| Mon 1 Sep 2008, 7:05 | | BVT - The Bidvest Group Limited - Audited results for the year ended June 30 |
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BVT
BVT
BVT - The Bidvest Group Limited - Audited results for the year ended June 30
2008
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: ZAE000117321
Audited results for the year ended June 30 2008
Revenue up 15,5% to R110,5 billion
Operating profit up 18,8% to R5,3 billion
Headline earnings per share 10,1% to 1068,0 cents
Basic earnings per share up 19,3% to 1 073,0 cents
Distributions per share up 10,9% to 495,0 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 IAS 34 - Interim
Reporting. In the current year, the group adopted IFRS 7 - Financial
Instruments: Disclosures and the consequential amendments to IAS 1 Presentation
of Financial Statements. These disclosures have not had an impact on the results
as reported. The accounting policies are consistent with those of the prior
year.
Reclassification
The unfunded defined benefit early retirement plan obligation of R220, 1
million, previously disclosed in 2007 under trade and other payables, has been
included in post-retirement obligations.
Defined benefit pension fund surpluses and post-retirement obligations have been
separately disclosed in the balance sheet.
Certain operations have been transferred to other segments. Comparatives within
the segmental analysis have been restated.
Audit report
The consolidated results for the year have been audited by Deloitte & Touche.
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
10:00 on Monday, September 1?2008.
Consolidated income statement
for the year ended June 30
Percentage
R000s 2008 2007 change
Revenue 110 477 551 95 655 509 15,5
Cost of revenue (88 785 765) (77 330 818)
Gross income 21 691 786 18 324 691 18,4
Other income 267 357 419 408
Operating expenses (16 624 277) (14 197 315)
?Sales and distribution (11 201 947) (9 432 053)
expenses
Administration expenses (4 234 615) (3 940 085)
Other expenses (1 187 715) (825 177)
Net capital items 9 041 (50 214)
Operating profit 5 343 907 4 496 570 18,8
Net finance charges (931 040) (566 181)
Finance income 88 396 79 521
Finance charges (1 019 436) (645 702)
Share of profit of associates 121 962 68 354
Dividends received 25 526 9 083
Share of current year 96 436 59 271
earnings
Impairment of associates - (178 339)
Profit before taxation 4 534 829 3 820 404 18,7
Taxation (1 199 960) (1 033 248)
Profit for the year 3 334 869 2 787 156 19,7
Attributable to:
?Shareholders of the Company 3 252 884 2 700 054 20,5
?Minority shareholders 81 985 87 102
3 334 869 2 787 156 19,7
Shares in issue
?Weighted (`000) 303 159 300 206
?Diluted weighted (`000) 308 075 307 421
Basic earnings per share 1 073,0 899,4 19,3
(cents)
Headline earnings per share 1 068,0 970,0 10,1
(cents)
Diluted basic earnings per 1 055,9 878,3 20,2
share (cents)
Diluted headline earnings per 1 051,0 947,2 11,0
share (cents)
Distributions per share 495,0 446,4 10,9
(cents)*
*Includes distributions from
share premium.
