| Mon 30 Aug 2010, 7:05 | | BVT - The Bidvest Group Limited - Audited results for the year |
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BVT
BVT
BVT - The Bidvest Group Limited - Audited results for the year
ended June 30?2010
THE BIDVEST GROUP LIMITED
("Bidvest")
(Incorporated in the Republic of South Africa)
Registration number: 1946/021180/06
Share code: BVT ISIN ZAE000117321
Audited results for the year ended June 30?2010
R109,8 billion
Revenue 2,3% decrease
R5,6 billion
Trading profit 8,1% increase
1?070,0 cents
Headline earnings per share 15,1% increase
R8,0 billion
Cash generated by operations 18,3% increase
432,0 cents
Distributions per share 13,7% increase
Summarised analysis of Group earnings on constant currency
The average rand exchange rate strengthened against both
sterling(14,47 in 2009 to 12,05 in 2010) and the euro (12,35 in
2009 to 10,60 in 2010). On a constant average currency basis (which
restates the current income statement using the previous year`s
average exchange rate) revenue would have been up 4,2% (reported:
down 2,3%), trading profit would have been up 11,9% (reported: up
8,1%) and HEPS would have been up 19,3% (reported: up 15,1%).
Comment
Pleasing results were achieved for the year ended June 30 against
the backdrop of extended recessionary conditions and a strong South
African exchange rate. Headline earnings per share (HEPS) increased
by 15,1% to 1?070,0 cents per share while basic earnings per share
increased by 14,4% to 1?063,6 cents per share. The appreciation of
the rand against sterling and the euro, which had a negative impact
on translation of the earnings of foreign operations equivalent to
4,2% of HEPS. The results included those of the acquired Nowaco
group with effect from July?1?2009. However, no contribution to
HEPS arose, due to the expensing of associated once-off acquisition
costs combined with the issue of new shares to fund the
acquisition.
The Group delivered a much improved second half trading
performance. Consumer demand for foodservice products held up,
particularly in the Asia Pacific region. In South Africa, commodity
exports improved, new vehicle sales staged an improvement and
demand for outsourced services increased. The infrastructure and
construction industry remained subdued impacting demand for
electrical and business furniture products.
Concerted efforts by operational management to optimise inventory
levels and manage debtor delinquencies ensured an improvement in
returns on funds employed across all regions. Cash generated by
operations after working capital changes improved by 18,3% to R8,0
billion (2009: R6,7 billion).
The Group continued to invest in property, plant and equipment to
ensure medium-term growth and sustainability.
Hosting of the 2010 FIFA World CupTrade Mark proved a major
sporting and organisational success for South Africa, which will
result in significant medium-term economic opportunities. However,
near term benefits accruing to Bidvest failed to meet expectations
with no material impact on the results. Adverse factors included
fewer than expected foreign tourists, extended holidays by
educational institutions and unpredicted leisure behavioural
patterns by stay-at-home South Africans.
Financial overview
Revenue fell 2,3% to R109,8 billion (2009: R112,4 billion),
impacted by lower import revenue in Safcor Panalpina, price
deflation and the impact of the appreciating rand. Deflation was
evident in all geographies as lower demand drove product prices
down. Many operations achieved market-share gains as they traded
aggressively and took advantage of market weakness. Operating
expenses were well controlled across the Group, reflecting a
decline on the prior year. The trading margin improved to 5,1%
(2009: 4,6%).
Headline earnings were impacted by abnormal charges of R61,2
million relating to acquisition costs, mostly attributable to our
new Eastern European businesses. 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, impacting HEPS
negatively by 2,1%.
Our balance sheet remains strong and appropriately capitalised. Net
debt declined to R3,8 billion (2009: R4,1 billion), assisted by a
R0,7 billion reduction in working capital and despite additional
debt funding of R1,7 billion for the Nowaco group acquisition.
Interest cover improved to 7,2 times from 4,8 times in 2009,
reflecting significant borrowing capacity. Net debt to equity at
23,1% shows pleasing improvement (2009: 29,2%). Net finance charges
declined 26,3% to R758,5 million. Exposure to the short end of the
funding market in South Africa`s falling interest rate environment
was also beneficial. Bidvest`s attitude to gearing remains
appropriate in the current climate. In December 2009, Fitch Ratings
affirmed the Group`s rating at A+ with a stable outlook while
Moody`s rated the Group at A1.za also with a stable outlook.
