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UTR
UTR
Unitrans Limited - Group results for the year ended 30 June 2006
UNITRANS LIMITED
Registration number 1967/003403/06
JSE Share Code: UTR
ISIN: ZAE000007670
("Unitrans")
Highlights
- Revenue up 20%
- Headline Earnings Per Share up 21%
- Cash from Operations: R514 million
- Capital Distribution up 23%
ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 30 JUNE 2006
The board of directors of Unitrans announces the following audited results:
Condensed Group Income Statement
Audited Restated
Year ended Year ended
30.06.06 30.06.05** Increase
R 000 R 000
Revenue 13 401 174 11 172 179 20%
Operating profit 552 004 404 378 37%
Interest income 71 161 63 804
Interest paid (127 907) (104 917)
Profit before taxation 495 258 363 265 36%
Taxation (157 640) (93 154)
Profit after taxation 337 618 270 111
Share of associates" profits 665 285
Profit for the year 338 283 270 396 25%
Attributable to:
Equity holders of the parent 332 836 268 478 24%
(Unitrans)
Minority interests 5 447 1 918
338 283 270 396 25%
Number of shares in issue
adjusted
for treasury stock (`000) 84 187 88 193
Weighted average number of 86 307 85 729
shares in issue (`000)
Diluted weighted average number 87 009 86 518
of ordinary shares in issue
(`000)
Earnings per share (cents)
- basic 385.6 313.2 23%
- basic as previously stated 321.5
- diluted 382.5 310.3 23%
- diluted as previously stated 318.6
Headline earnings per share
(cents)
- basic 405.5 335.4 21%
- basic as previously stated 343.7
- diluted 402.3 332.3 21%
- diluted as previously stated 340.6
Distribution per share (cents)
- final dividend paid 100
- final capital distribution in 110
lieu of a dividend paid
- capital distribution in lieu 135 110 23%
of a dividend declared
subsequent to year-end
** Prior year, figures have been restated to reflect the adoption of
International Financial Reporting Standards ("IFRS") and other restatements
as set out in note 10.
Condensed Group Balance Sheet
Audited Restated
Year ended Year ended
30.06.06 30.06.05**
R 000 R 000
Assets
Non-current assets 1 874 444 1 577 724
Property, plant and equipment 1 450 071 1 363 384
Vehicle rental fleet 34 532
Goodwill 219 058 82 150
Intangible assets 25 964 5 226
Investment in associate 21 622 43 296
companies
Held-to-maturity investments 28 622 28 622
Loans and receivables 31 268 21 273
Deferred tax assets 63 307 33 773
Current assets 3 203 567 2 576 585
Advances relating to Unitrans - 9 275
Finance (Pty) Ltd
Inventories 1 073 200 901 718
Vehicle rental fleet 142 024
Trade and other receivables 1 001 738 701 163
Assets classified as held-for- 13 878 2 158
sale
Cash and cash equivalents 972 727 962 271
Total assets 5 078 011 4 154 309
Equity and liabilities
Interest of all shareholders 1 891 942 1 751 263
Share capital 8 419 8 819
Capital reserves 607 485 700 992
Treasury stock (192 387) (29 597)
Non-distributable reserves 154 709 153 823
Retained earnings 1 253 794 905 534
Equity attributable to 1 832 020 1 739 571
shareholders of Unitrans
Minority interest 59 922 11 692
Non-current liabilities 732 791 647 312
Provisions 6 641 6 864
Deferred tax liabilities 135 955 115 846
Interest-bearing liabilities 63 915 4 691
Vendors for businesses acquired 17 287 2 253
Domestic medium-term note 400 623 400 700
Non-interest bearing long-term 88 343 105 249
liabilities
Obligations under finance leases 20 027 11 709
Current liabilities 2 453 278 1 755 734
Liabilities relating to Unitrans - 9 275
Finance (Pty) Ltd
Provisions 166 245 127 452
Taxation 38 480 35 561
Interest-bearing short-term 379 776 51 810
liabilities
Non-interest bearing short-term 343 010 196 240
liabilities
Trade and other payables 953 793 873 293
Obligations under finance leases 7 012 4 476
Bank overdrafts 564 962 457 627
Total equity and liabilities 5 078 011 4 154 309
Net asset value per share 2 176 1 972
(cents)
** Prior year figures have been restated to reflect the adoption of IFRS
and other restatements as set out in note 10.
