| Tue 24 Aug 2004, 17:22 | | RESULTS FOR YEAR ENDED 30 JUNE 2004 |
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UNITRANS - AUDITED RESULTS FOR YEAR ENDED 30 JUNE 2004
UNITRANS LIMITED
Registration number 1967/003403/06
JSE Share Code: UTR
ISIN: ZAE000007670
(`Unitrans`)
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 Investor Services 2004 (Pty) Limited, Ground
Floor, 70 Marshall Street, Johannesburg 2001. Telephone: 011-370-7700, Telefax:
011-688-5200
FINANCIAL HIGHLIGHTS
* Revenue up 20%
* Net profit for year up 19%
* Headline earnings up 15%
* Headline earnings per share up 13%
ANNOUNCEMENT OF AUDITED RESULTS FOR THE YEAR ENDED 30 JUNE 2004
The board of directors of Unitrans announces the following audited group
results:
ABRIDGED GROUP INCOME STATEMENT
Audited
Audited Restated
Year Year
ended ended
30.06.04 30.06.03** Increase
R 000 R 000
Revenue 9 291 031 7 757 864 20%
Operating income before 616 783 556 496 11%
depreciation
Depreciation of property, (200 214) (175 802)
vehicles and equipment
Operating income after 416 569 380 694 9%
depreciation
Investment income 6 070 6 138
Profit/(loss) on disposal of 3 535 (585)
property, vehicles and
equipment
Goodwill amortisation (13 559) (17 585)
Net finance costs (49 355) (52 443)
Profit before taxation 363 260 316 219 15%
Taxation expense (102 296) (90 668)
Profit after taxation 260 964 225 551 16%
Share of associate and joint 550 (4 252)
ventures` profits/(losses)
Minority interests (8 850) (9 206)
Net profit for the year 252 664 212 093 19%
Weighted average number of 76 001 74 733
ordinary shares in issue
(000`s)
Weighted average number of 876 1 408
ordinary shares that would be
issued on the conversion of
all the dilutive potential
ordinary shares (000`s)
Weighted average number of 76 877 76 141
shares for purposes of
calculating diluted earnings
per share (000`s)
Earnings per share (cents)
- basic 332.5 283.8 17%
- basic as previously stated 283.0
- fully diluted 328.7 278.6
- fully diluted as previously 282.2
stated
Headline earnings per share
(cents)
- basic 346.7 307.9 13%
- basic as previously stated 306.6
- fully diluted 342.7 302.2
- fully diluted as previously 305.8
stated
Determination of headline
earnings
Net profit for the year 252 664 212 093
Adjustment for:
- (profit)/loss on disposal of (3 535) 585
property, vehicles and
equipment
- goodwill amortisation 13 559 17 585
262 688 230 263
Taxation charge/(relief) on 792 (175)
profit/loss on disposal of
property, vehicles and
equipment
Headline earnings 263 480 230 088 15%
Dividends paid per share 93.0 84.5
** Prior year figures have been restated to reflect the consolidation of the
Share Trust and for the reclassification of wholesale revenue.
ABRIDGED GROUP BALANCE SHEET
Audited
Audited Restated
30.06.04 30.06.03**
R 000 R 000
Assets
Non-current assets 1 346 904 1 173 113
Property, vehicles and equipment 1 138 697 934 926
Goodwill 44 781 48 057
Investment in associate and joint ventures 71 205 87 182
Deferred taxation asset 9 024 10 716
Other non-current assets 83 197 92 232
Net advances (note 1) - -
Advances relating to liabilities 82 632 261 146
Less liabilities (82 632) (261 146)
Current assets 1 619 941 1 409 315
Inventories 731 278 708 487
Trade and other receivables 669 666 524 248
Cash and bank balances 218 997 176 580
Total assets 2 966 845 2 582 428
Equity and liabilities
Interest of shareholders of Unitrans 1 342 547 1 167 528
Limited
Share capital and share premium 423 554 408 731
Treasury stock (12 734) (22 870)
Reserves 931 727 781 667
Minority interests 42 529 38 567
Non-current liabilities 167 386 159 397
Interest bearing borrowings 4 709 4 790
Long term provisions 8 117 9 706
Deferred taxation liabilities 151 328 132 878
Vendors for businesses acquired 3 232 12 023
Current liabilities 1 414 383 1 216 936
Trade and other payables 892 077 804 448
Non-interest bearing floorplan creditors 117 362 55 017
Provisions 3 311 5 560
Taxation 24 612 46 881
Vendors for businesses acquired 6 000 1 188
Short-term borrowings 371 021 303 842
Total equity and liabilities 2 966 845 2 582 428
Number of shares in issue (000`s) 76 869 75 217
Net asset value per share (cents) 1 747 1 552
Note 1:
The liabilities of Unitrans Finance (Proprietary) Limited (`Ufin`) and the
assets pertaining thereto 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 and does not intend
doing so.
