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VLE - Value - Reviewed financial results for the year ended 28 February 2011
Value Group Limited
(Incorporated in the Republic of South Africa)
Registration number: 1997/002203/06
Share code: VLE
ISIN code: ZAE000016507
("Value" or "the company")
Value Group Limited
The measurable logistics company
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2011
Revenue up 18%
Headline earnings per share excluding BEE costs up 21%
Cash generated by operations up 12%
Net asset value up 14%
Final dividend up 20%
Thirty years of growth, determination and innovation
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
% Reviewed Audited
R000`s change 2011 2010
Revenue 18 1 588 315 1 351 611
Cost of sales (891 874) (754 764)
Gross profit 17 696 441 596 847
Other income 4 379 4 637
Operating expenses (534 405) (459 112)
Operating profit 17 166 415 142 372
Once-off BEE equity transaction (12 192) -
costs
Share of profit/(loss) of 11 (13)
associate net of taxation
Investment income 17 715 17 412
Finance costs (34 370) (31 167)
Net profit before taxation 137 579 128 604
Taxation (note 2) (43 468) (37 234)
Net profit for the year 94 111 91 370
Other comprehensive income net - -
of taxation
Total comprehensive income for 3 94 111 91 370
the year
Earnings per share (cents)
(note 3)
- Basic 54,5 50,8
- Headline 7 56,2 52,4
- Adjusted headline 21 63,3 52,4
- Diluted basic 56,4 50,3
- Diluted headline 12 58,0 51,9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
% Reviewed Audited
R000`s change 2011 2010
Assets
Non-current assets 864 931 736 026
Property, vehicles, plant and 828 456 704 506
equipment
Intangible assets 31 611 25 716
Investments and loans 1 007 2 518
Deferred tax 3 857 3 286
Current assets 370 010 328 047
Inventories 68 260 43 250
Investments and loans 2 617 -
Trade and other receivables 218 857 179 915
Taxation in advance 100 -
Cash and cash equivalents 80 176 104 882
Non-current assets held for 20 152
sale
Total assets 1 234 961 1 064 225
Equity and liabilities
Equity 502 774 485 006
Non-current liabilities 315 212 209 432
Interest-bearing borrowings 194 963 98 375
Deferred tax 120 249 111 057
Current liabilities 416 975 369 787
Trade and other payables 317 346 283 486
Current portion of interest- 84 042 73 250
bearing borrowings
Current tax payable 15 587 13 051
Total equity and liabilities 1 234 961 1 064 225
Net asset value per share 14 304,8 267,8
(cents)
CONSOLIDATED STATEMENT OF CASH FLOWS
% Reviewed Audited
R000`s change 2011 2010
Cash flows from operating 133 450 166 049
activities
Cash generated by operations 12 246 908 220 309
Net finance costs (16 967) (13 755)
Changes in working capital (36 098) 28 924
Taxation paid (32 411) (31 761)
Cash available from operating 161 432 203 717
activities
Dividends paid (27 982) (37 668)
Cash flows from investing (204 071) (134 109)
activities
Cash flows from financing 45 915 (38 461)
activities
Net change in cash and cash (24 706) (6 521)
equivalents
Cash and cash equivalents at 104 882 111 403
beginning of year
Cash and cash equivalents at end 80 176 104 882
of year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
R000`s 2011 2010
Ordinary share capital and premium 10 841 194
Balance at beginning of year 194 194
Shares issued 73 003 -
Share issue expenses (2 356) -
Share buy back (60 000) -
A shares 10 -
Shares issued 10 -
Treasury shares (100 325) (28 323)
Balance at beginning of year (28 323) (32 746)
Treasury shares sold 1 011 4 423
Treasury shares acquired (73 013) -
Share-based payment reserve 13 623 746
Balance at beginning of year 746 772
Share-based payment expense 13 130 258
Transfer to retained income (253) (284)
Retained income 578 625 512 389
Balance at beginning of year 512 389 461 689
Transfer from share-based payment reserve 253 284
Loss on disposal of treasury shares (120) (3 244)
Dividends paid (28 008) (37 710)
Total comprehensive income for the year 94 111 91 370
Net profit for the year 94 111 91 370
Other comprehensive income for the year - -
Total capital and reserves 502 774 485 006
SEGMENT INFORMATION
Reviewed Audited
R000`s 2011 2010
Total segment revenue 1 719 757 1 485 609
General distribution 1 266 234 1 073 095
Truck rental and other 368 640 333 153
Head office and other 84 883 79 361
