| Mon 27 Aug 2007, 7:00 | | BVT - Bidvest - Audited results for the year ended |
|
BVT
BVT
BVT - Bidvest - Audited results for the year ended June 30 2007
The Bidvest Group Limited
Incorporated in the Republic of South Africa
("Bidvest" or "the Group" or "the Company")
Registration number
1946/021180/06
Share code: BVT & ISIN: ZAE000050449
Audited results for the year ended June 30 2007
Revenue up 24% to R95,7 billion
Trading profit up 24% to R4,5 billion
Headline earnings per share up 21%to 970,0 cents
Basic earnings per share up 13% to 899,4 cents
Distribution per share up 21,0% to 446,4 cents
Basis of preparation of financial statement
The financial statements have been prepared in accordance with the recognition
and measurement requirements of International Financial Reporting Standards
(IFRS) and the presentation and disclosure requirements of IAS 34 Interim
Reporting. The accounting policies are consistent with those of the prior year.
Reclassification of expenses
To achieve consistent reporting throughout the Group, certain operations
reconsidered their allocation of expenses within the various income statement
categories. Prior year results have been restated to take account of these
reclassifications. The restatement has resulted in an increase in cost of
revenue of R217,4 million, an increase in sales and distribution expenses of
R160,8 million and a decrease in administration expenses and other expenses of
R6,7 million and R371,5 million respectively.
Audit report
The consolidated results for the year have been audited by KPMG Inc and their
unqualified audit report is available for inspection at the Company`s registered
office.
Analyst presentation
The presentation to investors will be available on the Bidvest website from
14:00 on August 27 2007.
Consolidated income statements
for the year ended June 30
Percentage
R`000 2007 2006 change
Revenue 95 655 509 77 276 493 23,8%
Cost of revenue (77 330 818) (61 807 227)
Gross income 18 324 691 15 469 266 18,5%
Other income 419 408 140 331
Operating expenses (14 247 529) (11 918 090)
Sales and distribution costs (9 432 053) (7 376 156)
Administration expenses (3 940 085) (3 599 717)
Other (875 391) (942 217)
Other expenses (825 177) (976 724)
Negative goodwill arising on - 3 780
acquisition of subsidiary
Impairment of goodwill and other (65 707) (14 174)
intangibles
Net capital profits 15 493 44 901
Operating profit 4 496 570 3 691 507 21,8%
Net finance charges (566 181) (342 392)
Finance income 79 521 66 295
Finance charges (645 702) (408 687)
Share of profit of associates 68 354 48 846
Dividends received 9 083 4 991
Share of retained earnings 59 271 43 855
Impairment of investment in associate (178 339) -
Profit before tax 3 820 404 3 397 961 12,4%
Taxation (1 033 248) (933 418)
Profit for the year 2 787 156 2 464 543 13,1%
Attributable to:
Shareholders of the Company 2 700 054 2 388 717 13,0%
Minority shareholders 87 102 75 826
2 787 156 2 464 543 13,1%
Shares in issue
Weighted (`000) 300 206 299 976
Diluted weighted (`000) 307 421 313 826
Basic earnings per share (cents) 899,4 796,3 12,9%
Headline earnings per share (cents) 970,0 804,6 20,6%
Diluted earnings per share (cents) 878,3 761,2 15,4%
Diluted headline earnings per share 947,2 769,1 23,2%
(cents)
Distributions per share (cents)* 446,4 369,0 21,0%
Interim 198,0 162,0
Final 248,4 207,0
*Includes distribution from share
premium
HEADLINE EARNINGS
The following adjustments to profit
attributable to shareholders f the
company were taken into account in
the calculation of headline earnings:
Profit attributable to shareholders 2 700 054 2 388 717 13,0%
of the Company
Impairment of goodwill and other 65 707 14 174
intangible assets
Net surplus on disposal of 595 19 951
investments in subsidiaries,
associates and disposal and closure
of businesses
Surplus on disposal of investment in (84) (29 212)
subsidiaries, associates, and
disposal and closure of businesses
