ordinary 1 590 1 456 1 564
share (cents)
Note:
1. The assets and liabilities of Unitrans Finance (Proprietary) Limited
("Ufin"), have been disclosed separately on the face of the balance sheet but
have been linked together and offset against each other as the Group is not
obliged to support any losses arising in Ufin.
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Audited
Unaudited year
Six months ended ended
R 000 31.12.03 31.12.02 30.06.03
Opening balance 1 195 071 1 083 236 1 083 236
Earnings attributable to 130 987 112 026 215 866
shareholders
Dividends paid (71 256) (64 432) (64 884)
Net proceeds of issue of 24 - 17
shares
Unrealised decrease on (29 540) (19 791) (40 332)
translation of net worth of
foreign subsidiaries
Insurance company contingency - - 1 168
reserves
Closing balance 31 December 1 225 286 1 111 039 1 195 071
2003
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited
Unaudited year
Six months ended ended
R 000 31.12.03 31.12.02 30.06.03
Cash generated by 318 883 289 348 561 386
operations
Investment income 3 662 3 877 6 138
Other non-cash movements - - 1 168
(Increase)/decrease in (150 916) (138 133) 9 827
working capital
- Inventories 85 976 (66 890) (136 167)
- Trade and other (167 968) (172 925) (26 387)
receivables
- Trade and other payables (46 021) 84 779 63 970
- Floorplan creditors (22 607) 16 903 106 110
- Provisions (296) - 2 301
Net finance costs and (95 098) (75 760) (149 922)
taxation paid
Cash available from 76 531 79 332 428 597
operations
Dividends paid (73 330) (68 863) (71 876)
Net cash inflow from 3 201 10 469 356 721
operating activities
Investment to expand
operations
- Property, vehicles and (153 702) (81 475) (214 045)
equipment
- Decrease/(acquisition) of 13 394 (41 132) (72 432)
business, associate and
joint ventures / non-
current assets
Investment to maintain
operations
- Replacement of property, (63 621) (54 296) (109 244)
vehicles and equipment
- Proceeds from disposal of 23 427 9 297 36 553
property, vehicles and
equipment
Long-term provisions (3 330) - (13 277)
Foreign exchange movements (14 886) (6 036) (18 325)
Net cash utilised by (195 517) (163 173) (34 049)
operations
(Increase)/decrease in 2 106 (4 115) (6 312)
interest-bearing borrowings
Addition in vendors for 8 812 4 943 3 561
businesses acquired
Increase/(decrease) in 343 500 108 912 (39 108)
short-term borrowings
Net proceeds from issue of 24 - 17
shares
Net cash inflow/(outflow) 354 442 109 740 (41 842)
from financing activities
Net increase/(decrease) in 158 925 (53 433) (75 891)
cash and bank balances
Cash and bank balances at 66 580 142 471 142 471
the beginning of the year
Cash and bank balances at 225 505 89 038 66 580
the end of the period
Notes:
1. Capital expenditure commitments amounted to R116.0m - R68m related to
expansion and R48m to replacement (2002: R52.9m).
2. There were no material litigation claims or undisclosed liabilities at 31
December 2003.
Notes
1. Compliance with GAAP
These interim results have been compiled in accordance with the South African
Statements of Generally Accepted Accounting Practice.
2. Accounting policies
The accounting policies used in the preparation of the interim financial
statements are consistent with those adopted in the annual financial statements
for the year ended 30 June 2003.
3. Dividends
It is the group"s policy to declare an annual dividend.
4. Material subsequent events
No events of note have occurred subsequent to the half-year end.
5. Changes in the business
There were no material changes in the composition of the business during the
interim period.
SEGMENTAL ANALYSIS
Six months to December 2003
Operating
income
after Net
R 000 Revenue % depreciation % assets %
Transport and 1 092 574 25 131 555 60 915 065 63
Logistics
- Freight and 906 879 107 416 763 300
logistics
- Passenger 185 695 24 139 151 765
Motor and 3 321 880 75 88 855 40 546 725 37
Financial
Services
- Retail 3 265 269 74 883 492 907
- Financial 56 611* 13 972 53 818
Total 4 414 454 100 220 410 100 1 461 790 100
Six months to December 2002
Operating
income
after Net
R 000 Revenue % depreciation % assets %
Transport 959 035 26 121 464 62 788 161 62
and
Logistics
- Freight 784 620 98 722 670 149
and
logistics
- Passenger 174 415 22 742 118 012
Motor and 2 694 845 74 74 023 38 491 325 38
Financial
Services
- Retail 2 619 302 63 376 434 477
- Financial 75 543* 10 647 56 848
Total 3 653 880 100 195 487 100 1 279 486 100
*Included in Financial Services" revenue is Ufin"s revenue of R14m in 2003 and
R40m in 2002.
Review of Results
The Directors are pleased to announce revenue growth of 20,8% to R4 414 (2002:
R3 654m); 98% of which was organic. Notwithstanding a decrease in operating
margins to 5% (2002: 5,4%) headline earnings per share increased by 15,1% to
180,7 cents (2002: 157,0 cents) and earnings per share increased by 16,5% to
171,2 cents (2002: 146,9 cents).
