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Reviewed Financial Results for the year ended 28 February 2013
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507
Share code: VLE
Reviewed Financial Results for the year ended 28 February 2013
- Revenue up 8%
- Headline earnings per share down 7%
- Final dividend up 7% to 15 cents per share
- Net asset value up 11%
- Interest-bearing debt reduced by R39,8 million
- 36% increase in cash flows from operating activities to R252,6 million
Consolidated statement of comprehensive income
% Reviewed Audited
R000s change 2013 2012
Revenue 8 1 945 419 1 798 012
Cost of sales (1 161 574) (1 034 898)
Gross profit 3 783 845 763 114
Other income 8 464 9 022
Overhead expenses (625 898) (595 149)
Operating profit (6) 166 411 176 987
Share of profit of associate net of taxation 25 34
Investment income 11 750 15 222
Finance costs (35 418) (38 224)
Net profit before taxation 142 768 154 019
Taxation (note 3) (41 090) (44 517)
Net profit for the year (7) 101 678 109 502
Other comprehensive income net of taxation
Foreign currency translation differences (20) -
Total comprehensive income for the year 101 658 109 502
Reviewed Restated
Earnings per share (cents) (note 4) 2013 2012
- Basic 61,5 66,4
- Headline (7) 63,5 68,0
- Diluted basic 58,9 65,5
- Diluted headline 60,8 67,2
Consolidated statement of financial position
% Reviewed Audited
R000s change 2013 2012
Assets
Non-current assets 981 269 981 687
Property, vehicles, plant and equipment 939 934 938 715
Intangible assets 38 064 37 362
Investments and loans 104 2 414
Deferred tax 3 167 3 196
Current assets 426 836 397 627
Inventories 56 637 60 060
Investments and loans 3 461 902
Trade and other receivables 234 700 272 455
Taxation in advance 137 234
Cash and cash equivalents 131 901 63 976
Non-current assets held for sale 350 139
Total assets 1 408 455 1 379 453
Equity and liabilities
Equity 650 117 582 728
Non-current liabilities 344 160 359 932
Interest-bearing borrowings 187 217 221 346
Deferred tax 156 943 138 586
Current liabilities 414 178 436 793
Trade and other payables 325 735 339 968
Current portion of interest-bearing borrowings 87 047 92 748
Other financial liabilities 287 -
Current tax payable 832 3 865
Shareholders for divided 277 212
Total equity and liabilities 1 408 455 1 379 453
Net asset value per share (cents) 11 393,3 353,0
Consolidated statement of cash flows
% Reviewed Restated
R000s change 2013 2012
Cash flows from operating activities 36 252 606 185 120
Cash generated by operations before proceeds on
disposal of rental assets 263 931 262 966
Proceeds on disposal of rental assets 35 191 40 110
Cash generated by operations 299 122 303 076
Net finance costs (23 940) (23 179)
Changes in working capital 39 336 (26 118)
Taxation paid (25 640) (37 375)
Cash available from operating activities 288 878 216 404
Dividends paid (36 272) (31 284)
Cash flows from investing activities (145 373) (236 681)
Cash flows from financing activities (39 324) 35 361
Net change in cash and cash equivalents 67 909 (16 200)
Translation difference on foreign bank accounts 16 -
Cash and cash equivalents at beginning of year 63 976 80 176
Cash and cash equivalents at end of year 131 901 63 976
Consolidated statement of changes in equity
Reviewed Audited
R000s 2013 2012
Ordinary share capital and premium 10 841 10 841
Balance at beginning of year 10 841 10 841
A ordinary shares 10 10
Balance at beginning of year 10 10
Treasury shares (99 670) (100 086)
Balance at beginning of year (100 086) (100 325)
Treasury shares sold 416 239
Share-based payment reserve 16 717 15 155
Balance at beginning of year 15 155 13 623
Share-based payment expense 1 562 1 532
Foreign currency translation reserve (20) -
Foreign currency translation differences (20) -
Retained income 722 239 656 808
Balance at beginning of year 656 808 578 625
Profit on disposal of treasury shares 90 33
Dividends paid (36 337) (31 352)
Net profit for the year 101 678 109 502
Total capital and reserves 650 117 582 728
Segment information
Reviewed Audited
R000s 2013 2012
Total segment revenue 2 102 745 1 941 589
General distribution 1 565 996 1 473 993
Truck rental and other 420 916 370 280
