| Mon 31 Aug 2009, 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
2009
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?2009
R112,4 billion
Revenue 1,8% increase
R5,1 billion
Trading profit 3,7% decrease
930,0 cents
Headline earnings per share 12,9% decrease
R6,8 billion
Cash generated by operations 10,9% increase
380,0 cents
Distribution per share 23,2% decrease
Consolidated income statement
for the year ended June 30
Percentage
R`000 2009 2008 change
Revenue 112 427 831 110 477 551 1,8
Cost of revenue (89 482 780) (88 785 765)
Gross profit 22 945 051 21 691 786 5,8
Other income 198 815 267 357
Operating expenses (18 007 297) (16 624 277) 8,3
Sales and distribution (12 726 832) (11 201 947)
expenses
Administration expenses (3 955 068) (4 234 615)
Other expenses (1 325 397) (1 187 715)
Trading profit 5 136 569 5 334 866 (3,7)
Non-trading items (164 240) -
Net capital items (37 701) 9 041
Operating profit 4 934 628 5 343 907
Net finance charges (1 029 243) (931 040) 10,5
Finance income 40 982 88 395
Finance charges (1 070 225) (1 019 435)
Share of profit of 49 238 121 962
associates
Dividends received 29 298 25 526
Share of current year 19 940 96 436
earnings
Profit before taxation 3 954 623 4 534 829 (12,8)
Taxation (1 046 344) (1 199 960)
Profit for the year 2 908 279 3 334 869 (12,8)
Attributable to:
Shareholders of the 2 802 386 3 252 884 (13,8)
Company
Minority shareholders 105 893 81 985
2 908 279 3 334 869
Shares in issue
Weighted (`000) 301 462 303 159
Diluted weighted (`000) 303 109 308 075
Basic earnings per share 929,6 1 073,0 (13,4)
(cents)
Diluted basic earnings per 924,5 1 055,9 (12,4)
share (cents)
Headline earnings per share 930,0 1 068,0 (12,9)
(cents)
Diluted headline earnings 924,9 1 051,0 (12,0)
per share (cents)
Distributions per share 380,0 495,0 (23,2)
(cents)*
*Includes distribution from
share premium and
capitalisation shares.
HEADLINE EARNINGS
The following adjustments
to profit attributable to
shareholders were taken
into account in the
calculation of headline
earnings:
Income attributable to 2 802 386 3 252 884 (13,8)
shareholders of the Company
Impairments of property, 34 952 59 639
plant and equipment,
goodwill and intangibles
Property, plant and 16 361 46 969
equipment and intangible
assets
Goodwill 19 910 16 753
Tax relief (1 319) (4 083)
Net loss on disposal of
interests in subsidiaries
and disposal
and closure of businesses 110 770 54 163
Loss on disposal and 138 272 60 480
closure
Tax relief (27 502) (6 317)
Profit on disposal, and (181 709) -
impairment of investments
in associates
Net profit on disposal of (391 138) -
associates
Impairment of investments 200 000 -
in associate
Tax relief 9 429 -
Net (profit) loss on
disposal of property, plant
and equipment
and intangible assets 37 561 (42 419)
Property, plant and 54 685 (46 789)
equipment
Intangible assets - 42
Tax charge (relief) (17 124) 4 328
Negative goodwill (389) (86 463)
recognised in profit
Arising on acquisition of (389) (86 496)
subsidiaries
Minority shareholders - 33
Headline earnings 2 803 571 3 237 804 (13,4)
Rand/Sterling exchange
rates
Opening rate 15,89 14,18
Closing rate 13,02 15,89
Average rate 14,47 14,64
Consolidated cash flow statement
for the year ended June 30
R`000 2009 2008
Cash flows from operating activities
Operating profit (including dividends 4 963 926 5 369 433
from associates)
Depreciation and other non-cash items 1 915 734 1 447 560
Cash generated by operations before 6 879 660 6 816 993
changes in working capital
Changes in working capital (130 792) (730 298)
Cash generated by operations 6 748 868 6 086 695
Net finance charges paid (1 024 829) (1 251 891)
Taxation paid (1 223 496) (1 166 305)
Distributions paid by Company (1 144 096) (761 148)