HEADLINE EARNINGS
The following adjustments to
profit attributable to
shareholders of the Company
were taken into account in
the calculation of headline
earnings:
Income attributable to 3 252 884 2 700 054 20,5
shareholders of the Company
Impairments of property, 59 639 65 707
plant and equipment; goodwill
and intangibles
?Property, plant and 46 969 585
equipment and intangible
assets
?Goodwill 16 753 65 122
?Tax relief (4 083) -
Net loss on disposal of 54 163 595
investments in subsidiaries
and associates, and disposal
and closure of businesses
Loss (profit) on disposal and 60 480 (84)
closure
?Tax charge (relief) (6 317) 679
Net profit on disposal of (42 419) (12 835)
property, plant and equipment
and intangible assets
?Property, plant and (46 789) (15 409)
equipment
?Intangible assets 42 -
?Tax charge 4 328 1 984
?Minority shareholders - 590
Negative goodwill (86 463) -
?Arising on acquisition of (86 496) -
subsidiaries
?Minority shareholders 33 -
Impairment of investment in - 178 339
associate
Share of capital items in - (19 874)
associates
Headline earnings 3 237 804 2 911 986 11,2
Rand/Sterling exchange rates
?Opening rate 14,18 13,20
?Closing rate 15,89 14,18
?Average rate 14,64 13,95
Segmental analysis
for the year ended June 30
Percentage
R000s 2008 2007 change
REVENUE
Bidfreight 21 992 703 18 772 454 17,2
Bidserv 6 424 538 5 243 193 22,5
Bidvest Europe 33 683 788 29 962 516 12,4
Bidvest Asia Pacific 14 467 388 8 863 650 63,2
Bidfood 4 418 919 3 733 227 18,4
?Caterplus and Speciality 2 925 383 2 480 649 17,9
?Bidfood Ingredients 1 493 536 1 252 578 19,2
Bid Industrial and Commercial 9 403 025 8 369 157 12,4
Products
Bidpaper Plus 1 937 393 1 823 822 6,2
Bid Auto 18 467 468 18 656 265 (1,0)
Corporate 2 370 829 2 191 329 8,2
?Bidvest Namibia 1 377 328 1 183 940 16,3
?Ontime Automotive 973 259 986 566 (1,3)
?Investment and other income 20 242 20 823 (2,8)
113 166 051 97 615 613 15,9
Inter-group eliminations (2 688 500) (1 960 104)
110 477 551 95 655 509 15,5
TRADING PROFIT
Bidfreight 690 813 585 610 18,0
Bidserv 838 659 660 046 27,1
Bidvest Europe 879 844 757 551 16,1
Bidvest Asia Pacific 551 403 346 554 59,1
Bidfood 358 792 273 086 31,4
?Caterplus and Speciality 214 290 174 505 22,8
?Bidfood Ingredients 144 502 98 581 46,6
Bid Industrial and Commercial 790 140 728 335 8,5
Products
Bidpaper Plus 220 192 226 899 (3,0)
Bid Auto 742 994 724 473 2,6
Corporate 262 029 244 230 7,3
?Bidvest Namibia 164 002 125 245 30,9
?Bidprop 98 650 78 304 26,0
?Ontime Automotive (21 591) (3 348)
?Investment, other income and 20 968 44 030 (52,4)
corporate costs
Trading profit 5 334 866 4 546 784 17,3
Net capital items 9 041 (50 214)
Operating profit 5 343 907 4 496 570 18,8
Consolidated cash flow statement
for the year ended June 30
R000s 2008 2007
Cash flows from operating activities
Operating profit (including dividends 5 369 433 4 505 653
from associates)
Depreciation and other non-cash items 1 447 560 1 098 638
Cash generated by operations before 6 816 993 5 604 291
changes in working capital
Changes in working capital (730 298) (1 367 396)
Cash generated by operations 6 086 695 4 236 895
Net finance charges paid (1 237 784) (472 697)
Taxation paid (1 166 305) (1 152 174)
Distribution of share premium by Company (761 148) (1 205 633)
Dividends to minorities (22 995) (27 786)
2 898 463 1 378 605
Cash flows from investment activities
Net additions to vehicle rental fleet (215 948) (134 050)
Net additions to property, plant and (2 341 458) (1 723 174)
equipment
Net additions to intangible assets (228 525) (121 552)
Net acquisition of subsidiaries, (1 290 245) (1 125 027)
businesses, associates and investments
(4 076 176) (3 103 803)
Cash flows from financing activities
Proceeds from shares issued 47 972 494 094
Net purchase of treasury shares (560 435) (699 593)
Net borrowings raised (repaid) 1 180 666 (129 751)
668 203 (335 250)