** Prior year figures have been restated to reflect the consolidation of the
Share Trust and the reclassification of the short-term borrowings and cash and
bank balances and interest bearing floorplan creditors.
ABRIDGED GROUP CASH FLOW STATEMENT
Audited
Audited Restated
year ended year ended
30.06.04 30.06.03**
R 000 R 000
Cash generated by operations 616 783 556 496
Other non cash movements (3 095) 4 100
Investment income 6 070 6 138
Changes in working capital (20 484) (133 834)
- Inventories (22 791) (136 167)
- Trade and other receivables (145 418) (26 387)
- Trade and other payables 87 629 63 970
- Non-interest bearing floorplan 62 345 (37 551)
creditors
- Provisions (2 249) 2 301
Net finance costs and taxation paid (157 358) (148 351)
Cash available from operations 441 916 284 549
Dividends paid (78 521) (70 859)
Net cash inflow from operations 363 395 213 690
Investment to maintain operations
- Replacement of property, vehicles and (191 545) (109 244)
equipment
- Proceeds from disposal of property, 65 118 36 553
vehicles and equipment
Investment to expand operations
- Property, vehicles and equipment (289 069) (214 045)
- Net cash inflow/(outflow) arising from 5 524 (73 880)
subsidiaries, associate and joint
ventures
Decrease in long term provisions (1 589) (13 277)
Foreign exchange movements (9 952) (18 325)
Decrease in other non-current assets 22 593 327
Net cash outflow from investing (398 920) (391 891)
activities
Net cash utilised by operations (35 525) (178 201)
Decrease in interest-bearing borrowings (81) (6 312)
Vendors for businesses (repaid)/acquired (3 979) 3 561
Increase in short-term borrowings 67 179 214 553
Net proceeds from issue of shares 14 823 508
Net cash inflow from financing activities 77 942 212 310
Net increase in cash and bank balances 42 417 34 109
Cash and bank balances at the beginning 176 580 142 471
of the year
Cash and bank balances at the end of the 218 997 176 580
year
** Prior year figures have been restated to reflect the consolidation of the
Share Trust and the reclassification of the short-term borrowings and cash and
bank balances and interest bearing floorplan creditors.
ABRIDGED GROUP STATEMENT OF CHANGES IN EQUITY
Audited
Audited Restated
year ended year ended
30.06.04 30.06.03**
R 000 R 000
Opening balance as previously reported 1 167 528 1 083 236
Effects of the change in accounting - (37 098)
policy for the consolidation of the share
trust
Opening balance restated 1 167 528 1 046 138
Net profit for the year 252 664 212 093
Dividends paid (70 694) (63 415)
Dividends paid on `A` shares in a (481) (452)
subsidiary
Vesting of unvested loans to participants 10 136 11 820
Net proceeds on issue of shares 7 727 17
Additional share premium arising on the 7 096 491
issue of shares by the share trust
Release of NDR on sale of property (192) -
Statutory reserve (release)/creation (157) 1 168
Unrealised decrease on translation of
net worth of foreign subsidiaries (31 080) (40 332)
Closing balance 30 June 2004 1 342 547 1 167 528
** Prior year figures have been restated to reflect the consolidation of the
Share Trust
NOTES
1. Compliance with GAAP
These results have been compiled in accordance with the South African Statement
of Generally Accepted Accounting Practice applicable to Preliminary Financial
Reporting.
