| Mon 1 Sep 2008, 8:20 | | BVT - The Bidvest Group Limited - Bidvest posts headline earnings per share |
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BVT
BVT
BVT - The Bidvest Group Limited - Bidvest posts headline earnings per share
THE BIDVEST GROUP LIMITED
("Bidvest")
(Registration number 1946/021180/06)
Share code: BVT ISIN ZAE 0000117321
BIDVEST POSTS HEADLINE EARNINGS PER SHARE
GROWTH OF 10,1% FOR YEAR TO JUNE 2008
Bidvest`s headline earnings per share rise 10,1% for year to June 2008
For 19 consecutive years, 24% compound growth in headline earnings per share
has been achieved.
HIGHLIGHTS
- Operating profit up 18,8% to R5,3 billion
- Trading profit up by 17,3%
- Revenue grows by 15,5% to R110,5 billion
- Headline earnings per share increases by 10,1% to 1068,0 cents
- Basic earnings per share up 19,3% to 1073,0 cents
- Distribution per share rises 10,9% to 495,0 cents
- Trading margin eases up to 4,8%
- Challenging trading conditions underline benefits of decentralised model
- Balance sheet remains strong with Bidvest still on a growth platform
- Good contributions from Bidserv, Bidfreight, Bidvest Asia Pacific and
Bidfood
OVERVIEW
Bidvest CE Brian Joffe today announced "satisfactory trading results" for the
year to June 30 2008, with a 10,1% increase in headline earnings per share to
1068,0 cents. Joffe noted that Bidvest`s non-stop growth continues, with
compound growth in headline earnings per share running at 24% per annum for
19 years.
Operating profit of R5,3 billion was 18,8% higher. Trading profit rose 17,3%,
with the trading margin easing higher to 4,8% (4,7%). Revenue was up 15,5% to
R110,5 billion (R95,7 billion). Performance was driven by market share growth
and inflation. Rand weakness was particularly beneficial in the translation
of the earnings of Bidvest Asia Pacific. The rand averaged R14,64 against
sterling (2007: R13,95). Good contributions were also recorded by Bidserv,
Bidfreight and Bidfood.
The South African and UK markets faced particular economic challenges, though
higher interest rates, spiralling inflation and lower consumer confidence had
limited impact on most operations until late in the year. Joffe said working
capital management had been quickly identified as a critical issue. Retail
market pressures led to underperformance at Bidpaper Plus and Bid Auto.
Joffe added: "A more challenging business environment showcased the
advantages of Bidvest`s decentralised business model as our divisions
optimised opportunities across various geographies and industries."
Basic earnings per share growth of 19,3% to 1073,0 cents was achieved.
Bidvest continued to trade from a growth platform. Substantial returns on
recent infrastructure investments had not been anticipated in 2008, but
incremental returns are expected to grow.
Net debt rose to R5,5 billion, though interest rate cover at 5,7 times
reflects ample borrowing capacity. Finance charges increased from R566,2
million to R931,0 million. Hardening rates and the global credit crisis
highlighted the appropriateness of Bidvest`s conservative attitude to debt,
said Joffe.
In April, Fitch affirmed Bidvest`s a 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 acquisitions 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.
Staff numbers rose from 104 814 to 106 225 while training investment
continued to increase. Joffe said Bidvest had stepped up its focus on
sustainability and would strive "to turn `green` into `gold` in a manner that
delivers profit, efficiency and quality". He said Bidvest`s positive attitude
to sustainability looked "beyond today`s obligations to tomorrow`s
opportunities".
Bidvest remains acquisitive and a challenging trading environment will create
opportunities. With effect from July 1 2007, Bidvest acquired 100% of the
Viamax vehicle management and leasing business for R961,1 million. Viamax
contributed R544,4 million to revenue and R203,8 million to the Group`s
trading profit pre funding costs. Subsequent to year-end, Bidvest agreed to
sell its interest in Enviroserv Holdings Ltd subject to the successful
implementation of a scheme of arrangement.
DISTRIBUTION
The final distribution to shareholders out of share premium, in lieu of a
dividend, increased 10,7% to 275,0 cents a share (2007: 248,4 cents a share).