Acquisition of Nowaco group
Nowaco and Farutex management have integrated seamlessly into
Bidvest. Results are in line with pre-acquisition expectations
despite tougher economic conditions in Eastern Europe.
Transformation
Transformation within the South African businesses remains a
strategic imperative. The Group continues to focus and improve on
the broad-based elements of the scorecard. Significant progress in
all businesses is evident and management remains firmly committed
to the journey of transforming. Bidvest is currently a Level 4
contributor to B-BBEE with many operations rated at Level 3 or
better.
Consolidated income statement
for the year ended June 30 Percentage
R000s 2010 2009 change
Revenue 109 789 207 112 427 831 (2,3)
Cost of revenue (86 778 366) (89 482 780)
Gross income 23 010 841 22 945 051 0,3
Other income 424 725 198 815
Operating expenses (17 880 870) (18 007 297)
?Sales and distribution costs (12 115 597) (12 726 832)
?Administration expenses (4 069 739) (3 955 068)
?Other costs (1 695 534) (1 325 397)
Trading profit 5 554 696 5 136 569 8,1
?Acquisition costs (61 202) -
?Non-trading items - (164 240)
?Net capital items (30 151) (37 701)
Operating profit 5 463 343 4 934 628 10,7
Net finance charges (758 479) (1 029 243) (26,3)
?Finance income 64 408 40 982
?Finance charges (822 887) (1 070 225)
Share of profit of associates 40 983 49 238
?Dividends received 30 785 29 298
?Share of current year 10 198 19 940
earnings
Profit before taxation 4 745 847 3 954 623 20,0
Taxation (1 301 059) (1 046 344)
Profit for the year 3 444 788 2 908 279 18,4
Attributable to:
?Shareholders of the Company 3 345 175 2 802 386 19,4
?Minority shareholders 99 613 105 893
3 444 788 2 908 279 18,4
Shares in issue
?Total 319 006 304 995
?Weighted (`000) 314 510 301 462
?Diluted weighted (`000) 316 439 303 109
Basic earnings per share 1 063,6 929,6 14,4
(cents)
Diluted basic earnings per 1 057,1 924,5 14,3
share (cents)
Headline earnings per share 1 070,0 930,0 15,1
(cents)
Diluted headline earnings per 1 063,4 924,9 15,0
share (cents)
Distributions per share 432,0 380,0 13,7
(cents)*
?Interim 207,0 190,0
?Final 225,0 190,0
*Includes distribution from
share premium and
capitalisation issue
Consolidated statement of other comprehensive income
for the year ended June 30
R000s 2010 2009
Profit for the year 3 444 788 2 908 279
Other comprehensive income (expense) for
the year net of tax
?Decrease in foreign currency translation (675 601) (1 277 229)
reserve
?Increase (decrease) in fair value of (12 831) 2 428
available-for-sale financial assets
?
Increase (decrease) in fair value of (17 877) 2 523
available-for-sale financial assets
before tax
?Taxation 5 046 (95)
Total comprehensive income for the year 2 756 356 1 633 478
Attributable to:
?Shareholders of the Company 2 661 125 1 527 585
?Minority shareholders 95 231 105 893
2 756 356 1 633 478
Consolidated statement of other comprehensive income
for the year ended June 30
R000s 2010 2009
Profit for the year 3 444 788 2 908 279
Other comprehensive income (expense) for
the year net of tax
?Decrease in foreign currency (675 601) (1 277 229)
translation reserve
?Increase (decrease) in fair value of (12 831) 2 428
available-for-sale financial assets
?