Less: Inter-segment revenue 131 442 133 998
General distribution 3 609 3 449
Truck rental and other 43 017 51 471
Head office and other 84 816 79 078
External segment revenue 1 588 315 1 351 611
General distribution 1 262 625 1 069 646
Truck rental and other 325 623 281 682
Head office and other 67 283
Business segment results
General distribution 142 376 103 715
Truck rental and other 39 228 45 456
Head office and other (15 189) (6 799)
Business segment results 166 415 142 372
Once-off BEE equity transaction costs (12 192) -
Share of profit/(loss) of associate net 11 (13)
of taxation
Investment income 17 715 17 412
Finance costs (34 370) (31 167)
Net profit before taxation 137 579 128 604
Total segment assets
General distribution 532 612 487 784
Truck rental and other 560 690 430 583
Head office and other 134 078 140 054
Segment assets 1 227 380 1 058 421
Investments and loans 3 624 2 518
Deferred tax 3 857 3 286
Taxation in advance 100 -
Total assets 1 234 961 1 064 225
NOTES
1. Statement of compliance
The financial results have been prepared in accordance with
International Financial Reporting Standards and in the
manner required by the Companies Act of South Africa and are
presented in accordance with IAS 34: Interim Financial
Reporting
The basis for the preparation of the financial results is
consistent with that applied in the preparation of the
annual financial statements for the year ended 28 February
2010.
The Group`s auditors, Charles Orbach & Company have reviewed
these results. Their unqualified review opinion is available
for inspection at the company`s registered office.
Reviewed Audited
R000`s 2011 2010
2. Taxation
Secondary tax on companies 3 422 3 346
included in taxation
3. Headline earnings
3.1 Reconciliation between basic and
headline earnings
Basic earnings 94 111 91 370
Loss on disposal of property, 2 935 2 852
vehicles, plant and equipment
less taxation
Headline earnings 97 046 94 222
Once-off BEE equity transaction 12 192 -
costs less taxation
Adjusted headline earnings 109 238 94 222
3.2 Number of ordinary shares of
R0,001 each in issue
Actual 198 627 386 194 436 033
Weighted average 172 707 357 179 717 904
Diluted 189 376 556 181 643 617
3.3 Number of A shares of R0,001 each
in issue
Actual 10 429 010 -
4. Supplementary information
Depreciation 69 710 64 447
Amortisation of intangible assets 8 698 9 499
Depreciation and amortisation 78 408 73 946
Commentary
Introduction
Value Group Limited ("the Group") 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 supply chain
services, which encompass distribution, transport of normal and abnormal loads,
clearing and forwarding, warehousing, container and fleet management, forklift
and commercial vehicle rental and leasing.
Financial review
The Group produced commendable results in a period characterised by a protracted
Transnet strike, a Transport sector strike and the World Cup soccer tournament.
During these periods, consistent volume throughput was materially affected.
Nevertheless, combined volume growth from an expanded customer base contributed
to income increasing by 18% from R1,352 billion to R1,588 billion.
Despite additional subcontractor costs being incurred in the first half, robust
trading conditions over the Christmas period and strict cost control, resulted
in gross profit percentages being maintained at 44%. Gross profit increased by
R99,6 million to R696,4 million.
Net profit before tax of R137,6 million was subject to a once-off BEE equity
transaction cost of R12,2 million which is not tax deductable. This cost in
addition to the STC payment had the effect of increasing the effective tax rate
to 31,6%. Consequently, headline earnings were impacted and thus increased by
only 7% from 52,4 cents per share to 56,2 cents per share. Excluding these once-
off BEE equity transaction costs, adjusted headline earnings increased by 21%
from 52,4 cents per share to 63,3 cents per share.
Cash generated by operations remained consistently strong and improved by 12% to
R246,9 million. Cash flows funded the
R60 million voluntary share repurchase in August 2010 where
16,7 million shares were acquired and subsequently cancelled. In addition, the
Group`s capital expenditure totalling R249,6 million was partly financed by debt
with the balance of R142,2 million being internally funded.
