Wrap Text
Reviewed condensed consolidated financial results for the year ended 28 February 2014
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507
Share code: VLE
Reviewed condensed consolidated financial results
for the year ended 28 february 2014
Highlights
- 2% Revenue
up 2% to r1,975 billion
feb 14: r1,975b
feb 13: r1,945b
- 7% Headline earnings per share
up 7% to 68,2 cents
feb 14: 68,2c
feb 13: 63,5c
- 9% Earnings per share
up 9% to 66,9 cents
feb 14: 66,9c
feb 13: 61,5c
- 11% Net asset value per share
up 11% to 437,2 cents
feb 14: 437,2c
feb 13: 393,3c
- 13% Final dividend per share
up 13% to 17 cents
feb 14: 17c
feb 13: 15c
- 4% Cash generated by operations
Up 4% to R311,1 million
Feb 14: R311,1m
Feb 13: R299,1m
Consolidated statement of comprehensive income
% Reviewed Audited
R000's change 2014 2013
Revenue 2 1 975 314 1 945 419
Cost of sales (1 195 903) (1 161 574)
Gross profit (1) 779 411 783 845
Other income 8 128 8 464
Operating expenses (620 682) (625 898)
Operating profit 166 857 166 411
Share of profit of associate net of taxation 21 25
Investment income 12 071 11 750
Finance costs (27 079) (35 418)
Net profit before taxation 151 870 142 768
Taxation (note 2) (41 200) (41 090)
Net profit for the year 9 110 670 101 678
Other comprehensive income net of taxation
Foreign currency translation differences 128 (20)
Total comprehensive income for the year 110 798 101 658
Earnings per share (cents) (note 3)
- Basic 9 66,9 61,5
- Headline 7 68,2 63,5
- Diluted basic 64,0 58,9
- Diluted headline 65,3 60,8
Consolidated statement of financial position
% Reviewed Audited
R000’s change 2014 2013
Assets
Non-current assets 1 031 266 981 269
Property, vehicles, plant and equipment 986 896 939 934
Intangible assets 37 568 38 064
Investments and loans 2 175 104
Deferred tax 4 627 3 167
Current assets 473 789 426 836
Inventories 64 890 56 637
Investments and loans - 3 461
Trade and other receivables 240 990 234 700
Taxation in advance 1 270 137
Cash and cash equivalents 166 639 131 901
Non-current assets held for sale 97 350
Total assets 1 505 152 1 408 455
Equity and liabilities
Equity 715 296 650 117
Non-current liabilities 338 584 344 160
Interest-bearing borrowings 165 383 187 217
Deferred tax 173 201 156 943
Current liabilities 451 272 414 178
Trade and other payables 366 695 325 735
Current portion of interest-bearing borrowings 83 805 87 047
Other financial liabilities 394 287
Current tax payable 88 832
Shareholders for dividend 290 277
Total equity and liabilities 1 505 152 1 408 455
Net asset value per share (cents) 11 437,2 393,3
Consolidated statement of cash flows
% Reviewed Audited
R000’s change 2014 2013
Cash flows from operating activities 265 194 252 606
Cash generated by operations before proceeds
on disposal of rental assets 275 858 263 931
Proceeds on disposal of rental assets 35 207 35 191
Cash generated by operations 4 311 065 299 122
Net finance costs (15 346) (23 940)
Changes in working capital 37 523 39 336
Taxation paid (28 314) (25 640)
Cash available from operating activities 304 928 288 878
Dividends paid (39 734) (36 272)
Cash flows from investing activities (195 985) (145 373)
Cash flows from financing activities (34 553) (39 324)
Net change in cash and cash equivalents 34 656 67 909
Translation difference on foreign bank accounts 82 16
Cash and cash equivalents at beginning of year 131 901 63 976
Cash and cash equivalents at end of year 166 639 131 901
Consolidated statement of changes in equity
Reviewed Audited
R000’s 2014 2013
Ordinary share capital and premium 10 841 10 841
A ordinary shares 10 10
Treasury shares (109 679) (99 670)
Balance at beginning of year (99 670) (100 086)
Treasury shares sold 545 416
Treasury shares acquired (10 554) -
Share-based payment reserve 20 322 16 717
Balance at beginning of year 16 717 15 155
Share-based payment expense 3 605 1 562
Foreign currency translation reserve 108 (20)
Balance at beginning of year (20) -
Foreign currency translation differences 128 (20)
Retained income 793 694 722 239
Balance at beginning of year 722 239 656 808
Profit on disposal of treasury shares 532 90
Dividends paid (39 747) (36 337)
Net profit for the year 110 670 101 678
Total capital and reserves 715 296 650 117
Segment information
Reviewed Audited
R000’s 2014 2013
Total segment revenue 2 131 048 2 102 745
General distribution 1 634 090 1 565 996
Truck rental and other 382 761 420 916
Head office and other 114 197 115 833