Net decrease in cash and cash equivalents (509 510) (2 060 448)
Net cash and cash equivalents at the 616 465 2 546 995
beginning of the year
Currency adjustments 201 599 129 918
Net cash and cash equivalents at the end 308 554 616 465
of the year
Net cash and cash equivalents are made up
as follows:
Cash on hand and in the bank 3 038 618 2 374 442
Bank overdrafts included in short-term (2 730 064) (1 757 977)
portion of borrowings
308 554 616 465
Consolidated balance sheet
At June 30
R000s 2008 2007
ASSETS
Non-current assets 17 250 060 13 041 908
?Property, plant and equipment 9 556 529 6 732 602
?Intangible assets 486 471 388 145
?Goodwill 4 556 137 3 772 297
?Deferred tax asset 397 297 431 525
?Defined benefit pension surplus 120 983 4 081
?Interest in associates 972 039 454 865
?Investments and advances 782 371 1 031 670
?Banking and other advances 378 233 226 723
Current assets? 24 611 325 19 806 022
?Vehicle rental fleet 654 252 527 524
?Inventories 8 389 646 6 813 187
?Short-term portion of banking and other 244 688 183 983
advances
?Trade and other receivables 12 284 121 9 906 886
?Cash and cash equivalents 3 038 618 2 374 442
Total assets 41 861 385 32 847 930
EQUITY AND LIABILITIES
Capital and reserves 13 778 085 10 824 966
?Attributable to shareholders of the 13 467 629 10 626 509
Company
?Minority shareholders 310 456 198 457
Non-current liabilities 4 680 474 3 338 346
?Deferred taxation liability 220 993 265 323
?Life assurance fund 33 478 50 457
?Long-term portion of borrowings 3 546 908 2 229 892
?Post-retirement obligations 477 286 380 748
?Long-term portion of banking liabilities - 73
?Long-term portion of provisions 218 152 245 757
?Long-term portion of operating lease 183 657 166 096
liabilities
Current liabilities 23 402 826 18 684 618
?Trade and other payables 17 200 173 13 972 421
?Short-term portion of provisions 290 397 200 375
?Vendors for acquisition 6 127 27 007
?Taxation 511 427 372 789
?Short-term portion of banking 356 130 203 025
liabilities
?Short-term portion of borrowings 5 038 572 3 909 001
Total equity and liabilities 41 861 385 32 847 930
Number of shares in issue (net of 300 575 302 852
treasury)
Net tangible asset value per share 2 803 2 135
(cents)
Consolidated statement of changes in equity
for the year ended June 30
R000s 2008 2007
Capital and reserves attributable to
shareholders of the Company
Issued share capital 15 029 15 143
- balance at the beginning of the year 15 143 14 958
- in terms of the share incentive scheme 54 279
- net movement in treasury shares (168) (94)
Share premium (1 456 154) (182 657)
- balance at the beginning of the year (182 657) 1 228 660
- in terms of the share incentive scheme 47 918 493 815
- refund of share premium to shareholders (761 148) (1 205 633)
in lieu of dividends
- net movement in treasury shares (560 267) (699 499)
Foreign currency translation reserve 1 968 975 1 158 151
- balance at the beginning of the year 1 158 151 807 033
- realised on disposal of subsidiary 25 -
- arising during the year 810 799 351 118
Statutory reserves 13 049 16 691
- balance at the beginning of the year 16 691 10 013
- transfer from (to) retained income (3 642) 6 678
Equity-settled share-based payment 220 559 165 664
reserve
- balance at the beginning of the year 165 664 107 724
- arising during the year 54 895 57 940
Retained earnings 12 706 171 9 453 517
- balance at the beginning of the year 9 453 517 6 760 607
- profit attributable to shareholders of 3 252 884 2 700 054
the Company
- change in fair value of available-for- (3 872) (466)
sale financial assets
- transfer from (to) statutory reserves 3 642 (6 678)
Attributable to shareholders of the 13 467 629 10 626 509
Company
COMMENT
Satisfactory trading results were produced for the year to June 30?2008.
Headline earnings per share rose by 10,1% while trading profit increased by
17,3%. For 19 years, annual compound growth in headline earnings per share has
been 24%.
