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Unaudited Interim Financial Results
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507 Share code: VLE
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2012
Revenue up 10%
Headline earnings per share down 6%
Net asset value per share up 14%
Interim dividend declared up 14%
Cash generated by operations up 8%
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
% August August February
R000s change 2012 2011 2012
Revenue 10 936 129 847 264 1 798 012
Cost of sales (550 741) (496 129) (1 034 898)
Gross profit 10 385 388 351 135 763 114
Other income 3 706 3 558 9 022
Operating expenses (319 350) (286 938) (595 149)
Operating profit 3 69 744 67 755 176 987
Share of profit of
associate net of taxation 20 8 34
Investment income 6 769 10 016 15 222
Finance costs (20 366) (19 260) (38 224)
Net profit before taxation 56 167 58 519 154 019
Taxation (note 2) (18 803) (18 184) (44 517)
Net profit for the period (7) 37 364 40 335 109 502
Other comprehensive income net
of taxation
Total comprehensive income for
the period 37 364 40 335 109 502
Earnings per share (cents) (note 3)
Basic 22,6 24,5 66,4
Headline (6) 23,4 25,0 68,0
Diluted basic 20,0 21,3 58,7
Diluted headline (6) 20,6 21,8 60,2
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
% August August February
R000s change 2012 2011 2012
Assets
Non-current assets 1 011 857 943 380 981 687
Property, vehicles, plant
and equipment 963 538 906 741 938 715
Intangible assets 40 032 30 440 37 362
Investments and loans 2 570 1 083 2 414
Deferred tax 5 717 5 116 3 196
Current assets 425 473 386 551 397 627
Inventories 61 241 63 241 60 060
Investments and loans 901 2 309 902
Trade and other receivables 284 406 267 847 272 455
Taxation in advance 3 718 3 889 234
Cash and cash equivalents 75 207 49 265 63 976
Non-current assets held for sale 270 256 139
Total assets 1 437 600 1 330 187 1 379 453
Equity and liabilities
Equity 598 073 524 095 582 728
Non-current liabilities 373 211 354 437 359 932
Interest-bearing borrowings 226 133 228 845 221 346
Deferred tax 147 078 125 592 138 586
Current liabilities 466 316 451 655 436 793
Trade and other payables 363 520 359 556 339 968
Current portion of interest-bearing
borrowings 99 314 91 955 92 748
Current tax payable 3 249 3 865
Shareholders for dividend 233 144 212
Total equity and liabilities 1 437 600 1 330 187 1 379 453
Net asset value
per share (cents) 14 361,9 317,7 353,0
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
% August August February
R000s change 2012 2011 2012
Cash flows from
operating activities 83 776 42 376 145 010
Cash generated by operations
before movements in working
capital 8 115 472 107 117 262 966
Movements in working capital 22 110 (2 225) (26 118)
Net finance costs (13 782) (9 244) (23 179)
Taxation paid (16 932) (33 476) (37 375)
Cash available from operating
activities 106 868 62 172 176 294
Dividends paid (23 092) (19 796) (31 284)
Cash flows from investing activities (84 266) (115 082) (196 571)
Cash flows from financing activities 11 721 41 795 35 361
Net change in cash and cash
equivalents 11 231 (30 911) (16 200)
Cash and cash equivalents
at beginning of period 63 976 80 176 80 176
Cash and cash equivalents at
end of period 75 207 49 265 63 976
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
August August February
R000s 2012 2011 2012
Ordinary share capital and premium 10 841 10 841 10 841
A ordinary shares 10 10 10
Treasury shares (99 785) (100 325) (100 086)
Balance at beginning of period (100 086) (100 325) (100 325)
Treasury shares sold 301 239
Share-based payment reserve 15 881 14 405 15 155
Balance at beginning of period 15 155 13 623 13 623
Share-based payment expense 726 782 1 532
Retained income 671 126 599 164 656 808
Balance at beginning of period 656 808 578 625 578 625
Profit on disposal of treasury shares 67 33
Dividends paid (23 113) (19 796) (31 352)
Total comprehensive income
for the period 37 364 40 335 109 502
Total capital and reserves 598 073 524 095 582 728
SEGMENT INFORMATION
Unaudited Unaudited Audited
August August February
R000s 2012 2011 2012
Total segment revenue 1 015 998 915 866 1 941 589
General distribution 763 232 674 485 1 473 993
Truck rental and other 195 074 194 926 370 280
Head office and other 57 692 46 455 97 316
Less: Inter-segment revenue 79 869 68 602 143 577
General distribution 5 966 4 232 9 994
Truck rental and other 16 898 17 915 37 205
Head office and other 57 005 46 455 96 378
External segment revenue 936 129 847 264 1 798 012
General distribution 757 266 670 253 1 463 999
Truck rental and other 178 176 177 011 333 075
Head office and other 687 938
Business segment results
General distribution 62 582 62 084 138 015
Truck rental and other 16 414 10 013 46 526
Head office and other (9 252) (4 342) (7 554)
Business segment results 69 744 67 755 176 987
Share of profit of associate
net of taxation 20 8 34
Investment income 6 769 10 016 15 222
Finance costs (20 366) (19 260) (38 224)
Net profit before taxation 56 167 58 519 154 019
Total segment assets
General distribution 646 729 594 899 646 470
Truck rental and other 596 212 614 096 596 383
Head office and other 181 753 108 795 129 854
Segment assets 1 424 694 1 317 790 1 372 707
Investments and loans 3 471 3 392 3 316
Deferred tax 5 717 5 116 3 196
Taxation in advance 3 718 3 889 234
Total assets 1 437 600 1 330 187 1 379 453
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 29 February 2012.
