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BVT
BVT
BVT - The Bidvest Group Limited - Results for the half year ended December
31?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
Results for the half year ended December 31?2009
Revenue
R56,1bn
-6,5%
Trading profit
R2,6bn
+0,1%
Headline earnings per share
495,0 cents
+9,0%
Cash generated by operations
R3,0bn
+229,7%
Distribution per share
207,0 cents
+9,0%
Consolidated income statement
for the Half year ended Year ended
December 31 June 30
2009 2008 Percent 2007 2009
age
R`000 Unaudited Unaudited change Unaudited Audited
Revenue 56 113 097 59 990 887 (6,5) 53 884 531 112 427 831
Cost of (44 610 (48 238 (43 711 (89 482 780)
revenue 298) 631) 260)
Gross income 11 502 799 11 752 256 (2,1) 10 173 271 22 945 051
Other income 180 418 181 066 197 842 198 815
Operating (9 066 804) (9 318 599) (7 913 027) (18 007 297)
expenses
Sales and (6 182 358) (6 205 722) (5 223 674) (12 726 832)
distribution
costs
Administrati (2 043 773) (2 237 292) (1 993 116) (3 955 068)
on expenses
Other costs (840 673) (875 585) (696 237) (1 325 397)
Trading 2 616 413 2 614 723 0,1 2 458 086 5 136 569
profit
Acquisition (53 416) - - -
costs
Non-trading - (165 338) - (164 240)
items
Net capital (10 450) 209 357 (46 544) (37 701)
items
Operating 2 552 547 2 658 742 (4,0) 2 411 542 4 934 628
profit
Net finance (385 599) (562 891) (445 468) (1 029 243)
charges
Finance 36 323 58 222 49 311 40 982
income
Finance (421 922) (621 113) (494 779) (1 070 225)
charges
Share of 26 383 29 320 59 081 49 238
profit of
associates
Dividends 16 697 26 238 24 388 29 298
received
Share of 9 686 3 082 34 693 19 940
current year
earnings
Profit 2 193 331 2 125 171 3,2 2 025 155 3 954 623
before
taxation
Taxation (597 135) (477 456) (525 576) (1 046 344)
Profit for 1 596 196 1 647 715 (3,1) 1 499 579 2 908 279
the period
Attributable
to:
Shareholders 1 543 407 1 594 074 (3,2) 1 480 024 2 802 386
of the
Company
Minority 52 789 53 641 19 555 105 893
shareholders
1 596 196 1 647 715 (3,1) 1 499 579 2 908 279
Shares in
issue
Weighted 312 213 300 514 303 283 301 462
(`000)
Diluted 314 675 302 932 310 195 303 109
weighted
(`000)
Basic 494,3 530,4 (6,8) 488,0 929,6
earnings per
share
(cents)
Diluted 490,5 526,2 (6,8) 477,1 924,5
basic
earnings per
share
(cents)
Headline 495,0 454,0 9,0 498,1 930,0
earnings per
share
(cents)
Diluted 491,1 450,3 9,0 487,0 924,9
headline
earnings per
share
(cents)
Distribution 207,0 190,0 9,0 220,0 380,0
per share
(cents)*
HEADLINE
EARNINGS
The
following
adjustments
to profit
attributable
to
shareholders
were taken
into account
in the
calculation
of headline
earnings:
Profit 1 543 407 1 594 074 (3,2) 1 480 024 2 802 386
attributable
to
shareholders
of the
Company
Impairment 7 009 61 989 - 34 952
of property,
plant and
equipment,
goodwill and
intangibles
Property, 9 304 73 901 - 16 361
plant and
equipment
Goodwill - 6 204 - 19 910
Intangible 310 - - -
assets
Tax relief (2 605) (18 116) - (1 319)
Net loss on
disposal of
interests in
subsidiaries
and disposal
and closure
of 5 636 70 616 50 829 110 770
businesses
Loss on 5 636 98 079 73 327 138 272
disposal and
closure
Tax relief - (27 463) (22 498) (27 502)
Profit on (25 900) (366 633) (16 782) (181 709)
disposal,
and
impairment
of
investments
in
associates
Impairment (25 900) - - 200 000
(reversal of
impairment)
of
investments
in associate
Net profit - (391 751) (23 308) (391 138)
on disposal
of
associates
?Tax charge - 25 118 6 526 9 429
Net loss 15 192 4 227 (3 475) 37 561
(profit) on
disposal of
property,
plant and
equipment
and
intangibles
Property, 21 100 4 227 (3 475) 54 685
plant and
equipment
Tax relief (5 908) - - (17 124)
Negative - (17) - (389)
goodwill
recognised
in profit
Headline 1 545 344 1 364 256 13,3 1 510 596 2 803 571
earnings
Exchange
rates
The
following
exchange
rates were
used in the
conversion
of foreign
interests
and foreign
transactions
during the
periods:
Rand/Sterlin
g
Closing 11,81 13,70 13,69 15,89
rate
Average 12,57 15,21 14,14 14,64
rate
Rand/Euro
Closing 10,62 13,33 10,04 11,05
