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UTR - Unitrans - Results for the six months ended 31 December 2006
UNITRANS LIMITED
Registration number 1967/003403/06
JSE Share Code: UTR
ISIN: ZAE000007670
("Unitrans")
ANNOUNCEMENT OF RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
The board of directors of Unitrans announces the following unaudited
consolidated results:
HIGHLIGHTS
* Revenue up 17%
* Operating profit up 26%
* Headline earnings per share up 24%
* Earnings per share up 25%
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited
Restated Restated*
Six months Six months Year
ended ended % ended
31.12.06 31.12.05 Increase 30.06.06
R 000 R 000 R 000
Revenue 7 970 161 6 809 631 17 13 401 174
Operating profit 361 670 286 228 26 547 793
Net finance costs (43 424) (25 440) (56 746)
Profit before taxation 318 246 260 788 22 491 047
Taxation (92 400) (75 699) (157 640)
Profit after taxation 225 846 185 089 22 333 407
Share of associates (203) (412) 665
(losses)/profits
Profit for the period 225 643 184 677 22 334 072
Attributable to:
Unitrans Limited 221 076 183 608 20 328 625
Shareholders
Minority interests 4 567 1 069 5 447
225 643 184 677 334 072
Number of shares in 84 262 84 827 84 187
issue adjusted for
treasury stock (`000)
Weighted average number 84 209 87 694 86 307
of ordinary shares in
issue (`000)
Diluted weighted average 84 999 88 712 87 009
number of ordinary
shares in issue (`000)
Earnings per share
(cents)
- basic 262,5 209,4 25 380,8
- basic as previously 210,1 385,6
stated
- diluted 260,1 207,0 26 377,7
- diluted as previously 207,7 382,5
stated
Headline earnings per
share (cents)
- basic 262,9 212,6 24 405,5
- diluted 260,4 210,2 24 402,3
Distribution per share
(cents)
- capital distribution 135 110 110
in lieu of dividend
* These balances have been audited with the exception of the restatements
disclosed in the Effects of Restatements table under ("Effects of
Restatements").
CONDENSED GROUP BALANCE SHEET
Unaudited
Restated Restated*
31.12.06 31.12.05 30.06.06
R 000 R 000 R 000
Assets
Non-current assets 1 953 121 1 794 372 1 914 233
Property, plant and equipment 1 536 501 1 425 246 1 450 071
Vehicle rental fleet 28 122 31 077 34 532
Goodwill 229 990 210 661 246 087
Intangible assets 23 924 15 971 25 964
Investment in associate company 1 682 1 783 21 622
Held-to-maturity investments 28 642 28 632 28 622
Loans and receivables 31 349 19 573 31 268
Deferred tax assets 72 911 61 429 76 067
Current assets 4 220 474 2 729 724 3 203 567
Inventories 1 182 431 906 588 1 073 200
Vehicle rental fleet 213 007 60 300 142 024
Trade and other receivables 1 292 061 1 060 192 1 001 738
Assets classified as held-for-sale 8 100 6 700 13 878
Cash and cash equivalents 1 524 875 695 944 972 727
TOTAL ASSETS 6 173 595 4 524 096 5 117 800
Equity and liabilites
Interest of all shareholders 1 998 074 1 735 342 1 887 731
Share capital 8 426 8 483 8 419
Capital reserves 497 213 593 871 607 485
Treasury stock (192 387) (157 030) (192 387)
Non-distributable reserves 158 027 153 823 154 709
Retained earnings 1 463 604 1 087 593 1 249 583
Interest of shareholders of Unitrans 1 934 883 1 686 740 1 827 809
Limited
Minority interests 63 191 48 602 59 922
Non-current liabilities 717 553 726 981 776 791
Provisions 62 599 50 102 50 641
Deferred tax liabilities 144 941 119 957 135 955
Interest-bearing domestic medium-term 400 623 400 683 400 623
note
Interest-bearing long-term liabilities 32 441 25 584 101 229
Non-interest bearing long-term 76 949 130 655 88 343
liabilities
Current liabilities 3 457 968 2 061 773 2 453 278
Trade and other payables 1 032 317 929 838 953 793
Provisions 176 360 166 014 166 245
Taxation 44 942 48 722 38 480
Interest-bearing short-term 830 505 401 155 386 788
liabilities
Non-interest bearing short-term 334 187 161 673 343 010
liabilities
Bank overdrafts 1 039 657 354 371 564 962
TOTAL EQUITY AND LIABILITIES 6 173 595 4 524 096 5 117 800
Net asset value per share (cents) 2 296 1 988 2 171
Net tangible asset value per share 1 995 1 721 1 848
(cents)
Net cash and cash equivalents (R 000) 485 218 341 573 407 765
Capital expenditure commitments (R 177,3 193,3 165,3
million)
Debt to equity ratio 40% 29% 26%
Net interest bearing liabilities (R 778 351 485 849 480 875
000)
* These balances have been audited with the exception of the restatements
disclosed in the Effects of Restatements table under ("Effects of
Restatements").
