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VLE
VLE
VLE - Value Group Limited - Reviewed financial results for the year ended 29
February 2012
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
JSE code: VLE & ISIN: ZAE000016507
("Value" or "the Company")
Value Group Limited
The measurable logistics company
REVIEWED FINANCIAL RESULTS
FOR THE YEAR ENDED 29 FEBRUARY 2012
Revenue up 13% to R 1,8 billion
Adjusted headline earnings per share up 7%
Net asset value up 16% to R3,53 per share
Dividends up 17%
R263 million cash generated by operations
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
% Reviewed Audited
R000`s change 2012 2011
Revenue 13 1 798 012 1 588 315
Cost of sales (1 034 898) (891 874)
Gross profit 10 763 114 696 441
Other income 9 022 4 379
Operating expenses (595 149) (534 405)
Operating profit 6 176 987 166 415
Once-off BEE equity transaction - (12 192)
costs
Share of profit of associate 34 11
net of taxation
Investment income 15 222 17 715
Finance costs (38 224) (34 370)
Net profit before taxation 154 019 137 579
Taxation (note 2) (44 517) (43 468)
Net profit for the year 16 109 502 94 111
Other comprehensive income net - -
of taxation
Total comprehensive income for 109 502 94 111
the year
Earnings per share (cents)
(note 3)
- Basic 66,4 54,5
- Headline 21 68,0 56,2
- Adjusted headline 7 68,0 63,3
- Diluted basic 58,7 56,4
- Diluted headline 60,2 58,0
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
% Reviewed Audited
R000`s change 2012 2011
Assets
Non-current assets 981 687 864 931
Property, vehicles, plant and 938 715 828 456
equipment
Intangible assets 37 362 31 611
Investments and loans 2 414 1 007
Deferred tax assets 3 196 3 857
Current assets 397 627 370 010
Inventories 60 060 68 260
Investments and loans 902 2 617
Trade and other receivables 272 455 218 857
Taxation in advance 234 100
Cash and cash equivalents 63 976 80 176
Non-current assets held for sale 139 20
Total assets 1 379 453 1 234 961
Equity and liabilities
Equity 582 728 502 774
Non-current liabilities 359 932 315 212
Interest-bearing borrowings 221 346 194 963
Deferred tax 138 586 120 249
Current liabilities 436 793 416 975
Trade and other payables 340 180 317 346
Current portion of interest- 92 748 84 042
bearing borrowings
Current tax payable 3 865 15 587
Total equity and liabilities 1 379 453 1 234 961
Net asset value per share 16 353,0 304,8
(cents)
CONSOLIDATED STATEMENT OF CASH FLOWS
% Reviewed Audited
R000`s change 2012 2011
Cash flows from operating 145 010 133 450
activities
Cash generated by operations 7 262 966 246 908
Net finance costs (23 179) (16 967)
Changes in working capital (26 118) (36 098)
Taxation paid (37 375) (32 411)
Cash available from operating 176 294 161 432
activities
Dividends paid (31 284) (27 982)
Cash flows from investing (196 571) (204 071)
activities
Cash flows from financing 35 361 45 915
activities
Net change in cash and cash (16 200) (24 706)
equivalents
Cash and cash equivalents at 80 176 104 882
beginning of year
Cash and cash equivalents at end 63 976 80 176
of year
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
R000`s 2012 2011
Ordinary share capital and premium 10 841 10 841
Balance at beginning of year 10 841 194
Shares issued - 73 003
Share issue expenses - (2 356)
Share buy back - (60 000)
A shares 10 10
Balance at beginning of year 10 -
Shares issued - 10
Treasury shares (100 086) (100 325)
Balance at beginning of year (100 325) (28 323)
Treasury shares sold 239 1 011
Treasury shares acquired - (73 013)
Share-based payment reserve 15 155 13 623
Balance at beginning of year 13 623 746
Share-based payment expense 1 532 13 130
Transfer to retained income - (253)
Retained income 656 808 578 625
Balance at beginning of year 578 625 512 389
Transfer from share-based payment - 253
reserve
Profit/(Loss) on disposal of treasury 33 (120)
shares
Dividends paid (31 352) (28 008)
Net profit for the year 109 502 94 111
Total capital and reserves 582 728 502 774
SEGMENT INFORMATION
Reviewed Audited
R000`s 2012 2011
Total segment revenue 1 941 589 1 719 757
General distribution 1 473 993 1 266 234
Truck rental and other 370 280 368 640
Head office and other 97 316 84 883
Less: Inter-segment revenue 143 577 131 442