Condensed Group Cash Flow Statement
Audited Restated
Year ended Year ended
30.06.06 30.06.05**
R 000 R 000
Cash generated from operations before 880 071 662 421
changes in working capital and other
non-cash movements
Other non-cash movements 15 932 7 069
Changes in working capital (154 096) (42 243)
- Inventories (168 694) (169 423)
- Trade and other receivables (132 147) (10 358)
- Trade and other payables 728 58 660
- Non-interest bearing liabilities - 146 017 78 878
floorplan creditors
Interest income 71 161 63 804
Interest paid (127 907) (104 917)
Taxation paid (170 668) (120 409)
Net cash generated from operating 514 493 465 725
activities
Proceeds on sale of assets held-for- 3 104 -
sale
Acquisition of subsidiaries and (158 266) (55 146)
businesses
Disposal of subsidiary 2 835 -
Acquisition of property, plant and
equipment
- Replacement (267 859) (216 411)
- Expansion (187 349) (264 844)
Proceeds from disposal of property, 90 486 67 224
plant and equipment
Acquisition of vehicle rental fleet (211 645)
Proceeds on disposal of vehicle rental 36 797
fleet
Project costs capitalised to intangible (936) -
assets
Acquisition of associate (18 762) (92)
Associate loan advanced - (1 500)
Net cash (outflow)/inflow on loans and (8 172) 11 635
receivables
Net cash utilised in investing (719 767) (459 134)
activities
Net cash (outflow)/inflow before (205 274) 6 591
financing activities
Dividends paid (1 072) (79 755)
Capital distribution (97 018) -
Net proceeds from issue of shares 20 287 020
Repurchase of shares (164 213) (26 992)
Net proceeds from issue of domestic - 400 700
medium-term note
Vendors for businesses acquired - (252) (7 957)
repaid
Increase in/(repayment of) interest- 29 546 (3 225)
bearing liabilities
Increase in finance lease obligations 13 418 -
Increase in non-interest bearing - 18 232
liabilities
Increase/(decrease) in interest-bearing 327 966 (314 735)
short-term liabilities
Net cash generated from financing 108 395 273 288
activities
Net (decrease)/increase in cash and (96 879) 279 879
cash equivalents
Cash and cash equivalents at beginning 504 644 224 765
of the year
Cash and cash equivalents at end of the 407 765 504 644
year
** Prior year figures have been restated to reflect the adoption of IFRS
and other restatements as set out in note 10.
Group Statement of Changes in Equity
Non-
distri-
Share Capital Treasury butable
capital reserves stock reserves
R 000 R 000 R 000 R 000
Balance at 30 June 2004 as
previously reported 7 687 415 867 (12 734) 107 788
Effect of adoption of IFRS
(refer note 10)
- share-based payment 3 500
charge
- the re-assessment of
residual
values and useful lives of
property,
plant and equipment
- resetting FCTR to nil 59 284
Total effect of adoption of - 3 500 - 59 284
IFRS
Effect of other
restatements (refer note
10)
- the consolidation of
special
purpose entities
- the re-assessment of the
useful
life of an intangible asset
Total effect of other - - - -
restatements
Balance at 30 June 2004 7 687 419 367 (12 734) 167 072
restated
Profit for the year
Dividends paid
Dividends paid on "A"
shares in a subsidiary
Share-based payment 4 555
charges
Loss on the sale of shares
in the Share Trust (8 790)
Vesting of previously 55 10 046
unvested loans to
participants in the Share
Trust
Shares repurchased by (83) (26 537)
subsidiary
Shares held by Share Trust (372)
Net proceeds on issue of 1 160 285 860
shares
Unrealised decrease on (7 341)
translation of net worth
of foreign subsidiaries
Release of realised non- (6 955)
distributable reserve on
sale of property
Insurance company 1 047
contingency reserves
Total recognised income
and expenses for the year 1 132 281 625 (16 863) (13 249)
Balance at 30 June 2005 8 819 700 992 (29 597) 153 823
restated
Profit for the year
Capital distribution (97 018)
Dividends paid on "A"
shares in a subsidiary
Share-based payment 5 289
charges
Loss on sale of shares in
the Share Trust (1 778)
Vesting of previously 5 998
unvested loans to
participants in the Share
Trust
Shares repurchased by (425) (163 684)
subsidiary
Shares held by Share Trust (104)
Net proceeds on issue of 20
shares
Minority shareholder
investment
Foreign exchange movement
on minority investments
Dividends paid to
minorities
Sale of business
Release of realised
non-distributable reserves (17 901)
Unrealised increase on
translation of
net worth of foreign 16 393
subsidiaries
Insurance company 2 394
contingency reserves
Total recognised income (400) (93 507) (162 790) 886
and expenses for the year
Balance at 30 June 2006 8 419 607 485 (192 387) 1 54 709
Equity