rate
Average 11,15 12,42 9,80 12,35
rate
Rand/Austral
ian dollar
Closing 6,62 6,54 6,01 6,34
rate
Average 6,67 6,81 6,04 6,67
rate
Consolidated statement of recognised income and expenses
Half year ended Year ended
December 31 June 30
2009 2008 2007 2009
R000s Unaudited Unaudited Unaudited Audited
Profit for the period 1 596 196 1 647 715 1 499 579 2 908 279
Net expense recognised (369 256) (1 037 527) (150 125) (1 279 408)
directly in equity
Decrease in foreign (371 375) (1 041 837) (149 888) (1 281 836)
currency translation
reserve
Increase (decrease) in 2 119 4 310 (237) 2 428
fair value of
available-for-sale
financial assets
Total recognised 1 226 940 610 188 1 349 454 1 628 871
income and expenses
for the period
Attributable to:
Shareholders of the 1 180 394 554 073 1 328 767 1 527 585
Company
Minority shareholders 46 546 56 115 20 687 101 286
1 226 940 607 714 1 349 454 1 628 871
Segmental analysis
for the Half year ended Year ended
December 31 June 30
2009 2008 Percentage 2007 2009
R`000 Unaudited Unaudited change Unaudited Audited
REVENUE
Bidfreight 8 005 679 10 729 253 (25,4) 10 580 870 18 647 915
Bidserv 3 518 872 3 644 707 (3,5) 2 955 021 7 267 867
Bidvest 18 860 467 19 329 869 (2,4) 16 007 122 36 984 511
Europe
Bidvest Asia 8 912 682 8 790 206 1,4 6 575 119 17 067 597
Pacific
Bidfood 2 588 821 2 650 759 (2,3) 2 195 275 4 952 905
Caterplus 1 671 474 1 705 122 (2,0) 1 478 667 3 237 101
and
Speciality
Bidfood 917 347 945 637 (3,0) 716 608 1 715 804
Ingredients
Bid 4 334 998 4 969 103 (12,8) 4 594 101 9 290 941
Industrial
and
Commercial
Products
Bidpaper 1 131 108 1 167 584 (3,1) 1 020 377 1 933 415
Plus
Bid Auto 8 709 934 8 822 511 (1,3) 9 989 525 16 464 297
Bidvest 949 384 860 399 10,3 568 952 1 616 381
Namibia
Corporate 223 268 458 587 (51,3) 494 483 727 033
Ontime 214 942 450 397 (52,3) 489 923 703 855
Automotive
Investment 8 326 8 190 1,7 4 560 23 178
and other
income
57 235 213 61 422 978 (6,8) 54 980 845 114 952 862
Intergroup (1 122 (1 432 (1 096 314) (2 525 031)
eliminations 116) 091)
56 113 097 59 990 887 (6,5) 53 884 531 112 427 831
TRADING
PROFIT
Bidfreight 375 651 365 456 2,8 330 874 768 052
Bidserv 385 270 489 401 (21,3) 384 816 933 882
Bidvest 447 123 396 262 12,8 410 379 769 997
Europe
Bidvest Asia 370 915 285 729 29,8 251 300 602 533
Pacific
Bidfood 214 142 217 634 (1,6) 186 138 384 254
Caterplus 112 787 128 594 (12,3) 110 296 232 151
and
Speciality
Bidfood 101 355 89 040 13,8 75 842 152 103
Ingredients
Bid 170 194 324 912 (47,6) 329 500 592 702
Industrial
and
Commercial
Products
Bidpaper 135 913 130 305 4,3 126 591 222 846
Plus
Bid Auto 278 423 214 382 29,9 353 617 502 926
Bidvest 150 015 126 013 19,0 30 009 294 341
Namibia
Corporate 88 767 64 629 37,3 54 862 65 036
Bidprop 90 072 69 491 29,6 54 190 144 602
Ontime (4 154) (19 967) - (10 913) (49 816)
Automotive
Investment, 2 849 15 105 (81,1) 11 585 (29 750)
other income
and corporate
costs
?2 616 413 2 614 723 0,1 2 458 086 5 136 569
Consolidated cash flow statement
for the Half year ended Year ended
December 31 June 30
2009 2008 2007 2009
R`000 Unaudited Unaudited Unaudited Audited
Cash flows from 1 627 867 (1 149 360) (1 178 167) 3 322 584
operating activities
Operating profit 2 569 244 2 684 980 2 435 930 4 963 926
(including dividends
from associates)
Depreciation and 941 028 745 314 703 767 1 744 350
amortisation
Other non-cash items (54 998) (107 985) 39 662 171 384
Cash generated by 3 455 274 3 322 309 3 179 359 6 879 660
operations before
changes in working
capital
Changes in working (431 553) (2 405 069) (2 527 161) (130 792)
capital
Cash generated by 3 023 721 917 240 652 198 6 748 868
operations
Net finance charges (379 615) (562 892) (367 145) (1 024 829)
paid
Taxation paid (405 681) (650 677) (691 432) (1 223 496)
Distributions by - (598 337) (833 646) (761 148) (1 144 096)
Company
- subsidiaries (12 221) (19 385) (10 640) (33 863)
Cash effects of (3 344 728) (906 487) (2 322 441) (1 862 306)
investment activities
Net additions to (250 982) (24 806) (124 055) (157 177)
vehicle rental fleet
