| Tue 7 Nov 2006, 17:17 | | Value Limited - Unaudited interim financial result |
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VLE
VLE
Value Limited - Unaudited interim financial results for the six months
ended 31 August 2006
VALUE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/002203/06)
Share Code: VLE ISIN: ZAE000016507
("Value" or "the Company")
the measurable logistics company
VALUE LIMITED
REVENUE UP 23%
NET ASSET VALUE UP 17%
cash generated by operations up 13%
headline earnings per share down 9%
Unaudited interim financial results for the six months ended 31 August 2006
Consolidated income statement
31 August 31 August 28 February
% 2006 2005 2006
change R000"s R000"s R000"s
Revenue 23 494 424 402 502 885 861
Operating profit before
depreciation, amortisation
and finance costs 15 65 559 57 238 150 307
Depreciation and
amortisation (31 720) (22 321) (47 693)
Operating profit 33 839 34 917 102 614
Investment income 291 609 1 377
Finance costs (5 664) (3 365) (8 033)
Net profit before taxation 28 466 32 161 95 958
Taxation (note 1) (8 976) (11 587) (31 263)
Net profit for the period 19 490 20 574 64 695
Earnings per share
(cents) (note 2)
- Basic 9,8 10,5 32,7
- Headline (9) 10,0 11,0 34,3
- Diluted basic 9,3 9,9 30,9
- Diluted headline 9,4 10,3 32,5
CONSOLIDATED BALANCE SHEET
Assets
Non-current assets 579 502 466 413 549 326
Property, plant and
equipment 560 590 449 700 532 249
Intangible assets 16 508 13 728 15 313
Deferred tax 1 424 2 005 784
Investments 980 980 980
Current assets 284 070 208 035 213 431
Inventory 17 903 7 259 5 970
Trade and other receivables 196 787 128 547 144 120
Non-current assets held
for sale 6 182 8 027 8 949
Taxation in advance 349 - 419
Bank and cash 62 849 64 202 53 973
Total assets 863 572 674 448 762 757
Equity and liabilities
Capital and reserves 388 183 322 886 367 309
Non-current liabilities 191 666 136 460 157 181
Interest-bearing borrowings 111 606 69 778 81 546
Deferred tax 80 060 66 682 75 635
Current liabilities 283 723 215 102 238 267
Trade and other payables 226 526 169 629 187 845
Current portion of
interest-bearing borrowings 44 659 28 266 35 387
Taxation 12 538 17 207 15 035
Total equity and
liabilities 863 572 674 448 762 757
Net asset value per share
(cents) 17 191,1 164,0 184,3
Consolidated cash flow statement
Cash flows from operating
activities 30 022 40 518 123 482
Cash generated by
operations 13 66 163 58 720 154 867
Net finance costs (5 373) (2 756) (6 656)
Changes in working capital (23 144) 13 970 17 127
Taxation paid (7 618) (19 591) (31 989)
Cash available from
operating activities 30 028 50 343 133 349
Dividends paid (6) (9 825) (9 867)
Cash flows from investing
activities (61 783) (63 938) (176 014)
Cash flows from financing
activities 40 637 21 513 40 487
Net change in cash and
cash equivalents 8 876 (1 907) (12 045)
Cash and cash equivalents
at beginning of period 53 973 62 989 62 989
Cash and cash equivalents
acquired - 3 029 3 029
Translation differences
of foreign cash - 91 -
Cash and cash equivalents
at end of period 62 849 64 202 53 973
Consolidated statement of changes in equity
Share Ordinary
capital share-
and Treasury Retained holders"
R000"s premium shares Reserves earnings equity
Balance at
31 August 2005 41 439 (5 716) 337 286 826 322 886
Treasury shares sold - 502 - - 502
Loss on disposal of
treasury shares - - - (231) (231)
Share-based payment - - (10) - (10)
Foreign currency
translation
differences - - 41 - 41
Net profit for the
period - - - 44 121 44 121
Balance at
28 February 2006 41 439 (5 214) 368 330 716 367 309
Treasury shares sold - 2 751 - - 2 751
Loss on disposal of
treasury shares - - - (1 445) (1 445)
Share-based payment - - 83 - 83
Foreign currency
translation
differences - - (5) - (5)
Dividends - - - - -
Net profit for
the period - - - 19 490 19 490
Balance at
31 August 2006
(unaudited) 41 439 (2 463) 446 348 761 388 183
Notes
The accounting policies adopted for the purpose of this report comply in
all material respects with International Financial Reporting Standards
(IFRS) and have been consistently applied to all periods presented.