Increase (decrease) in fair value of (17 877) 2 523
available-for-sale financial assets
before tax
?Taxation 5 046 (95)
Total comprehensive income for the year 2 756 356 1 633 478
Attributable to:
?Shareholders of the Company 2 661 125 1 527 585
?Minority shareholders 95 231 105 893
2 756 356 1 633 478
Segmental analysis
for the year ended June 30 Percentag
e
R000s 2010 2009 change
REVENUE
?Bidvest Freight 15 941 865 18 647 915 (14,5)
?Bidvest Services 7 927 750 8 105 904 (2,2)
?Bidvest Foodservice 58 389 859 59 005 013 (1,0)
??Europe 35 460 797 36 984 511 (4,1)
??Asia Pacific 17 547 642 17 067 597 2,8
??Southern Africa 5 381 420 4 952 905 8,7
?Bidvest Industrial and 8 643 601 9 290 941 (7,0)
Commercial Products
?Bidvest Paperplus 2 091 926 1 933 415 8,2
?Bidvest Automotive 17 297 510 15 626 260 10,7
?Bidvest Namibia 1 949 205 1 616 381 20,6
?Bidvest Corporate 444 034 727 033 (38,9)
??Ontime Automotive 410 674 703 855 (41,7)
??Corporate 33 360 23 178 43,9
112 685 114 952 (2,0)
750 862
Inter Group eliminations (2 896 (2 525 -
543) 031)
109 789 112 427 (2,3)
207 831
TRADING PROFIT
?Bidvest Freight 794 284 770 742 3,1
?Bidvest Services 1 126 008 1 181 160 (4,7)
?Bidvest Foodservice 2 046 017 1 759 087 16,3
??Europe 897 771 770 634 16,5
??Asia Pacific 729 375 602 533 21,1
??Southern Africa 418 871 385 920 8,5
?Bidvest Industrial and 421 286 596 882 (29,4)
Commercial Products
?Bidvest Paperplus 248 311 224 186 10,8
?Bidvest Automotive 424 102 264 384 60,4
?Bidvest Namibia 367 891 294 367 25,0
?Bidvest Corporate 205 850 79 138 160,1
??Bidvest Properties 176 637 144 602 22,2
??Ontime Automotive (16 115) (49 816) -
??Corporate 45 328 (15 648) -
5 633 750 5 169 946 9,0
?Share-based payment expense (79 054) (33 377) -
5 554 696 5 136 569 8,1
Consolidated condensed statement of cash flows
for the year ended June 30
R000s 2010 2009
Cash flows from operating activities 4 856 127 3 322 584
?Operating profit (including dividends 5 532 999 4 963 926
from associates)
?Depreciation and amortisation 1 870 465 1 744 350
?Other non-cash items (104 214) 171 384
?Cash generated by operations before 7 299 250 6 879 660
changes in working capital
?Changes in working capital 684 970 (130 792)
?Cash generated by operations 7 984 220 6 748 868
?Net finance charges paid (659 634) (1 024 829)
?Taxation paid (1 166 914) (1 223 496)
?Distributions by- Company (1 267 899) (1 144 096)
?- subsidiaries (33 646) (33 863)
Cash effects of investment activities (4 846 526) (1 862 306)
?Net additions to vehicle rental fleet (382 822) (157 177)
?Net additions to property, plant and (2 332 242) (1 960 676)
equipment
?Net additions to intangible assets (140 118) (182 635)
?
Net disposal (acquisition) of
subsidiaries, businesses, associates
and investments (1 991 344) 438 182
Cash effects of financing activities 993 372 (1 035 300)
?Proceeds from shares issued - Company 1 233 119 51 116
?- subsidiaries 300 772 -
?Net issue (purchase) of treasury 23 714 (6 371)
shares
?Net borrowings raised (repaid) 175 385 (322 868)
?Net decrease in bank overdrafts (739 618) (757 177)
Net increase in cash and cash 1 002 973 424 978
equivalents
Net cash and cash equivalents at the 3 212 425 3 038 618
beginning of the year
Exchange rate adjustment (76 676) (251 171)
Net cash and cash equivalents at end of 4 138 722 3 212 425
year
Consolidated statement of financial position
as at June 30
R000s 2010 2009
ASSETS
Non-current assets 19 371 091 16 119
562
?Property, plant and equipment 10 367 571 9 409 702
?Intangible assets 651 094 512 286
?Goodwill 5 709 169 3 966 950
?Deferred tax asset 426 822 378 603
?Defined benefit pension surplus 129 850 120 985
?Interest in associates 656 865 449 889
?Investments 1 157 190 908 884
?Banking and other advances 272 530 372 263
Current assets 23 973 829 22 364
822
?Vehicle rental fleet 915 042 684 205
?Inventories 8 030 752 7 443 252
?Short-term portion of banking and other 350 086 279 862
advances
?Trade and other receivables 10 539 227 10 745
078
?Cash and cash equivalents 4 138 722 3 212 425
Total assets 43 344 920 38 484
384
EQUITY AND LIABILITIES
Capital and reserves 17 392 937 14 297
627
?Attributable to shareholders of the 16 736 503 13 929
Company 132
?Minority shareholders 656 434 368 495
Non-current liabilities 4 669 207 4 155 520
?Deferred tax liability 378 992 255 402
?Life assurance fund 13 734 20 672
?Long-term portion of borrowings 3 448 501 2 990 232
