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BVT
BVT
BVT - The Bidvest Group Limited - Results for the half year ended December
31?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
Results for the half year ended December 31 2007
Revenue up 12,6% to R53,9 billion (2006: R47,9 billion)
Operating profit up by 17,9% to R2,5 billiion (2006: R2,1 billion)
Headline earnings per share up 10,1% to 498,1 cents (2006: 452,4 cents)
Distribution per share up 11,1 % to 220,0 cents (2006: 198,0 cents)
Basis of preparation of financial statements
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 IAS34 Interim
Reporting. The accounting policies are consistent with those of the prior
year.
Analyst presentation
The presentation to investors will be available on the Bidvest website from
14:00 on 3 March 2008.
Consolidated income statements
for the Half-year ended Year ended
December 31 June 30
2007 2006 Percentage 2007
R000s Unaudited Unaudited change Audited
Revenue 53 884 531 47 871 908 12,6 95 655 509
Cost of revenue (43 711 260) (38 766 554) (77 330 818)
Gross profit 10 173 271 9 105 354 11,7 18 324 691
Other income 197 842 89 614 419 408
Operating expenses (7 913 027) (7 109 232) (14 197 315)
?Sales and (5 223 674) (4 405 740) (9 432 053)
distribution costs
?Administration (1 993 116) (1 996 684) (3 940 085)
expenses
?Other costs (696 237) (706 808) (825 177)
Operating profit 2 458 086 2 085 736 17,9 4 546 784
Net finance charges (445 468) (224 989) (566 181)
?Finance income 49 311 36 931 79 521
?Finance charges (494 779) (261 920) (645 702)
Share of profit of 59 081 37 667 68 354
associates
?Dividends received 24 388 8 031 9 083
?Share of retained 34 693 29 636 59 271
earnings
Net capital items (46 544) 16 695 (228 553)
Profit before 2 025 155 1 915 109 5,7 3 820 404
income tax
Income tax expense (525 576) (519 089) (1 033 248)
Profit for the 1 499 579 1 396 020 7,4 2 787 156
period
Attributable to:
?Shareholders of 1 480 024 1 367 690 8,2 2 700 054
the Company
?Minority 19 555 28 330 87 102
shareholders
1 499 579 1 396 020 7,4 2 787 156
Shares in issue
?Weighted (`000) 303 283 299 566 300 206
?Diluted weighted 310 195 307 756 307 421
(`000)
Basic earnings per 488,0 456,6 6,9 899,4
share (cents)
Headline earnings 498,1 452,4 10,1 970,0
per share (cents)
Diluted basic 477,1 444,4 7,4 878,3
earnings per share
(cents)
Diluted headline 487,0 440,3 10,6 947,2
earnings per share
(cents)
Distribution per 220,0 198,0 11,1 446,4
share (cents)#
HEADLINE EARNINGS
The following
adjustments to
profit attributable
to shareholders
were taken into
account in the
calculation of
headline earnings:
Profit attributable 1 480 024 1 367 690 8,2 2 700 054
to shareholders of
the Company
Impairment of - - 65 707
goodwill and other
intangibles
Impairment of - - 178 339
investment in
associate
Loss (profit) 34 047 (6 055) 595
Loss (surplus) 50 019 (7 355) (84)
on disposal of
investments in
subsidiaries,
associates and
disposal and
closure of
operations
??Tax charge (15 972) 1 300 679
(relief)
Net profit on (3 475) (8 369) (12 835)
disposal of
property, plant and
equipment
?Profit on disposal (3 475) (9 340) (15 409)
of property, plant
and equipment
?Tax charge - 971 1 984
?Minority interest - - 590
Share of capital - 1 900 (19 874)
items in associates
Headline earnings 1 510 596 1 355 166 11,5 2 911 986
Rand/Sterling
exchange rates
?Opening rate 14,180 13,205 13,205
?Closing rate 13,691 13,822 14,180
