Wrap Text
VLE - Value Group Limited - Unaudited interim financial results for the
six months ended 31 August 2011
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507 Share code: VLE
VALUE GROUP LIMITED
The measurable logistics company
Thirty years of growth, determination and innovation
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2011
Revenue up 14%
Adjusted headline earnings per share up 14%
Dividend up 17%
Cash generated by operations up 8%
Net asset value per share up 18%
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
% August August February
R000`s change 2011 2010 2011
Revenue 14 847 264 740 766 1 588 315
Cost of sales (496 129) (416 709) (891 874)
Gross profit 8 351 135 324 057 696 441
Other income 3 558 2 633 4 379
Operating expenses (286 938) (268 500) (534 405)
Operating profit 16 67 755 58 190 166 415
Once-off BEE equity - (13 201) (12 192)
transaction costs
Share of profit of 8 10 11
associate net of
taxation
Investment income 10 016 10 929 17 715
Finance costs (19 260) (14 758) (34 370)
Net profit before 58 519 41 170 137 579
taxation
Taxation (note 2) (18 184) (16 510) (43 468)
Net profit for the 40 335 24 660 94 111
period
Other comprehensive - - -
income net of
taxation
Total comprehensive 40 335 24 660 94 111
income for the period
Earnings per share
(cents) (note 3)
- Basic 24,5 13,7 54,5
- Headline 71 25,0 14,6 56,2
- Adjusted headline 14 25,0 21,9 63,3
- Diluted basic 21,3 14,9 56,4
- Diluted headline 37 21,8 15,9 58,0
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
% August August February
R000`s change 2011 2010 2011
Assets
Non-current assets 943 380 808 734 864 931
Property, vehicles, 906 741 771 874 828 456
plant and equipment
Intangible assets 30 440 28 813 31 611
Investments and loans 1 083 2 690 1 007
Deferred tax 5 116 5 357 3 857
Current assets 386 551 334 781 370 010
Inventories 63 241 61 146 68 260
Investments and loans 2 309 - 2 617
Trade and other 267 847 238 506 218 857
receivables
Taxation in advance 3 889 - 100
Cash and cash 49 265 35 129 80 176
equivalents
Non-current assets 256 146 20
held for sale
Total assets 1 330 187 1 143 661 1 234 961
Equity and liabilities
Equity 524 095 442 225 502 774
Non-current 354 437 267 852 315 212
liabilities
Interest-bearing 228 845 153 439 194 963
borrowings
Deferred tax 125 592 114 413 120 249
Current liabilities 451 655 433 584 416 975
Trade and other 359 556 343 468 317 202
payables
Current portion of 91 955 75 997 84 042
interest-bearing
borrowings
Current tax payable - 14 002 15 587
Shareholders for 144 117 144
dividends
Total equity and 1 330 187 1 143 661 1 234 961
liabilities
Net asset value per 18 317,7 268,4 304,8
share (cents)
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
% August August February
R000`s change 2011 2010 2011
Cash flows from 42 376 44 286 133 450
operating activities
Cash generated by 8 107 117 98 742 246 908
operations
Net finance costs (9 244) (3 829) (16 967)
Changes in working (2 225) (18 242) (36 098)
capital
Taxation paid (33 476) (14 274) (32 411)
Cash available from 62 172 62 397 161 432
operating activities
Dividends paid (19 796) (18 111) (27 982)
Cash flows from (115 082) (110 160) (204 071)
investing activities
Cash flows from 41 795 (3 879) 45 915
financing activities
Net change in cash and (30 911) (69 753) (24 706)
cash equivalents
Cash and cash 80 176 104 882 104 882
equivalents at
beginning of period
Cash and cash 49 265 35 129 80 176
equivalents at end of
period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
August August February
R000`s 2011 2010 2011
Ordinary share capital and 10 841 10 841 10 841
premium
Balance at beginning of period 10 841 194 194
Shares issued - 73 003 73 003
Share issue expenses - (2 356) (2 356)
Share buy back - (60 000) (60 000)