Tax charge 679 49 638
Minority interest - (475)
Net profit on disposal of property, (12 835) (11 915)
plant and equipment
Profit on disposal of property, plant (15 409) (15 689)
and equipment
Tax charge 1 984 3 774
Minority interest 590 -
Negative goodwill recognised in - (2 457)
profit
Negative goodwill recognised in - (3 780)
profit
Minority interest - 1 323
Impairment of investment in associate 178 339 -
Share of capital items in associates (19 874) 5 059
Headline earnings 2 911 986 2 413 529 20,7%
Rand/Sterling exchange rates
Opening rate 13,205 11,532
Closing rate 14,180 13,205
Average rate 13,946 11,435
Segmental analysis
for the year ended June 30
Percentage
R`000 2007 2006 change
REVENUE
Bidfreight 18 994 985 15 601 922 21,7%
Bidserv 5 393 090 4 639 395 16,2%
Bidvest Europe 29 962 516 22 132 036 35,4%
Bidvest Asia Pacific 8 863 650 6 505 802 36,2%
Bidfood 3 845 772 3 344 173 15,0%
Caterplus and speciality 2 593 194 2 197 632 18,0%
Bidfood Ingredients 1 252 578 1 146 541 9,2%
Bid Industrial and Commercial 8 565 131 6 895 764 24,2%
Products
Bidpaper Plus 1 823 822 1 844 784 (1,1%)
Bid Auto 18 689 283 16 197 055 15,4%
Corporate 1 477 364 1 295 421 14,0%
Namsov 469 974 378 430 24,2%
Ontime Automotive 986 566 893 231 10,4%
Investment and other income 20 824 23 760 (12,4%)
Revenue from continuing businesses 97 615 613 78 456 352 24,4%
Revenue from businesses disposed of - 470 052
Inter-Group eliminations (1 960 104) (1 649 911)
95 655 509 77 276 493 23,8%
OPERATING PROFIT
Bidfreight 596 352 536 917 11,1%
Bidserv 669 411 562 433 19,0%
Bidvest Europe 757 551 651 223 16,3%
Bidvest Asia Pacific 346 554 219 403 58,0%
Bidfood 279 814 263 829 6,1%
Caterplus and Speciality 181 233 148 270 22,2%
Bidfood Ingredients 98 581 115 559 (14,7%)
Bid Industrial and Commercial 742 670 498 889 48,9%
Products
Bidpaper Plus 226 899 214 671 5,7%
Bid Auto 724 303 621 264 16,6%
Corporate 203 230 108 698 87,0%
Bidprop 82 471 58 039 42,1%
Namsov 80 077 75 925 5,5%
Ontime Automotive (3 348) 7 348 -
Investment, other income and 44 030 (32 614) -
corporate costs
Trading profit from continuing 4 546 784 3 677 327 23,6%
businesses
Trading loss from businesses - (20 327)
disposed of
TRADING PROFIT 4 546 784 3 657 000 24,3%
Net capital profits 15 493 44 901
Impairment of goodwill and other (65 707) (14 174)
intangibles
Negative goodwill arising on 3 780
acquisition of subsidiary
OPERATING PROFIT 4 496 570 3 691 507 21,8%
Certain operations have been transferred between divisions. Comparative
results have been restated.
Consolidated cash flow statements
for the year ended June 30
R`000 2007 2006
Cash flows from operating activities
Operating profit including dividends from 4 505 653 3 696 498
associates
Depreciation and other non-cash items 1 083 040 954 879
Cash generated by operations before changes in 5 588 693 4 651 377
working capital
Changes in working capital (1 351 796) (161 019)
Cash generated by operations 4 236 897 4 490 358
Net finance charges paid (472 699) (258 582)
Taxation paid (1 152 174) (863 495)
Distributions of share premium by Company (1 205 633) (992 408)
Dividends paid by subsidiaries (27 786) (23 184)
1 378 605 2 352 689
Cash flows from investment activities
Net additions to vehicle rental fleet (134 050) (298 251)
Net additions to property, plant and equipment (1 723 174) (1 454 153)
Net additions to intangible assets (121 552) (100 613)
Net acquisition of subsidiaries, businesses, (1 125 027) (515 355)
associates and investments
(3 103 803) (2 368 372)
Cash flows from financing activities
Proceeds from share issues 494 094 180 274
Net purchase of treasury shares (699 593) (508 810)
Net borrowings raised (repaid) (129 751) 1 171 313
(335 250) 842 777
Net increase (decrease) in cash and cash (2 060 448) 827 094
equivalents
Net cash and cash equivalents at the beginning of 2 546 995 1 497 683
the year
Currency adjustments 129 918 222 218