Dividends to minorities (33 863) (22 995)
3 322 584 2 884 356
Cash flows from investing activities
Net additions to vehicle rental fleet (157 177) (215 948)
Net additions to property, plant and (1 960 676) (2 327 351)
equipment
Net additions to intangible assets (182 635) (228 525)
Net acquisition (disposal) of 438 182 (1 290 245)
subsidiaries, businesses, associates and
investments
(1 862 306) (4 062 069)
Cash flows from financing activities
Proceeds from shares issued 51 116 47 972
Net purchase of treasury shares (6 371) (560 435)
Net borrowings (repaid) raised (322 868) 1 180 666
(278 123) 668 203
Net increase (decrease) in cash and cash 1 182 155 (509 510)
equivalents
Net cash and cash equivalents at the 308 554 616 465
beginning of the year
Currency adjustments (251 171) 201 599
Net cash and cash equivalents at the end 1 239 538 308 554
of the year
Net cash equivalents are made up as
follows:
Cash on hand and in the bank 3 212 425 3 038 618
Bank overdrafts included in short-term (1 972 887) (2 730 064)
borrowings
1 239 538 308 554
Consolidated balance sheet
at June 30
R`000 2009 2008
ASSETS
Non-current assets 16 119 562 17 250 060
Property, plant and equipment 9 409 702 9 556 529
Intangible assets 512 286 486 472
Goodwill 3 966 950 4 556 137
Deferred taxation asset 378 603 397 297
Defined benefit pension surplus 120 985 120 983
Interest in associates 449 889 972 038
Investments 908 884 782 371
Banking and other advances 372 263 378 233
Current assets 22 364 822 24 611 325
Vehicle rental fleet 684 205 654 252
Inventories 7 443 252 8 389 646
Short-term portion of banking and other 279 862 244 688
advances
Trade and other receivables 10 745 078 12 284 121
Cash and cash equivalents 3 212 425 3 038 618
Total assets 38 484 384 41 861 385
EQUITY AND LIABILITIES
Capital and reserves 14 297 627 13 778 085
Attributable to shareholders of the 13 929 132 13 467 629
Company
?Minority shareholders 368 495 310 456
Non-current liabilities 4 155 520 4 680 474
Deferred taxation liability 255 402 220 993
Life assurance fund 20 672 33 478
Long-term portion of borrowings 2 990 232 3 546 908
Post-retirement obligations 460 803 477 286
Long-term portion of provisions 218 972 218 152
Long-term portion of operating lease 209 439 183 657
liabilities
Current liabilities 20 031 237 23 402 826
Trade and other payables 14 570 716 17 200 173
Short-term portion of provisions 297 080 290 397
Vendors for acquisition 15 629 6 127
Taxation 262 080 511 427
Short-term portion of banking 591 200 356 130
liabilities
Short-term portion of borrowings 4 294 532 5 038 572
Total equity and liabilities 38 484 384 41 861 385
Number of shares in issue (net of 304 995 300 575
treasury shares) (`000)
Net tangible asset value per share 3 098 2 803
(cents)
Net asset value per share (cents) 4 567 4 481
Consolidated statement of changes in equity
for the year ended June 30
R`000 2009 2008
Capital and reserves attributable to
shareholders of the Company
Issued share capital 15 249 15 029
- balance at the beginning of the year 15 029 15 143
- in terms of the share incentive 56 54
scheme
- capitalisation issue 166 -
- net movement in treasury shares (2) (168)
Share premium arising on shares issued (2 251 264) (1 456 154)
- balance at the beginning of the year (1 456 154) (182 657)
- in terms of the share incentive 51 060 47 918
scheme
- cash issue - -
- capitalisation issue (166) -
- refund of share premium to (839 525) (761 148)
shareholders
- net movement in treasury shares (6 371) (560 267)
- share issue costs (108) -
Foreign currency translation reserve 691 746 1 968 975
- balance at the beginning of the year 1 968 975 1 158 151
- realised on disposal of subsidiary - 25
- arising during the year (1 277 229) 810 799
