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About Value Group
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, fleet management, materials handling and commercial vehicle rental and full maintenance leasing. The Group's retail
segment supplies fast moving consumer goods (FMCG) products into the convenience, formal and informal market. Below a description of Value's main service offerings.
Warehousing:
The Group operates fully owned and managed world-class warehouses in excess of 350 000 square meters nationally, supported by state of the art Warehouse Management Systems and IT infrastructure. The warehouses are integrated into the logistics network of the business to allow for accuracy and efficiency in carrying out the various processes. Barcode scanning and batch tracking is made available to further improve the service offering. The Group’s warehousing function is fully integrated with Distribution. Facilities are strategically positioned throughout southern Africa, creating the opportunity for our customers to supply products to their customers and stores nationally.
Distribution:
The Group has positioned itself as a leader in its field through expanding its services from basic truck rentals to fully outsourced supply chain solutions that include customised door-to-door offerings via road, air and sea. Highly skilled logistics staff are trained to understand their customers’ requirements and are supported by a national and cross-border infrastructure driven through effective technology. Customers benefit from the advantage of the Group’s vast size and infrastructure, with the Company boasting in excess of approximately 2,800 vehicles and sophisticated routing and scheduling.
Transport:
The Group offers a wide range of vehicles and services to cater for specific needs, ranging from truck rental, refrigerated fleets, full maintenance leases and dedicated distributions. Value Logistics will manage all facets of the transportation function. Our services include achievement of the agreed service levels, flexibility to increase the size of the fleet to cater for peak demand periods, management of drivers, relevant reporting and safe and flexible delivery of stock.
Warehousing:
The Group operates fully owned and managed world-class warehouses in excess of 350 000 square meters nationally, supported by state of the art Warehouse Management Systems and IT infrastructure. The warehouses are integrated into the logistics network of the business to allow for accuracy and efficiency in carrying out the various processes. Barcode scanning and batch tracking is made available to further improve the service offering. The Group’s warehousing function is fully integrated with Distribution. Facilities are strategically positioned throughout southern Africa, creating the opportunity for our customers to supply products to their customers and stores nationally.
Distribution:
The Group has positioned itself as a leader in its field through expanding its services from basic truck rentals to fully outsourced supply chain solutions that include customised door-to-door offerings via road, air and sea. Highly skilled logistics staff are trained to understand their customers’ requirements and are supported by a national and cross-border infrastructure driven through effective technology. Customers benefit from the advantage of the Group’s vast size and infrastructure, with the Company boasting in excess of approximately 2,800 vehicles and sophisticated routing and scheduling.
Transport:
The Group offers a wide range of vehicles and services to cater for specific needs, ranging from truck rental, refrigerated fleets, full maintenance leases and dedicated distributions. Value Logistics will manage all facets of the transportation function. Our services include achievement of the agreed service levels, flexibility to increase the size of the fleet to cater for peak demand periods, management of drivers, relevant reporting and safe and flexible delivery of stock.
Results overview for Value logistics:
- Revenue R1,359bn up 11%
- Normalised headline earnings per share 31,6 cents up 78%
- Headline earnings per share 31,6 cents UP 485%
- Earnings per share 30,3 cents UP 531%
- Net asset value per share 581,1 cents up 11%
- Cash generated by operations R138m up 35%
- Interim dividend per share 13 cents up 63%
The interim financial results provides an operational overview of its operations.
General distribution segment
Poor economic growth continues to impact a large portion of the customer base which places pressure on rates and volumes. Management's focus, however, on improving the operations and procuring new customers in the warehousing and breakbulk operations has yielded positive benefits with volumes increasing. As a result, revenue increased by 12% from R748,1 million to R837,6 million. In addition, operational savings and improved efficiencies contributed to operating profit increasing by 77% from R25,3 million to R44,7 million. The remaining operations comprising a significant portion of this segment, being dedicated distribution and express, performed to expectation.
Truck rental and other segments
Tough trading conditions hampered revenue growth which remained static at R183,8 million. Clearing and forwarding as well as linehaul performed to expectation. Strategic changes in the materials handling division contributed to a significant improvement in this segment's performance. Accordingly, operating margins improved from 10,8% to 16,3% with operating profit increasing by 52% from R19,8 million to R30 million.
Retail logistics segment
Trading conditions remain challenging with protest actions on delivery routes having an effect on revenue. Nevertheless, management's focus on growing the revenue base and areas serviced has resulted in revenue increasing by 13% to R334 million. Margins, however, have been negatively affected by the competitive environment and supplier changes in rebate and incentive structures. Consequently, operating profit reduced from R3,6 million to R3 million.