The Group`s balance sheet remains financially sound with the
net asset value increasing by 14% from 267,8 cents per share
to 304,8 cents per share.
Operation review
General distribution segment
The segment performed exceptionally well with volume growth from the expanded
customer base increasing turnover and operating margins. Turnover increased by
18% from R1,07 billion to
R1,26 billion. In addition, stringent cost controls and operational disciplines
resulted in operating margins increasing from 9,7% to 11,3% with operating
profits growing by 37,3% to R142,4 million.
Truck rental segment
Renewed management focus in the truck rental segment saw revenue increasing by
15,6% from R281,7 million to R325,6 million. A positive contribution of R39,2
million was made to Group profitability. Truck rental has become highly
competitive with rates under severe pressure in order to improve low vehicle
utilisations. This, in conjunction with the additional maintenance costs which
were incurred to improve and upgrade the fleet, reduced margins from 16,1% to
12,0%.
The defleeting process is ongoing with 398 older vehicles having been disposed
off during the 2011 financial year. The disposal of these older vehicles has
had a direct effect on maintenance downtime. Consequently, the Group has
improved maintenance turnaround times which has favourably affected the
availability of vehicles. Hence, the disposal of excess older vehicles will
continue. A further 400 vehicles have been earmarked for disposal in the new
financial year.
Capital commitments
The Group has and will continue to invest heavily in growing and upgrading its
vehicle, IT and depot infrastructure.
Budgeted capital expenditure for the 2012 financial year amounts to R240 million
comprising R178 million for vehicle and forklift additions and replacements, R42
million pertaining to IT infrastructure and application upgrades and R20 million
pertaining to the expansion of the Freightpak premises in Mahogany Ridge,
Durban. A major portion of this expenditure will initially be funded by interest
bearing debt with the balance being internally funded.
BBBEE UPDATE
Over the past few years the Group has been committed to achieving BBBEE across
all seven pillars of the BEE scorecard. Various initiatives have been
implemented in this regard simultaneously ensuring sustainability into the
future. During this period, shareholder and JSE approval was obtained which
facilitated up to a 15% equity ownership by Dr Nakedi Mathews Phosa and Mr Mano
Padiyachy, both directors of Value Group Limited, as well as selected black
employees in terms of an empowerment trust. Subsequent to the implementation of
this transaction, the Group was accredited as a level 4 BBBEE contributor.
Prospects
Management is continuously focussing on growing the customer base. The Group`s
strategy of growing the revenue streams within each division and each leg of the
logistics supply chain has and will necessitate additional infrastructure
investment. The Group`s budgeted investment expenditure will not only improve
its IT technology infrastructure and application base, but will also alleviate
vehicle and congestion constraints, thereby providing a platform for the future
sustainable growth of the business.
The prolonged effect of the recessionary environment and the recent increasing
price of fuel has somewhat curtailed consumer demand. This has hampered volume
growth amongst certain customers. Accordingly, volume gains in the new financial
year
has been relatively subdued. Notwithstanding this, operational performance in
March and April 2011 has been in line with expectation. The Group has procured
additional and new revenue streams for its various divisions. These will
materialise during the course of the current year. Accordingly, management is
cautiously optimistic that headline earnings for the 2012 financial year will
increase. This forecast has not been reviewed nor reported on by the Group`s
auditors.
DECLARATION OF FINAL DIVIDEND (NUMBER 9)
The Board has resolved to declare a final dividend of 12 cents per ordinary
share. This dividend is covered 3,5 times by second half headline earnings and
is payable as follows:
Declaration date Tuesday, 10 May 2011
Last day to trade cum dividend Friday, 24 June 2011
Trading ex-dividend commences Monday, 27 June 2011
Record date Friday, 1 July 2011
Payment date Monday, 4 July 2011
Share certificates may not be dematerialised or rematerialised between 27 June
2011 and 1 July 2011, both days inclusive.
For and on behalf of the Board
C D Stein Chairman S D Gottschalk Chief Executive Officer
Johannesburg
10 May 2011
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507 Share code: VLE
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack, I M Groves*, N
M Phosa*, M Padiyachy
*Non-executive director
Sponsor: Investec Bank Limited
Date: 10/05/2011 15:47:01 Supplied by www.sharenet.co.za
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