Statutory reserves 13 033 13 049
- balance at the beginning of the year 13 049 16 691
- transfer to retained income (16) (3 642)
Equity settled share based payment 253 936 220 559
reserve
- balance at the beginning of the year 220 559 165 664
- arising during the year 33 377 54 895
Movement in retained earnings 15 206 432 12 706 171
- balance at the beginning of the year 12 706 171 9 453 517
- profit attributable to shareholders 2 802 386 3 252 884
- dividends paid (304 569) -
- change in fair value of available-for- 2 428 (3 872)
sale equity securities
- transfer from statutory reserves 16 3 642
13 929 132 13 467 629
Segmental analysis
for the year ended June 30
Percentage
R`000 2009 2008 change
REVENUE
Bidfreight 18 647 915 21 992 703 (15,2)
Bidserv 7 267 867 6 424 538 13,1
Bidvest Europe 36 984 511 33 683 788 9,8
Bidvest Asia Pacific 17 067 597 14 467 388 18,0
Bidfood 4 952 905 4 418 919 12,1
Caterplus and Speciality 3 237 101 2 925 383 10,7
Bidfood Ingredients 1 715 804 1 493 536 14,9
Bid Industrial and 9 290 941 9 403 025 (1,2)
Commercial Products
Bidpaper Plus 1 933 415 1 937 393 (0,2)
Bid Auto 16 464 297 18 467 468 (10,8)
Bidvest Namibia 1 616 381 1 377 328 17,4
Corporate 727 033 993 501 (26,8)
Ontime Automotive 703 855 973 259 (27,7)
Investment and other 23 178 20 242 14,5
income
114 952 862 113 166 051 1,6
Intergroup eliminations (2 525 031) (2 688 500)
112 427 831 110 477 551 1,8
TRADING PROFIT
Bidfreight 768 052 690 813 11,2
Bidserv 933 882 838 659 11,4
Bidvest Europe 769 997 879 844 (12,5)
Bidvest Asia Pacific 602 533 551 403 9,3
Bidfood 384 254 358 792 7,1
Caterplus and Speciality 232 151 214 290 8,3
Bidfood Ingredients 152 103 144 502 5,3
Bid Industrial and 592 702 790 140 (25,0)
Commercial Products
Bidpaper Plus 222 846 220 192 1,2
Bid Auto 502 926 742 994 (32,3)
Bidvest Namibia 294 341 164 002 79,5
Corporate 65 036 98 027 (33,7)
Bidprop 144 602 98 650 46,6
Ontime Automotive (49 816) (21 591) -
Investment, other income (29 750) 20 968 -
and corporate costs
5 136 569 5 334 866 (3,7)
Comment
Respectable trading results were delivered for the year ended June 30?2009 in
extremely tough economic conditions. Headline earnings per share declined by
12,9% to 930,0 cents per share and basic earnings per share declined by 13,4%
to 929,6 cents per share. The decline in headline earnings is in part due to
the expensing of R118,3 million in closure and reorganisation costs in
certain operations within motor retail, the UK foodservice and Ontime
Automotive businesses as well as the impact of higher interest rates in the
first half of the year.
Decisive action was taken to put the Group in a stronger position at a time
of uncertainty and worldwide economic recession. Difficult times provide
opportunities and Bidvest is alert to the potential this offers.
Trading profit reflects resilient contributions from Bidfreight, Bidserv,
Bidvest Asia Pacific and the South African food businesses. Bidvest Namibia
performed exceptionally well. Areas of under-performance were principally in
3663 and Ontime Automotive in the UK, Bid Industrial and Commercial Products
and Bid Auto. Despite slightly lower trading profits, cash generated by
operations remained strong at R6,8 billion, an increase of 10,9%.
3663`s performance declined markedly as the severity of the recession in the
UK impacted consumer confidence and compounded weaker trading, necessitating
the closure and reorganisation of certain operations. The rand traded at an
average of R14,47 (2008: R14,64) against sterling, marginally impacting
translation of our foreign earnings.
Bid Industrial and Commercial Products was impacted by volatile metal prices
and ensuing inventory impairments and weak consumer demand in the furniture
sector.