CONDENSED CASH FLOW STATEMENT
Unaudited
Restated
Six months Six months Year
ended ended ended
31.12.06 31.12.05 30.06.06
R 000 R 000 R 000
Cash generated from operations before 500 474 453 357 880 071
changes in working capital and other
non-cash movements
Other non-cash movements 51 170 10 382 15 932
Changes in working capital (363 415) (253 354) (154 096)
- Inventories (110 319) 3 178 (168 694)
- Trade and other receivables (344 989) (191 976) (132 147)
- Trade and other payables 110 347 (32 722) 728
- Non-interest bearing liabilities - (18 454) (31 834) 146 017
floorplan creditors
Net finance costs (43 424) (25 440) (56 746)
Taxation paid (81 227) (81 877) (170 668)
Net cash generated from operating 63 578 103 068 514 493
activities
Acquisition of subsidiaries and - (191 907) (158 266)
businesses
Disposal of subsidiary 35 347 2 765 2 835
Acquisitions of property, plant and (310 263) (224 045) (455 208)
equipment
- Replacement (180 861) (119 058) (267 859)
- Expansion (129 402) (104 987) (187 349)
Proceeds from disposal of property, 41 736 32 335 93 590
plant and equipment and assets held
for sale
Acquisition of vehicle rental fleet (167 904) (78 758) (211 645)
Proceeds on disposal of vehicle rental 83 378 6 420 36 797
fleet
Other 2 635 (7 251) (19 698)
Net cash (outflow)/inflow on non (239) 3 038 (8 172)
current assets
Net cash utilised in investing (315 310) (457 403) (719 767)
activities
Net cash outflow before financing (251 732) (354 335) (205 274)
activities
Capital distribution and dividends (116 416) (98 090) (98 090)
paid
Movement in share capital and capital 6 - 20
reserves
Shares sold/(repurchased) by 476 (127 405) (164 213)
subsidiary and share trust
(Decrease)/increase in interest- (1 807) 632 31 830
bearing long-term liabilities
Increase in loan from minorities - 39 004 -
Increase in interest-bearing short- 446 926 355 484 338 848
term liabilities
Increase in non-interest bearing - 21 660 -
liabilities
Other - (21) -
Net cash generated from financing 329 185 191 264 108 395
activities
Net increase/(decrease) in cash and 77 453 (163 071) (96 879)
cash equivalents
Cash and cash equivalents at beginning 407 765 504 644 504 644
of the period
Cash and cash equivalents at end of 485 218 341 573 407 765
the period
CONDENSED CHANGES IN EQUITY
Unaudited
Restated Restated*
Six months Six months Year
ended ended ended
31.12.06 31.12.05 30.06.06
R 000 R 000 R 000
Ordinary shareholders` interest
Opening balance 1 887 731 1 751 263 1 751 263
Net profit for the period 225 643 184 677 334 072
Dividends paid (2 746) (1 072) (1 072)
Capital distribution (113 670) (97 018) (97 018)
Vesting of previously unvested loans - - 1 003
to participants in the share trust
Shares sold/(repurchased) by 476 (127 405) (164 213)
subsidiary and Share Trust
Net proceeds on issue of shares 6 - 20
Profit/(Loss) on the sale of shares by 441 (2 408) (1 778)
the Share Trust
Share based payments charge 2 779 4 125 5 289
Movement in minority interests 1 448 38 219 45 075
Disposal of subsidiary (6 142) (1 303) (1 303)
Increase/(decrease) on translation of 2 108 (13 736) 16 393
net worth of foreign subsidiaries
Closing balance 1 998 074 1 735 342 1 887 731
* These balances have been audited with the exception of the restatements
disclosed in the Effects of Restatements table under ("Effects of
Restatements").