A number of new contracts commenced during the period and this necessitated
increased investment in vehicles and equipment totalling R153,7m (2002: R81,5m).
A further amount of R63,6m (2002: R54,3m) was invested by the Group to maintain
its existing operations.
The return on average capital employed increased from 27,7% to 29,4% and the
return on average shareholders" funds increased from 20,2% to 21,5%.
Year on year, the working capital has remained constant, with a change in the
mix between trade and other payables and the floor plan, due to the change in
the motor manufacturers" supply terms, discussed in last year"s results. The
movement between year-end and 31 December 2003 is largely attributable to
movements in the working capital of the Motor division and represents normal
seasonal fluctuations. Inventory levels at 31 December 2003 fell to R622,5m
(2003: R709m), largely as a result of increased new vehicle sales. The impact of
this increase in sales was exacerbated by the usual distortion in debtors at 31
December 2003, with many customers having elected to defer the registration of
their new vehicles to January 2004, causing delays in settlements from the
finance houses. The reduced levels of new inventory on hand resulted in reduced
creditor shielding at 31 December 2003.
The average core borrowings of the Group (inclusive of interest-bearing floor
plan) increased to R500m (2002: R350m) during the period and this contributed to
the increase in net finance costs to R24,8m (2002: R20,7m).
SEGMENTAL ANALYSIS
Revenue in the Transport and Logistics division grew by 13,9% with operating
income after depreciation growing by 8,3%. Margins in the Freight and Logistics
division were impacted by the termination of the licence with UPS Worldwide
Forwarding Inc and by the start-up costs of certain new contracts. Net assets
increased by 16,1% to R915,1m (2002: R788,1m). This increase was mainly
attributable to the division"s increased investment in expanding its operations.
Driven by strong demand, the Motor and Financial Services division produced an
excellent set of results. Revenue in this division grew by 23,3% and operating
income after depreciation increased by 20,0%. Net assets employed within the
division rose by 11,3 % to R546,7m (2002: R491,3m).
CORPORATE ACTIVITY
The Freight division acquired the business of Chrisick Transport, a materials
handling and transportation operation providing services under contract to the
mining industry in the Northwest Province. This acquisition, which was effective
from 31 December 2003, has received the approval of the Competition Commission.
The Freight division also acquired three small forestry operations, which
complement its existing forestry businesses.
Pursuant to the termination by UPS of its licence agreement with UED, the export
business of UED was transferred to a newly formed company, Aramex SA
(Proprietary) Limited. This operation is still in a start-up phase and is
expected to make a limited contribution for the balance of the year.
With effect from 1 February 2004, the Group acquired the balance of the shares
previously held by UPSLG International BV in UPS Logistics Group South Africa
(Proprietary) Limited, now called Unitrans Supply Chains (Proprietary) Limited
("Unitrans Supply Chains"). As part of the Transport and Logistics division"s
strategy of offering a broad range of solutions to customers, Unitrans Supply
Chains will continue to provide and offer supply chain solutions to its existing
customer base and to its targeted markets.
SOCIAL RESPONSIBILITY
The Group remains committed to conducting its businesses as a responsible
corporate citizen.
CORPORATE GOVERNANCE
The company continues to comply in all material respects with the requirements
of the King Report on Corporate Governance for South Africa 2002.
PROSPECTS
The Tourism and Manufacturing sectors of the domestic economy are being
adversely impacted by the strength of the Rand and it is expected that this
impact will filter through to all service sectors of the economy.
The recent interest rate cuts have bolstered growth in the retail sector of the
domestic economy and the Motor and Financial Services division is hoping to
benefit from these reductions during the balance of 2004.
The securing of new contracts, coupled with the Group"s investment in revenue
producing assets to service both new and existing contracts, has established a
solid platform for earnings growth in the Transport and Logistics division. The
current interest rate levels should favour vehicle sales and the Motor division
should therefore equally have a solid platform for earnings growth.
Notwithstanding this, it is anticipated that the balance of the year to 30 June
2004 will be challenging and control of costs will remain a key area of
management focus for the Group as a whole.
The Board remains of the view that the Group will continue to deliver real
growth in earnings for the balance of the year ahead.
DIVIDEND POLICY
The Group"s dividend policy has been revised to provide that, until such time as
three and a half times dividend cover is attained (previously four times
dividend cover), year on year increases in dividends should not exceed the rate
of inflation for the relevant period.
For and on behalf of the Board
D C Brink K J Grove Illovo
Chairman Chief Executive 24 February 2004
Directors: D.C. Brink*, B.C. Bruce*, P.J. Dieperink, K.J. Grove, M.J. Jooste*,
S.M. Keys, D. Konar*, R.H. Naisby, P.K. Quarmby*, R.W. Rees*, D.M. van der
Merwe*
*non-executive
Secretary: J.V. Radnay
Registered office: 263 Oxford Road, Illovo, Johannesburg 2196
Telephone: 011-912-7000 Telefax: 011-442-7802/20
Transfer secretaries: Computershare Limited: Investor Services Division
Ground Floor, 70 Marshall Street, Johannesburg 2001
Telephone: 011-370-7700, Telefax: 011-688-5200
Sponsor:
PSG Capital Limited
www.unitrans.co.za
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