Bid Auto`s poor trading performance can largely be attributed to the high
interest rate environment, a sharp decrease in consumer spending and
consumers` inability to obtain vehicle finance.
Working capital management improved across the Group, and remains an area of
critical focus in an environment of heightened debtor delinquencies. In view
of the current economic climate, capital and operational expenditure was
strictly controlled in all operations. Tightening controls to improve returns
on funds employed remains management`s number one priority.
Financial overview
Revenue grew 1,8% to R112,4 billion (2008: R110,5 billion). Growth was
constrained by the slowdown in the low-margin operations of Bid Auto and
Bidfreight`s Safcor Panalpina, yet many other operations reflected market-
share gains.
The trading margin was slightly down at 4,6% (2008: 4,8%), reflecting the
drop in performances at 3663, Ontime Automotive, Bid Industrial and
Commercial Products and Bid Auto.
Our balance sheet remains strong and is appropriately capitalised. Key focus
areas remain the delivery of adequate returns on recent infrastructure
investments in the medium term and the aggressive management of costs and
working capital.
Net debt declined to R4,1 billion (2008: R5,6 billion) driven by the lower
working capital demands and tighter asset management. Interest cover at 5,0
times reflects adequate borrowing capacity. Net debt to equity at 28,5%
reflects a significant improvement on the prior year`s 40,3%. Net finance
charges increased 10,5% to R1 029,2 million, reflecting higher average
interest rates. Net interest paid declined significantly in the last quarter
as the Group benefited from short-term funding exposure. Bidvest`s
conservative attitude to debt remains appropriate in the current climate.
Divisional review
Bidfreight
Bidfreight put in a strong performance. Trading profit increased 11,2% to
R768,1 million (2008: R690,8 million). Revenue was R18,6 billion (2008: R22,0
billion).
Energetic cost-cutting and efforts to broaden the customer-base enabled
momentum to be maintained, despite significant volume pressures in the middle
part of the financial year. The lower volumes of containerised cargo were
generally offset by good volumes of basic commodities. Work has begun on a
R150,0 million Cape Town containerised cargo facilities project and a R250,0
million expansion for Island View Storage at Richards Bay.
Island View Storage performed extremely well as a result of increased
capacity usage. Safcor Panalpina was impacted by lower import volumes
compounded by the strengthening exchange rate and a lower interest rate
environment.
Higher volumes took South African Bulk Terminals comfortably ahead of profit
projections. SACD was impacted by lower imports and exports. Marine had a
good year while Bidfreight Port Operations showed resilience in the face of
lower export business. Bulk Connections had a challenging year, but benefited
from a good fourth quarter.
Rennies Distribution Services had a difficult year. Two Cape Town facilities
were closed while the Maydon Wharf and Super T facilities were consolidated.
Manica did well under difficult economic conditions.
Bidfreight expects bulk volumes to show some growth. However, containerised
cargo, airfreight and local distribution volumes will remain weak.
Bidserv
Bidserv could not maintain first-half momentum, though full-year results were
reasonably good in deteriorating conditions. Trading profit rose 11,4% to
R933,9 million (2008: R838,7 million), with revenue up 13,1% to R7,3 billion.
Businesses remained cash-generative following a major effort to improve
efficiencies and optimise asset management.
Prestige put in an excellent performance as cleaning contracts remain
resilient in the downturn. TMS Industrial Services launched operations in
Saudi Arabia as falling South African demand highlighted the need for broader
reach.
Loss of some institutional business, pressure on garment rental and low hotel
occupancies impacted Laundry Services. However, a reasonable result was
achieved. At Steiner nine divisional operations were consolidated into four
and a new managing director appointed. Steiner is expected to return to
normal levels of profitability in the year ahead.
Industrial Products put in a good performance and Green Services, now
comprising TopTurf, Execuflora, Pureau Fresh Water Company and Hotel
Amenities Suppliers, achieved acceptable growth.
The full-year effect of the "super licence" award drove growth at Bidair,
though results were below expectation. Certain airlines cut flight
frequencies and price wars impacted margins.