Earnings reflect good contributions from Bidserv, Bidvest Asia Pacific and the
South African food businesses. Areas of underperformance reside principally in
Bidpaper Plus and Bid Auto, impacted by the effects of a retail market under
pressure.
A more challenging business environment showcased the advantages of Bidvest`s
decentralised business model as our divisions optimised opportunities across
various geographies and industries.
High interest rates, spiralling inflation and lower consumer confidence had only
limited impact on most Bidvest operations until late in the year. Though South
Africa`s GDP growth slowed, continuing infrastructure spending by government
provided a degree of support for the economy.
Working capital management was identified as a critical issue early in the year.
The Group is tightening internal controls to improve returns on funds employed.
FINANCIAL OVERVIEW
Revenue grew 15,5% to R110,5 billion (2007: R95,7 billion), driven by market
share growth and benefits from inflationary pressures.
The trading margin was slightly improved at 4,8% (2007: 4,7%). Rand weakness had
a positive effect on the translation of offshore earnings, particularly in
Bidvest Asia Pacific. The rand traded at an average of R14,64 (2007: R13,95)
against sterling. Basic earnings per share growth of 19,3% was achieved.
Bidvest continued to trade off a growth platform and our balance sheet remains
strong. Substantial returns on recent infrastructure investments were not
anticipated in 2008, but we expect incremental returns to grow.
Net debt rose to R5,5 billion, though interest cover at 5,7 times reflects ample
borrowing capacity. Net finance charges increased from R566,2 million to R931,0
million. Hardening interest rates and the effects of the global credit crisis
highlighted the appropriateness of Bidvest`s conservative attitude to debt.
In April, Fitch affirmed Bidvest`s national long-term rating of AA- and a short-
term rating of F1. However, the outlook was changed from stable to negative.
Higher debt was driven by capital expansion, the acquisition of Angliss Asia and
increased working capital demands. The first full-year performance by Angliss
was ahead of expectations while Viamax became a major contributor to Bid Auto.
Many operations have found it necessary to carry strategic inventories in view
of stock shortages, increased volumes and product inflation.
HUMAN CAPITAL
Staff numbers rose from 104 814 to 106 225 while training investment continued
to increase. The Bidvest Academy continues to develop future leaders and
completion of the first graduate programme is imminent.
SUSTAINABILITY
Bidvest has stepped up its focus on sustainability. Businesses will strive to
turn `green` into `gold` in a manner that delivers profit, efficiency and
quality while integrating evolving financial, social and environmental needs and
expectations. Our businesses are united by a positive attitude to sustainability
that looks beyond today`s obligations to tomorrow`s opportunities.
ACQUISITIONS AND DISPOSALS
Bidvest remains an acquisitive company. A more challenging trading environment
in domestic and international jurisdictions will create opportunities. With
effect from July 1?2007, Bidvest acquired 100% of the Viamax Group, a vehicle
management and leasing business, consisting mainly of a vehicle rental fleet,
for R961,1 million. Viamax contributed R544,4 million to revenue and R203,8
million to the Group`s trading profit.
Subsequent to year-end, Bidvest has agreed to dispose of its interest in
Enviroserv Holdings Limited subject to the successful implementation of a scheme
of arrangement between Enviroserv and its shareholders.
DIVISIONAL REVIEW
Bidfreight
Revenue of R22,0 billion (2007: R18,8 billion) was up 17,2% while trading profit
rose 18,0% to R690,8 million (2007: R585,6 million). Results were mainly driven
by high volumes of cargo across our strategic port-based assets.
Utilisation levels were sustained by large import volumes and buoyant commodity
exports. High interest rates were positive for Marine Services and freight
forwarding. Cyclical factors lifted agricultural volumes.
Island View Storage was buoyed by strong demand for bulk storage. Despite fire
damage at the Durban site, performance was ahead of expectations. Efforts to
increase capacity at Durban and Richards Bay continue.
Bulk Connections achieved a 40% increase in throughput, with strong demand from
manganese exporters. Continued growth is anticipated as management pursues
opportunities to handle a wider range of products.
