| Tue 10 May 2005, 17:45 | | financial results For the year ended 28 February |
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Valuegroup Limited - Audited financial results For the year ended 28 February
2005
The Measurable Logistics Company
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN Code: ZAE000016507
Share code: VLE
- 29% INCREASE IN REVENUE
- 21% INCREASEINHEADLINEEARNINGSPERSHARE
- 25% INCREASE IN DIVIDEND
- 20% INCREASE IN OPERATING CASH FLOW
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 28 February 2005
CONSOLIDATED INCOME STATEMENT
% R000`s R000`s
change 2005 2004
Revenue 29 718 137 555 534
Operating income before depreciation
and finance costs 129 475 119 854
Depreciation (57 864) (51 844)
Operating income 5 71 611 68 010
Investment income 1 458 777
Finance costs (4 264) (9 331)
Net income before taxation 68 805 59 456
Taxation (note 2) (21 517) (19 693)
Earnings attributable to ordinary
shareholders 19 47 288 39 763
Earnings per share (cents) (note 3)
- Basic 24,2 20,4
- Headline 21 23,3 19,2
- Diluted basic 22,8 18,7
- Diluted headline 22,0 17,6
Dividends per share (cents) 5,0 4,0
Consolidated balance sheet
Assets
Non-current assets 327 201 265 348
Property, vehicles, plant and equipment 320 558 264 730
Deferred tax 663 613
Investments 5 980 5
Current assets 170 865 142 418
Inventory 9 295 10 514
Trade and other receivables 98 581 90 326
Bank and cash 62 989 41 578
Total assets 498 066 407 766
Equity and liabilities
Capital and reserves 241 308 201 338
Non-current liabilities 91 327 75 513
Interest-bearing borrowings 54 373 37 038
Deferred tax 36 954 38 475
Current liabilities 165 431 130 915
Trade and other payables 123 339 97 292
Current portion of interest-bearing borrowings 20 113 18 096
Taxation 21 979 15 527
Total equity and liabilities 498 066 407 766
Net tangible asset value per share (cents) 122,7 103,0
Return on average equity (%) 21,4 21,6
Debt: equity ratio (%) 30,9 27,4
Consolidated cash flow statement
Cash flows from operating activities 115 503 96 072
Cash flows from investing activities (113 948) (85 527)
Cash flows from financing activities 19 856 (8 883)
Net change in cash and cash equivalents 21 411 1 662
Consolidated statement of changes in equity
Share capital 208 208
Share premium 41 231 41 231
Accumulated profits 206 912 167 846
Balance at beginning of year 167 846 133 925
Earnings attributable to ordinary
shareholders 47 288 39 763
Dividend paid (7 822) (5 842)
Loss on disposal of shares held by Share
Incentive Trust (400) -
Shares held by Share Incentive Trust (7 043) (7 947)
Total capital and reserves 241 308 201 338
Notes
1. Accounting policies
The results have been prepared in accordance
with South African Statements of Generally
Accepted Accounting Practice.
The accounting policies adopted for this
report are consistent with those applied
in the previous year.
2. Taxation
Taxation includes secondary taxation on
companies. 1 038 778
3. Earnings per share
3.1 Reconciliation between basic and headline
earnings
Basic earnings 47 288 39 763
Profit on disposal of property vehicles,
plant and equipment less taxation (1 609) (2 447)
Headline earnings 45 679 37 316
3.2 Number of ordinary shares in issue
- Actual 207 599 040 207 599 040
- Weighted average 195 656 096 194 851 096
- Diluted 207 354 393 212 107 884
COMMENTARY
INTRODUCTION
Value Group Limited and its subsidiaries provide a comprehensive range of
tailored logistical solutions throughout Southern Africa. The major operating
divisions specialise in providing distribution services, warehouse and fleet
management, forklift and vehicle rental and leasing.
FINANCIAL REVIEW
The Board is pleased to announce a 21% increase in headline earnings from
19,2 cents to 23,3 cents per share. Earnings attributable to ordinary
shareholders increased by 19% from R39,8 million to R47,3 million.
Of further significance is the 29% increase in revenue from R555,5 million to
R718,1 million. This growth was attributable to increased volumes from existing
customers, organic growth and the acquisition of the customer base from Rennies
Technology Logistics in December 2003.