Net additions to (1 378 628) (1 058 677) (976 278) (1 960 676)
property, plant and
equipment
Net additions to (49 764) (70 378) (179 652) (182 635)
intangible assets
Net disposal (1 665 354) 247 374 (1 042 456) 438 182
(acquisition) of
subsidiaries,
businesses,
associates and
investments
Cash effects of 2 134 237 1 611 329 3 427 358 (1 035 300)
financing activities
Proceeds from shares 1 084 013 36 131 - 51 116
issued - Company
- subsidiaries 305 480 - - -
Net issue (purchase) (6 173) (49 384) 63 783 (6 371)
of treasury shares
Net borrowings 951 998 182 484 1 713 393 (322 868)
raised (repaid)
Net increase (201 081) 1 442 098 1 650 182 (757 177)
(decrease) in bank
overdrafts
Net increase 417 376 (444 518) (73 250) 424 978
(decrease) in cash
and cash equivalents
Net cash and cash 3 212 425 3 038 618 2 374 442 3 038 618
equivalents at the
beginning of the
period
Exchange rate (165 026) (105 504) (10 603) (251 171)
adjustment
Net cash and cash 3 464 775 2 488 596 2 290 589 3 212 425
equivalents at end of
period
Consolidated statement of financial position
as at December 31 June 30
2009 2008 2007 2009
R`000 Unaudited Unaudited Unaudited Audited
ASSETS
Non-current assets 19 367 912 17 017 052 14 613 196 16 119 562
?Property, plant and 10 465 714 9 632 011 8 175 995 9 409 702
equipment
Intangible assets 656 493 529 638 404 857 512 286
Goodwill 5 673 794 3 996 419 3 912 432 3 966 950
Deferred tax asset 309 094 412 199 396 104 378 603
Defined benefit pension 115 392 120 200 - 120 985
surplus
Interest in associates 579 242 640 862 664 517 449 889
Investments 1 069 888 1 252 468 712 766 908 884
Banking and other 498 295 433 255 346 525 372 263
advances
Current assets 23 044 858 24 754 750 22 234 444 22 364 822
Vehicle rental fleet 858 987 679 058 613 049 684 205
Inventories 7 860 914 8 731 101 7 876 548 7 443 252
Short-term portion of 227 384 438 103 277 764 279 862
banking and other
advances
Trade and other 10 632 798 12 417 892 11 176 494 10 745 078
receivables
Cash and cash 3 464 775 2 488 596 2 290 589 3 212 425
equivalents
Total assets 42 412 770 41 771 802 36 847 640 38 484 384
EQUITY AND LIABILITIES
Capital and reserves 16 356 030 13 538 700 11 538 793 14 297 627
Attributable to 15 733 685 13 192 736 11 287 679 13 929 132
shareholders of the
Company
Minority shareholders 622 345 345 964 251 114 368 495
Non-current liabilities 5 712 260 5 770 660 4 975 618 4 155 520
Deferred tax liability 220 665 204 555 324 263 255 402
Life assurance fund 16 916 26 491 41 127 20 672
Long-term portion of 4 609 758 4 493 441 3 824 403 2 990 232
borrowings
Post-retirement 439 581 496 697 383 574 460 803
obligations
Long-term portion of - 222 6 450 -
banking liabilities
Long-term portion of 211 145 361 377 244 705 218 972
provisions
Long-term portion of 214 195 187 877 151 096 209 439
operating lease
liabilities
Current liabilities 20 344 480 22 462 442 20 333 229 20 031 237
Trade and other payables 14 049 947 15 233 696 13 787 079 14 570 716
Short-term portion of 286 461 437 001 236 917 297 080
provisions
Vendors for acquisition - - 7 049 15 629
Taxation 449 310 302 269 218 249 262 080
Short-term portion of 848 548 590 570 275 013 591 200
banking liabilities
Short-term portion of 4 710 214 5 898 906 5 808 922 4 294 532
borrowings
Total equity and 42 412 770 41 771 802 36 847 640 38 484 384
liabilities
Number of shares in issue 317 196 300 887 304 171 304 995
Net tangible asset value 2 965 2 880 2 292 3 098
per share (cents)
Net asset value per share 4 960 4 385 3 711 4 567
(cents)
Consolidated statement of changes in equity
for the Half year ended Year ended
December 31 June 30
2009 2008 2007 2009
R`000 Unaudited Unaudited Unaudited Audited
Capital and reserves
attributable to
shareholders of the
Company
Issued share capital 15 855 15 044 15 209 15 249
balance at beginning of 15 249 15 029 15 143 15 029
period
shares issued during the 609 40 - 56
period
capitalisation issue - - - 166
net movement in treasury (3) (25) 66 (2)
shares
Share premium arising on (1 722 (2 303 (880 088) (2 251 264)
shares issued 642) 068)