?Post-retirement obligations 394 527 460 803
?Long-term portion of provisions 235 253 218 972
?Long-term portion of operating lease 198 200 209 439
liabilities
Current liabilities 21 282 776 20 031
237
?Trade and other payables 15 032 357 14 570
716
?Short-term portion of provisions 251 635 297 080
?Vendors for acquisition 539 15 629
?Taxation 364 558 262 080
?Short-term portion of banking liabilities 1 080 366 591 200
?Short-term portion of borrowings 4 553 321 4 294 532
Total equity and liabilities 43 344 920 38 484
384
Number of shares in issue 319 006 304 995
Net tangible asset value per share (cents) 3 253 3 098
Net asset value per share (cents) 5 246 4 567
Consolidated statement of changes in
equity
for the year ended June 30
R000s 2010 2009
Shareholders` interest
Issued share capital 15 950 15 249
?- balance at beginning of the year 15 249 15 029
?- shares issued during the year 693 56
?- capitalisation issue - 166
?- net movement in treasury shares 8 (2)
Share premium arising on shares issued (2 263 (2 251 264)
031)
?- balance at beginning of the year (2 251 (1 456 154)
264)
?- shares issued during the year 1 236 462 51 060
?- capitalisation issue - (166)
?- refund of share premium to (1 267 (839 525)
shareholders 899)
?- net movement in treasury shares 23 706 (6 371)
?- share issue costs (4 036) (108)
Foreign currency translation reserve 20 527 691 746
?- balance at beginning of the year 691 746 1 968 975
?- arising during the year (671 219) (1 277 229)
Statutory reserves 15 215 13 033
?- balance at beginning of the year 13 033 13 049
?- transfer from (to) retained earnings 2 182 (16)
Equity-settled share-based payment 328 640 253 936
reserve
?- balance at beginning of the year 253 936 220 559
?- arising during the year 74 704 33 377
Movement in retained earnings 18 619 202 15 206 432
?- balance at the beginning of the year 15 206 432 12 706 171
?- attributable profit 3 345 175 2 802 386
?- change in fair value of available-for- (12 831) 2 428
sale financial assets
?- dividends paid - (304 569)
?- transfer of reserves as a result of 82 608 -
changes in shareholding of subsidiaries
?- transfer from (to) statutory reserves (2 182) 16
Capital and reserves attributable to 16 736 503 13 929 132
shareholders of the Company
Minority shareholders
?- balance at beginning of the year 368 495 310 456
?- attributable profit 99 613 105 893
?- dividends paid (33 646) (33 863)
?- movement in foreign currency (4 382) (4 607)
translation reserve
?- movement in equity-settled share- 5 525 60
based payment reserve
?- issue of shares in subsidiaries 300 772 -
?- changes in shareholding 2 665 (9 444)
?- transfer of reserves as a result of (82 608) -
changes in shareholding of subsidiaries
656 434 368 495
Total equity 17 392 937 14 297 627
Divisional review
Bidvest Freight
Bidvest Freight did well in a difficult year, improving trading
profit by 3,1% to R794,3 million (2009: R770,7 million). This
improvement was achieved despite a 14,5% revenue decline to R15,9
billion (2009: R18,6 billion). The revenue mix improved as the lost
revenue was low-margin clearing and forwarding business.
Bulk trade drove profitability gains. Island View Storage put in a
good performance and excellent results were achieved by South
African Bulk Terminals. Export forest products, steel and imported
bulk products contributed to a record year at Bidfreight Port
Operations. Bulk Connections performed strongly, boosted by
increased manganese volumes. Rennies Distribution Services produced
a strong profit turnaround as the benefits of cost control and
restructuring were realised.
A significant fall in demand for imported consumer products
impacted clearing and forwarding and container handling. At Safcor
Panalpina, restructuring was necessary as billings to customers
dropped, exacerbated by lower interest rates and a strong rand.
SACD Freight performed well by containing costs as imported
container volumes fell. Stringent cost control and cash management
contributed to a good result at Marine. Manica had a difficult
year, compounded by falling aid cargoes.
Capital expenditure of R503 million included investments in new
tankage in Richards Bay and an SACD Freight facility in Cape Town.
Lease conditions for Island View Storage facilities in Richards Bay
and Bulk Connections in Durban were renegotiated with Transnet. The
K Line agency business within Rennies Ships Agency was
reconstituted as a joint venture.
