Wrap Text
Unaudited interim financial results for the six months ended 31 August 2019
Value Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/002203/06)
ISIN number: ZAE000016507
Share code: VLE
UNAUDITED INTERIM FINANCIAL RESULTS
for the six months ended 31 August 2019
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
Revenue R1,404bn UP 3%
Headline earnings per share 31,8 cents UP 30%
Earnings per share 30,8 cents UP 33%
Net asset value per share 521,1 cents UP 8%
Cash generated by operations after changes in working capital R241m DOWN 3%
Interim dividend per share 16 cents UP 23%
Value Group Limited and its subsidiaries ("the Group") provide a comprehensive range of tailored logistical solutions throughout southern Africa.
FINANCIAL REVIEW
Despite negligible growth rates, the Board is pleased to advise that the Group produced an improvement in the interim results for the 6 months ended
31 August 2019.
The difficult trading conditions have placed further pressure on volumes and rates across all segments. Volume decline was however partially
mitigated by management’s strategic objectives of growing the customer base in the latter half of the interim period in addition to cross selling of
Group services which contributed to revenue increasing by a marginal 3% from R1,36 billion to R1,4 billion. Gross profit increased by 6% to R468
million.
Salary and other overhead inflationary increases resulted in operating costs increasing by 6% from R351,6 million to R372,9 million. However,
improved gross profit margins resulted in operating profit margins being maintained at 7,6% and operating profit increasing by R3,2 million to R106,2
million.
The Group adopted IFRS16 effective 1 March 2019 whereby a right of use asset and an associated liability is raised for its operating leases. The
Group applied the full retrospective approach in its adoption of IFRS16 which requires the restatement of comparative financial information.
Accordingly, the Group benefitted from a reduced interest cost in comparison to the previous restated interim period due to reduction of the capital
outstanding on lease liabilities.
The Group also benefitted from a reduction in the effective tax rate from 29,5% to 22,8% due to the comparative period’s inclusion of an
underprovision pertaining to a prior period and the receipt in the current period of an allowance for energy efficiency savings.
The combined effects of the above has contributed to net profit and headline earnings per share increasing by 30% to R44 million and 31,8 cents per
share respectively.
Although collections and resulting cash flows throughout the period were strong, growth in the clearing and forwarding division’s customer base and
associated activity contributed to increase receivable balances at 31 August 2019. In addition, inventory levels increased due to anticipated retail
sales being less than expected and as a result of the increase in the number of vehicles earmarked for disposal. Working capital requirements were
also negatively affected by the accelerated payment cycle pertaining to the conversion of a substantial portion of labour broker staff to permanent
employees. Consequently, additional working capital requirements reduced cash generated by operations by 3% to R240,8 million.
SHARE REPURCHASES
During the current period, 1 368 083 shares were acquired at a cost of R8,05 million. Subsequent to August 2019, 79 270 shares were repurchased at a
cost of R0,5 million. The Group will continue to repurchase shares as the opportunities arise.
PROSPECTS
Due to seasonality of the Group’s earnings, it is anticipated that current volumes will increase in the second half which coincides with Christmas
trade. In addition, it is expected that the procurement of new customers in the second half of the financial year should add to the volume base and
increase trading activity across all divisions. Furthermore, ongoing focus on reducing operating costs remains a priority particularly in view of
ongoing rate, volume and margin pressures. These initiatives should mitigate the current economic challenges and provide a platform for sustainable
growth. Accordingly, the Board anticipates that the 2020 financial year’s earnings will at least be maintained in comparison with the previous
financial year. Any reference to future financial performance included in this announcement has not been reviewed nor reported on by the Group’s
auditors.
DECLARATION OF DIVIDEND (NUMBER 26)
The Board resolved to declare a gross interim dividend for the six months ended 31 August 2019, of 16 cents per ordinary share which will be paid out
of distributable reserves. The dividend is covered 2 times by interim headline earnings. The number of ordinary shares in issue at the date of this
declaration is 172 635 000. The dividend will be subject to dividend withholding tax of 20% which amounts to 3,2 cents per share. This will result in
a net dividend of 12,8 cents per share payable to those shareholders who are not exempt from paying dividend withholding tax. The tax reference
number of Value Group Limited is 9319054715. The dividend is payable to shareholders as follows:
Declaration date Thursday, 17 October 2019
Last day to trade cum dividend Tuesday, 14 January 2020
Trading ex-dividend commence Wednesday, 15 January 2020
Record date Friday,17 January 2020
Payment date Monday,20 January 2020
Share certificates may not be dematerialised or rematerialized between Wednesday, 15 January 2020 and Friday, 17 January 2020, both days inclusive.
ABOUT THIS ANNOUNCEMENT
This short-form announcement is the responsibility of the Board of Directors of Value Group Limited. It contains only a summary of the information in
the full announcement ("Full Announcement") and does not contain full or complete details. The Full Announcement can be found at:
https://senspdf.jse.co.za/documents/2019/JSE/ISSE/VLE/FYresults.pdf
Copies of the Full Announcement are also available for viewing on the Group’s website at https://www.value.co.za or may be requested in person, at
the Company’s registered office or the office of Investec Bank Limited, 100 Grayston Drive, Sandown, at no charge, during office hours. Any
investment decisions by investors and/or shareholders should be based on consideration of the Full Announcement, as a whole.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
17 October 2019
Sponsor:
Investec Bank Limited
Company Secretary:
Fluidrock Advisory (Pty) Ltd
Transfer secretary:
Computershare Investor Services (Pty) Ltd
Registered office:
49 Brewery Road, Isando, 1600, PO Box 778, Isando, 1600, Tel: (011) 570 2000
www.value.co.za
Date: 17/10/2019 02:55:00
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