balance at beginning of (2 251 (1 456 (182 657) (1 456 154)
the period 264) 154)
shares issued during the 1 137 071 36 091 - 51 060
period
capitalisation issue - - - (166)
refund of share premium (598 337) (833 646) (761 148) (839 525)
to shareholders
net movement in treasury (6 170) (49 359) 63 717 (6 371)
shares
share issue costs (3 942) - - (108)
Foreign currency 326 614 924 664 1 007 131 691 746
translation reserve
balance at beginning of 691 746 1 968 975 1 158 151 1 968 975
period
realisation of reserve - - -
on disposal of
subsidiaries
arising during the (365 132) (1 044 (151 020) (1 277 229)
current period 311)
Statutory reserves 10 093 7 984 13 398 13 033
balance at beginning of 13 033 13 049 16 691 13 049
period
transfer from (to) (2 940) (5 065) (3 293) (16)
retained earnings
Equity-settled share- 262 838 238 492 195 432 253 936
based payment reserve
balance at beginning of 253 936 220 559 165 664 220 559
period
arising during the 8 902 17 933 29 768 33 377
current period
Movement in retained 16 840 927 14 309 620 10 936 597 15 206 432
earnings
balance at the beginning 15 206 432 12 706 171 9 453 517 12 706 171
of the period
attributable profit 1 543 407 1 594 074 1 480 024 2 802 386
change in fair value of 2 119 4 310 (237) 2 428
available-for-sale
financial assets
dividends paid - - - (304 569)
transfer of reserves as 86 029 - - -
a result of changes in
shareholding of
subsidiaries
transfer from statutory 2 940 5 065 3 293 16
reserves
15 733 685 13 192 736 11 287 679 13 929 132
Capital and reserves 368 495 310 456 198 457 310 456
attributable to minority
shareholders balance at
beginning of period
attributable profit 52 789 53 641 19 555 105 893
dividends paid (12 221) (19 385) (10 640) (33 863)
movement in foreign (6 243) 2 474 1 132 (4 607)
currency translation
reserve
movement in equity- 74 34 73 60
settled share-based
payment reserve
issue of shares in 305 480 - - -
subsidiaries
transfer of reserves as (86 029) (1 256) 42 537 (9 444)
a result of changes in
shareholding of
subsidiaries
? 622 345 345 964 251 114 368 495
Total equity 16 356 030 13 538 700 11 538 793 14 297 627
Comment
Commendable results were delivered for the half year ended December 31?2009 in
generally tough economic conditions. Headline earnings per share (HEPS)
increased by 9,0% to 495,0 cents per share. However, basic earnings per share
declined by 6,8% to 494,3 cents per share as a result of the inclusion of net
capital profits of R209,4 million in the comparative interim period. The results
includes those of the acquired Nowaco group with effect from July 1 2009.
Trading conditions in southern Africa, with the exception of Namibia, were
challenging. Bidvest Asia Pacific returned a strong result. Bidvest Europe held
up relatively well in difficult economic conditions.
The group`s balance sheet remains strong, enhanced by a R2,0 billion reduction
in seasonal working capital absorption. As a result, finance charges are
materially lower. Exposure to the short end of the funding market in South
Africa`s falling interest rate environment was also beneficial. Working capital
management improved across the Group following concerted efforts by management
assisted by lower trading volumes. The risk of debtor delinquencies remains an
area of critical focus.
The average rand exchange rate was stronger versus sterling and the euro. This
had a negative impact on translation of foreign operations equivalent to 2,9% of
HEPS.
Financial overview
Revenue fell 6,5% to R56,1 billion (2008: R59,9 billion). Significantly lower
import demand constrained performance in Safcor Panalpina, while the strong rand
negatively impacted the translation of the international operations. Deflation
in South Africa as a consequence of the strong currency was well managed but
impacted trading margins. Many operations achieved market-share gains,
particularly those in Asia Pacific. Operating expenses were well controlled
across the group, reflecting a decline on the prior year. The overall trading
margin improved to 4,7% (2008: 4,4%).