Bidrisk Solutions performed well and Magnum Security showed a significant
improvement, growing market share. Product innovation at Global Payment
Technologies contributed to an exceptional year.At Office Automation, Konica
Minolta and Oce faced sustained pressure in the face of declining corporate
spend and sharply fluctuating exchange rates.
The fully automated Bidserv travel booking engine was rolled out by
mymarket.com to strong take-up by Bidtravel`s corporate clients. Travel
businesses were repositioned as travel management companies in a challenging
year. Some retrenchments could not be avoided.
Banking Services excelled, driven by product innovation and expansion of the
national footprint ahead of the 2010 World Cup.
Corrective action to right-size certain businesses will benefit Bidserv in
the year ahead. However, the leisure and hospitality sectors remain weak. The
anticipated increase in activity related to 2010 World Cup will benefit the
division.
Bidvest Europe
Performance was mixed. Trading profit fell 12,5% to R770,0 million (2008:
R879,9 million) while revenue moved 9,8% higher to R37,0 billion (2008: R33,7
billion). Economic conditions in the UK seem to have stabilised. However,
none of the Euro-zone economies has clarity on the immediate economic path.
Cash flows were maintained through stringent expense and working capital
management and prompt action to rightsize businesses. The Netherlands,
Belgium and UAE businesses produced good revenue and trading profit growth.
3663 in the UK recorded increased revenues. However, trading profits were
significantly down.
At 3663, efficiency was key and six wholesale division depots were closed.
Wholesale revenue was flat as institutional growth offset the decline in the
independent sector. Excellent cost control was achieved. Logistics was
impacted by warehousing and distribution operational difficulties and volume
declines, resulting in a trading loss for the year. Several projects to
improve efficiencies have been implemented. Roll-out of the Genesis IT system
was delayed.
At Deli XL Netherlands a strong first-half performance culminated in a record
Christmas season, but results fell away as recession took hold. Targeted
acquisitions continued. Growth in catering volumes were negated by the major
decline in hospitality volumes. The institutional market remains under
pressure in terms of both revenue and margins. Deli XL Belgium put in a
strong performance despite the impacts of the recession. Continuing demand
from core customers was beneficial, as was limited hospitality sector
exposure.
Horeca Trade compensated for falling volumes in the core Dubai market through
range extension. Further gains were made in Abu Dhabi and the business
expanded into Saudi Arabia.
Benelux businesses have been strengthened in anticipation of challenging
conditions in 2010 while sales and earnings growth is expected in the core UK
market.
Bidvest Asia Pacific
Bidvest Asia Pacific did remarkably well in challenging conditions. Revenue
rose 18,0% to R17,1 billion (2008: R14,5 billion) while trading profit
increased 9,3% to R602,5 million (2008: R551,4 million). Cash flows remained
robust, costs were well controlled and inventories well managed, though a
major correction to commodity prices significantly impacted Singapore`s
trading result. Australian and New Zealand businesses continued to benefit
from the growth in online ordering.
Australia performed strongly, growing profitability by 18,3% in local
currency despite consumer down-trading. Cash flows benefited from tight
working capital management. Foodservice increased trading profit despite
increasingly challenging conditions, achieving record margins primarily
through expense control. QSR benefited from contract gains as well as volume
increases from customers.
In New Zealand, rebranding as Bidvest proved highly successful. All New
Zealand divisions performed well in ongoing recessionary conditions and
remain strongly cash generative, with operating profit increasing by 17,0%.
Development of a South Island distribution hub in Christchurch proceeded as
planned.
Angliss Hong Kong and China equalled last year`s trading profits in adverse
market conditions. On the Chinese mainland we now have operations in Beijing,
Shanghai, Guangzhou and Shenzhen. Operations have begun in Macau, albeit
slowly. Angliss Singapore had a poor trading result - a 90,0% decline in
profitability on the back of inventory write-downs arising out of weak frozen
poultry prices, volatile exchange rates, and a greenfields entry into the
Malaysian market with the opening of a business in Kuala Lumpur. Early action
enabled sales volumes to be maintained and the business rebounded strongly in
the fourth quarter.
Operations in all geographies have been strengthened to ensure future growth
in revenue, margin enhancement and operational efficiencies.