Net cash and cash equivalents at the end of the 616 465 2 546 995
year
Net cash equivalents are made up as follows:
Cash and cash equivalents 2 374 442 3 255 457
Bank overdrafts shown as short-term portion of (1 757 977) (708 462)
borrowings
616 465 2 546 995
Consolidated balance sheets
as at June 30
R`000 2007 2006
ASSETS
Non-current assets 13 037 827 10 606 995
Property, plant and equipment 6 732 602 5 511 253
Intangible assets 388 145 378 808
Goodwill 3 772 297 3 123 722
Deferred tax 431 525 398 411
Interest in associates 454 865 574 893
Investments and advances 1 031 670 544 923
Banking and other advances 226 723 74 985
Current assets 19 806 022 17 387 506
Vehicle rental fleet 527 524 479 326
Inventories 6 813 187 5 092 821
Short-term portion of banking and other advances 183 983 142 718
Trade and other receivables 9 906 886 8 417 184
Cash and cash equivalents 2 374 442 3 255 457
Total assets 32 843 849 27 994 501
EQUITY AND LIABILITIES
Capital and reserves 10 824 966 9 158 695
Capital and reserves attributable to shareholders 10 626 509 8 928 995
of the company
Minority shareholders 198 457 229 700
Non-current liabilities 3 114 180 3 777 646
Deferred taxation 265 323 202 907
Life assurance fund 50 457 32 795
Long-term portion of borrowings 2 229 892 3 093 184
Post-retirement obligations 156 582 221 092
Long-term portion of banking liabilities 73 278
Long-term portion of provisions 245 757 99 869
Long-term portion of operating lease liabilities 166 096 127 521
Current liabilities 18 904 703 15 058 160
Trade and other payables 14 192 506 12 562 695
Short-term portion of provisions 200 375 224 798
Vendors for acquisition 27 007 41 795
Taxation 372 789 501 245
Short-term portion of banking liabilities 203 025 113 265
Short-term portion of borrowings 3 909 001 1 614 362
Total equity and liabilities 32 843 849 27 994 501
Number of shares in issue (`000) 302 852 299 154
Net tangible asset value per share (cents) 2 135 1 814
Consolidated statements of changes in equity
for the year ended June 30
R`000 2007 2006
Attributable to shareholders of the Company
Issued share capital 15 143 14 958
- balance at the beginning of the year 14 958 14 971
- in terms of the share incentive scheme 279 238
- net movement in treasury shares (94) (251)
Share premium arising on shares issued (182 657) 1 228 660
- balance at the beginning of the year 1 228 660 2 549 591
- in terms of the share incentive scheme 493 815 180 217
- refunds of share premium to shareholders in (1 205 633) (992 408)
lieu of dividends
- net movement in treasury shares (699 499) (508 559)
- share issue expenses - (181)
Foreign currency translation reserve 1 158 151 807 033
- balance at the beginning of the year 807 033 466 019
- realised on disposal of subsidiary - (20 562)
- arising during the year 351 118 361 576
Statutory reserves 16 691 10 013
- balance at the beginning of the year 10 013 6 039
- transfer from retained earnings 6 678 3 974
Equity-settled share-based payment reserve 165 664 107 724
- balance at the beginning of the year 107 724 57 828
- arising during the year 57 940 49 896
Movement in retained earnings 9 453 517 6 760 607
- balance at the beginning of the year 6 760 607 4 374 418
- profit attributable to shareholders of 2 700 054 2 388 717
the Company
- change in fair value of available-for-sale (466) 1 446
financial assets
- transfer to statutory reserves (6 678) (3 974)
10 626 509 8 928 995
Attributable to minority shareholders
- balance at the beginning of the year 229 700 173 558
- share of attributable profit 87 102 75 826
- dividends and capitalisation issues (27 786) (23 184)
- share of movement in foreign currency 940 2 659
translation reserve
- share of movement in equity-settled share-based 143 154
payment reserve
- changes in shareholding (91 642) 687
198 457 229 700
Total capital and reserves 10 824 966 9 158 695
FINANCIAL OVERVIEW
Satisfactory trading results were produced for the year to June 30 2007.