?Average rate 14,140 13,745 13,946
Segmental analysis
for the Half-year ended Year ended
December 31 June 30
2007 2006 Percentage 2007
R000s Unaudited Unaudited change Audited
REVENUE
?Bidfreight 10 580 870 9 561 473 10,7 18 994 985
?Bidserv 3 059 970 2 580 492 18,6 5 393 090
?Bidvest Europe 16 007 122 15 016 630 6,6 29 962 516
?Bidvest Asia 6 575 119 4 131 006 59,2 8 863 650
Pacific
?Bidfood 2 249 779 1 956 404 15,0 3 845 772
??Caterplus and 1 533 171 1 287 315 19,1 2 593 194
Speciality
??Bidfood 716 608 669 089 7,1 1 252 578
Ingredients
?Bid Industrial and 4 689 562 4 286 329 9,4 8 565 131
Commercial Products
?Bidpaper Plus 1 020 377 975 801 4,6 1 823 822
?Bid Auto 10 004 539 9 640 189 3,8 18 689 283
?Corporate Services 793 507 701 107 13,2 1 477 364
??Namsov 299 024 189 875 57,5 469 974
??Ontime Automotive 489 923 504 235 (2,8) 986 566
??Investment and 4 560 6 997 (34,8) 20 824
other income
54 980 845 48 849 431 12,6 97 615 613
Inter-Group (1 096 314) (977 523) (1 960 104)
eliminations
53 884 531 47 871 908 12,6 95 655 509
OPERATING PROFIT
?Bidfreight 330 874 278 968 18,6 596 352
?Bidserv 390 526 305 591 27,8 669 411
?Bidvest Europe 410 379 341 152 20,3 757 551
?Bidvest Asia 251 300 156 540 60,5 346 554
Pacific
?Bidfood 191 372 153 757 24,5 279 814
??Caterplus and 115 530 89 931 28,5 181 233
Speciality
??Bidfood 75 842 63 826 18,8 98 581
Ingredients
?Bid Industrial and 336 776 335 894 0,3 742 670
Commercial Products
?Bidpaper Plus 126 591 114 771 10,3 226 899
?Bid Auto 357 774 355 023 0,8 724 303
?Corporate Services 62 494 44 040 41,9 203 230
??Bidprop 54 190 35 685 51,9 82 471
??Namsov 7 632 17 042 (55,2) 80 077
??Ontime Automotive (10 913) 1 348 - (3 348)
??Investment, other 11 585 (10 035) - 44 030
income and
corporate costs
2 458 086 2 085 736 17,9 4 546 784
Certain operations have been transferred to other segments.
Comparative results have been restated.
Consolidated cash flow statements
for the Half-year ended Year ended
December 31 June 30
2007 2006 2007
R000s Unaudited Unaudited Audited
Cash flows from operating
activities
?Operating profit (including 2 482 474 2 093 767 4 555 867
dividends from associates)
?Depreciation and other non- 696 885 536 107 1 032 826
cash items
?Cash generated by operations 3 179 359 2 629 874 5 588 693
before changes in working
capital
?Changes in working capital (2 527 161) (2 306 002) (1 351 796)
?Cash generated by operations 652 198 323 872 4 236 897
?Net finance charges paid (367 145) (177 625) (472 699)
?Taxation paid (691 432) (702 759) (1 152 174)
?Distribution of share premium (761 148) (610 602) (1 205 633)
by Company
?Dividends paid by (10 640) (17 308) (27 786)
subsidiaries
(1 178 167) (1 184 422) 1 378 605
Cash flows from investment
activities
?Net additions to vehicle (124 055) (104 434) (134 050)
rental fleet
?Net additions to property, (976 278) (791 453) (1 723 174)
plant and equipment
?Net additions to intangible (179 652) (59 608) (121 552)
assets
?Net acquisition of (1 042 456) (347 650) (1 125 027)
subsidiaries, businesses,
associates and investments
(2 322 441) (1 303 145) (3 103 803)
Cash flows from financing
activities
?Proceeds from shares issued - 25 117 494 094
?Net issue (purchase) of 63 783 (323 600) (699 593)
treasury shares
?Net borrowings raised 1 713 393 (447 710) (129 751)
(repaid)
1 777 176 (746 193) (335 250)
Net decrease in cash and cash (1 723 432) (3 233 760) (2 060 448)
equivalents
Net cash and cash equivalents 616 465 2 546 995 2 546 995