Headline earnings were impacted by abnormal charges of R53,4 million relating to
the acquisition costs of our new eastern European businesses, Nowaco and
Farutex. Previously, these once off acquisition costs would have been
capitalised to the cost of the investment, but under the revised IFRS 3
accounting standard are now included as an expense in headline earnings. If HEPS
were to be adjusted for the impact of these once off acquisition costs, HEPS
would have been up 12,8%.
Our balance sheet remains appropriately capitalised. Net debt declined to R5,8
billion (2008: R7,9 billion), driven by lower seasonal working capital
absorption, despite debt funding of R1,7 billion assumed for the Nowaco Group
acquisition. Interest cover at 6,8 times reflects an improvement over 2008 with
adequate borrowing capacity. Net debt to equity at 37,2% reflects significant
improvement (2008: 56,7%). Net finance charges declined 31,5% to R385,6 million.
Bidvest`s conservative attitude to gearing remains appropriate in the current
climate. Fitch Ratings affirmed the Group rating at A+ with a stable outlook
while Moody`s rated the Group at A1.za with a stable outlook.
Acquisition of Nowaco Group
The Nowaco Group is the number one delivered wholesaler to the foodservice and
independent retail markets in central and eastern Europe. Nowaco focuses on the
Czech Republic and Slovakia while Farutex serves the Polish market. The
allocation of intangibles post the Euro250,0 million acquisition, have not been
audited and accounting for the acquisition has been determined on a provisional
basis in terms of IFRS 3. The Nowaco Group contributed R2,1 billion to revenue
and R31,8 million to profit, after expensing R53,4 million of acquisition costs.
Nowaco Group management have integrated themselves seamlessly into the Group and
results are in line with pre-acquisition expectations despite tougher economic
conditions in eastern Europe.
Divisional review
Bidfreight
Bidfreight generated revenue of R8,0 billion (2008: R10,7 billion),
significantly lower than the prior year. Trading profit of R375,6 million (2008:
R365,5 million) was 2,8% above the prior year, a commendable result considering
the revenue decline.
The terminals business did well. Depressed billings in international forwarding
and clearing arising out of lower import volumes and depressed automotive
activity and an operational loss at Manica held back overall performance.
Corrective action has been taken at Manica. A retrenchment programme has been
concluded at Safcor Panalpina and associated costs fully expensed.
Trading profit was up on prior year at Island View Storage. Chemical imports
softened and petroleum throughput weakened, however exports rose. SA Bulk
Terminals performed well despite increased competitor activity. Depressed demand
hit revenue and trading profit at SACD Freight. Marine did well in a very
challenging shipping environment. Bidfreight Port Operations put in an
exceptional performance, with steel, forest products and bulk volumes all
showing healthy improvements. Both trading profit and volumes were well up at
Bulk Connections due to increased exports of sized coal and manganese. Though
activity levels were low, Rennies Distribution Services performed well achieving
cost savings. Naval performed well in a difficult environment in Mozambique.
Bidserv
Bidserv`s results were below expectation and reflect the impact and extent of
the recession in South Africa. Trading profit fell 21,3% to R385,3 million
(2008: R489,4 million) while revenue dipped by 3,5% to R3,5 billion (2008: R3,6
billion). Banking, Travel, Aviation Services and product-related businesses were
most impacted. Cash flow and debtor`s collections improved across all
businesses.
Prestige produced pleasing results in difficult markets. Good expense management
contributed to a small rise in profits. New management at Steiner Group achieved
excellent results. Trading profit fell in the laundry business as a result of
lower hotel occupancies. Security operations performed well overall. The newly
acquired vehicle tracking business met expectations.
Bid Travel Services was affected by the corporate travel slowdown and low hotel
occupancies. Trading profit at TMS declined on the back of certain
rationalisation costs. New management has refocused the business. Market share
gains continued. The Industrial Products division was hit by falling demand for
workwear and equipment. Expenses were well managed. The Office Automation
division produced reasonably good results, with a noticeable pickup in product
demand.
Results at Global Payment Technologies were behind last year, but improved
demand from its banking customers is anticipated. Bidair was heavily impacted by
the scaling back of airline operations and loss of contracts. Trading profit at
Green Services was up on prior year, despite declining revenue.
Transaction values fell steeply at Bidvest Bank and Master Currency, as lower
interest rates and rand stability impacted results. Improved demand is expected
into the second half.
Bidvest Europe
Trading profit rose 12,8% to R447,1 million (2008: R396,3 million). Revenue was
down 2,4% to R18,9 billion (2008: R19,3 billion), principally due to the 17,4%
appreciation of the average rand versus sterling. In spite of the barrage of
negative economic data, results at the Benelux businesses were in line with
expectation. Performance in the Middle East was flat. UK operations showed
resilience despite strong margin pressure. Newly acquired Nowaco in Czech
Republic and Slovakia and Farutex in Poland lived up to expectations.