attribu-
table to
Retained share- Minority Total
earnings holders interest equity
R 000 R 000 R 000 R 000
Balance at 30 June 2004
as
previously reported 781 928 1 300 536 42 529 1 343 065
Effect of adoption of
IFRS (refer note 10)
- share-based payment (3 500) - -
charge
- the re-assessment of (8 022) (8 022) (8 022)
residual values and
useful lives of
property, plant and
equipment
- resetting FCTR to nil (59 284) - -
Total effect of (70 806) (8 022) - (8 022)
adoption of IFRS
Effect of other
restatements (refer
note 10)
- the consolidation of
special
purpose entities (891) (891) (30 994) (31 885)
- the re-assessment of
the useful
life of an intangible (1 056) (1 056) (1 056)
asset
Total effect of other (1 947) (1 947) (30 (32 941)
restatements 994)
Balance at 30 June 2004 709 175 1 290 567 1 1 535 1 302 102
restated
Profit for the year 268 478 268 478 1 918 270 396
Dividends paid (77 422) (77 422) (1 728) (79 150)
Dividends paid on "A" (605) (605) (605)
shares in a subsidiary
Share-based payment 4 555 4 555
charges
Loss on the sale of (8 790) (8 790)
shares in the Share
Trust
Vesting of previously 10 101 10 101
unvested loans to
participants in the
Share Trust
Shares repurchased by (26 620) (26 620)
subsidiary
Shares held by Share (372) (372)
Trust
Net proceeds on issue 287 020 287 020
of shares
Unrealised decrease on (7 341) (33) (7 374)
translation of net
worth of foreign
subsidiaries
Release of realised non- 6 955 - -
distributable reserve
on sale of property
Insurance company (1 047) - -
contingency reserves
Total recognised income 196 359 449 004 157 449 161
and expenses for the
year
Balance at 30 June 2005 905 534 1 739 11 692 1 751 263
restated 571
Profit for the year 332 836 332 836 5 447 338 283
Capital distribution (97 018) (97 018)
Dividends paid on "A" (83) (83) (83)
shares in a subsidiary
Share-based payment 5 289 5 289
charges
Loss on sale of shares (1 778) (1 778)
in the Share Trust
Vesting of previously 1 003 1 003
unvested loans to
participants in the
Share Trust
Shares repurchased by (164 (164 109)
subsidiary 109)
Shares held by Share (104) (104)
Trust
Net proceeds on issue 20 20
of shares
Minority shareholder 38 038 38 038
investment
Foreign exchange 7 037 7 037
movement on minority
investments
Dividends paid to (989) (989)
minorities
Sale of business (1 303) (1 303)
Release of realised non- 17 901 - -
distributable reserves
Unrealised increase on 16 393 16 393
translation of net
worth of foreign
subsidiaries
Insurance company (2 394) - -
contingency reserves
Total recognised 348 260 92 449 48 230 140 679
income and expenses
for the year
Balance at 30 June 1 253 794 1 832 020 59 922 1 891 942
2006
Notes
1. Basis of preparation
The financial statements have been prepared using accounting policies that
comply with International Financial Reporting Standards and presented in
compliance with IAS 34 (Interim Financial Reporting). The accounting
policies are consistent with those applied in the previous financial year,
except for the changes that are described in note 9.1.
This announcement has been prepared in compliance with the Listing
Requirements of the JSE Limited.
2. Auditors" opinion
The group auditors, Deloitte & Touche, have completed the audit of the
annual financial statements on which this preliminary announcement has been
based. Their unqualified report is available at the registered office of
the company.
3. Corporate Governance
The group subscribes to and complies, in all material respects, with the
Code on Corporate Practices and Conduct, as contained in the King II Report
on Corporate Governance.
Audited Restated
Year ended Year ended
30.06.06 30.06.05** Increase
R 000 R 000
4. Determination of headline
earnings
Profit attributable to equity 332 836 268 478 24%
holders of the parent
(Unitrans)
Adjustment for:
- closure costs 9 484 18 271
- net loss on 12 804 6 012
scrapping/disposal of property,
plant and equipment
- profit on sale of subsidiary (482) -
- goodwill impairment - 498
354 642 293 259
Taxation effect of the above (4 635) (5 751)
items
Headline earnings 350 007 287 508 22%
** Prior years figures have been restated to reflect the adoption of IFRS
and other restatement as set out in note 10.
5. Subsequent events
No material events have occurred subsequent to the year-end.
6. Capital commitments
Capital commitments (contracted but not provided for) at 30 June 2006
amounted to R165 million (2005: R30 million).
7. Litigation, claims and contingent liabilities
There were no material litigation, claims or contingent liabilities at 30
June 2006 (2005: Rnil).