at the beginning of the period
Currency adjustments (10 603) 84 841 129 918
Net cash and cash equivalents (1 117 570) (601 924) 616 465
at the end of the period
Net cash equivalents are made
up as follows
?Cash on hand and in the bank 2 290 589 2 469 541 2 374 442
?Bank overdrafts shown as (3 408 159) (3 071 465) (1 757 977)
current portion of interest-
bearing debt
(1 117 570) (601 924) 616 465
Consolidated balance sheets
at December 31 June 30
2007 2006 2007
R000s Unaudited Unaudited Audited
ASSETS
Non-current assets 14 613 196 11 506 804 13 037 827
?Property, plant and equipment 8 175 995 5 952 292 6 732 602
?Intangible assets 404 857 334 978 388 145
?Goodwill 3 912 432 3 319 112 3 772 297
?Deferred tax 396 104 327 726 431 525
?Interest in associates 664 517 606 225 454 865
?Investments and advances 712 766 801 425 1 031 670
?Banking advances 346 525 165 046 226 723
Current assets 22 234 444 18 798 097 19 806 022
?Vehicle rental fleet 613 049 583 760 527 524
?Inventories 7 876 548 6 336 313 6 813 187
?Short-term portion of banking 277 764 151 607 183 983
advances
?Trade and other receivables 11 176 494 9 256 876 9 906 886
?Cash and cash equivalents 2 290 589 2 469 541 2 374 442
Total assets 36 847 640 30 304 901 32 843 849
EQUITY AND LIABILITIES
Capital and reserves 11 538 793 9 825 909 10 824 966
?Shareholders` interest 11 287 679 9 614 290 10 626 509
?Outside shareholders` 251 114 211 619 198 457
interest
Non-current liabilities 4 755 533 3 730 269 3 114 180
?Deferred taxation 324 263 130 297 265 323
?Life assurance fund 41 127 43 648 50 457
?Long-term portion of 3 824 403 2 997 389 2 229 892
borrowings
?Post-retirement obligations 163 489 196 714 156 582
?Long-term portion of banking 6 450 293 73
liabilities
?Long-term portion of 244 705 216 266 245 757
provisions
?Operating lease liability 151 096 145 662 166 096
Current liabilities 20 553 314 16 748 723 18 904 703
?Accounts payable 14 007 164 12 400 606 14 192 506
?Provisions 236 917 193 890 200 375
?Vendors for acquisition 7 049 12 188 27 007
?Taxation 218 249 319 933 372 789
?Short-term portion of banking 275 013 154 544 203 025
liabilities
?Short-term portion of 5 808 922 3 667 562 3 909 001
borrowings
Total equity and liabilities 36 847 640 30 304 901 32 843 849
Number of shares in issue 304 171 300 520 302 852
Net tangible asset value per 2 292 1 983 2 135
share (cents)
Consolidated statements of changes in equity
for the Half-year ended Year ended
December 31 June 30
2007 2006 2007
R000s Unaudited Unaudited Audited
Shareholders` interest
Issued share capital 15 209 15 026 15 143
?- balance at the beginning 15 143 14 958 14 958
of the period
?- in terms of the share - 232 279
incentive scheme
?- net movement in treasury 66 (164) (94)
shares
Share premium arising on (880 088) 319 507 (182 657)
shares issued
?- balance at the beginning (182 657) 1 228 660 1 228 660
of the period
?- in terms of the share - 458 845 493 815
incentive scheme
?- refund of share premium to (761 148) (610 602) (1 205 633)
shareholders
?- net movement in treasury 63 717 (757 396) (699 499)
shares
Foreign currency translation 1 007 131 1 012 747 1 158 151
reserve
?- balance at the beginning 1 158 151 807 033 807 033
of the period
?- arising during the period (151 020) 205 714 351 118
Statutory reserves 13 398 10 549 16 691
?- balance at the beginning 16 691 10 013 10 013
of the period
?- transfer from/(to) (3 293) 536 6 678
retained income