Head office and other 115 833 97 316
Less: Inter-segment revenue 157 326 143 577
General distribution 4 733 9 994
Truck rental and other 36 925 37 205
Head office and other 115 668 96 378
External segment revenue 1 945 419 1 798 012
General distribution 1 561 263 1 463 999
Truck rental and other 383 991 333 075
Head office and other 165 938
Business segment results
General distribution 126 098 138 015
Truck rental and other 47 467 46 526
Head office and other (7 154) (7 554)
Operating segment results 166 411 176 987
Share of profit of associate net of taxation 25 34
Investment income 11 750 15 222
Finance costs (35 418) (38 224)
Net profit before taxation 142 768 154 019
Total segment assets
General distribution 642 408 646 470
Truck rental and other 551 190 596 383
Head office and other 207 988 129 854
Segment assets 1 401 586 1 372 707
Investments and loans 3 565 3 316
Deferred tax 3 167 3 196
Taxation in advance 137 234
Total assets 1 408 455 1 379 453
Notes
1. Statement of compliance
The financial results have been prepared in accordance with International Financial Reporting Standards (IFRS)
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 Groups auditors, Baker Tilly SVG (previously Charles Orbach & Company) have reviewed these results.
Their unqualified review opinion is available for inspection at the companys registered office.
2. Restatement of prior period reported items
Diluted earnings per share
During the year, the Group amended its earnings per share calculation to be in line with IAS 33: Earnings Per Share.
In previous reporting periods, the BEE transaction shares, issued to the BEE entities and BEE trust in July 2010,
were not treated as treasury shares at the end of the lock-in period. The Group has subsequently amended the
calculation of its diluted earnings per share and diluted headline earnings per share to treat these shares as
treasury shares at the end of the lock-in period.
The impact of the changes are reflected in the table below:
As previously Impact of Restated
stated 2012 change 2012
Weighted average number of shares outstanding for diluted
earnings per share 187 903 103 (20 747 195) 167 155 908
Diluted earnings per share (cents) 58,7 6,8 65,5
Diluted headline earnings per
share (cents) 60,2 7,0 67,2
Cash flows from operating activities
Comparative figures have been restated in the statement of cash flows.
Proceeds on disposal of rental assets, which were previously classified under investing activities have been
subsequently reclassified to operating activities in order to comply with IAS 7: Statement of Cash Flows.
Impact of
As previously change in Restated
R000s stated 2012 classification 2012
Cash flows from operating activities 145 010 40 110 185 120
Cash generated by operations 262 966 40 110 303 076
Cash available from operating activities 176 294 40 110 216 404
Cash flows from investing activities (196 571) (40 110) (236 681)
Reviewed Audited
R000s 2013 2012
3. Taxation
Secondary tax on companies and dividend 2 075 3 244
withholding tax included in taxation
4. Headline earnings
4.1 Reconciliation between basic and headline earnings
Basic earnings 101 678 109 502
Loss on disposal of property, vehicles, plant and
equipment less taxation 3 222 2 746
Headline earnings 104 900 112 248
4.2 Number of ordinary shares of R0,001 each in issue
Actual 198 627 386 198 627 386
Weighted average 165 204 702 164 991 563
Diluted 172 534 796 167 155 908
4.3 Number of A shares of R0,001 each in issue
Actual 10 429 010 10 429 010
5. Supplementary information
Depreciation 84 940 77 351
Amortisation of intangible assets 14 308 10 511
Depreciation and amortisation 99 248 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 adverse trading conditions which have resulted in pricing pressures and customer volume decline, revenue
increased by an inflationary 8% from R1,8 billion to R1,95 billion. This increase was attributable to annual
escalations in conjunction with fuel recoveries and an extended customer base. Revenue growth was tempered by reduced
volumes associated with weak consumer demand and the expiry of key contracts towards the end of the second half of the
financial year.