Bulk commodities demand is expected to remain high. Continued
pressure is anticipated across imported volumes of consumer
products.
Bidvest Services
Bidvest Services achieved pleasing results in the face of
challenging trading conditions for most of the year. Trading profit
of R1,1 billion was 4,7% down (2009: R1,2 billion). Revenue dipped
2,2% to R7,9 billion (2009: R8,1 billion).
The 2010 FIFA World CupTrade Mark was positive particularly for
Prestige which benefited through both hospitality cleaning and
toilet hire. TopTurf also benefited from tournament-related
contracts particularly hospitality floral design. However Bidvest
Bank and Bidtravel were disappointed at their contribution arising
out of the event.
Steiner did exceptionally well following a management restructure,
as did the security cluster of businesses. Prestige put in a strong
performance throughout the year and showed market share gains.
Laundry operations returned satisfactory results despite low hotel
occupancies. A fourth-quarter revival assisted Industrial Products.
Konica Minolta excelled and had a very good year as did Global
Payment Technologies. TMS Group performed well below expectation
but remedial action has been instituted. The Greens division
performed well particularly Pureau Water while TopTurf was impacted
by cuts to project work.
Cutbacks in corporate travel were negative for Bidtravel, which put
in a disappointing performance. Bidair underperformed and a
restructure is underway. Bidvest Bank, impacted by low interest
rates and a strong rand, performed below expectation. The asset-
based finance business, McCarthy Fleet Solutions, has been
integrated into Bidvest Bank.
Cash flows strengthened and asset management improved. B-BBEE
scores also showed pleasing improvement. Prestige, Magnum and
Steiner and other companies are being re-branded to emphasise the
Bidvest linkage.
Bidvest Foodservice
Overall the performance as a refocused division was satisfactory.
Across such a geographically diverse division, individual business
performances differed. Trading profit, including the Nowaco and
Farutex acquisition, rose 16,3% to R2,0 billion (2009: R1,8
billion). At R58,4 billion, revenue was 1,0% lower (2009: R59,0
billion). Excluding this acquisition, on a like-for-like basis,
revenue was down 7,8%, primarily a result of adverse exchange rate
movements.
Bidvest Asia Pacific put in another excellent performance. Results
from all contributors were above expectation as Asian economies
quickly shook off the effects of the financial crisis and the
Australian and New Zealand businesses maximised trading
opportunities and their position as industry leaders.
Bidvest Australia was affected by extremely challenging trading
conditions in the second half, but nevertheless returned good
results, with growth in both revenue and trading profit. Kele, a
central Queensland foodservice wholesaler, was acquired towards the
end of the year and performed in line with expectations. Major
expansions to Cairns, Hobart and Adelaide were completed. Entry
into the fresh produce market was initially disappointing, but the
potential is evident. The flagship foodservice business put in a
strong performance, grew market share and maintained margins
despite deflationary pressure.
Bidvest New Zealand faced a declining market and food deflation,
yet delivered pleasing revenue and trading profit growth. The core
foodservice business put in another strong performance. E-commerce
sales now represent more than a third of revenue. Fresh achieved
continued growth. Additional bad debt provisions were raised as
economic prospects remain challenging.
Angliss Singapore achieved revenue and profit growth as market
sentiment rebounded strongly. A gourmet fine food division was
created to address the fine food market. Angliss Greater China
operations put in a strong performance across all businesses,
achieving record trading profits.
Bidvest Europe had to contend with recessionary conditions and its
immediate aftermath in the UK and continental Europe. A further
constraint on trading results was incurred by acquisition charges
and the cost of UK depot closures. Nevertheless, results, excluding
contributions from Nowaco and Farutex, were in line with
expectations. Trading profit was significantly higher once the
contributions of the Eastern European businesses were included.
Asset management improved and cash generation was solid.
3663 First for Foodservice in the UK has been restructured into two
standalone units, 3663 Wholesale and Bidvest Logistics. Both
entities put in a creditable performance in difficult trading
conditions. 3663 Wholesale was impacted by lower volumes, however,
these improved late in the year. Expense and margin management were
focus areas. Various options are under consideration in respect of
servicing the fresh market. Bidvest Logistics benefitted from
operational efficiencies achieved in both warehousing and
distribution.
