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Unaudited Interim Results for the 6 months ended 31 August 2013
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507
Share code: VLE
Unaudited interim financial for the six months ended 31 August 2013
HIGHLIGHTS
- Revenue
up 1% to R946,6 million
Aug 13: R946,6m
Aug 12: R936,1m
- Headline earnings per share
up 13% to 26,4 cents
Aug 13: 26,4c
Aug 12: 23,4c
- Earnings per share
up 12% to 25,4 cents
Aug 13: 25,4c
Aug 12: 22,6c
- Net asset value per share
up 12% to 404,8 cents
Aug 13: 404,8c
Aug 12: 361,9c
- Interim dividend per share
up 13% to 9 cents
Aug 13: 9c
Aug 12: 8c
- Cash generated by operations
up 7% to R142,7 million
Aug 13: R142,7m
Aug 12: R133,2m
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
% August August February
R000s change 2013 2012 2013
Revenue 946 598 936 129 1 945 419
Cost of sales (566 392) (550 741) (1 161 574)
Gross profit 380 206 385 388 783 845
Other income 5 497 3 706 8 464
Overhead expenses (315 908) (319 350) (625 898)
Operating profit 69 795 69 744 166 411
Share of profit of associate
net of taxation 17 20 25
Investment income 6 527 6 769 11 750
Finance costs (17 141) (20 366) (35 418)
Net profit before taxation 5 59 198 56 167 142 768
Taxation (note 3) (17 103) (18 803) (41 090)
Net profit for the period 13 42 095 37 364 101 678
Other comprehensive income net of taxation:
Foreign currency translation differences 71 - (20)
Total comprehensive income for the period 42 166 37 364 101 658
Unaudited Restated Audited
August August February
Earnings per share (cents) (note 4) 2013 2012 2013
- Basic 25,4 22,6 61,5
- Headline 13 26,4 23,4 63,5
- Diluted basic 24,0 21,8 58,9
- Diluted headline 25,0 22,5 60,8
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
% August August February
R000s change 2013 2012 2013
Assets
Non-current assets 1 054 146 1 011 857 981 269
Property, vehicles, plant and equipment 1 005 020 963 538 939 934
Intangible assets 43 257 40 032 38 064
Investments and loans 120 2 570 104
Deferred tax 5 749 5 717 3 167
Current assets 461 733 425 473 426 836
Inventories 65 400 61 241 56 637
Investments and loans 3 301 901 3 461
Trade and other receivables 273 432 284 406 234 700
Taxation in advance 821 3 718 137
Cash and cash equivalents 118 779 75 207 131 901
Non-current assets held for sale 97 270 350
Total assets 1 515 976 1 437 600 1 408 455
Equity and liabilities
Equity 670 320 598 073 650 117
Non-current liabilities 377 405 373 211 344 160
Interest-bearing borrowings 214 132 226 133 187 217
Deferred tax 163 273 147 078 156 943
Current liabilities 468 251 466 316 414 178
Trade and other payables 367 090 363 520 325 735
Current portion of interest-bearing
borrowings 98 586 99 314 87 047
Other financial liabilities 121 - 287
Current tax payable 2 161 3 249 832
Shareholders for dividend 293 233 277
Total equity and liabilities 1 515 976 1 437 600 1 408 455
Net asset value per share (cents) 12 404,8 361,9 393,3
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Restated Audited
% August August February
R000s change 2013 2012 2013
Cash flows from operating activities 100 841 101 508 252 606
Cash generated by operations before
proceeds on disposal of rental assets 124 821 115 472 263 931
Proceeds on disposal of rental assets 17 836 17 732 35 191
Cash generated by operations 7 142 657 133 204 299 122
Net finance costs (10 808) (13 782) (23 940)
Changes in working capital 6 528 22 110 39 336
Taxation paid (12 710) (16 932) (25 640)
Cash available from operating activities 125 667 124 600 288 878
Dividends paid (24 826) (23 092) (36 272)
Cash flows from investing activities (153 471) (101 998) (145 373)
Cash flows from financing activities 39 531 11 721 (39 324)
Net change in cash and cash equivalents (13 099) 11 231 67 909
Translation difference on foreign bank accounts (23) - 16
Cash and cash equivalents at beginning of period 131 901 63 976 63 976
Cash and cash equivalents at end of period 118 779 75 207 131 901
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
August August February
R000s 2013 2012 2013
Ordinary share capital and premium 10 841 10 841 10 841
A ordinary shares 10 10 10
Treasury shares (99 125) (99 785) (99 670)
Balance at beginning of period (99 670) (100 086) (100 086)
Treasury shares sold 545 301 416
Share-based payment reserve 18 519 15 881 16 717
Balance at beginning of period 16 717 15 155 15 155
Share-based payment expense 1 802 726 1 562
Foreign currency translation reserve 51 - (20)
Balance at beginning of period (20) - -
Foreign currency translation differences 71 - (20)
Retained income 740 024 671 126 722 239