CONDENSED SEGMENTAL REPORT
TRANSPORT AND LOGISTICS
USCS Passenger Total
December 2006 R 000 R 000 R 000
INCOME STATEMENT
Revenue 1 437 235 334 969 1 772 204
Operating income before depreciation, 221 058 61 477 282 535
closure costs and net profit/(loss) on
scrapping/disposal of assets
Depreciation of property, plant and (99 695) (27 493) (127 188)
equipment
Depreciation of vehicle rental fleet - - -
Operating income after depreciation 121 363 33 984 155 347
Closure costs (807) (807)
Net profit/(loss) on 11 406 (1 441) 9 965
scrapping/disposal of assets
Goodwill reduction - - -
Operating profit 131 962 32 543 164 505
BALANCE SHEET
Total assets 2 254 076 715 141 2 969 217
Total liabilities 1 480 192 466 737 1 946 929
Net assets 773 884 248 404 1 022 288
GROSS CAPITAL EXPENDITURE 246 749 46 440 293 189
RESTATED
December 2005
INCOME STATEMENT
Revenue 1 224 155 296 740 1 520 895
Operating income before depreciation, 195 398 56 984 252 382
closure costs and net profit/(loss) on
scrapping/disposal of assets
Depreciation of property, plant and (94 818) (25 371) (120 189)
equipment
Depreciation of vehicle rental fleet -
Operating income after depreciation 100 580 31 613 132 193
Closure costs (2 407) - (2 407)
Net profit/(loss) on 192 (1 004) (812)
scrapping/disposal of assets
Goodwill reduction -
Operating profit 98 365 30 609 128 974
BALANCE SHEET
Total assets 1 759 745 387 544 2 147 289
Total liabilities 865 902 176 862 1 042 764
Net assets 893 843 210 682 1 104 525
GROSS CAPITAL EXPENDITURE 143 782 57 405 201 187
MOTOR AND FINANCIAL GROUP
SERVICES
Retail &
Rental Financial Total
December 2006 R 000 R 000 R 000 R 000
INCOME STATEMENT
Revenue 6 133 638 64 319 6 197 957 7 970 161
Operating income before 202 059 33 396 235 455 517 990
depreciation, closure
costs and net
profit/(loss) on
scrapping/ disposal of
assets
Depreciation of property, (11 040) (576) (11 616) (138 804)
plant and equipment
Depreciation of vehicle (19 953) - (19 953) (19 953)
rental fleet
Operating income after 171 066 32 820 203 886 359 233
depreciation
Closure costs (807)
Net profit/(loss) on (4 190) - (4 190) 5 775
scrapping/ disposal of
assets
Goodwill reduction (2 531) - (2 531) (2 531)
Operating profit 164 345 32 820 197 165 361 670
BALANCE SHEET
Total assets 2 841 519 362 859 3 204 378 6 173 595
Total liabilities 2 102 271 126 321 2 228 592 4 175 521
Net assets 739 248 236 538 975 786 1 998 074
GROSS CAPITAL EXPENDITURE 184 978 - 184 978 478 167
RESTATED
December 2005
INCOME STATEMENT
Revenue 5 232 729 56 007 5 288 736 6 809 631
Operating income before 145 828 26 442 172 270 424 652
depreciation, closure
costs and net
profit/(loss) on
scrapping/ disposal of
assets
Depreciation of property, (9 940) (143) (10 083) (130 272)
plant and equipment
Depreciation of vehicle (4 148) (4 148) (4 148)
rental fleet
Operating income after 131 740 26 299 158 039 290 232
depreciation
Closure costs - - - (2 407)
Net profit/(loss) on (120) - (120) (932)
scrapping/ disposal of
assets
Goodwill reduction (665) (665) (665)
Operating profit 130 955 26 299 157 254 286 228
BALANCE SHEET
Total assets 2 117 585 259 222 2 376 807 4 524 096
Total liabilities 1 625 322 120 668 1 745 990 2 788 754
Net assets 492 263 138 554 630 817 1 735 342
GROSS CAPITAL EXPENDITURE 101 616 - 101 616 302 803