Equity settled share-based 195 432 130 634 165 664
payment reserve
?- balance at the beginning 165 664 107 724 107 724
of the period
?- arising during the period 29 768 22 910 57 940
Movement in retained earnings 10 936 597 8 125 827 9 453 517
?- balance at the beginning 9 453 517 6 760 607 6 760 607
of the period
?- profit attributable to 1 480 024 1 367 690 2 700 054
shareholders
?- change in fair value of (237) (1 934) (466)
available-for-sale equity
securities
?- transfer from (to) 3 293 (536) (6 678)
statutory reserves
11 287 679 9 614 290 10 626 509
Outside shareholders`
interest
?- balance at the beginning 198 457 229 700 229 700
of the period
?- attributable profit 19 555 28 330 87 102
?- dividends and (10 640) (17 308) (27 786)
capitalisation issues
?- share of movement in 1 132 775 940
foreign currency translation
reserve
?- share of movement in 73 71 143
equity settled share-based
payment reserve
?- changes in shareholding 42 537 (29 949) (91 642)
251 114 211 619 198 457
Total equity 11 538 793 9 825 909 10 824 966
Message to shareholders
Overview and financial summary
In an environment characterised by higher interest rates and international
market volatility, Bidvest produced satisfactory operating results for the
half year to December 31?2007. Headline earnings per share rose by 10,1% while
operating profit increased by 17,9%. Revenue grew 12,6% to R53,9 billion, of
which 9,3% was achieved through organic growth. The effects of the slowdown in
the automotive industry on Bid Auto is pronounced as the rest of the Group,
excluding Bid Auto, grew headline earnings per share by 20,0%. The Group
trading margin improved slightly to 4,6% (2006: 4,4%).
Operating profit reflects excellent contributions from international
operations, notably Bidvest Australia and DeliXL Netherlands. The newly
acquired Angliss businesses in Singapore and Hong Kong are performing well.
Overall there were strong operating results from our South African businesses.
However areas of underperformance reside principally in Bid Auto and Bid
Industrial and Commercial Products divisions. Bidserv in particular has had a
good trading period as well as Bidfreight which benefited from the recovery in
imported agricultural volumes.
Net interest paid to funders reflects an increase of R220,5m over the
comparative period. This reflects higher interest rates across the geographies
in which the Group operates as well the funding costs associated with the
acquisitions of Angliss Asia (May 2007) and Viamax (July 2007).
Associate earnings reflect the improved performances of Enviroserv Limited and
Tiger Automotive Limited and the first time impact of the Group`s investment
in Comair Limited.
Rand weakness had a mildly positive effect on the translation of offshore
earnings. The rand traded at an average of R14,14 against sterling (2006:
R13,75).
Cash flows from operations and our balance sheet remain strong, however
seasonal working capital absorption and further significant investments into
capital expansions and acquisitions utilised funds. Working capital absorption
is seasonal and is 10% ahead of last year. Interest cover remains a
satisfactory 5,5 times. Cash invested in acquisitions utilised R1,0 billion
principally reflecting the payment for Viamax of R960 million. Net additions
to property, plant and equipment absorbed R1,4 billion, largely as a result of
existing commitments already contracted for at June 2007.