2. Accounting policies
The accounting policies used in the preparation of the results are consistent in
all material respects with those adopted in the annual financial statements for
the year ended 30 June 2003 except for the effects of the consolidation of the
share trust. For the details of the related adjustments, refer to notes 8 and 9
below. In addition, certain comparative figures have been restated to comply
with the current year classifications. These reclassifications relate to Motors`
wholesale revenue, short term borrowings and cash and bank balances and interest
bearing floor plan creditors. Refer to note 9 for the impact of these
adjustments.
3. Material subsequent events
No material events have occurred subsequent to the year end.
4. Changes in the business
There were no material changes in the composition of the business during the
year.
5. Audit opinion
The auditors Deloitte & Touche have issued unqualified audit opinions on the 30
June 2004 annual financial statements and the summarised results contained
herein. The reports are available for inspection at the company`s registered
office.
6. Capital commitments
Capital expenditure commitments amounted to R55 million (2003: R77 million).
These capital commitments ignore any commitments in respect of the commuter bus
contract awaiting Competition Tribunal approval.
7. Litigation and claims
There were no material litigation claims or undisclosed liabilities as at 30
June 2004.
8. Change in accounting policy
During the year the group changed its accounting policy with regard to the
consolidation of the Unitrans Limited Share Trust. The trust was created for the
purpose of purchasing and holding shares on behalf of employees. The Trust was
not previously consolidated into the accounts of Unitrans Limited. As a result
of the revised interpretation of AC132 (Consolidated Financial Statements) by
the JSE Securities Exchange South Africa GAAP Monitoring Panel the Share Trust
has been consolidated into the financial statements of Unitrans Limited
retrospectively. As a result the comparative information has been restated.
Refer to note 9 for details of the restatement.
9. Restatement of comparative information
The comparative information presented has been restated for the following:
- the consolidation of the Share Trust as detailed in note 8.
- the reclassification of wholesale revenue, relating to the Motors division,
from cost of sales to Revenue in accordance with AC 111 (Revenue).
- the reclassification of the Standard Bank call account from cash and bank
balances to external short-term borrowings and the reclassification of interest
bearing floorplan creditors to short-term borrowings to comply with the current
year classifications.
10. Segmental analysis
Transport
and Logistics
Freight &
2004 Logistics Passenger Total
Income statement
Revenue 1 763 258 372 620 2135 878
Operating income
before depreciation 321 052 84 311 405 363
Depreciation 147 548 38 154 185 702
Operating income
after depreciation 173 504 46 157 219 661
Balance sheet
Total assets 1 539 005 240 230 1 779 235
Total liabilities 867 481 50 288 917 769
Net assets 671 524 189 942 861 466
Gross capital
expenditure 404 505 54 582 459 087
Motor and
Financial Services Group
2004 Retail Financial Total
Income statement
Revenue 7 049 823 105 330 7 155 153 9 291 031
Operating income
before depreciation 173 619 37 801 211 420 616 783
Depreciation 13 667 845 14 512 200 214
Operating income
after depreciation 159 952 36 956 196 908 416 569
Balance sheet
Total assets 1 037 784 149 826 1 187 610 2 966 845
Total liabilities 596 468 67 532 664 000 1 581 769
Net assets 441 316 82 294 523 610 1 385 076
Gross capital
expenditure 21 380 147 21 527 480 614
Transport
and Logistics
Freight &
2003 (Restated) Logistics Passenger Total
Income statement
Revenue 1 483 014 347 688 1 830 702
Operating income
before depreciation 298 642 72 384 371 026
Depreciation 133 609 29 924 163 533
Operating income
after depreciation 165 033 42 460 207 493
Balance sheet
Total assets 1 314 813 202 299 1 517 112
Total liabilities 650 554 64 764 715 318
Net assets 664 259 137 535 801 794
Gross capital
expenditure 231 945 67 304 299 249
Motor and
Financial Services Group
2003 (Restated) Retail Financial Total
Income statement
Revenue 5 785 792 141 370 5 927 162 7 757 864
Operating income
before depreciation 155 957 29 513 185 470 556 496
Depreciation 11 016 1 253 12 269 175 802
Operating income
after depreciation 144 941 28 260 173 201 380 694
Balance sheet
Total assets 974 449 90 867 1 065 316 2 582 428
Total liabilities 603 496 57 519 661 015 1 376 333
Net assets 370 953 38 348 404 301 1 206 095
Gross capital
expenditure 23 778 262 24 040 323 289
Revenue earned outside of South Africa ( Mozambique, Malawi, Tanzania, Botswana,
Namibia, Lesotho and Swaziland) totalled
R389 million (2003: R376 million).