A shares 10 10 10
Shares issued 10 10 10
Treasury shares (100 325) (100 715) (100 325)
Balance at beginning of period (100 325) (28 323) (28 323)
Treasury shares sold - 621 1 011
Treasury shares acquired - (73 013) (73 013)
Share-based payment reserve 14 405 12 894 13 623
Balance at beginning of period 13 623 746 746
Share-based payment expense 782 12 359 13 130
Transfer to retained income - (211) (253)
Retained income 599 164 519 195 578 625
Balance at beginning of period 578 625 512 389 512 389
Transfer from share-based - 211 253
payment reserve
Profit/(loss) on disposal of - 45 (120)
treasury shares
Dividends paid (19 796) (18 110) (28 008)
Total comprehensive income for 40 335 24 660 94 111
the period:
Net profit for the period 40 335 24 660 94 111
Other comprehensive income for - - -
the period
Total capital and reserves 524 095 442 225 502 774
SEGMENT INFORMATION
Unaudited Unaudited Audited
August August February
R000`s 2011 2010 2011
Total segment revenue 915 866 802 304 1 719 757
General distribution 674 485 596 085 1 266 234
Truck rental and other 194 926 163 528 368 640
Head office and other 46 455 42 691 84 883
Less: Inter-segment revenue 68 602 61 538 131 442
General distribution 4 232 1 299 3 609
Truck rental and other 17 915 17 589 43 017
Head office and other 46 455 42 650 84 816
External segment revenue 847 264 740 766 1 588 315
General distribution 670 253 594 786 1 262 625
Truck rental and other 177 011 145 939 325 623
Head office and other - 41 67
Business segment results
General distribution 62 084 45 099 142 376
Truck rental and other 10 013 15 594 39 228
Head office and other (4 342) (2 503) (15 189)
Business segment results 67 755 58 190 166 415
Once-off BEE equity - (13 201) (12 192)
transaction costs
Share of profit of associate 8 10 11
net of taxation
Investment income 10 016 10 929 17 715
Finance costs (19 260) (14 758) (34 370)
Net profit before taxation 58 519 41 170 137 579
Total segment assets
General distribution 594 899 533 360 532 612
Truck rental and other 614 096 516 896 560 690
Head office and other 108 795 85 358 134 078
Segment assets 1 317 790 1 135 614 1 227 380
Investments and loans 3 392 2 690 3 624
Deferred tax 5 116 5 357 3 857
Taxation in advance 3 889 - 100
Total assets 1 330 187 1 143 661 1 234 961
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 2011.
The interim results have been prepared under the supervision of
the financial director, Mr. C L Sack.
Unaudited Unaudited Audited
August August February
R000`s 2011 2010 2011
2. Taxation
Secondary tax on 1 736 1 891 3 422
companies included in
taxation
3. Headline earnings
3.1 Reconciliation between
basic and headline
earnings
Basic earnings 40 335 24 660 94 111
Loss on disposal of 838 1 695 2 935
property, vehicles,
plant and equipment less
taxation
Headline earnings 41 173 26 355 97 046
Once-off BEE equity - 13 201 12 192
transaction costs less
taxation
Adjusted headline 41 173 39 556 109 238
earnings
3.2 Number of ordinary
shares of R0,001 each in
issue
Actual 198 627 386 198 627 386 198 627 386
Weighted average 164 962 874 180 417 830 172 707 357
Diluted 189 220 691 165 910 895 189 376 556
3.3 Number of A shares of
R0,001 each in issue
Actual 10 429 010 10 429 010 10 429 010
4. Supplementary
information
Depreciation 37 042 34 142 69 710
Amortisation of 4 757 6 191 8 698
intangible assets
Depreciation and 41 799 40 333 78 408
amortisation
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 period under review consisted of various challenges ranging from
disrupted fuel supplies to operational changes within certain business
units. Nevertheless, further growth in the supply chain services utilised
by an expanded customer base contributed to Group revenue increasing by
14% from R740,8 million to R847,3 million.