EFFECTS OF RESTATEMENT
31.12.06 31.12.05 30.06.06
R 000 R 000 R 000
Effect on the Income Statement
Profit for the period as previously N/A 184 273 332 836
reported
Increase in operating costs for (2 531) (665) (4 211)
goodwill adjustment in respect of at
acquistion deferred tax asset in terms
of par 65 of IFRS 3
Profit for the period attributable to N/A 183 608 328 625
Unitrans Limited shareholders revised
for the restatement
Effect on the Balance Sheet
Decrease in distributable reserves for 2 531 665 4 211
goodwill adjustment in respect of at
acquistiion deferred tax asset in
terms of par 65 of IFRS 3
Decrease in goodwill in respect of at (2 531) (665) (4 211)
acquistiion deferred tax asset ito par
65 of IFRS 3
Decrease in property, plant and - (12 020) -
equipment due to the reassessment of
residual values and useful lives in
terms of IAS 16
Decrease in deferred tax liabilities - 3 513 -
in respect of reassessment of residual
values and useful lives in terms of
IAS 16
Decrease in property, plant and - (2 931) -
equipment for revised treatment of
rebates
Decrease in deferred tax liabilities - 850 -
for revised treatment of rebates
Decrease in trade and other - (1 056) -
receivables for the reassessment of
the useful life of an intangible asset
Increase in goodwill arising on - 31 240 31 240
acquisition of subsidiary
Increase in provisions arising on - (44 000) (44 000)
acquisition of subsidiary
Increase in deferred tax asset arising - 12 760 12 760
on acquisition of subsidiary
Net decrease in distributable reserves - 11 644 -
in respect of the above adjustments
- - -
NOTES
1. Basis of preparation
The accounting policies used in the preparation of the condensed interim
financial statements comply with International Financial Reporting Standards
and are presented in compliance with IAS 34 (Interim Financial Reporting).
The accounting policies are consistent with those applied in the Annual
Financial Statements, for the year ended 30 June 2006.
This announcement has been prepared in compliance with the Listing
Requirements of the JSE Limited.
2. Corporate Governance
The group subscribes to and complies, in all material respects with the code
of Corporate Practices and Conduct, as contained in the King II Report on
Corporate Governance.
3. Determination of Headline Earnings
Unaudited
Restated Restated*
Six Six Year
months months
ended ended % ended
31.12.06 31.12.05 Increase 30.06.06
R 000 R 000 R 000
Profit for the period
attributable to
Unitrans Limited 221 076 183 608 328 625
shareholders
Adjustments for:
- closure costs 807 2 407 9 484
- net loss on
scrapping/disposal of
property, plant and 4 284 1 414 12 804
equipment
- profit on disposal of (10 059) (482) (482)
subsidiary
- goodwill reduction** 2 531 665 4 211
218 639 187 612 354 642
Taxation of the above items 2 726 (1 139) (4 635)
Headline earnings 221 365 186 473 19 350 007
* These balances have been audited with the exception of the restatements
disclosed in the effects of restatement table above.
** Reduction in the carrying amount of goodwill, in terms of par 65 of IFRS
3 - "Business combinations".
4. Subsequent events
No material events have occurred subsequent to 31 December 2006 with the
exception of the offer by Steinhoff referred to below.