This translated into operating income before depreciation of
R92 million (2003: R78 million).
The total net asset value attributable to these operations is
R444 million (2003: R462 million).
COMMENTARY
RESULTS
The directors announce a 20% increase in revenue to R9.3 billion (2003: R7.8
billion) and a 19% growth in attributable earnings to R253 million (2003: R212
million). Headline earnings increased by 15% to R263 million (2003: R230
million). Earnings per share grew by 17% to 332.5 cents per share (2003: 283.8
cents per share) with headline earnings per share increasing by 13% to 346.7
cents per share (2003: 307.9 cents per share).
Acquisitive growth was negligible during the year under review. The growth was
largely driven by strong performances in each of the Group`s major business
units.
The net asset value per share grew by 13% to 1 747 cents per share (2003: 1 552
cents per share).
The Group has continued to deliver a strong return on capital with the return on
average shareholders` funds increasing to 20% (2003: 19%).
Borrowings
The Group`s debt to equity ratio was 12% at year-end with the core level of net
borrowings increasing from R350 million to R550 million. The Group believes that
this level of borrowing provides it with the flexibility to pursue attractive
investment opportunities and improve returns to shareholders. The net finance
costs decreased from R52 million to R49 million as a result of the reduction in
interest rates during the reporting period. The interest bearing floor plan in
the Motor division has been reclassified as interest bearing debt in both the
current and prior year.
Balance sheet
The balance sheet remains strong with the key focus area being the management of
working capital. As a result of this focus, the working capital increase was
limited to a comparatively modest amount of R21 million. Inventories were up on
last year by only 3%. The movement in debtors was mainly attributable to
increased trading activities in both Motors and Freight and Logistics.
Reinvestment of capital and cash flow
The net cash from operations increased from R214 million to R363 million.
The Group reinvested R481 million during the current year in property, vehicles
and equipment. R192 million (2003: R109 million) was spent on the replacement of
existing equipment with the balance of R289 million (2003: R214 million) being
spent on expansion. The expansion capital was mainly invested in capital
required for new business awarded to the Group`s Freight and Logistics
operations. The Group has continued to invest in its core operations to provide
a solid platform for future growth.
SEGMENTAL ANALYSIS
Freight and Logistics
Despite a fundamental shift to operating in a lower-inflation environment and
notwithstanding the indirect impact of the strong Rand, the Freight and
Logistics division`s revenue grew by 19% to R1.8 billion, with operating income
after depreciation increasing by 5% to R174 million.
The reduction in margin in this division can be attributed to a number of
factors including:
* start-up costs associated with a number of new contracts;
* increased fuel costs;
* the termination of the UPS licence in February 2004; and
* initial start-up costs of the Aramex operation.
Fuel and Chemical performed well, with pleasing growth year-on-year. The non-
South African sugar operations delivered good results, however, the local sugar
operations were impacted by the adverse weather conditions in KwaZulu-Natal. The
Freight operations had a mixed performance with most of its operations
performing well save for Forestry. As stated previously, the termination of the
UPS licence had an impact on profitability in the Express Delivery operation,
with Aramex taking longer than anticipated to make a contribution.