Headline earnings per share rose by 20,6% while trading profit increased by
24,3%. For 16 years, compound growth in headline earnings per share has exceeded
25% per annum.
Earnings reflect good contributions from international operations, notably
Australasia, backed by strong results from our South African businesses. Areas
of underperformance have been addressed through the implementation of new
operational structures.
Revenue grew 23,8% to R95,7 billion. Performance was driven by organic growth
and operational efficiencies across all existing businesses. Our acquisition of
Angliss Asia occurred late in the period and had no material effect on earnings.
The trading margin was largely stable at 4,7%. Rand weakness had a positive
effect on the translation of offshore earnings. The rand traded at an average of
R13,95 against sterling (2006: R11,44).
Basic earnings per share growth of 12,9% was recorded in the year, impacted
primarily by the impairment of the Group`s interest in Tiger Wheels Limited of
R178,3 million. Tiger Wheels Limited was suspended on the JSE following the
announcement that its 74%-owned subsidiary ATS was unable to gather support from
its funders to continue operating.
Bidvest`s empowerment partners, the Dinatla consortium, refinanced their
investment. Bidvest facilitated the process at a R350 million net cost. Eighteen
million Bidvest shares were purchased from Dinatla at R79,38 a share for R1,4
billion. Third-party funding of R1,3 billion covered the balance of Dinatla`s
indebtedness. The first distributions have been paid to consortium members. The
benefits of Bidvest`s facilitation of the transaction is reflected in the
increase in the diluted headline earnings per share of 23,2%.
Cash generation and our balance sheet remain strong, however working capital
absorption and further significant investments into capital expansions utilised
funds. Net debt rose to R3,7 billion, though interest cover at eight times
reflects the Group`s significant borrowing capacity. Hardening interest rates in
South Africa and overseas highlighted the appropriateness of Bidvest`s
conservative attitude to debt. The Group`s credit rating of AA- (zaf) was
affirmed by Fitch Ratings in March 2007.
In May 2007, the Group set up a domestic medium-term note programme, enabling us
in due course to raise a total of R4,5 billion in corporate debt. An initial
tranche of R1,5 billion was raised subsequent to year-end. Our primary objective
is funding efficiency at levels that will assist us in repricing existing term
loans.
Our two most significant structural changes involved Bidfood and Bidvest
Australasia. In Bidfood, a unified management structure has been adopted at
Caterplus while our food ingredient supply businesses have been consolidated.
Bidvest Australasia has been given a new identity (Bidvest Asia Pacific) to
reflect the wider scope of geographic activities.
HUMAN CAPITAL
In operations across the Group, younger managers are moving into positions of
real responsibility, adding impetus to transformation and accountability
illustrating the success of Bidvest`s `succession generation`. They benefit from
an increased investment in training and a consistent strategy of early
identification and incubation of managerial talent. The Bidvest Academy has
become a key tool for developing the Bidvest leaders of tomorrow.
ACQUISITIONS
Angliss
In May we acquired 100% of Angliss Singapore, Angliss Hong Kong and Angliss
China in a US$80 million transaction funded by debt raised in Australia. This
leading Asian foodservice business has combined sales of more than R2,1 billion
a year, giving the Group direct participation in the high-growth economies of
Asia. Management`s initial focus area is the exploitation of substantial
synergies between Angliss and Bidvest Australia and New Zealand. The transaction
entrenches the position of our foodservice businesses as the largest industry
player outside the United States of America.
Viamax
The purchase of Transnet`s Viamax fleet management and leasing business was
concluded late in the period, though implementation is not expected until
September 2007. This R974 million purchase will be funded from existing Group
resources. Integration of Viamax into Bid Auto will give critical mass to the
division`s diversification strategy.
DIVISIONAL REVIEW
Bidfreight
Results were in line with management`s expectations. Trading profit grew by
11,1% to R596,4 million on a 21,7% increase in revenue to R19,0 billion. Cost
management and efficiency gains were focus areas while rising interest rates
proved beneficial in the businesses holding cash.
Safcor Panalpina`s international clearing and forwarding operations put in a
pleasing performance. Airfreight operations achieved a succession of throughput
records thanks to the completion of Phase 1 of our expansion programme at OR
Tambo International Airport.