COMMENTARY
RESULTS for the six months ended 31 December 2006
Revenue increased by 17% to R8 billion (2005 restated: R6,8 billion). Operating
profit increased by 26% to R362 million (2005 restated: R286 million),
headline earnings per share by 24% to 263 cents (2005 restated: 213 cents)
and earnings per share went up by 25% to 263 cents (2005 restated: 209
cents).
The group`s operating margin increased from 4,2% (restated) to 4,5%.
Review of Operations
Heightened trading activity was experienced throughout the group, with all
divisions reporting good results for the period.
Unitrans Supply Chain Solutions
The strategy of Unitrans Supply Chain Solutions in focusing on building more
extensive long-term partnerships with current and future customers is paying
dividends and has contributed to the results achieved by this division. The
integration of supply chain engineering specialist skills into the
division`s traditional businesses is assisting in expanding our traditional
service offering. Several significant contracts have been secured or renewed
during the period under review and represent recognition of the value-add
propositions offered by the division.
The division`s revenue increased by 17% to R1,4 billion (2005 restated: R1,2
billion) and operating income after depreciation increased by 21% to R121
million (2005 restated: R101 million). The combined operating margin was up
on the same period last year at 8,4% (2005 restated: 8,2%).
Passenger
The Mega Coach and Mega Tourer operations performed in line with expectations,
as did the commuter side of the division`s operations, including Bojanala
Transport and Mega Bus. The division has built on its solid track record in
the area of commuter transport, which assisted it in securing additional
business during the period. The division`s intercity operations reflected an
improved performance particularly in the second quarter.
Revenue grew by 13% to R335 million (2005 restated: R297 million) and operating
income after depreciation improved by 8% to R34 million (2005 restated: R32
million). Operating margins declined to 10,2% (2005 restated: 10,7%),
largely on the back of the performance of the division`s intercity
operations.
Motor and Financial Services
The six months to 31 December 2006 reflected another record level of growth for
both the motor retail industry and the company`s Motor Retail division.
Boosted by record levels of new vehicle sales experienced over the last three
years, the Motor Retail division`s service and parts operations also
reflected strong growth. While the sales mix continued to be skewed towards
new vehicles, following the recent increases in interest rates and the new
vehicle price increases in October 2006, the market for pre-owned vehicles
has begun to strengthen.
The buoyant domestic economy continued to feed the demand for rental cars and
Hertz Rent a Car, assisted by the introduction of enhanced operational
efficiencies, delivered results ahead of budget for the period.
Revenue of the Motor Retail and Rental division grew by 17% to R6,1 billion
(2005 restated: R5,2 billion) and operating income after depreciation
improved by 30% to R171 million (2005 restated: R132 million). The operating
margin increased to 2,8% (2005 restated: 2,5%)
Through increased marketing activities, the division`s Finance and Insurance
operations grew their revenues from the finance and insurance products sold
on the dealer floors. These achievements were further strengthened by the
high levels of new vehicle sales and revenues increased by 15% to R64
million (2005 restated: R56 million). Operating income after depreciation
increased by 25% to R33 million (2005 restated: R26 million).
The overall operating margin in the Motor and Financial Services division
improved from 3,0% (restated) to 3,3%.
Net Financing Costs and Taxation
Net financing costs rose to R43 million (2005 restated: R25 million), largely as
a result of the increase in interest rates and the increase in net interest-
bearing liabilities to R778 million (2005 restated: R486 million). The
group`s debt to equity ratio at the end of the period was 40% (2005
restated: 29%) which was well within the internal guidelines set by the
board. The group`s interest cover of 8,3 times (2005 restated: 11,3 times)
remained strong and, again, was within the internal guidelines set.
The taxation charge for the six months remained the same as for last year, at
approximately 29%.
Cash Flow
At 31 December 2006 the group was in a net cash position of R485 million (2005
restated: R342 million). Net Cash generated from operations, before working
capital, totalled R551 million (2005 restated: R463 million); R363 million
of which was utilised to fund the increase in working capital.