Trading profit at 3663 First for Foodservice in the UK was slightly ahead of
budget while sales were 3% ahead of forecast. Logistics achieved significant
productivity improvements in some areas. Overall protection of gross margin
remains a focus area as food inflation ticks higher. Another focus area is
management of debtors following six successive quarters of recession. Working
capital is well controlled and inventory tightly managed.
At Deli XL Netherlands trading profit was well down as recession hit the
hospitality sector hard. The Netherlands business has bought 60% of fresh
produce supplier Stavasius. In Belgium, trading profit was up on last year. Cash
generation improved. Both sales and trading profit have reduced slightly at
Horeca Trade. Hotel occupancy is soft, so is confidence following Dubai`s debt
restructure. Despite being in the start-up phase, sales and profits were
reasonably in line with budget at the Al Diyafa JV in Saudi Arabia.
Nowaco`s revenue and trading profit exceeded target. Loss of a major quasi-
logistics contract impacted revenue at Farutex, though replacement sales are
being secured as trade to hotels and restaurants picks up.
Bidvest Asia Pacific
The division put in an exceptional performance as strong results from Australia
and New Zealand were supported by the businesses performance in greater China
and Singapore. Revenue was up 1,4% to R8,9 billion (2008: R8,8 billion). Trading
profit increased by 29,8% to R370,9 million (2008: R285,7 million).
The Australian economy has held up well and Bidvest Australia continued its run
of pleasing results. Most sales gains were driven by growth in market share. The
flagship foodservice division put in a particularly pleasing performance.
Expense control was rigorous by all divisions. As the period progressed, trading
conditions toughened and food deflation became evident. A Sydney produce and
meat wholesaler has been acquired, which will be a platform for entry into the
Fresh market. Some items of capital expenditure were accelerated to take
advantage of government`s tax stimulus package.
Bidvest New Zealand achieved very good results in a poor economic environment.
Trading profit rose, driven by growth in a declining market and improved trading
terms. Logistics put in a strong showing as did Foodservice, which achieved
record results. The Fresh business performed well and national roll-out is
substantially complete. The business`s largest tender ever was secured for the
supply of a wide range of products to the Defence Forces and the Corrections
Department.
Angliss Greater China benefited from the rebounding Asian economies. The core
Hong Kong business put in an especially pleasing performance, achieving market
share gains. Mainland China operations are all profitable and looking to expand.
Sales and trading profit exceeded expectations at Angliss Singapore. Performance
was assisted by recovery in the poultry market while a restructured foodservice
division took advantage of improved pricing and an improved regional economic
outlook.
Bidfood
Overall results were flat. Revenue was 2,3% lower at R2,6 billion (2008: R2,7
billion). Trading profit at R214,1 million was 1,6% lower (2008: R217,6
million).
Caterplus was impacted by intense pressure on restaurants, hotels and
conferencing. Industrial catering volumes also fell, though the rate of decline
is easing. Management remains strongly focused on debtor`s risk and expense
control while competing aggressively for growth. Margins have stabilised, though
pressure remains intense. The FIFA draw in Cape Town provided a snapshot of the
2010 FIFA World CupTrade Mark effect at work. Hotel occupancy for the week
approached 100% with many restaurants full. This gives rise to cautious optimism
that a turning point is close.
Comprehensive planning enabled Speciality to maximise trading opportunities
during the festive period. A firmer rand was helpful from a margin management
perspective, but contributed to deflation. Stockholding was reduced as inventory
control was rigorous. The strategy of growing Speciality`s distribution to small
convenience outlets is on track.
Bidfood Ingredients recorded pleasing results. Revenue was impacted by lower
sales of commodity products. Trading profit moved materially higher. The Crown
National Group`s results were adversely impacted by deflation. The Chipkins
Bakery Group continued the upward momentum of the previous year, while NCP Yeast
performed well.
Bid Industrial and Commercial Products
Disappointing results were recorded as trading conditions deteriorated. Trading
profit fell 47,6% to R170,2 million while revenue contracted by 12,8% to R4,3
billion.
Electrical Wholesaling had a tough six months, with trading profit down, though
margins were maintained. Expenses and stockholdings were cut. Cash flows stayed
positive. Voltex was impacted by the tailing off of large projects, including
2010 FIFA World CupTrade Mark-related contracts. Voltex Solutions is still
building momentum. Significant income flow from smart energy solutions is not
expected until the third quarter of 2010. Copper prices are higher, but
volatility is expected.
Stationery and furniture experienced a big fall in trading profit, flat revenue,
margin squeeze and expenses pressure. Waltons is in the process of implementing
changes to its distribution model to align costs with international norms.
Waltons new filing division - launched after the Optiplan acquisition - met
expectations. Expenses were well managed at Contract Office Products. Kolok
achieved revenue growth despite tough trading conditions. Expenses were
contained and trading profit rose. CN Business Furniture, Seating and Dauphin
were hit badly by market conditions and recorded operating losses.
