| Mon 3 Mar 2008, 10:30 | | BVT - The Bidvest Group Limited - Press release |
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BVT
BVT
BVT - The Bidvest Group Limited - Press release
The Bidvest Group Limited
Incorporated in the Republic of South Africa
Registration number 1946/021180/06
Share code: BVT
ISIN: ZAE000050449
("Bidvest" or "the Company")
BIDVEST`S HALF-YEAR RESULTS SHOW 10,1%
RISE IN HEADLINE EARNINGS PER SHARE
Bidvest`s headline earnings per share rise 10,1% for half-year to December
2007.
Operating profit up 17,9% while revenue rises 12,6% to R53,9 billion.
HIGHLIGHTS
* 9,3% of revenue growth attributable to organic growth
* Performance of Angliss - acquired May 2007 - exceeds expectations
* Viamax contribution incorporated into Group`s results from July 2007
* The Group trading margin improved to 4,6% from 4,4%
* Rand weakness proved mildly positive on the translation of offshore
earnings
* Cash flows and balance sheet remain strong
* Distribution of 220,0 cents per share to be paid
OVERVIEW
Bidvest CE Brian Joffe today announced "satisfactory operating results" for
the half year to December 31 2007. Headline earnings per share rose 10,1% to
498,1 cents. Operating profit grew 17,9% to R2,5 billion off revenue of R53,9
billion, a rise of 12,6%.
Revenue was largely driven by organic growth, which contributed 9,3% of the
increase.
Joffe noted excellent contributions from international operations,
particularly Australia and Deli XL Netherlands while the newly acquired
Angliss businesses of Singapore and Hong Kong performed well. Strong trading
results were also achieved by South African businesses, though
underperformance was evident at Bid Auto and Bid Industrial & Commercial
Products. Bidserv and Bidfreight did well. Group trading margin was slightly
improved at 4,6% (2006: 4,4%).
Joffe added: "The effects on Bid Auto of the automotive industry slowdown are
pronounced as the rest of the Group, excluding Bid Auto, grew headline
earnings per share by 20,0%." Bid Auto was affected by a slow down in vehicle
sales due to high interest rates and National Credit Act implementation.
Net interest paid to funders was up R220,5 million, reflecting the higher
interest rate environment in the geographies in which the Group operates as
well as higher funding costs following 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 first time returns on the Group`s Comair Limited
investment.
Rand weakness was mildly positive for the translation of offshore earnings.
The rand traded at an average of R14,14 against sterling (2006: R13,75).
Cash flows and the Bidvest balance sheet remain strong, though seasonal
working capital absorption and investments into capital expansions and
acquisitions utilised funds. Interest cover at 5,5 times remains
satisfactory. Cash invested into acquisitions utilised R1,0 billion. 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 increased substantially as the businesses invested for medium
term growth. Incremental returns on this investment will impact positively on
future growth.
In May 2007, Bidvest bought 100% of Angliss Singapore, Angliss Hong Kong and
Angliss China in a US$80 million equity transaction funded by debt raised in
Australia. Angliss contributed R46,0 million operating profit to Group results
and is exceeding managements` expectations.
The Viamax fleet management and leasing business was incorporated into Bid
Auto`s results from July 2007, contributing R98,0 million operating profit.
Viamax operations have been integrated into McCarthy Fleet Services.
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.
Joffe said the 2005 strategic objective of doubling the size of Bidvest in
five years remains on track. Management forecasts for the rest of the
financial year 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.
DISTRIBUTION
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 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).
DIVISIONAL REVIEW
Bidfreight`s R330,9 million operating profit was 18,6% up on a 10,7% increase
in revenue to R10,6 billion. Island View Storage achieved satisfactory
operating profit despite lower capacity following the fire at its Durban
operation. A weaker rand and higher interest rates were beneficial for Safcor
Panalpina`s billings, though margins declined. Operating profit at SACD
Freight was somewhat above expectations, with all branches at full capacity.
South African Bulk Terminals performed strongly, with volumes up 38%. SABT`s
six new silos are nearing completion. Bidfreight Port Operations was another
strong performer, benefiting from increased demand for general cargo
warehousing, resurgent steel exports, higher throughput of ferrochrome exports
and increased stevedoring. Rennies Distribution Services faced a challenging
six months, but Bulk Connections achieved pleasing growth following facility
upgrades. The Marine division also had a good half year. High demand for
Bidfreight`s port-based services is expected to continue.
Bidserv`s first-half operating profits rose 27,8% to R390,5 million. Revenue
of R3,1 billion was 18,6% up. The Security Group turned last year`s loss into
solid profit in an improved industrial relations climate. Bid Travel 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 and Industrial Products continued its run of pleasing results.