The increase in working capital was largely attributable to the growth in
trading activity experienced by all divisions and in particular by the Motor
Retail division. The traditional seasonal increase in December in inventory
holdings by the Motor Retail division was exacerbated by longer than normal
delays in vehicle registrations, resulting in increased delays in the
receipt of payment for the vehicles.
The management of working capital remains an area of top priority for
management.
Investment in Property, Plant and Equipment
The group`s investment in property, plant and equipment increased from June 2006
by 6%. R181 million (2005 restated: R119 million) was invested in the
replacement of property, plant and equipment and a further R129 million
(2005 restated: R105 million) was invested in expansion. The group increased
its investments in the vehicle rental fleet by a net R85 million (2005
restated: R72 million).
The net asset value per share increased to 2 296 cents (2005 restated: 1 988
cents) while tangible net asset value per share increased to 1 995 cents
(2005 restated: 1 721 cents).
DIRECTORATE
With effect from 1 September 2006 and pursuant to his resignation from the board
of Arch Equity Limited, Mr Desmond Lockey resigned as a non-executive
director of Unitrans. The Unitrans board records its appreciation of the
contribution made by Mr Lockey.
SUSTAINABILITY
The group`s ability to retain and attract customers to ensure sustainable growth
is evidence of its ongoing commitment to service and innovation and to
building and sustaining long-term partnerships with its customers.
The group recently received several awards for operational excellence and
innovation, including recognition as the "Best Transporter of the Year 2006"
in the recent prestigious Focus on Excellence awards. The group also
received no fewer than six "Dealer of the Year" awards from various motor
manufacturers during 2006.
Health, Safety and Environmental issues, together with Broad Based Black
Economic Empowerment, continue to receive management`s attention, as part of
the group`s strategic focus on sustainable development.
OUTLOOK
Unitrans Supply Chain Solutions
This division is currently assessing several organic growth opportunities. It is
also reviewing acquisitive growth opportunities to complement and augment
its already substantial platform of contracts.
Passenger
The long-term contract for the feeder and distribution service for the Gautrain
Rapid Rail Link ("the Gautrain"), which is scheduled to commence operating
in 2010, was awarded to the Passenger division and has now been signed. This
division is closely involved with the design of feeder systems to be
constructed to service the Gautrain.
There are several other growth prospects for the Passenger division, in
particular in the area of commuter transport.
Motor and Financial services
The motor industry, which has enjoyed strong growth over the past three years,
is susceptible to interest rate hikes, and product price increases. However,
the positioning of the Unitrans Motor Retail division`s marques towards the
volume sector of the market, coupled with the ongoing flow-through impact of
high new vehicle sales on the complementary activities of the division, such
as parts, service, insurance and financing, should serve to offset any
adverse impact from these factors.
Management believes that the division has positioned itself appropriately to
benefit from the anticipated move by the consumer market towards pre-owned
vehicle sales and this diversification should support growth in the
division, as should the demographic growth forecasts.
Group
The Board is accordingly of the view that the group is on track to meet its
objectives and will deliver growth in earnings for the financial year ending
30 June 2007.
The group will continue to evaluate both organic and acquisitive prospects to
grow its businesses.
OFFER BY STEINHOFF
An offer has been received from Steinhoff regarding a proposed transaction. The
independent directors of Unitrans intend recommending this offer to the
minority shareholders. An announcement containing details of the offer will
be released shortly.
In the interim, shareholders are referred to the cautionary announcement by
Unitrans dated 24 November 2006, which was renewed on 4 January 2007, and
are advised that they should continue to exercise caution when dealing in
the company`s securities until such time as the announcement referred to
above is made and the cautionary is withdrawn.
For and on behalf of the Board
D C Brink K J Grove Illovo
Chairman Chief Executive 20 February 2007
Directors:#DC Brink*, PJ Dieperink, N Boshoff, KJ Grove, MJ Jooste*, SM Keys, D
Konar*, 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
Date: 21/02/2007 11:54:01 Produced by the JSE SENS Department.