Bidfreight Port Operations grew on the back of higher ferrochrome exports and
increased volumes of cement clinker and soya. BPO`s diversification strategy
proved timely as steel and pulp exports continued to decline.
Results at Rennies Distribution Services were disappointing. Volumes in support
of certain retailers fell and paper product volumes came under pressure.
Warehousing was downscaled in some centres.
SACD Freight`s container depot operations had a good year despite the slowdown
in imports from Asia. Replacement business was secured and many facilities
operated near capacity.
South African Bulk Terminals witnessed exceptional grain handling volumes,
notching up a series of vessel unloading records, folowing major capital
investment. Agricultural volumes eased in the final quarter.
Naval`s coal and bagged cereal cargo volumes fell as competitive pressure
mounted. Manica Africa was impacted by lower volumes from the DRC and Zimbabwe.
Safcor Panalpina achieved improved operating results.
Marine Services did well to maintain last year`s momentum.
Bidfreight expects strong freight and commodity volumes to continue in 2009,
albeit at a lower growth rate than in 2008.
Bidserv
Businesses across Bidserv recorded pleasing results with a 22,5% increase in
revenue - up from R5,2 billion to R6,4 billion. Trading profit of R838,7 million
(2007: R660,0 million) was up 27,1%.
All areas of major operational focus performed well. National infrastructure
expansion was positive as increased service support is required.
Prestige consolidated its position as a cleaning industry leader thanks to
consistent levels of service and successful tenders. TMS Group Industrial
Services grew on continued equipment and infrastructure investment. Several
small acquisitions widened the offering.
Laundry Services benefited from high hotel occupancy and bigger garment rental
volumes as companies respond to demands for better health and hygiene standards.
However, escalating energy costs create a strategic challenge.
Steiner`s flagship brand, Steiner Hygiene, achieved an acceptable performance.
Infrastructure spending rose as they expanded their footprint.
Range extension underpinned growth at Bidserv Industrial Products as the
transformation of G.Fox into a national brand continued to pay off. Giant
Workwear and Clockwork Clothing performed well. Hotel Amenities and Accessories
secured several new contracts while Bidprocure continued to deliver cost savings
and efficiencies.
Top Turf had a good year, completing one major golf course built in Mauritius
and one in Limpopo. A specialised golf course unit has been set up.
Bidair achieved pleasing results. Expanded services have bedded down following
the award of a `super licence` for ground handling services at ACSA airports.
Good service levels are being achieved and 2 000 new jobs have been created.
Within the Security division, the Magnum Shield guarding operation completed a
significant turnaround. Vericon performed well but Provicom did not meet
expectations. Global Payment Technologies reached its targets.
Office Automation performed extremely well. Konica Minolta benefited from high
demand for multi-functional devices and the marketplace success of the bizhub
format. Strong demand was evident for Oce printing services.
Bidtravel optimised buoyant conditions in travel and hospitality. The online
booking engine previously housed at mymarket Business Solutions has been
integrated into Bidtravel.
Bidvest Bank and Master Currency traded exceptionally well. Strong growth was
achieved in Bidvest Bank following new product launches in the foreign exchange
field.
Bidserv plans continued niche diversification and will seek growth across the
board with particular emphasis on opportunities in travel and hospitality.
Bidvest Europe
The division recorded steady results with 12,4% revenue growth, up from R30,0
billion to R33,7 billion. Trading profit rose 16,1% to R879,8 million (2007:
R757,6 million). Gains were achieved despite a rapidly slowing British economy,
though economic headwinds took longer to reach Deli XL in the Netherlands and
Belgium.
In the UK, 3663 First for Foodservice focused on cost control, synergies and
range extension. The most significant new account gain was that of the Gondola
Group which operates over 500 UK restaurants.
Consolidation of frozen, fresh, chilled and multi-temperature operations reduced
headcount by 300 while opening the way for service improvements.
Food inflation rose and extension of a public smoking ban from Scotland and
Wales to England impacted the pub market. Customers remained resistant to rising
foodservice prices, despite spiralling inflation. Margin management became a
focus area.