Funds employed in the Group have increased substantially as the businesses
invested for medium term opportunities. The incremental returns from this
investment will impact positively on future growth.
Acquisitions
Angliss
In May 2007 we acquired 100% of Angliss Singapore, Angliss Hong Kong and
Angliss China in a US$80 million equity transaction funded by debt raised in
Australia. Performance of Angliss has exceeded managements` expectations and
Angliss contributed R46,0 million operating profit to the Group`s results.
Viamax
The purchase of Transnet`s Viamax fleet management and leasing business has
been incorporated into the Group`s results with effect from July 2007. The
operations of Viamax have been integrated into those of McCarthy Fleet
Services, and is managements` key focus in order to capitalise on the
synergistic benefits. Viamax contributed R98,1 million to Bid Auto`s operating
profit.
Divisional review
Bidfreight
Operating profit of R330,9 million was 18,6% up on a 10,7% increase in revenue
to R10,6 billion as Bidfreight regained momentum. Island View Storage achieved
a satisfactory operating profit despite lower capacity following the fire at
Bay 3 of the Durban operation. Work to clear the site is under way. A weaker
rand and higher interest rates had a beneficial effect on Safcor Panalpina`s
billings, though margins declined. Operating profit at SACD Freight was
somewhat above expectation, with all branches operating at high volumes and
full capacity. South African Bulk Terminals performed strongly, with volumes
up by 38% and operating profit showed pleasing growth. Six new silos
commissioned by SABT are nearing completion. Bidfreight Port Operations was
another strong performer. It benefited from increased demand for general cargo
warehousing, a resurgence in steel exports, higher throughput of ferrochrome
exports and increased stevedoring. Rennies Distribution Services faced a
challenging six months. Corrective action is under way. Bulk Connections
achieved pleasing growth in trading volumes, where facility upgrades have led
to higher efficiency and load rates. Marine had a good half year, with
operating profit significantly above budget. High demand for Bidfreight`s port-
based services is expected to continue.
Bidserv
A good set of results puts the division on course to achieve its full-year
targets, with first-half operating profits up 27,8% at R390,5 million. Revenue
of R3,1 billion is 18,6% up. The Security Group turned last year`s loss into
solid profit in an improved industrial relations climate. Bidtravel returned
good results, though cost control is a concern. TMS Group produced excellent
results with further momentum assured by new contract gains. The Steiner Group
was bolstered by excellent results at Steiner Hygiene while the Prestige
performance was credible given wage pressures. The Laundry division`s result
is pleasing, with the new equipment business off to a promising start. Bidserv
Industrial Products continued its run of pleasing results, despite margin
pressure. Operating profit in Office automation was well up on last year, with
Oce staging a pleasing recovery. Global Payment Technologies achieved
reasonable results, with pleasing performances by the cash-handling and
service divisions. Bidvest Bank achieved an excellent growth in operating
profit while pursuing new opportunities. The acquisition of Master Currency
has bedded down well. Bidair continues to benefit from rising airport traffic
and will pursue further gains when its super ramp licence becomes effective on
March 1 2008. Top Turf continues to do well and reported record results. Hotel
Amenities Supplies optimised growth in hotel rooms and hotel vacancies for an
exceptional six months. After achieving break-even last year, mymarket.com and
Group Procurement returned a pleasing result while delivering Bidvest-wide
efficiencies.
Bidvest Europe
Encouraging performances by all businesses contributed to revenue growth of
6,6% to R16,0 billion while operating profit rose 20,3% to R410,4 million.
Incremental rand weakness against sterling augmented the translation of the
result.
