Value Group headline earnings up 90%

This was on the back of a 15% growth in revenue to R1,37-billion.

Over the past two years management has been focused on returning the group to profitability.

This has entailed repricing and remodelling of certain service offerings, improving vehicle utilisation and reducing costs in addition to targeting high growth industries.

The group said on Thursday that the effect of these initiatives has been to grow the customer base while simultaneously, improving margins and Group profitability.

"Even though volumes in the second half of the 2009 year were below that of the corresponding previous period, turnover increased by 15% from R1,186-billion to R1,368-billion," it added.

"The improved alignment of resources and planning of distribution requirements has contributed positively to the reduction of costs while at the same time improving infrastructure utilisation.

"Consequently, operating margins before depreciation improved from 12.3% to 15.6%," Value stated.

Operating profit after depreciation increased by 72% from R80,5-million to R138,3-million.

Once again, the Group has demonstrated its ability to generate cash.

"Not only did the Group deliver record earnings for the year but also operating cash flow performance.

"Cash generated by operations improved by 46% from R154,8-million to R225,3-million. Operating cash flows improved by R12-million due to improved collections and working capital management.

"Although interest bearing debt increased marginally, the improved cash flow funded R120-million in capital expenditure," the group added.

Turning to its prospects, Value Group said the downturn in the South African economy has manifested itself in the level of operational activity within the Group.

The trend of reduced volumes in the second half of the financial year has continued into the new financial year albeit to a lesser extent.

"Currently, volume recovery and growth amongst the existing customer base cannot be predicted with any certainty," it noted.

"Nevertheless, the Group is well positioned to benefit from an increase in consumer demand.

"The growth of the customer base subsequent to year end has begun to yield positive results," it added.

"Substantial new accounts have been procured which should partially mitigate against volume decline.

"In order to improve profitability in this difficult trading environment, management have also focused on continued cost reduction and optimal resource utilisation.

"Accordingly, management is cautiously optimistic that these initiatives will produce comparable earnings in the new financial year."

The Board has resolved to declare a dividend of 15c per ordinary share. This dividend is covered 3.3 times by headline earnings.

Source: AFP

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