8. Related party transactions
The group is controlled by Steinhoff International Holdings Limited, which
owns 64,5% of the company"s shares. During the year, the company and its
subsidiaries, in the ordinary course of business, entered into various
sales and purchase transactions with its holding company, fellow
subsidiaries, joint ventures and associates. These transactions occurred
under terms that are no less favourable to Unitrans than those arranged
with third parties.
9.1 Changes in accounting policies
The group"s accounting policies were changed on 1 July 2005 to comply with
IFRS.The transition to IFRS has been accounted for in accordance with IFRS
1 (First-time Adoption of International Financial Reporting Standards),
with 1 July 2004 as the date of transition. The changes in accounting
policy as a consequence of the transition to IFRS are described below.
IFRS 2 - Share-based payment
IFRS 2 requires the recognition of equity-settled share-based payments at
fair value at the date of grant. Prior to the adoption of IFRS 2, the group
did not recognise the financial effect of share-based payments until such
payments were settled.
In accordance with the transitional provisions of IFRS 2, the Standard has
been applied retrospectively to all grants of equity instruments after 7
November 2002 that were unvested as of 1 January 2005.
IAS 16 - Property, plant and equipment
Under SA GAAP, the residual values of items of property, plant and
equipment were determined at recognition date and were not re-assessed
during the life of the asset. In terms of IFRS, the useful lives and the
residual values used are assessed each year to reflect the estimated amount
that an entity would currently obtain from the disposal of the asset, after
deducting the estimated costs of disposal, if the asset was already of the
age and in the condition expected at the end of its useful life. The
application of this Standard resulted in an increase in the depreciation
charge in the opening retained earnings and to the prior year income
statement.
IFRS 1 - First-time Adoption of International Financial Reporting Standards
In terms of the allowed exemption in IFRS 1, the group has elected to reset
its foreign currency translation reserve at the date of transition to IFRS
to nil.
9.2 Other restatements
Circular 9/2006 - Transactions giving rise to adjustments to
Revenue/Purchases
Previously, the group had accounted for certain volume rebates as income in
the income statement. In terms of Circular 9/2006, these rebates need to be
estimated at the date the related asset is recognised and capitalised to
the cost of the asset. As a result, the income recognised in the
comparative financial statements has been reversed against the cost of the
asset and the depreciation charge for the prior year decreased.
SIC-12 - Consolidation of Special Purpose Entities
SIC-12 provides additional guidance to IFRS 3 on how to determine whether a
controlling relationship exists with an entity and hence whether that
entity needs to be consolidated. SIC-12 has now been applied to the
relevant relationships.
Intangible assets
Re-assessment of the useful life of an intangible asset.
Notes (continued)
2006 2005
R 000 R 000
10. Effects of the adoption of IFRS and
other restatements
Effect on the Income Statement
Profit for the year as previously reported N/A 279 959
IFRS adjustments
Increase in operating costs for the share- (5 289) (4 555)
based payment charges
Decrease/(increase) in operating costs due 1 298 (680)
to the re-assessment of residual values and
useful lives in terms of IAS 16
Tax effect of the above items (376) 197
Profit for the year after the adoption of N/A 274 921
IFRS
Other restatements
Increase in operating costs for the revised (119) (2 931)
treatment of rebates
Decrease in investment income as a result (2 462) (2 381)
of the consolidation of Special Purpose
Entities
Increase in interest paid for the revised
purchase price allocation of acquisitions
of subsidiaries (134) (63)
Tax effect of the above items 35 850
Profit for the year after the adoption of N/A 270 396
IFRS and other restatements
Decrease in minorities due to the (2 462) (2 381)
consolidation of Special Purpose Entities
Effect on the Balance Sheet
ASSETS
IFRS adjustments
Decrease in property, plant and equipment (10 816) (12 114)
due to the re-assessment of residual values
and useful lives in terms of IAS 16
Increase in investment in associates as a - 94
result of the IFRS adjustments iro
associates
Total effect of IFRS adjustments on assets (10 816) (12 020)
Other restatements
Decrease in property, plant and equipment (3 050) (2 931)
for the revised treatment of rebates
Decrease in other non-current assets for - (31 885)
the consolidation of Special Purpose
Entities
Increase in goodwill for the revised - 139
purchase price allocation of acquisitions
of subsidiaries
Increase in intangibles for the revised - 1 800
purchase price allocation of acquisitions
of subsidiaries
Increase in intangibles due to the separate - 3 426
disclosure of intangible assets
Decrease in other non-current assets to - (3 426)
reflect the separate disclosure of
intangible assets
Decrease in accounts receivable for the (2 158)
separate disclosure of assets held-for-sale