In the UK, 3663 First for Foodservice returned a solid operating profit and
strong cash flows were generated, despite the first signs that an economic
slowdown in the UK is under way. Sales were slightly below expectation,
however, volumes in the comparable period were still buoyed by the final
months of the MoD contract. Multi temp exceeded budgeted sales, offsetting
lower volumes in Logistics. Cost control was stringent at all business units,
with cost efficiencies particularly evident in Wholesale following its
reorganisation into a single entity. Prospects for the rest of the year were
enhanced by several new national account gains while margins have been
strengthened. Replacement of the IT system continues, though at a slower pace
than initially anticipated. Deli XL Netherlands entrenched recent gains with
operating profit somewhat above expectation, though the institutional market
remains under pressure. A new contract - to supply Starbucks` first operation
in the Netherlands - has been won. The hospitality business continues to
achieve real growth and a number of acquisitive opportunities are under
consideration. Deli XL Belgium more than doubled its operating profit and good
progress is being achieved with the integration of the Kruidenier acquisition.
Dubai-based Horeca Trade achieved an improved second quarter performance
ensuring a reasonable first half trading result. Management are confident of
producing strong full year results within the context of the broader European
economy.
Bidvest Asia Pacific
Excellent performances by all businesses, including those of Angliss Asia,
contributed to revenue growth of 59,2% to R6,6 billion while operating profit
rose 60,5% to R251,3 million.
Bidvest Australia registered another excellent performance with operating
profit up by more than 23,3% to A$27,0 million. Revenue was up 16,3%, driven
by small acquisitions, organic growth and price inflation. A particularly
strong sales performance was achieved in the core wholesale business. The QSR
division continues to operate efficiently whilst exploring additional sources
of revenue. Hospitality remains below expectations, however prospects remain
positive. The overall trading margin reached a new record of 3,8% and the
business is well positioned to maintain momentum as the commodities boom
continues to sustain relatively strong economic growth.
Bidvest New Zealand increased operating profit by 20,0% to NZ$8,8 million
while revenue rose by 18,3%. The trading margin was a highly satisfactory
4,7%. Growth of the business is particularly pleasing as it occurs at a time
when many foodservice customers are experiencing lower year-on-year sales as a
result of falling consumer confidence and higher inflation and interest rates.
The success is attributable to the continued growth of the customer-base and
the diversification into new product categories.
Angliss Singapore since acquisition has exceeded managements` expectations
despite product supply and quality issues. Notwithstanding Singapore`s
moderating GDP growth of 7,5% for 2007, Angliss achieved revenue of S$150,6
million and operating profit of S$5,7 million. The foodservice, wholesale and
export divisions are the principal contributors to the volumes in the business
and management are committed to exploring growth in the southeast Asian
region.
At Angliss Hong Kong, a pleasing first-half performance was achieved with
revenue of HK$681,2 million and operating profit of HK$26,3 million. The
foodservice and wholesale divisions are the core of the business benefiting
from robust GDP growth of 6,1% and aggressive focus on margin expansion. The
performance puts the business into a sound position from which to pursue
additional growth in both Hong Kong as well as meaningful expansion in
mainland China on the run-in to the 2008 Beijing Olympics.
Bidfood
Bidfood business units delivered a satisfactory performance, growing revenue
by 15,0% to R2,2 billion and operating profit by 24,5% to R191,3 million.
Caterplus and Speciality achieved a 28,5% increase in operating profit to
R115,5 million on revenue of R1,5 billion, up 19,1%. In Caterplus, whilst food
inflation benefited top-line growth, the strategy of growing the basket of
goods to each customer continues to ensure we deliver growth in our market
share and operating profit. Despite the environment becoming increasingly
challenging, strong cash flows were maintained and managements` focus on the
opportunities, service levels, asset management and alleviating capacity
constraints will ensure ongoing growth.
Despite concerns about falling consumer spending, Speciality put in a strong
performance achieving record sales, with Gauteng region making particularly
impressive gains. Aggressive promotion drove good growth across all brands,
especially Lu-Tuc, Frico and the in-house Goldcrest range. Higher food
inflation and a weakening rand create a continuing challenge, though
operational difficulties in Gauteng have eased following the relocation of the
Johannesburg branch. Prospects for the Speciality business remain encouraging.