South African Bulk Terminals was impacted by lower agricultural export volumes
in the first three quarters, though a substantial increase in activity at the
end of the year indicated that the adverse agricultural cycle has come to an
end. South African Bulk Terminals is well positioned to derive advantage from
more robust volumes after commissioning South Africa`s largest and fastest ship
unloader.
Bidfreight Port Operations faced a challenge as steel exports fell, impacted by
high local demand for steel in the construction sector. Island View Storage
achieved good growth in revenue and trading profit as a result of high demand
for the storage and handling of bulk liquid products. The strategy of widening
the range and handling more non-coal commodities resulted in another year of
strong growth at Bulk Connections. Manganese ore exports added significantly to
Durban volumes.
SACD Freight continues to derive benefit from global growth in container
traffic. Both revenue and trading profit rose above budgeted levels. Marine
Services performed well, driven by growth in volumes handled by liner principals
and car-carrier activities. Manica Africa recorded a pleasing performance.
Slow progress in the expansion of ports infrastructure is resulting in high
utilisation levels in several operations.
Bidserv
A creditable performance was achieved despite strike action in the security and
cleaning industries. Growth in tourism, property and petro-chemicals has knock-
on benefits for numerous Bidserv units. Higher interest rates were mildly
positive for financial service activities. Trading profit grew by 19,0% to
R669,4 million on a 16,2% increase in revenue to R5,4 billion.
Bidserv increased its ownership of Master Currency to 100% in a transaction that
only became effective in July 2007 while Hotel Amenities Suppliers (ex-Bidfood)
joined Bidserv. TMS bought a small industrial services company to complement its
existing product range.
The market for cleaning services remained buoyant. Opportunities are being
examined in areas such as food hygiene. Laundry Services achieved pleasing
profitability levels in a year of consolidation.
Investment in infrastructure and consolidation is driving continued growth at
TMS, now positioned as a strong partner able to assist major industrial and
petro-chemical companies.
The Steiner Division achieved good growth. Last year`s inclusion of Execuflora
within the division proved highly successful. Steiner has opened operations in
Mozambique and Botswana.
Industrial Products has built strong momentum and has created the industry`s
first workwear cash-and-carry operation. National rollout of G. Fox products has
helped this business grow by 50% in two years. Malawi-based Giant Clothing put
in another strong performance.
Green Services had a record year following further expansion into golf course
design and development. Aviation Services enjoyed substantial growth and has
become a significant player in the growing airport services market. Aviation
Services was awarded a super licence which will commence in March 2008.
Bidrisk Solutions (the guarding and electronics security businesses) was
affected by the aftermath of the strikes. Magnum`s results were extremely
disappointing. Vericon`s security offerings did well. Provicom Electronics put
in another satisfactory performance.
Global Payment Technologies has formed strong relationships in the financial
services sector and continues to secure acceptable growth. Pleasing progress at
Business Solutions and Group Procurement is expected to continue.
Office automation did well and won a major government tender. Konica Minolta`s
market leadership has been strongly entrenched.
Bidtravel Services put in an outstanding performance, buoyed by airline business
growth, strong car rental demand and high hotel occupancies.
The interest rate climate, high demand for travel-related forex and a
strengthened management team underpinned a pleasing performance at Bidvest Bank.
We regard financial services as an area of strategic opportunity, particularly
within the wider Group.
Bidserv anticipates continued growth as its strategy of taking a bigger basket
of value-adding services to a corporate customer-base has growing appeal.
Bidvest Europe
Trading profit for our foodservice businesses in the UK was disappointing.
However, operations in continental Europe continue to improve. Revenue was up
35,4% to R30,0 billion and trading profit improved 16,3% to R757,6 million. The
weakening of the rand against sterling enhanced the translation of Bidvest
Europe`s results.
In Britain, food deflation has been replaced by food inflation. Bad debt levels
have risen sharply, a development that resulted in some losses at 3663 First for
Foodservice. Energetic action by UK operations resulted in 6% sales growth
despite last year`s loss of the Ministry of Defence contract. 3663 First for
Foodservice won additional contracts to supply the Compass Group, Hilton Hotel
chain and HM Prison Service.
The Manchester-based Barton Meat Company is staging a recovery following losses
earlier in the year while the frozen, fresh and chilled division recorded
another year of sales growth. 3663 First for Foodservice also introduced an
expanded fresh and frozen fish range in July 2007.