PROSPECTS
Joffe said economic conditions may worsen, but tougher times create
opportunities for those that manage well. Bidvest had a record of growth in
adverse conditions and will look to leverage its strong balance sheet to fund
strategic acquisitions.
Closer to 2010, South African businesses would benefit from the `World Cup
effect` while high infrastructure spending should sustain growth. A planned
listing of Namibian assets provided "a model for the future development of
our interests in various African regions".
Bidvest businesses in UK and Europe face macro-challenges, but were strongly
placed while the Australian and New Zealand units would look to grow.
Exciting prospects exist in Asia.
The internal focus would fall on incremental returns from recent investments
and working capital management. The Group, said Joffe, was "well on track to
achieve our 2005 goal of doubling the size of Bidvest by 2010".
DIVISIONAL REVIEW
Bidfreight`s revenue of R22,0 billion (R18,8 billion) was up 17,2% while
trading profit rose 18,0% to R690,8 million (R585,6 million). Results were
driven by high utilisation levels on the back of 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 and Bulk
Connections achieved a 40% increase in throughput. Bidfreight Port Operations
grew thanks to higher ferrochrome exports and increased volumes of cement
clinker and soya.
Results at Rennies Distribution Services were disappointing. Some warehousing
was downscaled.
SACD Freight had a good year despite lower Asian imports and South African
Bulk Terminals witnessed exceptional grain volumes. Naval`s coal and bagged
cereal cargo volumes fell while lower volumes from the DRC and Zimbabwe
impacted Manica Africa.
Safcor Panalpina achieved good results and Marine Services maintained last
year`s momentum.
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 (R660,0
million) was up 27,1%.
National infrastructure expansion was positive and all areas of major
operational focus performed well. Prestige consolidated its position as a
cleaning industry leader and TMS Industrial Services grew on continued
equipment and infrastructure investment. Laundry Services benefited from high
hotel occupancy and bigger garment rental volumes.
Steiner Group`s flagship brand, Steiner Hygiene recorded an acceptable
performance as the group expanded its footprint. Range extension underpinned
growth at Bidserv Industrial Products. Giant Workwear and Clockwork Clothing
performed well. Hotel Amenities and Accessories secured several new
contracts.
Top Turf had a good year, completing golf courses in Mauritius and Limpopo. A
specialised golf course unit has been set up.
BidAir achieved pleasing results as expanded operations bedded down following
the award of a `super licence` for ground handling services at ACSA airports.
Two thousand jobs were created.
In the Security division, the Magnum Shield guarding operation completed a
significant turnaround, Vericon performed well, but Provicom failed to meet
expectations. Global Payment Technologies reached its targets.
Office Automation performed extremely well. Konica Minolta benefited from
high demand for multi-functional devices. Strong demand was evident for Oce
printing services.
Bidtravel optimised buoyant conditions and Bidvest Bank and Master Currency
traded exceptionally well.
Bidvest Europe achieved 12,4% revenue growth, up from R30,0 billion to R33,7
billion. Trading profit rose 16,1% to R879,8 million (R757,6 million). Gains
were achieved despite a rapidly slowing British economy. 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 facilitating service improvements. Food
inflation rose and margin management became key. The Whites aspirational
brand was 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. In Belgium, last year`s acquisition of Flanders-based Kruidenier
bedded in well. A wider offering across the fresh, ambient and frozen
categories was well received.
In Dubai, Horeca Trade doubled the size of its business.
Bidvest Asia Pacific recorded exceptional results, with a 63,2% revenue
increase to R14,5 billion. 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 Asia Pacific currencies was beneficial.
All jurisdictions grew despite tougher economic conditions, particularly in
New Zealand. Substantial food price inflation was well managed.
Revenue at Bidvest Australia rose 17,5% to A$1,4 billion while trading profit
moved 24,6% higher to A$55,7 million (A$44,7 million). Growth was achieved by
continued focus on range extension, development of the customer-base and
geographic expansion.