Deli XL Belgium did well to achieve improved margins and trading
profit growth despite the recession. Deli XL Netherlands performed
to expectation despite intense pressure on sales in both the
institutional and hospitality markets. Distribution, labour and
overhead expenses were well managed. Nowaco in the Czech Republic
and Slovakia performed well despite the prolonged impacts of the
financial crisis. Flat revenues were countered by stringent margin
management and cost controls. Farutex delivered a commendable
trading result. Revenue has recovered following the loss of a major
contract early in the financial year. A new depot in Lodz was
opened in November 2009. The UAE business and the new Saudi Arabian
joint venture performed in line with expectations and are
profitable.
Southern Africa
The domestic food businesses performance was mixed in challenging
conditions as food deflation set in and cash-strapped consumers
down-traded. 2010 FIFA World CupTrade Mark benefits were not as
strong as hoped and occurred much later than anticipated.
Hospitality industry volumes rose, but industrial catering business
remained flat while prolonged school holidays meant the educational
component of the institutional eating market was adversely
affected.
Bidvest Foodservice SA (formerly Caterplus) had an excellent fourth
quarter, but trading profit for the year was flat. The business
grew market share in a contracting market as business travel,
conferencing and the domestic holiday market came under pressure.
2010 FIFA World CupTrade Mark volumes were not as large as
expected, though the business launched a concerted effort to
maximise the opportunity. Throughout the year, margins remained
under pressure. Expenses were well controlled and credit extension
rigorously managed. Exports continued to grow. A catering equipment
distributor was acquired.
Bidfood Ingredients achieved a pleasing overall performance in
challenging conditions, impacted by lower commodity product volumes
and deflation across major product lines. This resulted in a dip in
revenue, though trading profit showed pleasing growth. Strong
profit performances were put in by the Crown factory, Chipkins
Bakery Group and NCP. Stock levels were increased in anticipation
of higher 2010 FIFA World CupTrade Mark sales, but the expected
increase failed to materialise. Debtors collections improved
significantly, as did cash generation and return on funds employed.
The Crown and Chipkins factories gained ISO 22?000 accreditation.
Speciality achieved record revenue and trading profit on the back
of a good second half. However, sales during the 2010 FIFA World
CupTrade Mark were lower than expected. The business benefited from
increased in-home eating and a high in-store presence. Several new
products were introduced to the brand bouquet while the Goldcrest
range was expanded.
Bidvest Industrial and Commercial Products
Bidvest Industrial and Commercial Products was impacted by reduced
demand as a result of the recessionary climate, lower construction
activity and the winding down of major infrastructure projects.
Despite World Cup disruptions, fourth-quarter improvements were
registered. However, overall results were disappointing. Revenue
fell 7,0% to R8,6 billion (2009: R9,3 billion), while trading
profit dropped 29,4% to R421,3 million (2009: R596,9 million).
Despite the weak trading environment, cash flow improved. Capital
expenditure was deferred, inventories cut and funds employed
reduced. Expenses were aggressively managed. ERP rollouts
continued.
All contributors to the Office Products business faced a tough
trading environment and margin squeeze. Furniture companies were
hard hit by corporate spending cutbacks. Extended school holidays
and price deflation impacted Waltons, contributing to a
disappointing year. Kolok delivered solid results despite currency
volatility. Electrical Wholesale was hard hit by lower construction
activity, though sales improved in the second half. The level of
building plan approvals remain depressed. Depot and branch
infrastructure was downsized.
Revenue at Packaging and Catering Equipment was flat. Activity
picked up in the final quarter and Vulcan did well from 2010 FIFA
World CupTrade Mark contracts. Bidvest Materials Handling
(suppliers of forklifts and previously part of McCarthy Heavy
Equipment) was integrated into Packaging and Catering.
Bidvest Paperplus
Bidvest Paperplus performed well in a challenging market. Revenue
of R2,1 billion was up 8,2% (2009: R1,9 billion). Trading profit
rose 10,8% to R248,3 million (2009: R224,2 million). Returns on
funds employed and cash generation improved. Investment in new
property, plant and equipment was trimmed from R83 million to R44
million.
No major export contracts were won, but this was offset by 2010
FIFA World CupTrade Mark contracts gained. Margins were well
managed.
Rotolabel performed strongly from an already good base and the
Wholesale Stationery Distribution business delivered much-improved
results. Take-up of the Parker pen agency was beneficial.
Personalisation and Mail entrenched its position as the top profit
contributor. Print Sales and Distribution was impacted by low
demand for traditional print but maximised 2010 FIFA World CupTrade
Mark opportunities. Alternative Products continues to grow.