General distribution 9 994 3 609
Truck rental and other 37 205 43 017
Head office and other 96 378 84 816
External segment revenue 1 798 012 1 588 315
General distribution 1 463 999 1 262 625
Truck rental and other 333 075 325 623
Head office and other 938 67
Business segment results
General distribution 138 015 142 376
Truck rental and other 46 526 39 228
Head office and other (7 554) (15 189)
Business segment results 176 987 166 415
Once-off BEE equity transaction costs - (12 192)
Share of profit of associate net of 34 11
taxation
Investment income 15 222 17 715
Finance costs (38 224) (34 370)
Net profit before taxation 154 019 137 579
Total segment assets
General distribution 622 371 532 612
Truck rental and other 620 449 560 690
Head office and other 129 887 134 078
Segment assets 1 372 707 1 227 380
Investments and loans 3 316 3 624
Deferred tax 3 196 3 857
Taxation in advance 234 100
Total assets 1 379 453 1 234 961
NOTES
1. Statement of compliance
The financial results have been prepared in accordance with International
Financial Reporting Standards 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 2011.
The Group`s auditors, Charles Orbach & Company have reviewed these results.
Their unqualified review opinion is available for inspection at the
company`s registered office.
Reviewed Audited
R000`s 2012 2011
2. Taxation
Secondary tax on companies 3 244 3 422
included in taxation
3. Headline earnings
3.1 Reconciliation between basic and
headline earnings
Basic earnings 109 502 94 111
Loss on disposal of property, 2 746 2 935
vehicles, plant and equipment
less taxation
Headline earnings 112 248 97 046
Once-off BEE equity transaction - 12 192
costs less taxation
Adjusted headline earnings 112 248 109 238
3.2 Number of ordinary shares of
R0,001 each in issue
Actual 198 627 386 198 627 386
Weighted average 164 991 563 172 707 357
Diluted 187 903 103 189 376 556
3.3 Number of A shares of R0,001 each
in issue
Actual 10 429 010 10 429 010
4. Supplementary information
Depreciation 77 351 69 710
Amortisation of intangible assets 10 511 8 698
Depreciation and amortisation 87 862 78 408
COMMENTARY
INTRODUCTION
Value Group Limited ("the Group") and its subsidiaries provide a
comprehensive range of tailored logistical solutions throughout southern
Africa. The major 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
Although the Group`s customer base expanded, the year under review proved to
be challenging with the Group faced with a number of extraneous market
factors. Meaningful growth in the first half was achieved despite
disruptive fuel supplies and operational changes in certain business units.
Conversely, unexpected volume decline in the second half impacted revenue
growth and profitability. Consequently, revenue for the year increased by
13% from R1,59 billion to R1,8 billion.
Expansion of the Group`s infrastructure in addition to increased fuel,
labour and maintenance costs contributed to the gross profit percentage
reducing from 43,8% to 42,4%. Notwithstanding this, gross profit improved by
10% to R763,1 million. This improvement more than offset the increased
operational expenses and net finance costs to produce increased earnings. In
addition, the once-off non-deductable BEE equity transaction costs incurred
in the previous year had a negative effect on comparative headline earnings.
Accordingly, headline earnings increased by 21% from 56,2 cents per share to
68 cents per share. Excluding the previous year`s once-off BEE equity
transaction costs, adjusted headline earnings increased by 7% from 63,3
cents per share to 68 cents per share.
Cash flows remained solid. A total of R239 million was spent on the
acquisition of capital assets which consisted of R129,6 million for
vehicles, R42,7 million for materials handling equipment, R37,8 million for
IT hardware and software, R17,3 million for property upgrades and the
balance of R11,6 million for plant, equipment and accessories. R203,9
million of this capital expenditure was funded by a 7% increase in cash
generated by operations and proceeds on disposal of assets. The remainder
of the capital expenditure totalling R35,1 million was funded by net
interest-bearing debt.