Bidvest New Zealand`s trading rose 17,0% to NZ$16,8 million on revenue of
NZ$383,9 million. All businesses performed ahead of budget. The ability to
back an extensive foodservice range with high quality fresh produce drove
market gains in a market that appears to be in recession.
Angliss Hong Kong achieved trading profit of HK$45,5 million on revenue of
HK$1,4 billion, more than doubling budgeted profit. Angliss Singapore
achieved trading profit of S$10,7 million off revenue of S$315,6 million.
Results benefited from foreign currency gains.
Bidfood`s autonomous units, Caterplus, Bidfood Ingredients and Speciality
achieved an 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. But 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 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.
A solid performance at Speciality saw revenue rise 22,1%. Trading profit rose
28,6%. Relocation to larger premises enabled Johannesburg operations to cope
with rising demand and deliver efficiencies. Selected supermarket deployment
of field marketers to complement sales representatives drove 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 Bidbake restructure. All teams took a back-to-basics approach. Trading
profit rose 46,6%.
Bid Industrial and Commercial Products cemented the gains of the previous
period. Revenue grew 12,4% off a high base to R9,4 billion (R8,4 billion).
Trading profit rose 8,5% to R790,1 million (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 rates sharpened the asset management
and cash utilisation challenge.
Infrastructure spending provided a strategic underpin for electrical supply,
though activity fell in the residential sector. Lower copper and steel prices
were initially negative, but rebounded.
Voltex teams registered good results in all centres. Voltex Lighting
continues to benefit from demand for energy-efficient solutions.
Waltons` new-look stores maintained momentum to counteract the economic
slowdown. Kolok was impacted by margin pressure though Dauphin was buoyed by
high levels of corporate project activity. The rebranding of CN Business
Furniture (formerly Cecil Nurse) delivered continued benefits.
Afcom GE Hudson and Seating responded to competitive pressures through higher
imports. Buffalo Executape entrenched its leadership position. Vulcan had a
disappointing year.
At Bidpaper Plus trading profit fell to R220,2 million (R226,9 million).
Revenue grew 6,2% to R1,9 billion. Bidpaper Plus was impacted by an absence
of major cross-border contracts while domestic consumer pressures reduced
demand for print, labels and packaging.
The acquisition of Rotolabel supported a growing presence in the labels and
packaging industry. The operations of Lithotech Labels and Lithotech
Manufacturing were consolidated in Spartan. Growing acceptance of electronic
document presentment drove continued growth at Email Connection.
The capital expenditure programme has peaked and operations focus
increasingly on deriving advantage from industry-leading technology while
imposing stringent controls.
Bid Auto felt the impact of declining business confidence, consumer distress
and a year of NCA implementation. Trading profit was 2,6% up at R743,0
million (R724,5 million), though revenue of R18,5 billion (R18,7 billion) was
below expectation. The Viamax acquisition 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 small franchises incurred
losses and the insurance division failed to match previous performance. 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.
The vehicle import and distribution business and the Value Centre/Value Serv
networks incurred substantial losses. Initial response to the light
commercial vehicles sourced from China was disappointing. The Chery was
successfully introduced in May. McCarthy Heavy Equipment increased market
share and Yamaha Distributors delivered good returns at lower activity
levels. Budget Car and Van Rental had a disappointing year.
Corporate stepped up World Cup commercialisation planning and a minority
interest was acquired in MATCH Hospitality AG, a FIFA-appointed hospitality
services company. The intrinsic value of the property portfolio continued to
rise and new developments for Bid Auto were completed.
Bidvest Namibia, established to consolidate the Group`s Namibian interests,
is well positioned ahead of its anticipated listing. Namsov performed
strongly, reversing first-half losses thanks to better catches and firmer
prices. Solid contributions came from the previous assets of the Bid
Industrial and Commercial Products and Bidserv divisions.
UK-based Ontime Automotive was impacted by fuel hikes and the exit of volume
distribution loss-making contracts. Ontime Parking Solutions won a major
tender. Prestige Vehicle Distribution exceeded target.
_____________________________________________________________________________
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
1 September 2008
Sponsor: Investec Bank Limited
Date: 01/09/2008 08:20:01 Produced by the JSE SENS Department.
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