In the Netherlands, economic recovery has gathered pace while Belgium`s economy
continues to achieve moderate gains. Deli XL Netherlands put in a strong
performance with a 40% leap in trading profits. The business has exploited the
decentralised Bidvest model to create its own solutions. The result is
significant operational, buying, marketing and sales gains.
Deli XL Belgium has benefited from management changes at a strategic, sales and
operational level. The new team made a promising start, achieving solid revenue
gains. The acquisition of the Kruidenier foodservice operation has created an
operational base in Flanders which has positioned the business as the industry
leader in its national market.
Horeca Trade, the division`s Dubai-based foodservice operation, has doubled the
size of its business in 18 months as the hospitality boom in the United Arab
Emirates shows every sign of continuing. Horeca Trade`s range is continually
being expanded and product sales have benefited from the acquisition of several
international agencies.
After a year of consolidation at Bidvest Europe, renewed growth in revenue and
trading profit is targeted.
Bidvest Asia Pacific
The Angliss acquisition creates exposure to some of Asia`s fastest-growing
markets while transactions in Australia and New Zealand have strengthened our
national leadership in these countries. The Angliss transaction became effective
in May, resulting in a limited contribution in 2007. Bidvest Asia Pacific traded
extremely well, growing revenue and trading profit by 36,2% and 58,0%
respectively, in rand terms.
Bidvest Australia and Bidvest New Zealand rose to the challenge of achieving
strong growth on growth. Australian operations made an especially pleasing
contribution with trading profit up 33,2% to A$44,6 million off revenue growth
of 9,0%.
Stable management teams capitalised on Australia`s supportive economic
fundamentals. Geographical expansion by the three divisions is ongoing,
underpinned by strong organic growth. Bidvest Australia now holds an estimated
20% of the national foodservice market.
Infrastructure growth continues. Australian operations will pursue double-digit
gains in revenue and trading profit in 2008.
Despite high interest rates and low economic growth, Bidvest New Zealand grew
trading profit (in local currency) by 23,3% while revenue increased by 19,3%.
Results reflect the full-year effect of a successful restructure. Crean, the
core foodservice business, is now complemented by a fast-growing fresh produce
division supported by a focused logistics operation.
Fresh produce businesses were acquired in Hamilton, Wellington and Christchurch.
This expansion creates the basis for New Zealand`s first truly national player
in the fresh produce sector.
Establishment of the Bidvest Logistics division proceeded as planned. Recent
acquisitions and continued infrastructure investment will enable further growth
in 2008.
At Angliss, local management is pursuing synergies of the Singapore and Hong
Kong businesses. The Angliss businesses have performed above our expectations,
which we expect to continue.
Bidfood
Revenue rose 15,0% to R3,8 billion while trading profit increased 6,1% to R279,8
million. Bidfood now comprises three focused divisions: Caterplus, Speciality
and Bidfood Ingredients.
Caterplus drew benefit from a buoyant hospitality sector and achieved pleasing
results. Two distinct cultures have been aligned, enabling Caterplus to
aggressively compete for market share. The business increasingly complements the
penetration of large national accounts with strong gains among smaller
customers.
Bidfood Ingredients division became operational in April 2007. The
reorganisation houses all food ingredient businesses within a single structure,
creating cross-selling opportunities, potential for supply synergies and an
increased focus on product development within the food ingredient market. The
impact of corrective action and a back-to-basics approach is expected to lead to
an improvement in results in the forthcoming year.
Another strong performance was registered at Speciality, with revenue growth of
29,1%. Trading profit rose by 29,3%. Largely stable exchange rates were
beneficial for Speciality Foods, while continued GDP growth was positive for all
units. Opportunities for expansion into Namibia and Mpumalanga will be explored.
The macro-economic climate remains supportive for all Bidfood operations. All
teams will pursue growth in market share and trading profit.
Bid Industrial and Commercial Products
All elements of the division benefited from strong economic fundamentals.
Pleasing growth was achieved, with trading profit up by 48,9%. Revenue increased
by 24,2%.
Demand for cable and electrical products remained strong, underpinned by
investment in large infrastructure projects. South Africa`s national power
utility is investing heavily in capacity expansion. However, demand-side
management (DSM) remains central to energy strategy, with Voltex strongly
positioned as a reliable partner of major institutions and businesses seeking
energy savings.