Packaging and Catering equipment suffered only a small dip in trading profit off
slightly lower revenue. Afcom GE Hudson faced volatile trading conditions, but
trading improved in the second quarter. Buffalo Executape was under pressure but
will improve going forward. At Vulcan an encouraging second quarter resulted in
improved trading profit.
Bidpaper Plus
Results were generally satisfactory and were bolstered by a strong, but late
rush for product over the festive season. Revenue of R1,1 billion was flat
(2008: R1,0 billion) on prior year. Trading profit of R135,1 million (2008:
R130,3 million) was up 4,3%.
The business built up inventory ahead of the festive season and back-to-school
campaigns which assisted in meeting demand. Cash generation was pleasing, but
expenses moved higher in relation to inflation and cost of power. Product mix
changes influenced overall margin.
Demand for manufactured print products was sluggish. Excess capacity in the
market resulted in margin squeeze, though cost increases were well contained.
Stationery distribution recovered well after a slow start. Personalisation and
mail continued to perform well. Print sales and distribution benefited from
export project success. Labels and packaging achieved a modest profit, with
Rotolabel performing strongly. Alternative products achieved strong growth off a
relatively small base.
Bid Auto
The encouraging recovery by Bid Auto reflects restructuring efficiencies at the
core McCarthy motor retail business. Revenue of R8,7 billion was marginally
below expectation. Trading profit of R278,4 million was up 29,9% on prior year
(2008 R214,4 million).
Though new unit volumes were below those of the prior year, demand for used
vehicles improved. Margins on both new and used vehicles were better than
expected, resulting in improved returns, particularly in the used vehicle
department. Parts and service revenue remained solid. Motor retail produced
encouraging trading results significantly above prior year. Profit at most
dealerships rose while the number of loss-makers fell. The underlying trend in
new vehicle sales reflects modest growth, though challenging trading conditions
are expected to persist.
Car and van rental revenue remained under pressure as a result of reduced rates
and lower volumes. Average daily revenue and fleet utilisation were below
expectations. An improvement in profitability is expected arising out the
anticipated activity surrounding the 2010 FIFA World CupTrade Mark.
Financial Services revenue fell as a result of the decline in vehicle volumes,
though penetration levels were at record levels which resulted in pleasing
trading results. The equity portfolio performed well and reflects a significant
turnaround from the losses reported in the previous year. In December, the
McCarthy Finance joint venture with Wesbank recorded its highest monthly revenue
since October 2007, signalling improved credit availability.
Trading conditions at Yamaha Distributors remained tough as the demand for
leisure products remained weak. Relative stability of the Rand contributed to
some margin restoration. Heavy equipment was impacted by a significant falloff
in infrastructural demand. Restructuring of the business will now be
aggressively pursued. Fleet services delivered lower results as the effects of
the slowdown and higher impairment charges negatively impacted trading profit.
Cash generation in the period was excellent.
Arresting the slide in new vehicle net profit is a priority along with plans to
entrench Bid Auto`s leadership in used vehicle retailing. Consolidation and
multi-franchising will continue at poorly performing dealerships. Headcount has
fallen as a result of rationalisation and implementation of a cost-reduction
strategy, but in 2010 talent retention will receive greater attention.
Bidvest Namibia
The business, which in October was successfully listed on the Namibian Stock
Exchange, achieved trading profit of R150,0 million (2008: R126,0 million), up
19,0% on prior year. Revenue moved 10,3% higher to R949,4 million (2008: R860,4
million). Performance was down in the commercial businesses as customers scaled
back demand. Manica Namibia delivered good results on the back of strong demand
for freight and agency services. Fishing operations in the Bidfish division
performed well, despite the strength of the Namibian dollar against the US
dollar. Excellent catch rates and a recovery in selling prices boosted trading
profit.
Corporate
Corporate continued to explore acquisition opportunities. A strategic review is
under consideration as to the positioning of the "Bidvest" brand.
Bidvest Property Holdings continued to successfully manage and grow its
strategic portfolio. A number of Group opportunities are being pursued despite
very challenging market conditions. The restructured Ontime Automotive in the UK
delivered an improved result in a challenging automotive market.
Prospects
The adverse economic conditions created by the global financial crisis would
appear to have abated somewhat, however, the return to previous levels of
activity still appears to be some way off. Opportunity has been taken to
reassess many businesses and their cost structures in view of the new economic
reality and decisive action has been taken. The Group remains committed to its
decentralised business model which has proven resilient over a sustained period
of economic upheaval.
Our balance sheet remains strong with conservative gearing, the businesses are
well resourced and we have the capacity and desire to seek out further strategic
acquisition opportunities.
The hosting of a successful 2010 FIFA World CupTrade Mark is an opportunity both
for Bidvest and South Africa. Our exposure to the potential that will accrue to
the hospitality industry should provide meaningful benefit to the Group. Much of
the direct exposure has already been contracted.