Gross profit increased by 3% to R783,8 million. Gross profit margins, however, were negatively affected by increased
operating costs particularly during the violent transport sector strike in September and October 2012. Although
disruptive, most services continued during this peak period. In addition, with the completion of contracted project
business, the months of January and February 2013 proved to be very quiet resulting in gross profit margins reducing
from 42,4% to 40,3%. Increased employment costs contributed to overheads increasing by 5% to R625,9 million.
Net profit after tax and headline earnings reduced by 7% to R101,7 million and 63,5 cents per share respectively.
Notwithstanding the small reduction in headline earnings, the substantial non-cash flow items comprising mainly
depreciation and amortisation enable the Group to generate cash flows which materially exceed net profit. In addition,
ongoing focus on stringent working capital management contributed positively to cash flows from operating activities
improving 36% to R252,6 million. Total capital expenditure amounted to R148,8 million and comprised R77,4 million for
vehicles, R31,4 million for IT hardware and software, R21,9 million for materials handling equipment and the balance
of R18,1 million for plant, equipment and accessories. The Groups resilient cash flow generation funded this expenditure
in addition to the R39,8 million reduction in interest-bearing debt. In addition, cash balances improved by R67,9 million
to R131,9 million.
Net asset value increased by 11% to 393,3 cents per share. The Group remains adequately capitalised with a low debt:equity
level of 42,2% which is well within the 40% to 60% target range.
OPERATIONAL REVIEW
General distribution segment
Organic growth, annual price adjustments and fuel recoveries contributed to revenue increasing by 6,6% to R1,56
billion. This increase was muted by the expiry of large contracted business which together with the declining volumes
throughout the period and the sector strike, had an effect on margins and profitability in the second half of the
financial year. Consequently, operating margins declined from 9,4% to 8,1% and operating profit reduced from R138
million to R126,1 million.
Truck rental and other segments
Despite the expiry of ad hoc project business and the competitive market conditions, operating profits increased from
R46,5 million to R47,5 million. Margins, however, reduced from 14% to 12,4%, a direct result of poor trading in January
and February 2013, rate pressures and additional sales staff costs.
CAPITAL EXPENDITURE
Capital expenditure for the 2014 financial year is estimated to be R175 million. This will be funded by
interest-bearing debt and internally generated cash flows.
PROSPECTS
Reduced debt levels and positive cash flows will facilitate the future growth of the Group both organically and by
acquisition. Various opportunities are being evaluated in South Africa and Sub-Saharan Africa. The move into the
continent will enable the Group to service the growth requirements of its customers, penetrate new markets and increase
its overall volume base.
Growth rates in the South African economy are expected to be subdued. The associated challenges within the corporate
and consumer environment have forced the Group to contend not only with reducing volumes in a highly competitive market,
but also escalating costs annually exceeding inflation. Accordingly, various
sustainable cost saving initiatives have been undertaken to restore margins by streamlining the Groups processes and
thereby facilitating a leaner operating cost base. In addition, since the 2013 year end, a number of new accounts have
been procured which will replace lost contracted business. Accordingly, subsequent to
year end, there has been an encouraging increase in revenue.
DECLARATION OF FINAL DIVIDEND (NUMBER 13)
The generation of positive cash flows is expected to remain strong. Reduced capital expenditure and the associated
reduction in debt has enabled the Board to declare a 7% increase in the gross final dividend to 15 cents per ordinary share
which will be paid out of distributable reserves. The total STC credits utilised as part of this declaration amount to
R71 835,22. 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 0,03617 cents per share. The dividend will be subject to a dividend withholding
tax of 15% which amounts to 2,24458 cents per share. This will result in a net dividend of 12,75542 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. This dividend is covered 2,7 times by second half headline earnings and is payable to shareholders
as follows:
Declaration date Wednesday, 15 May 2013
Last day to trade cum dividend Friday, 21 June 2013
Trading ex dividend commences Monday, 24 June 2013
Record date Friday, 28 June 2013
Payment date Monday, 1 July 2013
Share certificates may not be dematerialised or rematerialised between Monday, 24 June 2013 and Friday, 28 June 2013 both days
inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
15 May 2013
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: 15/05/2013 04:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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