Less: Inter-segment revenue 155 734 157 326
General distribution 4 991 4 733
Truck rental and other 38 714 36 925
Head office and other 112 029 115 668
External segment revenue 1 975 314 1 945 419
General distribution 1 629 099 1 561 263
Truck rental and other 344 047 383 991
Head office and other 2 168 165
Business segment results
General distribution 144 232 126 098
Truck rental and other 36 905 47 467
Head office and other (14 280) (7 154)
Operating segment results 166 857 166 411
Share of profit of associate net of taxation 21 25
Investment income 12 071 11 750
Finance costs (27 079) (35 418)
Net profit before taxation 151 870 142 768
Total segment assets
General distribution 687 786 642 408
Truck rental and other 574 121 551 190
Head office and other 235 173 207 988
Segment assets 1 497 080 1 401 586
Investments and loans 2 175 3 565
Deferred tax 4 627 3 167
Taxation in advance 1 270 137
Total assets 1 505 152 1 408 455
Notes
1. Statement of compliance
The reviewed condensed consolidated financial results are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings
Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council
and to also, as a minimum, contain the information required by IAS34 Interim Financial Reporting. The accounting policies
applied in the preparation of the reviewed condensed consolidated financial results are in terms of IFRS and are consistent
with those applied in the previous consolidated annual financial statements. These results have been prepared under the
supervision of the Group Financial Director, Mr CL Sack.
The Group’s auditor, Baker Tilly SVG has reviewed these results.
The auditor’s unqualified review opinion does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s engagement they
should obtain a copy of the auditor’s report together with the accompanying financial information from the company’s registered
office.
Reviewed Audited
R000’s 2014 2013
2. Taxation
Dividend withholding tax and secondary tax on companies included in taxation 39 2 075
3. Headline earnings
3.1 Reconciliation between basic and headline earnings
Basic earnings 110 670 101 678
Loss on disposal of property, vehicles, plant and equipment less taxation 2 229 3 222
Headline earnings 112 899 104 900
3.2 Number of ordinary shares of
R0,001 each in issue
Actual 198 627 386 198 627 386
Weighted average 165 505 874 165 204 702
Diluted 172 797 925 172 534 796
3.3 Number of A ordinary shares of
R0,001 each in issue
Actual 10 429 010 10 429 010
4. Supplementary information
Depreciation 92 915 84 940
Amortisation of intangible assets 15 972 14 308
Depreciation and amortisation 108 887 99 248
Commentary
Introduction
Value Group Limited (“the Group”) and its subsidiaries provide a comprehensive range of tailored logistical solutions
throughout southern Africa. The operating divisions specialise in providing a diversified range of supply chain
services, which encompass distribution, transport, clearing and forwarding, warehousing, container and fleet management,
forklift and commercial vehicle rental and leasing.
Financial review
Despite the subdued economic environment which continued to impact trading conditions in the form of pricing pressures
and reduced customer volumes, the Group produced acceptable results. Revenue increased marginally by 2% to R1,975
billion. New accounts, increased fuel recoveries and annual escalations were offset by weak consumer demand and the expiry
of key contracts towards the end of the previous financial year.
Gross profit margins were negatively affected by the 10% increase in the labour rate and an average 13% increase in
the cost of fuel. These increases were mostly offset by operational efficiencies and reduced maintenance costs
attributable to the quality of the fleet. Nevertheless, gross profit marginally decreased to R779,4 million.
Notwithstanding this reduction, the key focus to extract efficiencies through stringent control of employment and overhead
costs enabled operating margins to be maintained at 8%.
Decreased average debt levels contributed to the reduction of finance costs from R35,4 million to R27,1 million. In
addition, the effective tax rate reduced from 28,8% to 27,1% due to the previous period’s inclusion of the STC expense
amounting to R2,1 million. Accordingly, net profit and basic earnings per share increased by 9% to R110,7 million and
66,9 cents respectively. Headline earnings increased by 7% to 68,2 cents per share.