Bid Food Ingredients continued to derive benefit from last year`s
reorganisation. Revenue increased by 7,1% to R716,6 million while operating
profit rose 18,8% to R75,8 million. The Crown National Group was a major
contributor benefiting from investment in human capital and modern facilities.
Chipkins Bakery Supplies maintained their recently improved performance. The
bakery ingredients factory remains a focus area for management. NCP performed
in line with expectations despite higher input costs. Bidfood Exports
performed exceptionally well, albeit off a small base.
Bid Industrial and Commercial Products
Acceptable results were achieved with revenue up 9,4% to R4,7 billion however,
operating profit was flat at R336,8 million. Despite strong volume growth,
electrical wholesaling margins were impacted by an extremely weak copper price
in the latter part of the period. The firmer rand against the US dollar were
negative for Kolok. Higher interest rates affected sales at many business
units.
Electrical Wholesale grew revenue 12,1% but operating profit was flat as
trading challenges sharpened. While activity levels across most sectors of the
construction market remained buoyant, there are indications of cash flow
stresses within the contracting sector. The major portion of the divisions`
debt is insured. The national electricity crisis creates opportunities in the
area of alternate power sources, but has adverse effects for numerous
industrial and mining sector customers.
The Stationery and Furniture performance was satisfactory, although operating
profit was flat. The flagship Walton`s brand achieved gains in both revenue
and operating profit, with improved results in the key Gauteng market. New
retail branches and a distribution hub are performing beyond managements`
expectations. The impact of a "soft" market with reduced margin were
detrimental to the trading results of Kolok. Furniture benefited from strong
demand delivering good trading results.
Afcom GE Hudson put in a steady performance benefiting from selling a much
broader range of products, much of which is imported. Buffalo Executape grew
sales, particularly in the DIY range, whilst opening new markets.
Bidpaper Plus
Operating profit rose 10,3% to R126,6 million off revenue growth of 4,6%.
Revenue of R1,0 billion was pleasing considering the major export orders
executed in the comparative period.
The business entrenched its leadership in print and paper conversion while
achieving a growing presence in the labels and packaging industry. The profile
in this sector will be further strengthened by the acquisition of Rotolabel.
The strategy of re-establishing Silveray Statmark as the leading producer and
distributor of stationery gained momentum. Though mixed results were obtained
with the effort to grow electronic alternatives to traditional print products,
electronic mail put in a strong performance. The revitalised Croxley brand
made important gains, but Ozalid continues to suffer margin pressure. Lufil`s
integration is now complete yet its performance was impacted by input cost
increases. While the print and conversion operations have flat prospects for
the balance of the year, personalisation and mail, electronic solutions,
labels and packaging businesses all expect higher activity levels going
forward.
Bid Auto
Revenue growth was lower than anticipated, rising by 3,8% to R10,0 billion,
while operating profit was up 0,8% at R357,8 million. Excluding the effect of
the acquisition of Viamax, operating profit fell by 26,8% to R259,7 million.
The prevailing higher interest rates during the period under review, as well
as the stricter lending criteria, adversely affected motor retail activity and
demand for ancillary products. In December 2007 South African vehicle sales
hit the lowest monthly level in five years and Bid Auto`s new and used vehicle
volumes also fell significantly below budget. However, revenue from parts and
servicing was in line with expectations. The larger McCarthy franchises
performed well in a very difficult environment, however the smaller motor
franchises recorded disappointing results. The recently acquired Viamax fleet
management and leasing business performed above expectations. Viamax has been
integrated successfully into McCarthy Fleet Services. Financial Services was
impacted by falling vehicle sales and its inability to sell term products
following the introduction of the National Credit Act, allied to both lower
premium and investment income. Budget Rent a Car and van rental performed
satisfactorily in a tough climate although returns were negatively impacted by
lower fleet utilisation. The new import and distribution business and Yamaha
registered disappointing results, although the start-up Heavy Equipment
performed well ahead of budget, recording a small profit. McCarthy Value
Centres were affected by the delayed introduction of the Chinese imports and
intense competition resulting in lower than expected sales. An import and
distribution agreement with Chery Automobile Company, China`s largest domestic
car brand sets the scene for the launch of Chery passenger cars by financial
year-end. Bid Auto continues to create jobs, with 954 new staff joining
McCarthy. Technical and non-technical training is being stepped up. In an
increasingly challenging trading environment, non-performing operations,
expense savings and working capital management are receiving priority.