Gross profit improved by 8% from R324,1 million to R351,1 million. This
improvement more than offset the 6,7% rise in operating expenses to
produce increased earnings. In addition, the once-off BEE equity
transaction costs incurred in the previous period had a negative effect
on the comparative headline earnings figure. Accordingly headline
earnings increased by 71% from 14,6 cents per share to 25 cents per
share. Excluding the prior period`s once-off BEE equity transaction
costs, adjusted headline earnings per share increased by 14% from 21,9
cents per share to 25 cents per share.
A total of R138,7 million was spent on the acquisition of capital assets
which consisted of R88,2 million for vehicles, R25,3 million for
materials handling units, R8,5 million for IT hardware and software, R7,6
million for property upgrades and the balance of R9,1 million for plant,
equipment and accessories. R96,9 million of this capital expenditure was
funded by an 8% increase in cash generated by operations and proceeds on
disposal of assets. The remainder of the capital expenditure totalling
R41,8 million was funded by interest bearing debt.
Debt:equity levels increased to 61,2% which is marginally above the upper
target level of 60%. Interest-bearing debt levels are expected to return
to within the target range of 40% to 60% within the short term. Net asset
value per share improved by 18% from 268,4 cents to 317,7 cents per
share.
Operational review
General distribution
This segment`s revenue increased by 12,7% from R594,8 million to R670,3
million. Growth was driven by an expanded customer base which increased
volume throughput. Operating margins increased to 9,3% from 7,6% in the
previous period. Margin improvement was achieved on improved volumes,
reduced subcontractor costs and improved sustainable operational
efficiencies driven by information technology enablement.
Truck rental and other
Contrary to expectation, the segment performed poorly. Although revenue
increased from R145,9 million to R177 million, operating margins reduced
from 10,7% to 5,7%, a direct result of extremely competitive pricing,
operational challenges and additional maintenance to improve the quality
of the fleet. Substantial management time and effort has been, and
continues to be devoted to these business units to restore profitability
to acceptable levels.
INFORMATION TECHNOLOGY
The Group is currently at an advanced stage in its major infrastructure
upgrade programme. A new world class data centre has been constructed.
State of the art servers, data storage devices and network equipment have
been procured and are currently being commissioned. It is envisaged that
this long-term investment will not only improve response times, but also
provide a platform for the Group`s future applications, data and
transactional volume growth requirements.
Capital commitments
Approved capital expenditure of approximately R68,2 million will be
incurred in the remaining six months of the financial year. This
expenditure will be funded out of a combination of existing interest-
bearing debt facilities and cash flows. The expenditure consists of R31,8
million for vehicles, R25,2 million for IT hardware and software upgrades
and R11,2 million for the expansion of the Freightpak facilities in
Mahogany Ridge, Durban.
Prospects
Global financial market volatility and uncertainty can induce another
recessionary environment both abroad and within the local economy.
Volumes have reduced amongst certain customers operating in different
industry verticals within the supply chain. Accordingly, management is
focused on growing a diversified revenue base across all logistical
service offerings, whilst, simultaneously, reducing costs.
Traditionally, the second half of the financial year is characterised by
increased consumer demand and hence increased logistics` volumes. This
however, must be viewed in light of a possible economic downturn which
could depress volumes particularly over the Christmas season.
Accordingly, management is cautious in advising that headline earnings
for the 2012 financial year will at least be maintained. This forecast
has not been reviewed nor reported on by the Group`s auditors.
DECLARATION OF INTERIM DIVIDEND (NUMBER 10)
Capital expenditure commitments are evaluated prior to the declaration of
a dividend. In addition, the declaration of dividends are dependent not
only on dividend cover ratios, but also on the associated effect on cash
flows and available cash resources.
Accordingly, the Board has resolved to declare an interim dividend of 7
cents per ordinary share. This dividend is covered 3,6 times by interim
headline earnings and is payable as follows:
Declaration date Tuesday, 18 October 2011
Last day to trade cum dividend Friday, 13 January 2012
Trading ex-dividend commences Monday, 16 January 2012
Record date Friday, 20 January 2012
Payment date Monday, 23 January 2012
Share certificates may not be dematerialised or rematerialised between 16
January 2012 and 20 January 2012, both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
18 October 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: 18/10/2011 12:15:12 Supplied by www.sharenet.co.za
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