Voltex`s wholesale and specialist supply businesses performed strongly. A
weakening rand was overall positive for the business while copper price
fluctuations created trading opportunities. The trend to higher inflation was
also positive for trading activities. Competitive pressures continue to mount
and Chinese imports create a strategic challenge, but the situation is generally
well managed.
Accelerating urbanisation, high business and consumer confidence were positive
for business units in the office furniture, stationery and computer consumables
markets. Numerous corporate office relocations and upgrades led to an active
furniture project market. Sustained growth prompted renewed expansion of several
branch networks.
Walton`s southern and northern Gauteng regions have been consolidated and the
restructure has already shown much improvement. The high growth of the furniture
category within Waltons has led to the expansion of distribution facilities and
greater emphasis on furniture showrooms.
Our packaging businesses experienced strong demand across the entire range of
strapping and tape products. The business registered improved performance,
benefiting from last year`s rationalisation and the rebalancing of local
production and imported goods. Increased imports led to stronger penetration of
key markets. Vulcan Catering Equipment (ex-Bidfood) has further strengthened the
division.
Bidvest Industrial and Commercial Products will pursue double-digit growth in
both revenue and trading profit in 2008. Though continued growth in the domestic
market is anticipated, opportunities exist for the export of patented and
strongly branded products, as well as acquisitive opportunities.
Bidpaper Plus
Trading profit rose 5,7% to R226,9 million on flat revenue of R1,8 billion in
the first full year as an autonomous division. Label and packaging production
businesses have been housed in a distinct sub-division. Revenue growth was in
line with management expectations as 2006 sales were boosted by large election
materials contracts in Lithotech.
High levels of retail activity were positive for the business, particularly bill
presentment and print-to-post and fulfilment services. Signs that retail
activity would slacken had no material effect on the business in 2007.
Continued success was achieved with the strategy of positioning Bidpaper Plus as
a provider of digital and new technology solutions that complement the
traditional base in print production. The Export Projects division won the
contract to supply ballot papers to the Nigerian election while the Lithotech
corporate sales team achieved significant national account success.
Investment in new plant at Silveray Manufacturing paves the way for further
expansion into the scholastic stationery market.
After a year of consolidation, Bidpaper Plus will exploit synergies and seek
expansion through both acquisition and growth in market share.
Bid Auto
Trading profit rose 16,6% to R724,3 million while revenue moved 15,4% higher to
R18,7 billion. Total sales of new and used vehicles rose to 88 989, up 5,4%. A
39,5% return on funds employed is well below the exceptional 51,7% in 2006 but
is a creditable performance in a more challenging market. Implementation of the
National Credit Act affected only one month`s trading, but the retail market
slowdown was significant. A weaker rand also translated into price increases for
some vehicle buyers for the first time in three years. However, the construction
boom supported stronger commercial vehicle sales.
Bid Auto`s margin improved from 3,7% to 3,85% due to diversification and good
insurance portfolio returns. Further diversification progress is anticipated
when the Viamax fleet management and leasing business is integrated into Bid
Auto in the coming months.
Acquisition of Shell AutoServ, a national chain of 28 service centres,
facilitated further growth in parts and service business. The chain has been
incorporated into the McCarthy Value Centres which were launched in March 2007
to sell affordable quality used cars and a growing range of affordable Chinese
vehicles.
The recent launch of a Chinese range of light commercial vehicles has
strengthened the import and distribution element of Bid Auto`s business.
Response was positive to the first offerings, a range of pick-ups, SUVs and a
mini-bus taxi. McCarthy Heavy Equipment was launched in February 2007 and is
well placed to benefit from infrastructure-led growth. The unit distributes
equipment from China, including bulldozers, rollers and excavators.
McCarthy PreOwned has been rebranded as McCarthy Call a Car Direct and the
network was expanded to ensure national coverage. The introduction of point-to-
point Chauffeur Drive has extended the range of Budget Rent a Car`s activities.
Bid Auto will continue to pursue growth in 2008.
Corporate services
Namsov, Namibia`s leading horse mackerel fishing business, increased its
ownership of pilchard-focused Namsea to 100%. Lower catch rates were offset by
higher selling prices, enabling trading profit growth of 5,5%.