Balance at beginning of period 722 239 656 808 656 808
Profit on disposal of treasury shares 532 67 90
Dividends declared (24 842) (23 113) (36 337)
Net profit for the period 42 095 37 364 101 678
Total capital and reserves 670 320 598 073 650 117
SEGMENT INFORMATION
Unaudited Unaudited Audited
August August February
R000s 2013 2012 2013
Total segment revenue 1 023 543 1 015 998 2 102 745
General distribution 788 183 763 232 1 565 996
Truck rental and other 178 948 195 074 420 916
Head office and other 56 412 57 692 115 833
Less: Inter-segment revenue 76 945 79 869 157 326
General distribution 3 577 5 966 4 733
Truck rental and other 16 969 16 898 36 925
Head office and other 56 399 57 005 115 668
External segment revenue 946 598 936 129 1 945 419
General distribution 784 606 757 266 1 561 263
Truck rental and other 161 979 178 176 383 991
Head office and other 13 687 165
Business segment results
General distribution 61 204 62 582 126 098
Truck rental and other 11 947 16 414 47 467
Head office and other (3 356) (9 252) (7 154)
Operating segment results 69 795 69 744 166 411
Share of profit of associate net of taxation 17 20 25
Investment income 6 527 6 769 11 750
Finance costs (17 141) (20 366) (35 418)
Net profit before taxation 59 198 56 167 142 768
Total segment assets
General distribution 703 099 646 729 642 408
Truck rental and other 562 102 596 212 551 190
Head office and other 240 784 181 753 207 988
Segment assets 1 505 985 1 424 694 1 401 586
Investments and loans 3 421 3 471 3 565
Deferred tax 5 749 5 717 3 167
Taxation in advance 821 3 718 137
Total assets 1 515 976 1 437 600 1 408 455
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 28 February 2013.
The interim results have been prepared under the supervision of the Group financial director, Mr C L Sack.
2. Restatement of prior period reported items
Diluted earnings per share
During the year ended 28 February 2013, the Group amended its earnings per share calculation to be in line with
IAS 33: Earnings Per Share.
In reporting periods prior to 28 February 2013, 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 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.
These changes are reflected in the table below:
As previously
stated Restated
August Impact of August
2012 change 2012
Weighted average number of shares outstanding for
diluted earnings per share 189 328 493 (17 830 930) 171 497 563
Diluted earnings per share (cents) 20,0 1,8 21,8
Diluted headline earnings per share (cents) 20,6 1,9 22,5
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.
As previously
stated Impact of Restated
August change in August
R000s 2012 classification 2012
Cash flows from operating activities 83 776 17 732 101 508
Cash generated by operations 115 472 17 732 133 204
Cash available from operating activities 106 868 17 732 124 600
Cash flows from investing activities (84 266) (17 732) (101 998)
Unaudited Restated Audited
August August February
R000s 2013 2012 2013
3. Taxation
Dividend withholding tax and secondary
tax on companies included in taxation 24 2 056 2 075
4. Headline earnings
4.1 Reconciliation between basic
and headline earnings
Basic earnings 42 095 37 364 101 678
Loss on disposal of property, vehicles,
plant and equipment less taxation 1 638 1 227 3 222
Headline earnings 43 733 38 591 104 900
4.2 Number of ordinary shares
of R0,001 each in issue
Actual 198 627 386 198 627 386 198 627 386
Weighted average 165 430 685 165 129 994 165 204 702
Diluted 175 108 247 171 497 563 172 534 796
4.3 Number of A ordinary shares
of R0,001 each in issue
Actual 10 429 010 10 429 010 10 429 010
5. Supplementary information
Depreciation 45 318 41 911 84 940
Amortisation of intangible assets 8 056 6 857 14 308
Depreciation and amortisation 53 374 48 768 99 248
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 weak economic environment which continued to impact trading conditions in the form of pricing pressures
and lower customer volumes, the Group produced strong results. Revenue increased by 1% to R946,6 million. 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 2012 Road Freight Industrys 10% increase in the labour rate and
an average 15% increase in the cost of fuel. These cost increases were mostly offset by operational efficiencies and
reduced maintenance costs attributable to the quality of the fleet. Nevertheless, gross profit and gross profit margins
reduced by 1% to R380,2 million and to 40,2% respectively. Notwithstanding this reduction, stringent control of employment
costs and overhead expenses contributed to operating margins being maintained at 7,4%.