Bidvest Automotive
Performance as a whole across the restructured and decentralised
division was satisfactory. Trading profit rose 60,4% to R424,1
million (2009: R264,4 million). Revenue at R17,3 billion was 10,7%
higher (2009: R15,6 billion).
Following extensive rationalisation and restructuring over the past
two years, the McCarthy Motor Group staged a strong turnaround.
Trading profit more than doubled to R208 million despite a 4%
decline in vehicle sales to 72 291 units. Increased emphasis on
used vehicle trading resulted in an improvement of 34% in profit
contribution, despite lower sales volumes. Parts and service
revenues increased. Strong performances were put in by Toyota,
VW/Audi, Mercedes, BMW/Mini and Land Rover franchises. Burchmores
did well.
The insurance and financing business McCarthy Financial Services is
transitioning to a multi-channel business model while retaining its
strong automotive linkages. Pleasing results were recorded. Record
penetration levels were achieved across all major product lines.
Underwriting profits exceeded expectations and an equity recovery
bolstered the investment portfolio returns.
Budget Car and Van Rental results were weaker, a result of
international and domestic travel cutbacks. Industry price-cutting
depressed rates. Vehicle utilisation and rental days were below
expectation. The 2010 FIFA World CupTrade Mark did not provide the
substantial upturn in demand as was expected. Pre-event up-fleeting
led to overstocking as corporate travel declined during the
tournament. The Door2Door and Chauffer division did well.
Yamaha Distributors results were disappointing as a consequence of
the further significant weakening in the demand for leisure
products. Margins were also under pressure as a result of yen
strength and aggressive, price based competition. Encouraging
market share improvements were recorded in virtually all segments.
Bidvest Namibia
Bidvest Namibia listed successfully on the Namibian Stock Exchange
in October 2009. Results were in line with listings prospectus
projections despite an additional once-off BEE charge arising out
of the conclusion of the Ovanhu transaction. Revenue was up 20,6%
to N$1,9 billion (2009: N$1,6 billion). Trading profit of N$367,9
million (2009: N$294,4 million) was up 25,0%. The fisheries
businesses did exceptionally well, underpinned by a strong
performance by Namsov`s core horse mackerel operation. A new vessel
was acquired for N$210 million. Cash generation was strong. Results
within Bidvest Commercial Holdings were mixed. Several acquisition
opportunities are being pursued.
Bidvest Corporate
Group-wide initiatives are being pursued to extract further
synergistic benefits across the decentralised Group. Corporate
continued to evaluate acquisition opportunities. The positioning of
the Bidvest brand is gaining momentum and the alignment of
operational branding to `Bidvest` continues. Bidvest Property
Holdings continued to successfully manage and grow its significant
strategic portfolio. Ontime Automotive in the UK delivered a small
loss, an improved result in a challenging market.
Prospects
Weak economic conditions created by the global financial crisis
appear to have stabilised yet activity levels in many geographies
are likely to remain subdued. In many of our businesses, the asset
bases and cost structures were scrutinised in view of the new
economic reality. Where necessary, decisive action has been taken
to ensure we are best placed in the `new normal` economic reality.
The Group remains committed to its decentralised business model
which has proven resilient over a sustained period of economic
upheaval. New management appointments in a number of businesses has
enabled succession, whilst launching these businesses onto their
next growth path.
The Asia Pacific businesses are benefitting from the regional
economic environment and remain confident of growth in the year
ahead. Focus remains on achieving sustainable revenues and improved
operational efficiencies whilst expanding the business model into
new product ranges. In the UK, overall economic growth remains
anaemic. Opportunities are being sought to expand our European
presence in the hospitality and fresh sectors. We remain very
positive about the potential of the Eastern European region.
The rate of recovery in the South African economy remains uncertain
despite evidence to the contrary. The benefits of a lower interest
rate environment has yet to improve consumer demand significantly.
Focus remains on ensuring we remain efficient low cost service
providers of choice. Our businesses are well resourced and
competitively placed to benefit from any recovery.
Our financial position remains strong with conservative gearing and
ample capacity to seek out further strategic acquisition
opportunities. Our focus remains on delivering acceptable returns
from funds employed. Working capital management continues to
receive attention, however, some absorption will be evident as and
when trading volumes pick up. We remain confident that the momentum
seen in the second half of 2010 will result in an improved trading
performance in the year ahead. We are budgeting for real growth in
earnings.