Increase in assets held-for-sale as a 2 158
result of the separate disclosure of assets
held-for-sale
Decrease in trade and other receivables for (1 056)
the re-assessment of the useful life of an
intangible asset
Total effect of other restatements on (3 050) (33 933)
assets
Total effect of IFRS adjustments and other (13 866) (45 953)
restatements on assets
EQUITY
Total equity as previously reported N/A 1 794 853
IFRS adjustments
Increase in share-based payment reserves 13 344 8 055
for the share-based payment charges
Decrease in distributable reserves for the (13 344) (8 055)
share-based payment charges
Decrease in distributable reserves for the (7 679) (8 601)
re-assessment of residual values and useful
lives in terms of IAS 16
Increase in non-distributable reserves for - 59 284
the resetting of the FCTR to nil at 30 June
2004
Decrease in distributable reserves for the - (59 284)
resetting of the FCTR to nil at 30 June
2004
Increase in distributable reserves as a - 94
result of the IFRS adjustments in
associates
Total effect of IFRS adjustments on equity (7 679) (8 507)
Total equity adjusted for the adoption of N/A 1 786 346
IFRS
Other restatements
Decrease in distributable reserves for the (2 165) (2 081)
revised treatment of rebates
Decrease in distributable reserves for the - (891)
adjustment of consolidation of Special
Purpose Entities
Decrease in minority interest due to the
adjustment for consolidation of Special
Purpose Entities - (30 994)
Decrease in the distributable reserves for (1 056)
the re-assessment of the useful life of an
intangible asset
Decrease in distributable reserves for the (134) (62)
revised purchase price allocation of
acquisitions of subsidiaries
Total effect of other restatements on (2 299) (35 084)
equity
Total effect of IFRS adjustments and other (9 978) (43 591)
restatements on equity
LIABILITIES
IFRS adjustments
Decrease in deferred tax liability as a (3 137) (3 513)
result of the re-assessment of residual
values and useful lives in terms of IAS 16
Total effect of IFRS adjustments on (3 137) (3 513)
liabilities
Other restatements
Decrease in deferred tax liability for the (885) (850)
revised treatment of rebates
Increase in interest-bearing 134 2 001
liabilities for the revised purchase
price allocation of acquisitions of
subsidiaries
Total effect of other restatements on (751) 1 151
liabilities
Total effect of IFRS adjustments and (3 888) (2 362)
other restatements on liabilities
CONDENSED SEGMENTAL REPORT
Transport
and logistics
R 000 USCS Passenger Total
2006
Income statement
Revenue 2 482 193 594 738 3 076 931
Operating income before
depreciation, closure
costs
and net loss on
scrapping/disposal
of assets 376 483 106 950 483 433
Depreciation 184 525 52 936 237 461
Operating income after 191 958 54 014 245 972
depreciation
Closure costs 9 484 - 9 484
Net loss on
scrapping/disposal
of assets 5 331 6 058 11 389
Operating income 177 143 47 956 225 099
Balance sheet
Total assets 2 604 962 380 105 2 985 067
Total liabilities 1 697 140 266 992 1 964 132
Net assets 907 822 113 113 1 020 935
GROSS CAPITAL 332 184 83 051 415 235
EXPENDITURE
RESTATED 2005 **
Income statement
Revenue 1 971 672 516 263 2 487 935
Operating income before
depreciation, closure
costs
and net loss on
scrapping/disposal
of assets 300 433 106 279 406 712
Depreciation 186 212 44 418 230 630
Operating income after 114 221 61 861 176 082
depreciation
Closure costs 18 271 - 18 271
Net loss on
scrapping/disposal
of assets 4 971 654 5 625
Operating income 90 979 61 207 152 186
Balance sheet
Total assets 2 090 202 385 085 2 475 287
Total liabilities 1 334 264 161 519 1 495 783
Net assets 755 938 223 566 979 504
GROSS CAPITAL 334 932 121 884 456 816
EXPENDITURE
MOTOR AND
FINANCIAL SERVICES GROUP
Retail &
R 000 Rental Financial Total
2006
Income statement
Revenue 10 211 003 113 240 10 324 243 13 401
174
Operating income
before
depreciation,
closure costs
and net loss on
scrapping/disposal
of assets 289 137 61 588 350 725 834 158
Depreciation 22 116 289 22 405 259 866
Operating income 267 021 61 299 328 320 574 292
after depreciation
Closure costs - - - 9 484
Net loss on
scrapping/disposal
of assets 1 415 - 1 415 12 804
Operating income 265 606 61 299 326 905 552 004
Balance sheet
Total assets 1 790 181 302 763 2 092 944 5 078 011
Total liabilities 1 105 092 116 845 1 221 937 3 186 069
Net assets 685 089 185 918 871 007 1 891 942
GROSS CAPITAL 251 471 147 251 618 666 853
EXPENDITURE
RESTATED 2005 **
Income statement
Revenue 8 589 493 94 751 8 684 244 11 172
179
Operating income
before
depreciation,
closure costs
and net loss on
scrapping/disposal
of assets 228 638 42 512 271 150 677 862
Depreciation 18 033 538 18 571 249 201
Operating income 210 605 41 974 252 579 428 661
after depreciation
Closure costs - - - 18 271
Net loss on
scrapping/disposal
of assets 387 - 387 6 012
Operating income 210 218 41 974 252 192 404 378
Balance sheet
Total assets 1 491 368 187 654 1 679 022 4 154 309
Total liabilities 835 819 71 444 907 263 2 403 046
Net assets 655 549 116 210 771 759 1 751 263
GROSS CAPITAL 24 272 167 24 439 481 255
EXPENDITURE
** Prior year figures have been restated to reflect the adoption of FRS and
other restatements as set out in note 10.