The environment for Bid Auto is anticipated to remain challenging in the short-
term.
Corporate
Namsov Fishing Enterprises experienced difficult trading conditions, impacted
by poor winter conditions and lower than expected catch rates. We have
consolidated our Namibian assets into Bidvest Namibia to be managed wholly by
Namibians. Due to unforeseen circumstances, the listing of Bidvest Namibia has
been delayed to the third quarter of calendar 2008.
UK-based Ontime Automotive underperformed. It was unable to achieve improved
contract returns in the national car delivery business so exited the major
part of this segment. Pleasing performances were achieved in the Specialist
and Prestige distribution divisions.
Bid Property Holdings continues with the development of a high-quality
portfolio over strategic operational properties within the Group, albeit at a
slower pace.
Prospects
Internationally our foodservice businesses continue to trade well. Acquisition
opportunities continue to be sought across all geographies in order to extend
and grow our international foodservice footprint. Angliss Asia holds much
promise as it operates in high growth economies with ample opportunity for
expansion in the surrounding regions. Approximately 30% of the Group`s
earnings are derived internationally and should rand weakness persist this
will provide a positive hedge in the translation of the results of our
international businesses.
Locally our businesses, other than Bid Auto, are confident that the momentum
achieved in the first half will continue into the next period. Economic
conditions are challenging, yet manageable. A prolonged high interest rate
cycle and sustained electricity supply constraints will have some negative
impact on most businesses. The tightened credit conditions and higher
inflation climate will present acquisition opportunities allowing our
businesses to take advantage thereof. Management has placed an intense focus
on the improvement in returns on funds employed in all divisions.
Management forecasts remain positive. Earnings growth in the second half of
the financial year is expected to be at a higher rate than that achieved in
the first half. Our strategic objective set in 2005 of doubling the size of
Bidvest in five years remains on track.
For and on behalf of the Board
MC Ramaphosa B Joffe
Chairman Chief Executive
Distribution
Notice is hereby given that Bidvest intends to make an interim cash
distribution by way of a pro rata share buy back. The implementation will be
effected by way of a scheme of arrangement in terms of section 311 of the
Companies Act for the repurchase of 1,82% of every members` shareholding in
Bidvest at a price of R121,00 per share being a premium of 15,3% over the last
30 days weighted average share price of Bidvest. The payment will equate to an
effective distribution of 220,0 cents per share (2006: 198,0 cents). On the
basis that the scheme of arrangement is successfully implemented, it is
anticipated that shareholders will receive payment on or about May 5 2008.
The rationale for Bidvest implementing the pro rata buy back by scheme of
arrangement is to ensure all shareholders are treated on a uniform basis and
that after implementation, a shareholders` effective percentage holding of
Bidvest would not have changed. Bidvest would benefit in that a reduction of
shares in issue would be earnings enhancing and accordingly all shareholders
would share in the accretion.
The requisite circular to shareholders will be posted to shareholders in due
course and a further announcement detailing the salient dates and notice of
scheme meeting will be published shortly.
For and on behalf of the board
MA David
Company Secretary
Johannesburg
February 29 2008
Directors
Chairman: MC Ramaphosa
Independent non-executive: DDB 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: 03/03/2008 07:05:13 Produced by the JSE SENS Department.
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