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Reviewed Condensed Consolidated Financial Results for the year ended 29 February 2020
Value Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1997/002203/06
ISIN number: ZAE000016507 Share code: VLE
Reviewed Condensed Consolidated Financial Results
for the year ended 29 February 2020
Directors: C D Stein* (Chairman), S D Gottschalk (CEO), C L Sack,
I M Groves*, N M Phosa*, M Padiyachy, V W Mcobothi*,B Bulo*
*Non-executive director
Sponsor: Investec Bank Limited
Revenue up 4% R2,88bn
Headline earnings per share UP 22% 92,2 cents
Earnings per share UP 22% 89,5 cents
Net asset value per share up 9% 564,6 cents
Cash generated by operations UP 12% R599m
Final dividend per share down 11% 24 cents
Value Group Limited and its subsidiaries ("the Group") provide a comprehensive range of tailored logistical solutions
throughout southern Africa.
FINANCIAL REVIEW
The poor economic conditions have proven to be very challenging with consumer demand, volume and pricing pressures
affecting the wholesale and certain logistics divisions within the various segments. Volume decline was however
partially mitigated by management's strategic initiatives of growing the customer base organically in addition to
cross selling of Group services which contributed to revenue increasing by a marginal 4% from R2,78 billion to R2,88
billion.
Ongoing focus on improving operational efficiencies in addition to improved planning and maintenance cost savings
contributed to gross profit margins improving from 31,7% to 32,9%. Gross profit increased by 7,4% to R947,8 million
while operating profit increased marginally to R257,7 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.
The Group benefited from a reduction in the effective tax rate from 25,8% to 24,3% due to the comparative period's
inclusion of an under-provision 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 headline earnings per share increasing by 22% to 92,2 cents per
share.
Notwithstanding increased working capital requirements from the accelerated payment cycle on conversion of the
remaining labour broker staff to permanent employees, minor increases in inventory and receivable balances from growth
in the customer base and ongoing focus on working capital management yielded improved cash flow results. Debtors
collections during the second half of the financial year were very strong and exceeded expectations. In addition, the
Group generated record proceeds on disposal of older vehicles amounting to R59,1 million. Consequently, cash generated
by operations increased by 12% to R598,7 million. The improvement in cash generated by operations resulted in cash
resources at year end increasing by a significant R86,6 million to R262,6 million.
THE GROUP'S RESPONSE TO COVID-19
The Group has implemented stringent SHEQ compliance procedures to ensure the health, safety and wellbeing of its
employees in order to fulfil its part in controlling and eradicating the spread of the Covid-19 pandemic. Aside from
preventing the spread of the virus, extensive focus has been applied in safeguarding the sustainability and operations
of the Group.
To date, the extent of the Group's cash resources materially exceeds that budgeted. The Group is thus solvent, has
adequate cash resources and banking facilities required to continue trading into the future.
PERFORMANCE SUBSEQUENT TO YEAR END
Trading performance subsequent to year end has been affected by Covid-19. The Group continues to deal with these
challenges noting the following:
There have been no significant increases in credit risk as customers have generally continued to pay in accordance
with agreed credit terms.
Trade creditors have been settled without any extension of terms and tax returns have been paid on time without
requiring any form of financial assistance.
Disposal of older assets has gained momentum with proceeds realised being similar to that achieved in the previous
financial year.
Accordingly, no significant impairments to any of the Group's assets are currently required as a result of the Covid-
19 lockdown measures.
The implementation of the level 5 lockdown, resulted in a material reduction in revenue. The Group was designated as
an essential service provider and was permitted to provide services to a limited number of customers supplying
essential goods. Accordingly, April 2020 revenue was 32,6 % below that of April 2019. As lockdown restrictions eased
to level 4, more of the Group's customers were permitted to trade which resulted in a material increase in revenue
compared to April 2020. Revenue in May 2020 was however only 5,3% down on May 2019. Notwithstanding the aforementioned
reduction in revenue, profitability was materially better than expected albeit less than last year. With the shift to
less restrictive level 3 lockdown, the Group became almost fully operational.
PROSPECTS
COVID-19 will have an effect on the Group's 2021 results. Despite the damaging effects of COVID-19, the Group's
business characterized by low debt levels, substantial asset base and the ability to generate positive cash flows will
ensure its sustainability into the foreseeable future. The Group is resilient and well positioned to adapt and grow in
this changing environment. In this light, the Group has been successful in growing its customer base with the
onboarding of a number of new customers in the current financial year. Lastly, further improvements in certain
operations should contribute to improved profitability and sustainability in the years ahead.
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 27)
The Group's net cash position is highly positive with access to adequate banking facilities should the need arise.
Accordingly, the Group has sufficient cash balances to increase its final dividend, however, due to the uncertainty of
COVID-19, the Board has considered that a more conservative approach be adopted and therefore resolved to declare a
reduced gross final dividend for the year ended 29 February 2020 of 24 cents per ordinary share which will be paid out
of distributable reserves. This dividend is covered 2,52 times by second half 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 4,8 cents per share. This will result in a net dividend of 19,2 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 Friday, 12 June 2020
Last day to trade cum dividend Tuesday, 4 August 2020
Trading ex-dividend commences Wednesday, 5 August 2020
Record date Friday, 7 August 2020
Payment date Tuesday, 11 August 2020
Share certificates may not be dematerialised or rematerialised between Wednesday, 5 August 2020 and Friday, 7 August
2020, both days inclusive.
ABOUT THIS ANNOUNCEMENT
This short form announcement is the responsibility of the directors and is only a summary of the information in the
full announcement. The full announcement was released on SENS at
https://senspdf.jse.co.za/documents/2020/jse/isse/VLE/Finals.pdf on 12 June 2020 and is also available on the Group's
website at www.value.co.za. Copies of the full announcement may also be requested at the company's registered office,
at no charge, during office hours. The Group's auditor, SVG has reviewed these results. A copy of their unmodified
review report is available for inspection at the Company's registered office. Any investment decision must be based on
the full announcement published.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
12 June 2020
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: 12-06-2020 04:48:00
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