COMMENTARY ON RESULTS
During the year under review, the economy benefited from low interest
rates, high consumer demand, relatively low inflation and strong economic
growth. On the back of this, the group grew headline earnings per share by
21% to 405,5 cents (2005 restated: 335,4 cents) and earnings per share by
23% to 385,6 cents (2005 restated: 313,2 cents).
The group achieved the following objectives set by it at the end of its
2005 financial year:
Objectives for 2006 Performance in 2006
Revenue growth Revenue from the group"s activities
grew by 20% to R13,4 billion (2005
restated: R11,2 billion).
Headline earnings growth Headline earnings grew by 22% to
R350 million (2005 restated: R288
million).
Growth in the international The group acquired interests in two
component of the group"s specialist logistics service
businesses companies in the United Kingdom
(See details under Corporate
Activity below).
Repositioning of Freight and The restructuring of Freight and
Logistics as a supply chain Logistics has been completed and
service provider the division, now re-named Unitrans
Supply Chain Solutions, offers a
wide range of supply chain re-
engineering services. A new
managing director, Mr Frank Wagner,
was appointed with effect from 16
April 2006.
Growth in the group"s car Africa) (Proprietary) Limited
rental operations trading as Hertz Rent a Car
("Hertz"), the management has been
restructured. This operation, which
returned to profitability during
the year, is actively pursuing
additional market share at
acceptable levels of return.
Increased return on The return on shareholders" funds
shareholders" funds increased to 19% (2005 restated:
18%).
REVIEW OF OPERATIONS
Unitrans Supply Chain Solutions
The group restructured its freight and logistics operations to facilitate
its increased emphasis on the provision of supply chain re-engineering
solutions to both new and existing customers. In March 2006 it started
trading under its new name, Unitrans Supply Chain Solutions ("USCS"). USCS
operates in conjunction with its specialised marketing and sales arm,
Unitrans Customer Solution Development ("CSD") to offer innovative supply
chain solutions to the market and has been successful in securing several
new contracts. The traditional freight and logistics businesses performed
in line with expectations and were substantially up on the prior year
largely as a result of improved trading and the corrective actions
implemented during the latter part of the prior year.
The two businesses that did encounter some difficulties in the current year
were:
- the South African sugar operations, where adverse weather and reduced
volumes had a negative impact on cane volumes transported and, as a
consequence, on results achieved; and
- the express freight activities where a decision was taken to close
down the South African courier operations and dispose of the Botswana
courier business.
The UK acquisition is included in results from 1 December 2005. This
acquisition has also contributed to the increase in operating income after
depreciation year on year.
Revenue increased by 26% to R2,5 billion (2005 restated: R2,0 billion).
This increase in revenue is partly organic, as well as a result of
increased cost recoveries (fuel and labour escalations) and partly as a
result of acquisitions (accounting for 100% of Roadway for a full year and
for UK Logistics for seven months).
Operating income after depreciation was 68% up on the prior year at R192
million (2005 restated: R114 million).
The combined margin increased year on year from 5,8% to 7,7%.
Passenger
The luxury coach business and the commuter and contractual bus businesses
performed in line with expectations and were up year on year. High fuel
cost increases and continued competition had a negative impact on the
results of the division"s inter-city coach operations.
Revenue in this division increased by 15% to R595 million (2005 restated:
R516 million). Operating income after depreciation decreased by 13% to R54
million (2005 restated: R62 million). The operating margins in this
business came under pressure, dropping to 9% (2005 restated: 12%).