We are excited by the potential that the acquisitions of Nowaco and Farutex
businesses offer, not only in their home countries but as the springboard to
growth in other geographies. The UK business is benefiting from the hard
decisions taken previously, however, the economy remains flat with no
significant recovery prospects evident. Our European businesses are holding
their own but economic conditions remain soft.
Our businesses in the Asia Pacific region are confident of growth in the period
ahead. Focus will be on increasing revenue, margin enhancement and improved
operational efficiencies which will further their leading market positions. They
are well placed for further expansion through acquisitions and market-share
gains.
South Africa appears to be on the cusp of economic recovery however the rate
thereof remains uncertain. Improved fundamentals of a lower interest rate
environment and improved consumer demand will assist. Our businesses are well
placed to benefit from the anticipated upturn.
Our focus remains on delivering acceptable returns from funds employed. Working
capital management continues to receive the necessary attention, however, some
absorption will be evident as trading volumes tick up. We remain confident of an
improved trading performance in the current environment to ensure ongoing value
creation.
For and on behalf of the Board
MC Ramaphosa B Joffe
Chairman Chief Executive
Distribution
Notice is hereby given that a interim cash distribution by way of a capital
reduction out of share premium of 207,0 (2009: 190,0) 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, March 26 2010.
The salient dates applicable to the cash distribution are as follows:
Last day to trade cum distribution: Thursday, March 18 2010
Shares trade ex distribution Friday, March 19 2010
Record date: Friday, March 26 2010
Payment date: Monday, March 29 2010
Share certificates may not be rematerialised or dematerialised during the period
Friday, March 19 2010 to Friday, March 26 2010, 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 impact of the distribution on the Company as at December 31?2009, is a
reduction of equity attributable to ordinary shareholders and cash and cash
equivalents of R656,6 million and a reduction in the net asset value and
tangible net asset value of 207,0 cents per share to 4 753 cents and 2 758 cents
respectively.
For and on behalf of the board
CA Brighten
Company secretary
Johannesburg
March 1 2010
Basis of presentation of condensed financial statements
The condensed financial statements have been prepared on the historical cost
basis, except for financial instruments which are stated at fair value, in
accordance with International Financial Reporting Standards (IFRS) and the
presentation and disclosure requirements of IAS 34 - Interim Reporting.
The accounting policies are consistent with those used in the preparation of the
June 30?2009 financial statements, with exception of the adoption of the
following new and modified standards and interpretations, in response to changes
to IFRS.
IFRS 2 - Amendments to IFRS 2 Share-based Payment - vesting conditions and
cancellations
IFRS 3, IAS 27, IAS 28 and IAS 31 - Comprehensive revision on applying the
acquisition method affecting the standards: Business Combinations; Consolidated
and Separate Financial Statements; Investments in Associates; Interests in Joint
Ventures
IFRS 7 - Financial instruments: Disclosure
IFRS 8 - Operating Segments
IAS 1 - Presentation of financial statements
IAS 23 - Borrowing Costs
IAS 32 - Financial Instruments: Presentation
IAS 39 - Financial Instruments: Recognition and Measurement
IFRIC 16 - Hedges of a net investment in a foreign operation
The adoption of the amendments to IFRS 3 has resulted in costs relating to
acquisitions of R53,4 million being charged to profit during the period as
compared to prior periods, where these costs were included as part of the cost
of the acquisition. Changes to IAS 27 have resulted in a surplus of R86,0
million resulting from a change in shareholding in a subsidiary being recognised
directly in equity as apposed to being included in profit for the period.
The change in accounting policies in respect of IFRS 3 and IAS 27 has resulted
in a reduction to profit attributable to shareholders of the Company of R139,4
million. Had this change not taken place basic earnings per share for the half
year would have been 539,0 cents an increase of 1,6% and headline earnings per
share would have been 512,1 cents an increase of 12,8%.
Results for the comparative periods have not been restated as the transitional
arrangements for both IFRS 3 and IAS 27 provide exemptions from retrospective
application.
Other than the above, the adoption of the new and modified standards and
interpretations, has had no effect on the results of the Group.
The results, as reported, for the half year ended December 31?2007 have been
included in the condensed financial statements for information purposes.
*Distribution per share
Includes distributions from share premium and capitalisation shares at market
value.
Analyst presentation
The investor presentation will be available on the Bidvest website from 11:00 on
March 1?2010.
The Bidvest Group Limited
Incorporated in the Republic of South Africa ("Bidvest" or "the Group" or "the
Company")
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
Registration number 1946/021180/06
Share code: BVT???ISIN: ZAE000117321
Further information regarding our Group can be found on the Bidvest website
www.bidvest.com
1 March 2010
Sponsor: Investec Bank Limited
Date: 01/03/2010 07:05:12 Produced by the JSE SENS Department.
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