Cash generated by operations increased by 4% to R311,1 million. Total capital expenditure amounted to R202,3 million
and comprised R124,9 million for vehicles, R25,7 million for IT hardware and software, R29,1 million for materials
handling equipment and the balance of R22,6 million for plant, equipment and accessories. The Group’s solid cash flows
together with the R39,8 million realised from the disposal of rental vehicles and other assets funded this capital
expenditure in full in addition to reducing interest-bearing debt by R25,1 million. Cash balances increased by
R34,7 million to R166,6 million.
Net asset value increased by 11% to 437,2 cents per share. Two million shares were repurchased during the period which
are now held as treasury shares.
The Group’s balance sheet remains sound with a low debt:equity ratio of 35% which is below the 40% to 60% target
range.
Broad-based black economic empowerment
Subsequent to the BEE equity transaction concluded in the 2011 financial year, the Group is pleased to advise that the
respective BEE equity funding structures are comfortably covered by the underlying market value of the shares in Value
Group Limited. In addition, over the last three years, the Group has maintained a level 4 BBBEE score.
Operational review
General distribution segment
Due to the expiry of contracted business towards the end of the previous period, the volume decline experienced in the
first half was partially reversed through new customer take on. This, in addition to annual price adjustments and fuel
recoveries contributed to revenue increasing by 4% to R1,629 billion. In addition, the ongoing cost saving initiatives
contributed to operating margins increasing from 8% to 9%. Operating profit increased from R126,1 million to
R144,2 million.
Truck rental and other segments
Operating results in the truck rental division were below expectation. The completion of a key project at the end of
the previous period resulted in revenue reducing from R384 million to R344 million. Accordingly, operating profits
reduced by R10,6 million to R36,9 million. Measures have been taken to grow the revenue base and improve performance.
The other divisions comprising this segment performed in line with expectation.
Future capital expenditure
Capital expenditure for the 2015 year has been budgeted at approximately R190 million. This will be funded
predominantly by internally generated cash flows and the balance by interest-bearing debt.
Prospects
The introduction of e-tolls, increases in fuel, labour, interest rates and inflationary pressures do not bode well for
the South African market. In addition, high unemployment rates and consumer debt exposure together with protracted
strike action continue to weaken the economy by depressing growth rates. It is therefore anticipated that the resultant
financial pressures faced by the consumer will impact existing customer volume growth and the Group’s ability to expand the
customer base. Consequently, the Group expects difficult trading conditions in 2015.
The Group remains committed to its acquisitive growth strategy by leveraging off its intellectual property,
infrastructure, low gearing, positive cash balances and strong cash flows. The Group seeks to invest not only in businesses
that complement existing divisions, but also in those that will diversify and grow new revenue streams. Various acquisition
opportunities continue to be evaluated and actively pursued both in South Africa and its neighbouring countries.
Declaration of final dividend (number 15)
Generation of increased positive cash flows has enabled the Board to declare a 13% increase in the gross final
dividend to 17 cents per ordinary share which will be paid out of distributable reserves. The total STC credits utilised as
part of this declaration amount to R1 855,70. The number of ordinary shares in issue at the date of this declaration is 198
627 386 and consequently the STC credits utilised per share amounts to 0,00093 cents per share. The dividend will be
subject to a dividend withholding tax of 15% which amounts to 2,54986 cents per share. This will result in a net dividend
of 14,45014 cents per share to those shareholders who are not exempt from paying dividend withholding tax. The tax
reference number of Value Group Limited is 9319/054/71/5. The gross dividend is covered 2,5 times by second half headline
earnings and is payable to shareholders as follows:
Declaration date Tuesday, 13 May 2014
Last day to trade cum dividend Friday, 27 June 2014
Trading ex dividend commences Monday, 30 June 2014
Record date Friday, 4 July 2014
Payment date Monday, 7 July 2014
Share certificates may not be dematerialised or rematerialised between Monday,
30 June 2014 and Friday, 4 July 2014 both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
13 May 2014
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack, I M Groves*, N M Phosa*, M Padiyachy, V W Mcobothi*
*Non-executive director
Sponsor: Investec Bank Limited
Date: 13/05/2014 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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