Motor and Financial Services
The Motor Retail division, with its network of 72 dealerships, experienced
another record-breaking year and has shown strong volume and earnings
growth from its national footprint. This growth extended to all franchises
under management and has largely been driven by new vehicle sales and
increased parts and service sales. It is pleasing to note that used vehicle
sales are also showing signs of improvement.
High levels of activity in the domestic economy fed the demand for rental
cars. The rental operations were faced with increased competition and
pressure on rental rates but nevertheless, since taking control, Hertz
achieved a profit for the ten month period.
Revenue of the Motor Retail and Rental division grew by 19% to R10,2
billion (2005 restated: R8,6 billion) against which operating income after
depreciation increased by 27% to R267 million (2005 restated: R211
million). The operating margin increased from 2,5% in the prior year to
2,6%.
Insurance, leasing and other financing activities were favourably impacted
by heightened activity in the vehicle sales sector and, year on year,
revenues increased by 20%. Operating income after depreciation increased by
46% to R61 million (2005 restated: R42 million).
The overall operating margin in the Motor and Financial Services division
improved from 2,9% to 3,2%.
Net Finance Costs and Taxation
Net finance costs increased to R57 million (2005 restated: R41 million) as
a result of the increase in total interest-bearing borrowings to R889
million (2005 restated: R476 million). The group"s debt to equity ratio at
year end was 26% which is well within the internal guidelines set by the
board. Year on year, the interest cover remains unchanged at 10 times.
The taxation charge in the current year increased to R158 million (2005
restated: R93 million). The reported effective tax rate of 32% is higher
than the normal statutory South African corporate tax rate of 29%, largely
as a result of one-off tax adjustments which are not expected to be
repeated going forward.
Cash Flow
At year end the group was in a net cash position of R408 million (2005
restated: R505 million). The net cash generated from operations totalled
R514 million, which is 10% higher than the prior year"s restated R466
million.
Investment in Property, Plant and Equipment
During the year, the group"s investment in property, plant and equipment,
inclusive of vehicle rental fleet, increased by 19,3%. R268 million (2005
restated: R216 million) was invested under the group"s ongoing programme
for the replacement of vehicles and equipment. A further R187 million (2005
restated: R265 million) was invested in expansion. A net R175 million
(2005: R nil) was invested in converting the vehicle rental fleet at Hertz
from operating lease structures to owned assets.
The group"s net asset value per share increased to 2176 cents (2005
restated: 1972 cents) and tangible net asset value increased to 1885 cents
(2005 restated: 1873 cents).
Working Capital
Management of working capital remains a high priority and the increase in
working capital from the prior year was largely a function of heightened
activity in all of the group"s divisions. Working capital within the group
remained well-controlled and, in particular, the inventories within the
Motor division were well-managed.
Corporate Activity
USCS
- The group acquired 60% of Unitrans Logistics (UK) Limited ("Unitrans
Logistics"), a company incorporated in the United Kingdom. Unitrans
Logistics is the sole shareholder in Concorde Logistics Services Limited
("Concorde") and TechXpress Limited ("TechXpress"), private companies
incorporated in the United Kingdom and operating as specialist logistics
service providers to high technology companies in the United Kingdom and
Europe. The purchase consideration for Concorde and TechXpress was GBP20
million. These transactions enable Unitrans to expand its logistics
operations into the United Kingdom and Europe.
- A 25,1% interest has been acquired in Xinergistix Limited, the holding
company of a broad-based Black Economic Empowered group of companies
specialising in road freight transportation.
- The group disposed of its 60% interest in the Botswana registered
company, African Express (Proprietary) Limited. This disposal was in line
with the group"s decision to exit from the express courier business.
Motor and Financial Services
- In August 2005, the Competition Authorities approved the acquisition
by Unitrans Motors (Proprietary) Limited of the remaining 60% of the issued
share capital of Hertz. Hertz is now a wholly-owned group subsidiary.
- During the first half of the year, two new vehicle dealerships were
acquired. In addition, three independent pre-owned vehicle dealerships were
opened as well as the division"s first manufacturer approved repair centre.
Share Repurchase Programme
During the year, the company continued with its share repurchase programme
and, under the general authorities granted by shareholders, a further 4 254
490 shares were repurchased. Together with the prior year repurchases of
814 971 shares, a total of 5 069 461 shares or 5,7% of the issued share
capital of the company at the commencement of the programme has been
repurchased. (An announcement was made on 15 December 2005, when the
repurchases at that date cumulatively exceeded 3% of the issued share
capital.) The 5 069 461 shares were repurchased utilising available cash
resources and are held as treasury stock within a wholly-owned subsidiary
of Unitrans.