The gross capital investment in this division was R405 million; R273 million of
which was used to fund expansion with the balance spent on replacement.
The Freight and Logistics division used the opportunity afforded by the strength
of the rand to reassess its fleet age and replace fleet where appropriate.
Passenger
In the Passenger division revenue grew by 7% to R373 million, with operating
income after depreciation increasing by 9% to R46 million. The Intercity
activities faced strong competition throughout the year. The luxury coach
operations came under pressure in the second half of the year as tourist numbers
declined on the back of the strong rand. The balance of the business performed
well; more than making up for the shortfall in other areas.
The capital invested in this operation was R55 million, of which R14 million was
used to fund expansion and the balance was spent on replacement.
Motor and Financial Services
The Motor Retail division has had an outstanding year.
Revenue grew by 22% to R7.1 billion with operating income increasing by 10% to
R160 million. The decrease in margin is largely attributable to a change in mix
between new and used vehicles. New vehicles formed a far larger percentage of
overall revenue during the review period. In addition, the inclusion of
wholesale sales in revenue in the current year has contributed to the margin
reduction.
The increased consumer confidence and lower interest environment provide a
strong growth platform for this business. However, lower inflation also impacted
results with reduced price escalations and increased pressure on used vehicle
prices.
Notwithstanding an extremely competitive market, this division has retained its
market share.
The Insurance and Finance operations exceeded expectations with operating income
increasing by 31% to R37 million.
The performance of the Hertz-Rent-a-Car operations, in which the division has a
40% equity stake, represents a considerable improvement over the results for the
prior year and this operation is expected to make an improved contribution going
forward.
CORPORATE ACTIVITY
The Group remains committed to its policy of entrenching and building on organic
growth whilst investigating potential acquisitions and investment opportunities
that accord with the Group`s risk profile and strategic plan.
As previously advised, the Freight division acquired the business of Chrisick
Transport with effect from 31 December 2003. Chrisick Transport, which provides
a materials handling and transportation service under contract to the mining
industry in the Northwest Province, has now been bedded down in the mining
services business unit of the Freight division and is fully operational.
Following the termination by United Parcel Services Inc. of its licence
agreement with Unitrans Express Deliveries (Proprietary) Limited with effect
from 1 February 2004, a new licence agreement has been entered into with Aramex
International Limited and operations under the new licence have commenced. In
addition, the Company purchased the 50% shareholding held by UPSLG International
BV in Unitrans Supply Chain (Proprietary) Limited, also with effect from 1
February 2004.
The Freight division formed a joint venture, UniViron (Proprietary) Limited, for
the provision of administrative and transport services to a waste disposal
business in KwaZulu-Natal. As part of its divisional black economic empowerment
(BEE) initiative, it increased its equity stake in Klipstone Transport
(Proprietary) Limited to 64% (2003: 51%). The Group has taken a 30% equity stake
in a BEE company, Nomakanjani Logistics Company (Proprietary) Limited, the
balance of the shareholders being Imbani Holdings, a black-owned company
involved in transport logistics for the mining sector, Bakgotsi Holdings (a
group of black business leaders involved in various industry sectors, and Anglo
Zimele (Anglo American PLC`s empowerment and business development facilitator).
Nomakanjani has been providing transport services under contract to the coal
mining industry from 1 July 2004.
A contract for commuter bus transport in the Rustenburg area has been awarded to
Bojanala Bus (Proprietary) Limited, a BEE entity in which the Passenger division
holds an effective 48% equity stake. This contract will involve the acquisition
of 210 commuter buses and is subject to the final approval of the Competition
Tribunal. Should approval be granted, operations will commence in October.
SOCIAL RESPONSIBILITY
The Group remains committed to conducting its businesses as a responsible
corporate citizen.
As part of its programme to combat Aids, the Group has introduced voluntary
counselling and anti-retroviral treatment on a pilot basis. Initiatives are
being implemented in other areas to overcome any fear and stigma associated by
the workforce with this disease.