UK-based Ontime Automotive was impacted by the loss of a major technical
services contract and further losses in the national car delivery business, but
pleasing performances were recorded in the Specialist and Prestige distribution
divisions.
At Bid Property Holdings the development of a high-quality portfolio has helped
Bidvest to retain control over strategic operational properties. Property
management and maintenance has become a focus area to ensure optimum returns on
increasingly valuable assets.
The Group acquired 20% of the equity of JSE-listed airline group, Comair.
CHANGES TO THE BOARD
Gill Marcus and Bernadette Moffat have resigned. Tania Slabbert has become a
full director. A long-standing executive member of the board - Colin Kretzmann -
has retired. David Cleasby, Peter Nyman`s successor as financial director has
become a full director. Peter Nyman remains an executive director responsible
for special projects. The board expresses its thanks to the outgoing directors
for their contributions.
APPRECIATION
The Group now employs 104 184 people, up from 93 325 a year ago. The directors
and management applaud their commitment and contribution to another year of
sustained growth.
PROSPECTS
The environment is generally favourable in the markets in which Bidvest is
represented.
South Africa is enjoying the longest run of sustained GDP growth in managerial
memory, a situation we believe will continue up to and beyond the 2010 Soccer
World Cup. We therefore see opportunities for sustained growth. However, with
tightening credit conditions and rising local inflation, management`s focus will
be on rigorous cost containment and absolute attention to asset management.
In Europe we are confident our growth objectives will be achieved. The UK
operation has adjusted its business mix and secured major account gains while we
see encouraging progress in both the Netherlands and Belgium.
Bidvest Asia Pacific has made huge strides. We are the national leaders in
foodservice distribution in Australia and New Zealand and are poised to unlock
considerable opportunities in Asia.
A new, positive mood is evident in many parts of Africa. We see strong potential
in Namibia and are consolidating our Namibian assets into Bidvest Namibia ahead
of a listing that will be domiciled in Namibia and managed by Namibians.
Management is committed to ensure that Bidvest will be in a position to deliver
superior results for the year ending June 2008. Our 2005 strategic objective of
doubling the size of Bidvest in five years remains on track.
MC Ramaphosa B Joffe
Chairman Chief executive
DISTRIBUTION OUT OF SHARE PREMIUM
Notice is hereby given that a final cash distribution out of share premium of
248,4 (2006: 207,0) cents per share, in lieu of dividend, has been awarded to
members recorded in the register of the Company at the close of business on
Friday, September 21 2007.
Shareholders are advised that the last day to trade `cum` the distribution will
be Friday, September 14 2007. The shares will trade `ex` the distribution as
from Monday, September 17 2007 and the record date will be Friday, September 21
2007. Share certificates may not be rematerialised or dematerialised during the
period Monday, September 17 2007 to Friday, September 21 2007, both days
inclusive. Payment will be made on Tuesday, September 25 2007.
In terms of the requirements of the Companies Act, the directors confirm that
after the payment of the distribution, the Company will be able to pay its debts
as they become due in the ordinary course of business and its consolidated
assets, fairly valued, will exceed its consolidated liabilities.
For and on behalf of the board
MA David
Company secretary
Johannesburg
August 24 2007
Directors
Chairman: MC Ramaphosa
Independent non-executive: D Band, S Koseff, D Masson,
JL Pamensky, NG Payne, Adv FDP Tlakula
Non-executive: LG Boyle*, AA Da Costa (alternate LJ Mokoena),
MBN Dube, RM Kunene, T Slabbert
Executive: B Joffe (Chief Executive), FJ Barnes*, BL Berson**,
MC Berzack, DE Cleasby, AW Dawe, LI Jacobs, P Nyman
SG Pretorius, LP Ralphs, AC Salomon (*British **Australian)
Company Secretary
MA David
Transfer secretaries
Link Market Services South Africa (Pty) Limited,
11 Diagonal Street, Johannesburg, 2001 South Africa.
PO Box 4844, Johannesburg, 2000 South Africa.
Registered office
Bidvest House, 18 Crescent Drive, Melrose Arch,
Melrose, Johannesburg, 2196 South Africa.
PO Box 87274, Houghton, Johannesburg, 2041 South Africa.
Date: 27/08/2007 07:00:07 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