Directorate
Mr Nico Boshoff, managing director of Unitrans Passenger, was appointed to
the board of Unitrans with effect from 1 June 2006. Mr Boshoff has 11
years" experience within the group and brings to the board 25 years"
experience within the transport industry.
Pursuant to his resignation from the board of Arch Equity Limited, with
effect from 1 September 2006, Mr Desmond Lockey has resigned from the board
of Unitrans as a non executive director. The Unitrans board wishes to
express its gratitude to Mr Lockey for his contributions.
Sustainability
The group has identified key risk areas and has made progress in measuring
and monitoring activity in most of these areas. A thorough review of the
group"s standing in regard to the DTI Codes of Good Practice for broad-
based Black Economic Empowerment has now been undertaken. Health, safety
and environment continue to receive significant focus within the group"s
operations, in particular, road safety and environmental protection.
Dividend/Capital Distribution Policy
The group"s dividend/capital distribution policy has been amended and the
policy now provides that the group"s dividend cover shall be maintained in
the range of two and a half to four times cover. (The previous policy
limited year on year increases in dividends/capital distributions to be
equal to or below inflation levels until such time as three and a half
times cover was attained).
Capital distribution number 2 of 135 cents per share, as detailed below,
has been declared.
Prospects
Following its restructuring, USCS, supported by the supply chain re-
engineering expertise within CSD, is well-positioned to accelerate organic
growth, either within its existing customer base or via the entering into
of partnerships with new customers. This cluster will evaluate prospects in
additional market segments as well as new regional opportunities in areas
in Africa where Unitrans has acquired expertise.
In the United Kingdom and Europe, the acquisition of Concorde and
TechXpress, will provide a springboard for expansion. These companies plan
to expand on their existing businesses and will look to capitalising on
synergies with the company"s major shareholder, Steinhoff International
Holdings Limited.
The Passenger division will continue to pursue contracts in the commuter
transport arena, where it has established a solid reputation. The division
will also focus on strengthening its relationships with tour operators and
on developing ongoing working partnerships to ensure increased
differentiation of its services.
Prospects for the Motor and Financial Services division are dependent on
consumer demand and, in turn, on interest rates. Although it is anticipated
that the recent increases in interest rates will, to some extent, serve to
curb consumer spending, the demand for motor vehicles is nevertheless
expected to remain strong in the medium-term. The Motor Retail division"s
financing, insurance and after-market services should continue to benefit
from sustained high levels of vehicle sales.
Whilst it is anticipated that the major portion of the group"s growth will
continue to be organic in nature, the group is constantly evaluating
acquisition opportunities and has adequate resources available to secure
such opportunities, either locally or offshore.
The board is of the view that the group will be able to deliver growth in
earnings in the year ahead.
For and on behalf of the Board
D C Brink K J Grove Illovo
Chairman Chief Executive 23 August 2006
Distribution out of Share Premium: Capital Distribution Number 2
Notice is hereby given that a capital distribution from share premium, in
lieu of a dividend in respect of the year ended 30 June 2006, of 135 cents
per share (2005: 110 cents per share) has been declared and is payable to
shareholders recorded in the books of the company at the close of business
on Friday 13 October 2006. The distribution will be made in terms of the
general authority granted by shareholders at the annual general meeting
held on 28 November 2005. The salient dates of this distribution are:
Last day to trade cum capital distribution Friday 6 October 2006
Share commence trading ex capital Monday 9 October 2006
distribution
Record date Friday 13 October 2006
Payment date Monday 16 October 2006
Share certificates may not be dematerialised/rematerialised between Monday
9 October 2006 and Friday 13 October 2006, both days inclusive.
On Monday 16 October 2006, the cash distribution will be electronically
transferred to the bank accounts of certificated shareholders who have
elected to use this facility. For those who have not yet elected to use
this facility, cheques dated 16 October 2006 will be posted on or about
that date. Shareholders who have dematerialised their shares will have
their accounts credited on 16 October 2006.
In compliance with the requirements of the Companies Act, the directors
confirm that, after the payment of this capital distribution, the company
will be able to pay its debts as they become due in the ordinary course of
business and its consolidated assets, fairly valued, will exceed its
consolidated liabilities.
By order of the board
J V Radnay Illovo
Company Secretary 23 August 2006
Directors:
DC Brink*, N Boshoff, PJ Dieperink, KJ Grove, MJ Jooste*, SM Keys,
D Konar*, D Lockey*, KB Mosehla*, PK Quarmby*, DM van der Merwe*, JHN van
der Merwe*
*non-executive
Secretary: JV 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: 011-370-5000, Telefax: 011-688-5200
Date: 23/08/2006 04:38:16 PM Produced by the JSE SENS Department
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