The interim results have been prepared under the supervision of the financial director, Mr C L Sack.
Unaudited Unaudited Audited
August August February
R000s 2012 2011 2012
2. Taxation 2 056 1 736 3 244
Secondary tax on companies included
in taxation
3. Headline earnings
3.1 Reconciliation between basic
and headline earnings
Basic earnings 37 364 40 335 109 502
Loss on disposal of property,
vehicles, plant and equipment
less taxation 1 227 838 2 746
Headline earnings 38 591 41 173 112 248
3.2 Number of ordinary shares
of R0,001 each in issue
Actual 198 627 386 198 627 386 198 627 386
Weighted average 165 129 994 164 962 874 164 991 563
Diluted 189 328 493 189 220 691 187 903 103
3.3 Number of A ordinary shares
of R0,001 each in issue
Actual 10 429 010 10 429 010 10 429 010
4. Supplementary information
Depreciation 41 911 37 042 77 351
Amortisation of intangible assets 6 857 4 757 10 511
Depreciation and amortisation 48 768 41 799 87 862
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 of normal
and abnormal loads, clearing and forwarding, warehousing, container and fleet management, forklift and commercial vehicle rental and leasing.
FINANCIAL REVIEW
Despite tough trading conditions which have manifested in volume decline and pricing pressures, annual escalations in conjunction with increased
fuel recoveries and an extended customer base contributed to Group revenue growing by 10% to R936,1 million. Reduced utilisation of external
subcontractors offset escalating fuel, maintenance and labour costs. Accordingly, gross profit margins were maintained. Gross profit improved
by 10% from R351,1 million to R385,4 million. Headline earnings, however, reduced by 6% from 25 cents per share to 23,4 cents per share.
Earnings were impacted by increased sales staff employment costs and additional STC charges which pushed up the effective tax rate to 33,5%.
Net finance costs increased from R9,2 million to R13,6 million predominantly due to the notional fair value adjustment made to revenue and
expenditure. Notwithstanding a small reduction in headline earnings, cash generated by operations improved by 8% to R115,5 million.
Cash flows of the Group remain resilient with ongoing focus on working capital management. Capital expenditure amounted to R104,3 million
and consisted of R63,4 million for vehicles, R21,9 million for IT hardware and software, R10,5 million for materials handling equipment and
the balance of R8,5 million for plant, equipment and accessories. R92,9 million of this expenditure was funded by internally generated cash
flows with the balance of R11,4 million being funded by interest-bearing debt. Cash balances improved from R64 million to R75 million.
The Group remains adequately capitalised with interest-bearing debt levels well within the debt:equity target of 40% to 60%. Net asset value
per share increased by 14% from 317,7 cents per share to 361,9 cents per share.
OPERATIONAL REVIEW
General distribution segment
Annual price adjustments and fuel recoveries contributed to the segments revenue increasing by 13% from R670,3 million to R757,3 million.
Although additional business from new and existing customers contributed to revenue growth, overall volumes throughout the period declined.
Consequently, operating costs were reduced where possible. Notwithstanding the reduction in operating margins from 9,3% to 8,3%, operating
profits increased marginally from R62,1 million to R62,6 million.
Truck rental and other segment
Despite the extremely competitive market conditions, operating profits increased from R10 million to R16,4 million. The turnaround of
previous loss making divisions, fleet realignment and additional truck rental business contributed to operating profit margins improving
from 5,7% to 9,2%.
FUTURE CAPITAL EXPENDITURE
Approved capital expenditure of approximately R35,7 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 R20,3 million for vehicles, R8,9 million for various IT hardware and software projects and R6,5 million for plant and equipment.
PROSPECTS
In light of the quality of the existing infrastructure, capital expenditure has been materially reduced. This will enable the Group to
continue to reduce debt and utilise its consistent positive cash flows to build up its cash resources which over the next five years,
will be earmarked for expansion opportunities into the rest of Africa. The Group aims to benefit from the substantially higher growth
rates achieved across the continent. This expansion will enable the Group to service the growth requirements of its customers, penetrate
new markets and increase its overall volume base. Although sustainable cost reduction initiatives have been and continue to be
implemented, an improvement in the current trading environment is not expected. Notwithstanding the take-on of new customers, the volume
decline trend continued in September 2012. This was further exacerbated by the protracted transport sector strike towards the end of
September and into October 2012. This strike will have an effect on profitability. Nevertheless, in the absence of any unforeseen
circumstances, the Board anticipates headline earnings to be similar to the previous year. This forecast has not been reviewed nor
reported on by the Groups auditors.
DECLARATION OF INTERIM DIVIDEND (NUMBER 12)
Generation of additional positive cash flows has enabled the Board to declare a 14% increase in the gross interim dividend to 8 cents
per ordinary share which will be paid out of distributable reserves. The total STC credits utilised as part of this declaration amount
to R446 943,17. 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 0,22502 cents per share. The dividend will be subject to a dividend withholding tax of 15% which amounts
to 1,16625 cents per share. This will result in a net dividend of 6,83375 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 2,9 times
by interim headline earnings and is payable to shareholders as follows:
Declaration date Tuesday, 16 October 2012
Last day to trade cum dividend Friday, 11 January 2013
Trading ex-dividend commences Monday, 14 January 2013
Record date Friday, 18 January 2013
Payment date Monday, 21 January 2013
Share certificates may not be dematerialised or rematerialised between Monday, 14 January 2013 and Friday, 18 January 2013, both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
16 October 2012
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, V W Mcobothi*
*Non-executive director
Sponsor: Investec Bank Limited
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