VALUE GROUP LIMITED 
By | SENS- Tuesday, 15 October 2013 |
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VLE 201310150038A 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 |
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