Future capital expenditure
Capital expenditure for the remainder of the financial year is anticipated to amount to approximately R76,1 million and consists primarily of vehicle and forklift additions and replacements. This capital expenditure will be funded by internally generated cash flows and interest bearing debt.
Prospects
It is expected that poor growth and high unemployment rates coupled with the recent hikes in fuel prices will constrain consumer disposable income and associated demand over the festive season. Despite these economic difficulties, management has implemented a range of initiatives to mitigate these challenges. In addition, these challenges should be offset by the growth in the customer base. Accordingly, the Board anticipates that second half earnings will at least be maintained resulting in an improvement in earnings for the 2019 financial year. Any reference to future financial performance included in this announcement has not been reviewed nor reported on by the Group's auditors. The Group continues to pursue acquisition opportunities that will complement and improve revenue streams in the existing divisions.
General distribution segment
Poor economic growth continues to impact a large portion of the customer base which places pressure on rates and volumes. Management's focus, however, on improving the operations and procuring new customers in the warehousing and breakbulk operations has yielded positive benefits with volumes increasing. As a result, revenue increased by 12% from R748,1 million to R837,6 million. In addition, operational savings and improved efficiencies contributed to operating profit increasing by 77% from R25,3 million to R44,7 million. The remaining operations comprising a significant portion of this segment, being dedicated distribution and express, performed to expectation.
Truck rental and other segments
Tough trading conditions hampered revenue growth which remained static at R183,8 million. Clearing and forwarding as well as linehaul performed to expectation. Strategic changes in the materials handling division contributed to a significant improvement in this segment's performance. Accordingly, operating margins improved from 10,8% to 16,3% with operating profit increasing by 52% from R19,8 million to R30 million.
Retail logistics segment
Trading conditions remain challenging with protest actions on delivery routes having an effect on revenue. Nevertheless, management's focus on growing the revenue base and areas serviced has resulted in revenue increasing by 13% to R334 million. Margins, however, have been negatively affected by the competitive environment and supplier changes in rebate and incentive structures. Consequently, operating profit reduced from R3,6 million to R3 million.
Future capital expenditure
Capital expenditure for the remainder of the financial year is anticipated to amount to approximately R76,1 million and consists primarily of vehicle and forklift additions and replacements. This capital expenditure will be funded by internally generated cash flows and interest bearing debt.
Prospects
It is expected that poor growth and high unemployment rates coupled with the recent hikes in fuel prices will constrain consumer disposable income and associated demand over the festive season. Despite these economic difficulties, management has implemented a range of initiatives to mitigate these challenges. In addition, these challenges should be offset by the growth in the customer base. Accordingly, the Board anticipates that second half earnings will at least be maintained resulting in an improvement in earnings for the 2019 financial year. Any reference to future financial performance included in this announcement has not been reviewed nor reported on by the Group's auditors. The Group continues to pursue acquisition opportunities that will complement and improve revenue streams in the existing divisions.
Below the revenue contribution of the main segments of Value logistics
Cash generated per share came in at 94c per share for the 6 months ending. Extremely strong cash generation from the group. They generated R138million in cash and have 146 million shares in issue. Net profit amounted to R44 million from R1.358 billion in turnover, implying a net profit margin of 3.2%. Which is pretty thin margins.
The group has also been actively buying back shares, which indicates that either they dont see attractive investment opportunities, or management feels that their shares are offering better value than potential acquisitions. The group also indicated that it will continue to buy back shares when the opportunity presents itself. At a PE ratio of around 8 and a dividend yield 5.2% and strong cash generation, the group is well worth the look for investors. Just keep in mind slower economic growth in South Africa and higher fuel prices in South Africa will hurt their overall profitability and net profit margins.
- General distribution: R839 693 000 (58.3%)
- Truck rental and other: R208 025 000 (14.5%)
- Retail Logistics: R334 034 000 (23.2%)
- Head office and other: R57 432 000 (4%)
Cash generated per share came in at 94c per share for the 6 months ending. Extremely strong cash generation from the group. They generated R138million in cash and have 146 million shares in issue. Net profit amounted to R44 million from R1.358 billion in turnover, implying a net profit margin of 3.2%. Which is pretty thin margins.
The group has also been actively buying back shares, which indicates that either they dont see attractive investment opportunities, or management feels that their shares are offering better value than potential acquisitions. The group also indicated that it will continue to buy back shares when the opportunity presents itself. At a PE ratio of around 8 and a dividend yield 5.2% and strong cash generation, the group is well worth the look for investors. Just keep in mind slower economic growth in South Africa and higher fuel prices in South Africa will hurt their overall profitability and net profit margins.