The Whites aspirational brand was further extended and a successful entry into
the wine market achieved.
Operations in the Netherlands expanded following two bolt-on acquisitions in the
foodservice business and investment in two localised fresh produce suppliers.
The chilled foods distribution warehouse at Ede was enlarged.
The market in the Netherlands remains highly competitive, with aggressive use of
e-tenders, e-auctions and buying consortia. However, our operations are
establishing themselves as efficient suppliers and are market leaders.
In Belgium, last year`s acquisition of Flanders-based Kruidenier bedded down
well. A strong platform in the north now complements Deli XL`s established hub
in the south.
A wider offering across the fresh, ambient and frozen categories was well
received. Range extension was developed further through the introduction of the
Whites brand.
In Dubai, Horeca Trade doubled the size of its business. The strategy of
complementing dry goods with a multi-temperature offering is a resounding
success.
Bidvest Europe will seek revenue and profit growth while remaining alert for
growth opportunities.
Bidvest Asia Pacific
Exceptional results saw a 63,2% revenue increase to R14,5 billion while trading
profit rose 59,1% to R551,4 million. Results reflect the first full-year
contribution of Angliss Hong Kong and Singapore. Rand depreciation against Asian
Pacific currencies was beneficial. All jurisdictions saw strong growth despite
tougher economic conditions, particularly in New Zealand. Substantial food price
inflation was well managed to achieve a positive outcome for the division.
The Australia and New Zealand businesses benefit from an increasing eating-out
trend. Angliss units are major beneficiaries of the Asian trend toward greater
variety in meal choices and a preference for some Western foods, which grow in
popularity.
Revenue at Bidvest Australia rose 17,5% to A$1,4 billion while trading profit
moved 24,6% higher to A$55,7 million (2007: A$44,7 million). Growth across all
divisions was achieved by continued focus on range extension, development of the
customer base and geographic expansion. The business has a solid foundation from
which growth will be achieved through increased sales, margin enhancement and
operational efficiencies.
Bidvest New Zealand`s trading profit rose 17,0% to NZ$16,8 million on revenue of
NZ$383,9 million. All businesses (foodservice, fresh produce and logistics)
performed ahead of budget. The ability to back an extensive foodservice range
with high-quality fresh produce drove market gains in an economy that appears to
be in recession.
Angliss businesses with their trading bias were well positioned to protect
margins by strategic buying. Management in Hong Kong and Singapore have embraced
Bidvest`s entrepreneurial culture in a seamless transition of ownership, and
results exceeded our expectations in the first full year of ownership.
Angliss Hong Kong achieved trading profit of HK$45,5 million on revenue of
HK$1,4 billion and more than doubled budgeted profits. Trading opportunities and
operational efficiencies contributed to the excellent results.
Angliss Singapore achieved trading profit of S$10,7 million off revenue of
S$315,6 million. Results benefited from foreign currency gains. Operational
efficiencies and regional expansion remain a focus area with the opening of a
Malaysian office in July 2008.
Bidvest Asia Pacific will seek continued growth in all markets.
Bidfood
The division`s autonomous units, Caterplus, Speciality and Bidfood Ingredients
together achieved a 18,4% increase in revenue to R4,4 billion while trading
profit rose 31,4% to R358,8 million.
Pressure on consumers was negative for out-of-home eating, impacting Caterplus
and its restaurant customers. More in-home eating and emphasis on affordable
meal options were beneficial for
Bidfood Ingredients and Speciality.
Despite a post-Christmas crisis in the over-traded restaurant sector, Caterplus
still increased trading profit by 19,4%. Management grew value per drop while
broadening the basket of goods. Improved inventory management and timely stock
buy-in protected margins. The Gauteng Chipkins and Sea World operations were
successfully relocated to a single site.
Speciality turned in a solid performance. Revenue was up 22,1% while trading
profit rose 28,6%. Relocation to larger premises at Crown Mines enabled
Johannesburg operations to cope with rising demand while achieving new
efficiencies. Deployment of field marketers to complement sales representatives
at selected supermarkets drove higher sales.