BLACK ECONOMIC EMPOWERMENT (`BEE`)
Subject to the obtaining of such regulatory and statutory approval as may be
required, the Company has accepted an offer from a special purpose vehicle (`the
BEE Company`), owned by a combination of BEE shareholders namely Mvelaphanda
Capital (Proprietary) Limited, Arch Equity (Proprietary) Limited and an employee
trust (to be formed), for the subscription by the BEE Company on 4 October 2004
for 11 600 000 (eleven million six hundred thousand) shares in the Company at an
issue price, payable in cash, of R25,04 (twenty five rand and four cents) per
share. This issue price is at a discount of 10% to Unitrans` weighted average
share price of R27.82 (twenty seven rand and eighty two cents) per share for the
30 trading days up to and including Friday 6 August 2004 i.e. the date before
the written offer from the BEE company was submitted. The 11 600 000 shares to
be issued will not qualify for Dividend No. 31.
The Board is committed to BEE transformation and believes that this transaction
will result in new growth and development opportunities for the Group.
SURPLUS DISTRIBUTION
The Fund Trustees and the actuary of the Unitrans Retirement Fund are in the
process of completing a surplus apportionment exercise. Initial valuations of
the Fund have revealed that the Group has an estimated obligation in terms of
recently introduced legislation totaling approximately R7.2 million. This amount
has been provided for in full in the review period.
CORPORATE GOVERNANCE
During the period under review, the Group established the following initiatives:
- board and committee appraisals;
- compliance committees; and
- an external independent whistle-blowing facility.
Attention will continue to be focused on sound corporate governance practices
and the Group remains compliant in all material respects with the
recommendations of the King Report on Corporate Governance for South Africa
2002.
PROSPECTS
The 2005 financial year has started on a positive footing for the Motor division
with a further decrease in the prime lending rate. The vehicle retail market
remains buoyant and new product launches and the lower levels of interest rates
should, in the Board`s opinion, continue to stimulate the market for at least
the next 6 months.
The Freight and Logistics division has an established platform of contracts in
place for the year ahead. There are several exciting new projects under
consideration, which could provide attractive growth opportunities.
If approved by the Competition Tribunal, the new contract in the commuter arena
should position the Passenger division for reasonable growth in the year ahead.
The resolution of the issues encountered within Hertz-Rent-a-Car and Unitrans
Express Delivery operations bodes well for future contributions from these
entities.
The Group has committed and stable management teams in place who have delivered
significant growth in the past and are well positioned to ensure that the
various business silos continue to grow in the future. The existing brands are
well established and are positioned to assist in achieving the Group`s growth
objectives. Part of the Group`s strong performance in the past was due to the
diversity of the Group`s operations, which has proved an effective
counterbalance to cyclical swings.
The Board is accordingly of the view that the Group should continue to deliver
real growth in earnings in the year ahead.
CAUTIONARY
Shareholders` attention is drawn to the cautionary notice published by the
Company on 20 August 2004 which referred to the cautionary announcement
published by Murray & Roberts Holding Limited (`M&R`) on that date advising that
M&R had received an offer for its 44% shareholding in Unitrans.
At the time of this announcement no further information has been made available
to the Directors relating to the offer to M&R. Shareholders will be kept advised
of any developments in this regard.
For and on behalf of the Board
D C Brink K J Grove
Chairman Chief Executive
DIVIDEND
Dividend No. 31 of 100 cents per share, being the total dividend for the year
ended 30 June 2004 (2003: 93 cents per share) has been declared payable on 4
October 2004 to those shareholders recorded in the books of the Company at the
close of business on 1 October 2004.
The dividend is payable in the currency of South Africa.
Last date to trade cum dividend Thursday 23 September 2004
Shares trade ex dividend Monday 27 September 2004
Record date Friday 1 October 2004
Payment date Monday 4 October 2004
No dematerialisation or rematerialisation of shares may take place between
Monday 27 September 2004 and Friday
1 October 2004, both dates inclusive.
By order of the Board
J V Radnay Illovo
Group Secretary 24 August 2004
Date: 24/08/2004 05:18:32 PM
Produced by the JSE SENS Department