31 August 31 August 28 February
R000"s 2006 2005 2006
1. Taxation
Permanent differences included
in taxation are:
- Taxation includes secondary
tax on companies - 1 297 1 297
2. Headline earnings
2.1 Reconciliation between
basic and headline earnings
Basic earnings 19 490 20 574 64 695
Loss on disposal of property,
plant and equipment less
taxation 373 974 2 439
Impairment of intangible asset - - 811
Headline earnings 19 863 21 548 67 945
2.2 Number of ordinary shares
in issue
- Actual 207 599 040 207 599 040 207 599 040
- Weighted average 199 321 286 196 582 022 198 117 402
- Diluted 210 205 822 208 251 941 209 113 128
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 a diversified range of
distribution services, warehousing, fleet management, forklift and
commercial vehicle rental and leasing.
Financial review
Turnover increased by 23% from R402,5 million to R494,4 million. The
increase was due to the expanded customer base, which added to the Group"s
volumes. This is in line with the Group"s objective to grow revenue
utilising the enlarged vehicle and logistics infrastructure.
Operating margins were adversely affected by a 25% average increase in the
diesel price. The delay in recovering a portion of this substantial
increase cost the Group approximately R10 million. In addition, the
smoothing of lease costs pertaining to the new warehouse and distribution
facility in Gauteng and the requirements for larger premises at the coastal
regions added R7 million more cost compared with the prior interim results.
Nevertheless, operating profit before depreciation increased by 15% from
R57,2 million to R65,6 million.
Additional depreciation and net finance costs amounting to R9,4 million and
R2,6 million respectively arose due to the current and prior year"s
significant capital expenditure incurred to sustain the growth of the
Group. Accordingly, interest-bearing debt levels rose by R40 million to
R156 million. Debt:equity funding amounted to 40%, which is well within the
Board"s conservative guidelines.
Cash generated by operations increased by 13% from R58,7 million to R66,2
million. Problems incurred with the rollout of the new IT system severely
hampered accounts receivable collections which had the effect of increasing
working capital requirements. Subsequently, management has focused its
attention on reducing working capital and addressing these IT related
issues.
As a result of the aforesaid factors, headline earnings per share decreased
by 9% from 11 cents per share to 10 cents per share.
Operational review
Large turnover growth emanated out of the logistics and freightpak
divisions. However, the divisions performed below expectation due to rate
pressures and increased operational and infrastructure costs. The logistics
division improved service levels and is geared to absorb additional
critical mass in all regions.
The truck rental division performed according to budget and contributed
positively to these results. This is despite a disputed cancellation of a
major contract on which substantial capital expenditure was incurred. The
Group is seeking redress on this contract.
Information technology
The Group went live with the first three finance modules of its new
integrated IT solution in June 2006. This rollout did not proceed as
planned and, consequently, a substantial amount of management time and
effort was focused in addressing problem areas. Certain difficulties are
still being experienced, however the key problems identified have been and
are in the process of being resolved. Management has decided to delay
further module implementations until such time it is satisfied that the
solution is stable and functional. The logistics and truck rental
operations of the Group are still fully operational on the current IT
systems, which perform without interruption.
Capital commitments
New fleet contracts and the growth of the logistics operation in all the
major centres in the country have necessitated the requirements for a
larger vehicle infrastructure. Subsequent to August 2006, R44,9 million has
been spent on new vehicles to service this volume and customer growth. This
capital investment will be funded out of a combination of cash flows and
debt.
Prospects
Customer rate and margin pressures arising from a volatile diesel price,
smoothing of lease costs and IT problems have impacted negatively on the
Group"s earnings. In addition, the 2007 financial year has already seen
three interest rate hikes all aimed primarily at controlling inflation by
curbing consumer credit demand. Further interest rate increases may subdue
individual customer volume throughput over the remainder of the 2007
financial year. Although a large portion of the Group"s turnover is
generated in the last six months of the financial year, the Board expects
headline earnings for the 2007 financial year to be less than that achieved
in the 2006 financial year.
Acknowledgements
Mr Brian Goldie, a non-executive director, resigned effective 30 August
2006. The Board thanks him for his operational contributions and dedicated
service to the Group since the acquisition of Freightpak in 1999 and wishes
him success in his future endeavours.
Distribution in lieu of dividend
The Group paid a cash distribution of 7 cents per ordinary share out of the
share premium account in September 2006. It is the Group"s policy to pay a
single dividend annually. Accordingly, no interim dividend has been
declared.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
7 November 2006
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06) ISIN code: ZAE000016507 Share code:
VLE
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack, G J
Igesund, I M Groves*, N M Phosa, D A Todd *Non-executive director
Date: 07/11/2006 05:17:23 PM Produced by the JSE SENS Department