Operating profit in Office automation was well up, with Oce staging a pleasing
recovery. Global Payment Technologies achieved reasonable results while
Bidvest Bank achieved excellent growth in operating profit. The Master
Currency acquisition has bedded down well. Bid Air benefited from rising
airport traffic while Top Turf achieved record results. Hotel Amenities
Supplies also reported an exceptional six months. mymarket.com and Group
procurement returned pleasing results while delivering Bidvest-wide
efficiencies.
Bidvest Europe achieved revenue growth of 6,6% to R16,0 billion while
operating profit rose 20,3% to R410,4 million. 3663 First for Foodservice
returned a solid operating profit and strong cash flows were generated, though
sales were slightly below expectation. Multi temp exceeded budgeted sales,
offsetting lower Logistics volumes. Cost control was stringent at all
businesses, with efficiencies particularly evident in Wholesale following
reorganisation into a single entity. Prospects for the rest of the year were
enhanced by national account gains while national account margins
strengthened. Replacement of the IT system continues. Deli XL Netherlands
entrenched recent gains, though the institutional market remains under
pressure. The contract to supply Starbucks` first operation in the Netherlands
has been won. Hospitality continues to achieve real growth and acquisitive
opportunities are under consideration. Deli XL Belgium more than doubled its
operating profit. Good progress was made with the integration of Kruidenier.
Dubai-based Horeca Trade achieved an improved second quarter performance
ensuring a reasonable first half. Management are confident of producing strong
full year results within the context of the broader European economy.
Bidvest Asia Pacific achieved 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 overall trading margin reached a
record 3,8% and the business is well positioned to maintain momentum. Bidvest
New Zealand increased operating profit by 20,0% to NZ$8,8 million. Revenue
rose by 18,3%. The trading margin was a highly satisfactory 4,7%. Growth of
the business occurs at a time when many foodservice customers are experiencing
lower year-on-year sales. Success is attributable to continued growth of the
customer-base and diversification into new product categories. Angliss
Singapore 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. Management are exploring growth in regional
areas. Angliss Hong Kong achieved operating profit of HK$26,3 million off
revenue of HK$681,2 million. This pleasing performance puts the business into
a sound position from which to pursue additional growth on the run-in to the
2008 Beijing Olympics.
Bidfood business units delivered a satisfactory performance overall, 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 28,5%. 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.
Bid Food Ingredients continued to derive benefit from last year`s
reorganisation. Revenue increased 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.
Bid Industrial & Commercial Products grew revenue by 9,4% to R4,7 billion, but
operating profit was flat at R336,8 million. Despite strong volume growth,
electrical wholesaling margins were impacted by weak copper prices in the
latter part of the period and the firmer rand against the US dollar was
negative for Kolok. Higher interest rates affected sales at many business
units. Electrical Wholesale grew revenue by 12,1% though operating profit was
flat as trading challenges sharpened. Activity levels across most construction
sectors remained buoyant, but there are indications of cash flow stress among
contractors.The major portion of the divisions debt is insured. The
electricity crisis creates opportunities in the area of alternate power
sources, but is negative for many 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. New retail branches and a distribution hub are
performing well. A `soft` market and reduced margins were detrimental for
Kolok. Furniture benefited from strong demand, delivering good trading
results. Afcom GE Hudson put in a steady performance and Buffalo Executape
grew sales.
At Bidpaper Plus operating profit rose 10,3% to R126,6 million. Revenue of
R1,0 billion was up by 4,6%. 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. Mixed results were obtained with the effort to grow electronic
alternatives to traditional print products, though electronic mail performed
strongly. The revitalised Croxley brand made important gains, but Ozalid faced
margin pressure. Lufil`s integration into the division is now complete.
Bid Auto`s revenue was lower than anticipated, rising from R9,6 billion to
R10,0 billion. 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.
Within Corporate, Namsov Fishing Enterprises experienced difficult trading
conditions, impacted by poor winter conditions and lower than expected catch
rates. The Namibia listing of Bidvest Namibia has been delayed until the
third quarter of calendar 2008.
UK-based Ontime Automotive underperformed as it was unable to achieve
improved contract returns in the national car delivery business and therefore
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 of strategic operational properties within the Group, albeit at a
slower pace.
ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (CE)
Tel: (011) 772 8704
David Cleasby (FD)
Tel : (011) 772 8706
Mobile: (083) 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: (011) 444 0650
Mobile: (083) 447 6648
Date: 03/03/2008 10:30:07 Produced by the JSE SENS Department.
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