Bidfood
Caterplus and Speciality achieved pleasing results. Trading profit rose 8,3%
to R232,2 million (2008: R214,3 million) while revenue moved 10,7% higher to
R3,2 billion (2008: R2,9 billion).
Caterplus operations remained cash-generative thanks to continued focus on
working capital management and efficiency improvements. In the Eastern Cape,
two operations were merged into one while in the Western Cape three units
were merged into two.
Volumes fell as the economy contracted and restaurant failures mounted.
Credit management and responsible trading became key. Hotel occupancies
remained under pressure. For industrial caterers, the return of the lunchbox
impacted foot-traffic and spend per head.
Caterplus widened the range of house brands and increased the average value
per drop by growing the basket into each customer. This enabled Caterplus to
grow market share and maintain operating margin despite shrinking gross
margin by delivering efficiencies through the distribution channel.
Speciality`s revenue increased by 8,9% to R547,8 million while trading profit
dropped 13,2% to R30,0 million. Inventory control and margin management were
complicated by price volatility arising from foreign exchange and commodity
price movements. Upper LSM groups - Speciality`s core customers - traded down
as they were affected by the credit crunch. Margin erosion was substantial as
price sensitivity rose.
Relationships with international brand principals were strengthened as
Speciality`s provided leading edge data mining capabilities.
Efforts were stepped up to ensure high on-shelf visibility and optimum in-
store space. Expansion by servicing the convenience store market is being
pursued.
Bidfood Ingredients was affected by higher debt provisions, but returned a
satisfactory trading profit of R152,1 million (2008: R144,5 million), an
increase of 5,3% despite customer de-stocking in a slowing economy. The
strengthening of the rand and deflation experienced in certain product lines
had an adverse impact on profitability, particularly during the last quarter.
Revenue was up 14,9% at R1,7 billion (2008: R1,5 billion) and cash flows
remained strong.
A new division, Bidfood Solutions, was created to exploit opportunities in
the general foods sector. NCP had to contend with abnormal input price
increases and margin pressure as a result of the molasses shortage.
Momentum following the turnaround in the bakery ingredients business was
maintained. Product innovation also supported growth by Chipkins` Bakery
Supplies. Crown National strengthened its technical and innovations resource
base, the results of which will continue to be seen in the new financial
year. Growth prospects are encouraging.
Bid Industrial and Commercial Products
The division had a difficult year. Revenue eased 1,2% to R9,3 billion (2008:
R9,4 billion). Trading profitfell 25,0% to R592,7 million (2008: R790,1
million).
Businesses focused on improving working capital management, which resulted in
a significant improvement in cash-generation. Capital and operational
expenditure was strictly controlled. Demand was depressed in both the
business-to-business and business-to-consumer environments. Lower inflation
and massive metals price deflation necessitated de-stocking.
Voltex was impacted by falling metal prices and fluctuating exchange rates.
Write-downs on copper-related products ensued. Pressure on the mining and
construction sectors was also negative for the business.
Notwithstanding low consumer spending and tight expense management by
customers, Waltons delivered solid results. Kolok did well to maintain first-
half momentum, growing significantly. CN Business Furniture was severely
affected by falling demand and Dauphin was impacted by a sluggish project
market. Seating implemented short-time working.
Afcom`s packaging closures business put in a satisfactory performance despite
deflation, which impacted margins. A manufacturing sector in survival mode
impacted Buffalo Executape. Production efficiencies bolstered performance at
Vulcan Catering Supplies.
Optiplan, a specialist in paper-based information management systems, was
acquired and will form the core of a new Waltons filing division. The
remaining 24,0% stake in Versalec, a Gauteng cable distributor, was
purchased.
Looking ahead, gradual improvements in trading conditions are expected. A
rising copper price may create opportunities. New products for an era of
higher electricity prices are in development.