Bidfood Ingredients achieved a major turnaround and Crown Foods had an
exceptional year. The business benefited from the full-year effect of the 2007
restructure whereby Bidbake was split in two to give dedicated focus to yeast
manufacture and bakery ingredient supplies.
All businesses adopted a back-to-basics approach, focusing on efficiencies and
controls. Trading profit rose 46,6%. Priority was given to solutions that helped
customers assist cash-strapped consumers. Solution-finding and trend-spotting
became major sources of competitive advantage.
Pressure on consumers will persist in the short term, but Bidfood will pursue
competitive advantage and continued growth.
Bid Industrial and Commercial Products
A generally pleasing performance cemented previous gains. In a less benign
operating environment, revenue grew 12,4% off a high base to R9,4 billion (R8,4
billion). Trading profit increased by 8,5% to R790,1 million (2007: R728,3
million).
Results reflect prompt response to a more challenging environment. Divisional
diversification cushioned some effects of a slowing economy, though margins came
under increasing pressure. Rising interest rates sharpened the asset management
and cash utilisation challenge - areas of intense management focus.
High infrastructure spending provided a strategic underpin for electrical supply
activities, though activity fell in the residential sector. Lower copper and
steel prices initially impacted negatively, but prices rebounded.
Voltex teams put in a solid performance, registering good results in all
centres. Voltex Lighting continues to benefit from demand for energy-efficient
solutions.
Waltons continued its ongoing programme of upgrades and relocations. New-look
stores maintained momentum to counteract the effects of the economic slowdown.
Results were bolstered by a successful back-to-school season.
Kolok was impacted by intense margin pressures and a resilient rand yet
improvement was achieved in the latter part of the year.
Dauphin was buoyed by high levels of corporate project activity while the
rebranding of CN Business Furniture (formerly Cecil Nurse) delivered continued
benefits.
Afcom GE Hudson and Seating responded to competitive pressures in their
respective markets by increasing their level of imports. Buffalo Executape
entrenched its leadership position.
Vulcan had a disappointing year, but is poised to benefit from anticipated
hospitality industry expansion.
The division expects to maintain current levels of revenue and trading profit
growth, benefiting from the non-discretionary nature of many of its products.
Bidpaper Plus
Trading profit fell to R220,2 million (2007: R226,9 million) while revenue grew
by 6,2% to R1,9 billion. Bidpaper Plus was impacted primarily by an absence of
major cross-border contracts. A slowing domestic economy affected volumes and
material cost increases impacted margins. Consumer pressures across most retail
sectors reduced demand for print, labels and packaging.
The acquisition of Rotolabel, a producer of self-adhesive labels, supported a
growing presence in the labels and packaging industry. The operations of
Lithotech Labels and Lithotech Manufacturing were consolidated in Spartan.
Growing marketplace acceptance of electronic document presentment drove
continued growth at Email Connection.
The capital expenditure programme has peaked and operations focus increasingly
on deriving optimum advantage from industry-leading technology while imposing
stringent working capital controls. Bidpaper Plus will seek growth on the back
of new contracts and more favourable cyclical factors. Growing stimulus is
expected from preparations for the 2010 World Cup, though industry pressures
will persist.
Bid Auto
Bid Auto comprises the McCarthy group of companies. The impact of declining
business confidence, consumer distress and the implementation of the National
Credit Act (NCA) was material. Trading profit was 2,6% up at R743,0 million
(2007: R724,5 million), though revenue of R18,5 billion (R18,7 billion) was
below expectation. The Viamax acquisition was successfully bedded down and
enabled the scaling-up of McCarthy Fleet Services, which emerged as the major
profit contributor.
New vehicle sales fell 12,2% to 44 434 units. Most of the smaller franchises
incurred losses, unable to sustain unacceptably high levels of overheads on
current volumes and depressed margins. As a result of lower volumes, the drop in
the equity market and the impact of the NCA, the insurance division failed to
match previous performance. The major franchises delivered good returns despite
lower retail activity.