The balance sheet remains sound with net asset value per share increasing by
16% from 304,8 cents per share to 353 cents per share. The debt equity
ratio improved marginally to 53,9%. Interest-bearing debt levels are
expected to remain within the target range of 40% to 60%.
OPERATION REVIEW
General distribution segment
Annual price adjustments and fuel recoveries contributed to the segment`s
revenue growing by 16% from R1,26 billion to R1,46 billion. Although
additional business from new and existing customers contributed to revenue
growth, volumes throughout the period were flat. Furthermore, unexpected
volume declines in September 2011 and more so in January 2012 impacted the
segment`s results. Consequently, operating margins reduced from 11,3% to
9,4%. Operating profit reduced by 3% from R142,4 million to
R138 million.
Truck rental and other segment
Despite extremely competitive market conditions, a positive turnaround in
profitability was achieved. Although revenue increased marginally from
R325,6 million to R333,1 million, operating margins improved from 12% to
14%, a direct result of repricing service offerings to drive up
utilisations. Operating profit increased by 19% from R39,2 million to R46,5
million.
INFORMATION TECHNOLOGY
The substantial portion of the Group`s information technology infrastructure
upgrade is complete. A new world class data centre has been constructed and
is fully operational. The latest technology in servers, data storage
devices and network equipment has been commissioned. The Group will continue
to invest in its IT infrastructure to enhance scalability, security,
redundancy, and manageability of its core networks and server environment.
This long-term investment will not only improve response times, but also
provide a platform for the Group`s future applications, data and
transactional volume growth requirements.
The application environment has been bolstered by the recruitment of highly
skilled staff, the result of which has been an improved turnaround time and
quality of customer interface and Group software development and support. In
addition, the implementation of specialised software applications continues
throughout the business.
CAPITAL EXPENDITURE
Capital expenditure for the 2013 financial year is estimated to be R200
million. This will be funded by interest-bearing debt and internally
generated funds.
APPOINTMENT OF INDEPENDENT NON-EXECUTIVE DIRECTOR
The Board is pleased to announce the appointment of Mr Velile Welcome
Mcobothi as a non-executive director effective 3 November 2011 and as an
independent non-executive director effective 29 February 2012. The Board
congratulates Velile on his appointments to the Board, the audit and risk
committee and the social and ethics committee.
PROSPECTS
Management expects the effects of the ongoing fuel price hikes and current
trading environment to continue into the new financial year. Consequently,
consumer discretionary spend could be impacted further which may negate
volume recovery within the existing customer base. In addition, certain
costs have escalated above inflation. These challenges in this economic
environment have led to rate pressures and resistance in obtaining the
required annual increases.
Growing a diversified profitable revenue base across all logistical service
offerings, whilst simultaneously containing and reducing costs, remains a
top priority of the Group. The Group`s infrastructure base has been
expanded to enable it to manage large growth in trading activity and
critical mass. The restructuring and expansion of the Group`s sales force
has been completed. New accounts have been procured and commenced in the
current financial year. Although volumes in March were flat, contribution
from other revenue streams within the Group has produced reasonable results.
In the absence of any material unforeseen circumstances, management expect
headline earnings to improve. This forecast has not been reviewed nor
reported on by the Group`s auditors.
DECLARATION OF FINAL DIVIDEND (NUMBER 11)
As previously announced on 29 March 2012, the Board declared a final
dividend of 14 cents per ordinary share. This dividend is covered 3,1 times
by second half earnings and is payable as follows:
Declaration date Wednesday, 28 March 2012
Last day to trade cum dividend Friday, 22 June 2012
Trading ex-dividend commences Monday, 25 June 2012
Record date Friday, 29 June 2012
Payment date Monday, 2 July 2012
Share certificates may not be dematerialised or rematerialised between 25
June 2012 and
29 June 2012 both days inclusive.
Total dividends declared have increased by 17% from 18 cents per share in
2011 to 21 cents per share in 2012.
For and on behalf of the Board
C D Stein S D Gottschalk
Chairman Chief Executive Officer
Johannesburg
16 May 2012
Value Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/002203/06)
ISIN: ZAE000016507
Share code: VLE
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: 16/05/2012 13:33:02 Produced by the JSE SENS Department.
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