Bidpaper Plus
The division put in a creditable performance in adverse conditions, with
revenue flat at R1,9 billion (2008: R1,9 billion). Actual volumes were static
while trading profit was marginally higher at R222,8 million (2008: R220,2
million). Expenses were well managed and businesses remained strongly cash-
generative. Customer de-stocking set in during the third quarter and
resultant reduced demand in certain sectors became a major challenge. Steeply
rising input costs during the second and third quarters placed pressure on
margins in a competitive environment. Export efforts were stepped upin the
realm of African election support. Despite these successes, falling
manufacturing output in South Africa, reduced spending by retailers and
shrinking marketing budgets impacted the division.
A number of small structural changes were made during the year. Management
will continue to match capacity to market demands. In the coming year, the
2010 World Cup effect will be positive for several businesses. The division
is well placed to optimise any upturn.
Bid Auto
Bid Auto had to contend with extremely tough trading conditions in the motor
industry which resulted in a decline in trading profit of 32,3% to R502,9
million (2008: R743,0 million) while revenue declined from R18,5 billion to
R16,5 billion. Positive cash flow, though lower, was assured by rigorous
working capital management and early action to reduce asset levels in line
with lower sales. Returns were affected by restructure costs following the
reduction in the number of motor retail outlets from 140 to 120. Inventory
levels declined by R400,0 million.
The new vehicle market faced growing pressure. A swing to used vehicles
occurred and the McCarthy business optimised its position as South Africa`s
leading national used-vehicle brand, resulting in record sales. Service
business and parts sales increased.
Successful integration of the Viamax acquisition was confirmed as McCarthy
Fleet Solutions emerged as top profit-contributor. The McCarthy Insurance
equity portfolio was negatively impacted by the corrections to the JSE. Lower
vehicle sales and increased bad debt write-offs impacted McCarthy Finance.
A materials handling division was added to the heavy equipment business.
Vehicle import and distribution losses prompted a strategic review. A joint
venture was formed with Imperial Group to handle the import and distribution
of the Chery and Foton marques.
Bid Auto will be restructured into a more focused and decentralised
automotive business with its ancillary services including Insurance, a
leasing and financing arm and an import and distribution business. These
changes will cater for succession as well as position the constituent
segments for further expansion. Acquisition opportunities will be
aggressively pursued.
Bidvest Namibia
The division put in a strong performance ahead of its planned listing, with
revenue growth of 17,4% to R1,6 billion (2008: R1,4 billion). Trading profit
rose to R294,3 million (2008: R164,0 million). Excellent horse mackerel
catches helped trading profit to record levels at Namfish. The pilchard
canning factory reopened in April. Investment into the Angolan inshore
fishing trade will not yield returns for another year. At Bidcom, some teams
doubled trading profit. Positives included demand for freight and logistic
solutions, growth in ship and rig repairs and demand from mining industry.
Infrastructure projects and an increase of Angolan customers all widened
Bidcom`s footprint.
Corporate
Corporate continued to explore sports opportunities. A procurement contract
with MATCH Hospitality and MATCH Services made Bidvest the preferred supplier
to the biggest World Cup service provider. Bidvest Wits helped drive
increasing brand awareness. The Group bought 50,0% of a sports marketing
company now repositioned as Bidsport.
Challenging conditions confirmed the quality of Bidvest`s property portfolio.
A R100,0 million joint venture development was completed in Cape Town. At
Ontime Automotive in the UK, the loss-making volume vehicle distribution
business was closed, as was Technical Services. Specialist Transport
Operations and Prestige Vehicle Distribution were consolidated while Ontime
Rescue and Recovery and Ontime Parking Solutions were merged.
The associate investment in Enviroserv Holdings Limited was sold with effect
from November 3?2008 for a pretax profit of R391,8 million. The value of the
Group`s listed equity accounted investments were impaired by a pre-tax R200,0
million in terms of IFRS listed market value requirements.
Prospects
The challenging economic conditions created by the fallout from the global
financial crisis appear to be abating. However, the speed of recovery remains
uncertain. The Group`s decentralised business model has proven resilient at a
time when others appear to be faltering. Our divisions continue to optimise
opportunities across various geographies and industries while remaining
focused on the basic deliverables.
Our balance sheet remains strong, our gearing remains conservative and we
have the capacity to seek out further strategic acquisition opportunities.