Used vehicle volumes of 42 182 units were at a record high.
Burchmores wholesale-to-the-public proposition proved a major success.
By year-end Burchmores was the country`s largest seller of used vehicles.
Auction business was brisk following a flood of repossessions by the major
financial institutions.
The vehicle import and distribution business and the Value Centre/Value Serv
networks incurred substantial losses. Initial response to the launch of the
light commercial vehicles sourced from China was disappointing. In May 2008, Bid
Auto successfully introduced the Chery range of vehicles which boasts the most
affordable cars in each of their market segments.
McCarthy Heavy Equipment increased its market share and also opened a Cape Town
branch. Yamaha Distributors delivered good returns at much lower activity
levels, impacted by reduced consumer demand for leisure products and intense,
price-based competition. Budget Car and Van Rental had a disappointing year as a
result of high funding costs, the continuation of the rate war and a sharp
escalation in vehicle thefts and accidents.
An increasingly difficult trading environment is anticipated. Dealer network
rationalisation, expense savings and working capital management will receive
priority. Further growth in parts and service business will be pursued while
seeking continued expansion in the used-vehicle market. Further synergies will
be exploited by McCarthy Fleet Solutions and corrective action will be taken at
loss-makers.
Corporate
2010 World Cup commercialisation planning was stepped up and a minority interest
acquired in MATCH Hospitality AG, a FIFA-appointed hospitality services company.
The intrinsic value of the Bid Property Holdings strategic portfolio continued
to rise. New developments for Bid Auto were completed and work began on new
premises for Bidpaper Plus and Caterplus.
Bidvest Namibia, established to consolidate the Group`s Namibian interests, is
well positioned ahead of a listing on the Namibian Stock Exchange. Namsov, part
of Bidfish, performed strongly, reversing first-half losses thanks to better
catches and firmer prices. Solid contributions came from the previous assets of
Bid Industrial and Commercial Products and Bidserv.
UK-based Ontime Automotive was impacted by fuel hikes and the termination of
volume distribution loss-making contracts. Ontime Parking Solutions won a major
tender and Prestige Vehicle Distribution exceeded target.
PROSPECTS
Economic conditions remain challenging in most industries in which we operate
and may worsen in 2009. Tougher times create greater opportunities for those who
manage well. Bidvest has a record of growth in adverse conditions and strong
performance in times of high inflation.
Our balance sheet remains strong and we will look to leverage our position to
fund strategic acquisitions. We seek to unlock growth opportunities; South
Africa, Africa, Europe, Australasia and East Asia.
Our South African businesses will benefit from the `World Cup effect` as we move
closer to 2010 while high levels of infrastructure spending should sustain
growth. The anticipated listing of our Namibian assets provides a model for the
future development of our interests in various African regions.
Our businesses in the UK and Europe will have to contend with macro-challenges,
but are strongly placed to leverage competitive advantage in tougher markets.
In Asia Pacific, we see growth opportunities for our market leaders in Australia
and New Zealand. We are particularly excited about prospects in the greater
Asian region.
Internally, we will focus on incremental returns from recent investments while
optimising the management of working capital. Retention of skills and human
capital development remain areas of management focus.
We maintain our commitment to sustained shareholder value creation. We are well
on track to achieve our 2005 goal of doubling the size of Bidvest by 2010.
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
275,0 (2007: 248,4) cents per share, in lieu of a dividend, has been awarded to
members recorded in the register of the Company at the close of business on
Friday, October 10 2008.
Shareholders are advised that the last day to trade `cum` the distribution will
be Friday, October 10 2008. The shares will trade `ex` the distribution as from
Monday, October 13 2008 and the record date will be Friday, October 17?2008.
Share certificates may not be rematerialised or dematerialised during the period
Monday, October 13 2008 to Friday, October 17 2008, both days inclusive. Payment
will be made on Monday, October 20 2008.
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 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.
Sponsor: Investec Bank Limited
Date: 01/09/2008 07:05:03 Produced by the JSE SENS Department.
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