The increased level of activity amongst the customer base necessitated
additional warehousing and infrastructure costs, which had the effect of
reducing margins. These additional costs partially negated the 29% increase in
revenue and resulted in a 5% increase in operating income from R68 million to
R71,6 million.
The rapid growth of the Group and the favourable interest rate environment
motivated the significant investment of R119,4 million in assets, R104,8 million
of which represents the investment in new fleet. The ongoing replacement of
older vehicles is necessary to reduce maintenance costs albeit at the expense of
an additional depreciation charge.
Cash flows from operating activities increased by 20% from R96 million to R115,5
million notwithstanding the payment of R16,6 million in taxation. This was
achieved through stricter control of working capital. The exceptional cash
inflows contributed to a R5 million reduction in finance charges and a
R21,4 million increase in cash resources to R63 million.
OPERATIONAL REVIEW
Improved utilisation of the fleet in the Truck Rental division was fuelled by
the volumes distributed in the Logistics division. Additionally, the focus on
cost control contributed to a significant increase in the divisions results.
The Group experienced a difficult year in the Logistics breakbulk division, a
market that continues to produce many challenges. Although profitable, the
increased level of activity required additional infrastructure costs in order to
service the volume growth, the result of which contributed to reduced margins.
Management has and remains focused on improving these margins to prior year
levels. The effect of the remedial action undertaken should manifest itself in
improved operating profitability in the following financial year.
A Truck Rental depot was opened in Rustenburg. A new Logistics branch was opened
in Harrismith to service freight requirements in the Natal Midlands. In
addition, new branches were opened in Windhoek and Gabarone to facilitate the
growth in volumes distributed in these areas.
Freightpak, the niche distributor of hazardous dry chemicals, performed
according to expectation and contributed meaningfully to headline earnings.
Capital commitments
Capital expenditure for annual replacement of vehicles and growth of the
business has been budgeted at R93 million for the forthcoming year.
PROSPECTS
Construction of the new state-of-the-art 90000 m2 leased warehouse and
distribution facility is nearing completion. It is expected to be fully
operational from October 2005. Six decentralised warehouses and two distribution
facilities in the Gauteng area will be consolidated into this facility. Although
the new facility will result in increased lease costs, these will be comfortably
offset by operational efficiencies and cost savings that should materialise from
this consolidation in the last quarter of the 2006 financial year.
The Group obtained the internationally recognised Komatsu agency to distribute
material handling equipment throughout Southern Africa. Komatsu equipment will
be used internally and marketed to the industrial sector through rentals, full
maintenance lease agreements and direct sales.
In line with the Group`s policy of acquiring businesses that are well-managed
and synergise with the services offered by the Group, the acquisition of
Countrywide Footwear Carriers (Pty) Limited (CFC), as announced on SENS on
5 April 2005, should contribute positively to future earnings of the Group. CFC
specialises in the provision of warehousing and distribution services focused on
the footwear, clothing and general merchandise industries.
During the past year, the Group`s significant investment in renewing and
upgrading its fleet provides a platform for future organic growth and improved
vehicle utilisation. A stable economy and operating environment including a
steady diesel price and interest rate should contribute to an increase in
headline earnings for the 2006 financial year at least in line with inflation.
ACKNOWLEDGEMENTS
Mr Brian Goldie retired as an executive director at the end of December 2004.
The Board thanks him for his valued contribution to the Group and is pleased
that his knowledge and experience will be available to the Group in his new
capacity a non-executive director.
AUDIT OPINION
Charles Orbach & Company has audited these results. Their unqualified audit
opinion is available for inspection at the company`s registered office.
DECLARATION OF DIVIDEND (NUMBER 3)
The Group`s generation of positive cash flows will be sufficient to cover future
capital and operational expenditure. Accordingly, the Board has resolved to
increase the dividend by 25% from 4,0 cents to 5,0 cents per ordinary share.
This dividend is covered 4,7 times by headline earnings and is payable as
follows:
Declaration date: Tuesday, 10 May 2005
Last day to trade cum dividend: Friday, 24 June 2005
Trading ex-dividend commences: Monday, 27 June 2005
Record date: Friday, 1 July 2005
Payment date: Monday, 4 July 2005
Share certificates may not be dematerialised or rematerialised between 27 June
2005 and 1 July 2005, both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
10 May 2005
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), D C Marais, B E Goldie*,
C L Sack, G J Igesund, I M Groves*, N M Phosa *Non-executive director