The benefits of improved cash flow generation and a lower interest rate
environment are expected to lower finance charges going forward.
Our focus remains on delivering the basics that have built up the Group over
many years. In the medium term, the goal is to increase incremental returns
from recent investments. The current environment is an opportunity to
strengthen our skills base as human capital seeks strength and stability in a
volatile market.
The recent Confederations Cup has demonstrated the potential that South
Africa can derive from an event like the 2010 World Cup. Our plans are
gaining momentum. Bidvest continues to position itself to take advantage of
such opportunities, many of which have already been contracted.
The UK economy appears to have stabilised, though Benelux is expected to
continue to slow. The tough decisions taken by the UK businesses were
necessary and we are optimistic the rationalisation programme undertaken will
yield improved results.
We are confident our Australian and New Zealand businesses will entrench
their leading market positions and are well placed for further expansion
through market-share gains, growth in revenue, margin enhancement and
improved operational efficiencies. Our established bases in Hong Kong and
Singapore continue to evolve and remain the springboard to growth in other
geographies in the region.
Both new and used vehicle sales should benefit from higher levels of business
and consumer confidence, as well as the lower interest rate environment.
We remain committed to sustained value creation through superior trading
performance and returns improvement, while maintaining a prudent capital
structure with appropriate leverage.
Acquisition of the Nowaco Group
On August 3?2009, Bidvest announced that it had entered into an agreement, in
terms of which it will acquire the Nowaco Group subject to the receipt of
European Union competition clearance. The Nowaco Group comprises Nowaco,
which focuses on the Czech Republic and Slovakia and Farutex which serves the
Polish market. The Nowaco Group is the leading delivered wholesaler to the
foodservice and independent retail markets in Central and Eastern Europe. The
acquisition of the Nowaco Group will complement the existing international
foodservice business of Bidvest in the UK and Europe, Middle East, Australia,
New Zealand and Asia. Central and Eastern Europe represents a strategic
market with growth opportunities.
Bidvest will purchase the Nowaco group for an enterprise value consideration
of Euro250,0 million, cash and debt free. The acquisition will be funded with
an equal mix of debt and equity. To date, a significant portion of the equity
has already been raised by placing Bidvest shares in the market. Completion
is expected early in October 2009.
Appreciation
The directors and management of Bidvest wish to thank all staff for their
focused efforts and loyalty over these challenging times.
For and on behalf of the board
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
190,0 (2008: 275,0) 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, November 27?2009.
The salient dates applicable to the cash distribution are as follows:
Last day to trade cum distribution: Friday, 20 November
2009
First day to trade ex distribution: Monday, 23 November
2009
Record date: Friday, 27 November
2009
Payment date: Monday, 30 November
2009
Share certificates may not be rematerialised or dematerialised during the
period Monday, November 23?2009 to Friday, November 27?2009, both days
inclusive.
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.
The decline in the distribution is a result of lower earnings, increased
distribution cover and the pending Nowaco acquisition.
For and on behalf of the board
CA Brighten
Company secretary
Johannesburg
August 29?2009
Directors
Chairman: MC Ramaphosa
Independent non-executive: DDB Band, LG Boyle*, S Koseff, NP Mageza, D
Masson, JL Pamensky, NG Payne, Adv FDP Tlakula
Non-executive: 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
CA Brighten
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.
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. The accounting policies are consistent with those of the
prior year.
Capital commitments
R`000 2009 2008
Contracted for 745 704 477 928
Not contracted for 252 231 445 853
997 935 923 781
Audit report
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended June 30?2009. The audit was conducted
in accordance with International Standards on Auditing. They have issued an
unmodified audit opinion. A copy of their audit report is available for
inspection at the Company`s registered office. These summarised financial
statements have been derived from the Group financial statements and are
consistent in all material respects, with the Group financial
statements.Analyst presentationThe presentation to investors will be
available on the Bidvest website from 10:00 on Monday, August 31?2009.
Further information regarding our financial results can be found on the
Bidvest website: www.bidvest.com
31 August 2009
Sponsor: Investec Bank Limited
Date: 31/08/2009 07:05:02 Produced by the JSE SENS Department.
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