Reduced average debt levels contributed to the reduction of finance costs from R20 million to R17 million. In
addition, the effective tax rate decreased from 33,5% to 28,9% due to the prior periods inclusion of the STC expense amounting
to R2,1 million.
Accordingly, net profit and headline earnings for the period increased by 13% to R42,1 million and 26,4 cents per
share respectively.
Cash generated by operations improved by 7% to R142,7 million. The major portion of the Groups capital expenditure
was incurred in the current period. Total capital expenditure amounted to R155,4 million and comprised R112,2 million for
vehicles, R19,1 million for IT hardware and software, R16,6 million for materials handling equipment and the balance of
R7,5 million for plant, equipment and accessories. The Groups cash balances and resilient cash flows funded the
majority of this expenditure with the balance of R38,5 million being funded by interest bearing debt.
Cash balances improved from R75,2 million to R118,8 million. Net asset value increased by 12% to 404,8 cents per
share. The Group remains adequately capitalised with a low debt:equity level of 46,7% which is well within the 40% to 60%
target range.
OPERATIONAL REVIEW
General distribution segment
New customer take-on, annual price adjustments and fuel recoveries contributed to revenue increasing by 3,6% to R784,6
million. This increase was muted by the expiry of large contracted business in the prior period, which combined with
the declining volumes and average increase in the price of fuel, contributed to a reduction in margins and profitability.
Consequently, operating margins declined from 8,3% to 7,8% and operating profit reduced from R62,6 million to R61,2
million.
Truck rental and other segment
Operating results in the truck rental and other segments were below expectation. Revenue reduced from R178,2 million
to R162 million with operating profits reducing by R4,5 million to R11,9 million. Measures have been taken to further
improve the divisions revenue and related performance.
FUTURE CAPITAL EXPENDITURE
Capital expenditure for the remainder of the 2014 financial year is estimated to be R20 million. This will be funded
by interest bearing debt and internally generated cash flows.
PROSPECTS
The future growth strategy of the Group will be driven both organically and by acquisition. Funding thereof will be
facilitated by debt, cash balances, and internally generated cash flows. The Group continues to evaluate various
opportunities in and around southern Africa, which will complement the requirements of the Groups customers and diversify and
grow additional revenue streams.
Growth rates in the South African economy continue 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
implemented to restore margins by streamlining the Groups processes and thereby facilitating a leaner operating cost
structure.
Towards the end of the first half of the current financial year and into the second, new accounts were procured which
will replace lost contracted business in the short term. In line with previous years trading, the second half is
expected to be more buoyant due to increased activity levels associated with the Christmas season. Accordingly, in the absence
of unforeseen circumstances, the Board anticipates headline earnings to be maintained. This forecast has not been
reviewed nor reported on by the Groups auditors.
DECLARATION OF INTERIM DIVIDEND (NUMBER 14)
Generation of increased positive cash flows has enabled the Board to declare a 13% increase in the gross interim
dividend to 9 cents per ordinary share which will be paid out of distributable reserves. The total STC credits utilised as
part of this declaration amount to R11 545.76. 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 0,00581 cents per share. The dividend will be
subject to a dividend withholding tax of 15% which amounts to 1,34913 cents per share. This will result in a net
dividend of 7,65087 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, 15 October 2013
Last day to trade cum dividend Friday, 10 January 2014
Trading ex-dividend commences Monday, 13 January 2014
Record date Friday, 17 January 2014
Payment date Monday, 20 January 2014
Share certificates may not be dematerialised or rematerialised between Monday, 13 January 2014 and Friday,
17 January 2014, both days inclusive.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
15 October 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: 15/10/2013 04:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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