MC Ramaphosa B Joffe
Chairman Chief executive
Johannesburg
August 28?2010
Dividend
Notice is hereby given that a final cash dividend of 225,0 (2009 a
distribution out of share premium: 190,0) cents per share, has been
awarded to members recorded in the register of the Company at the
close of business on Thursday, September 23?2010.
The salient dates applicable to the cash dividend are as follows:
Last day to trade cum dividend: Thursday, September 16?2010
First day to trade ex dividend: Friday, September 17?2010
Record date: Thursday, September 23?2010
Payment date: Monday, September 27?2010
Share certificates may not be rematerialised or dematerialised
during the period Friday, September 17?2010 to Thursday, September
23?2010, both days inclusive.
Shareholders are advised the payment of the final cash dividend
will attract Secondary Tax on Companies at a rate of 10%.
For and on behalf of the board
CA Brighten
Company secretary
Johannesburg
August 28?2010
Basis of presentation of financial statements
These condensed financial statements have been prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International financial reporting
standards and ("IFRS"), the interpretations adopted by the
International Accounting Standards board, South African
interpretations of Generally Accepted Accounting Practice and
include disclosure as required by IAS 34: Interim Financial
Reporting.
The report has been prepared using accounting policies that comply
with IFRS which are consistent with those applied in the financial
statements for the year ended June 30? 2009. The Group has,
however, adopted 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 16 - Property, Plant and Equipment
IAS 19 - Employee Benefits
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
IFRIC 17 - Distributions of Non-Cash Assets to Owners
IFRIC 18 - Transfer of Assets from Customers
The adoption of the amendments to IFRS 3 has resulted in costs
relating to acquisitions of R61,2 million being charged to profit
during the year as compared to prior years, where these costs were
included as part of the cost of the acquisitions. Changes to IAS 27
have resulted in a surplus of R82,6 million resulting from change
in shareholding in a subsidiary being recognised directly in equity
as apposed to being included in profit for the year.
As a result of the change in accounting standards in respect of
IFRS 3 and IAS 27 profit attributable to shareholders of the
company has reduced by R143,8 million. Had this change not taken
place basic earnings per share for the year would have been 1?109,3
cents an increase of 19,3% and headline earnings per share would
have been 1?089,4 cents an increase of 17,1%.
Results for the comparative years have not been restated as the
transitional arrangements for both IFRS 3 and IAS 27 provide
exemption from retrospective application.
On review of how the operating segments are managed in accordance
with IFRS?8 it was decided to remove the costs in respect of share-
based payment expenses from each of the operating segments, and
disclose this as a reconciling item in the segmental analysis of
trading profit and segmental result, as this not a criteria used in
the management of the various segments. In addition to this, the
leasing and fleet management business previously included with
Bidvest Automotive, has been reallocated to the Bidvest Services
segment. The comparative year`s results have been restated to
reflect these changes.
Other than the above, the adoption of the new and modified
standards and interpretations, has only altered disclosure with no
impact on the Group`s results.
Acquisitions
The Group acquired 100% of the issued share capital of Nowaco Czech
Republic s.r.o ("Nowaco"), a company incorporated in Czech Republic
and 100% of the issued share capital of Farutex Sp.z.o.o
("Farutex"), a company incorporated in Poland (collectively "the
Nowaco group") with effect from July?1?2009, for an enterprise
value consideration of Euro250 million. The purchase consideration
was settled with cash of Euro119 million and the assumption of
Euro131 million debt. 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.
Euro130 million of the acquisition price was funded by cash, partly
raised by the Company from an issue of shares and partly from the
Group`s existing banking facilities, with the balance being funded
by debt.
The acquisition of the Nowaco Group will complement the existing
international foodservice business of Bidvest in the United
Kingdom, Europe, Australia, New Zealand and Asia. Central and
Eastern Europe represents a strategic market with growth
opportunities. A presence here will enable Bidvest to continue
expanding its international interests in the foodservice industry
with the objective of developing a leading global foodservice
business. The acquisition provides a unique opportunity to acquire
market-leading Central and Eastern European foodservice businesses,
creating potential customer and purchasing synergies. The Nowaco
group is a consistently highly profitable business with a strong
management team and provides Bidvest with a foothold and entry
point into the broader Central and Eastern European markets.
Nowaco group contributed R4?094,8 million to revenue and R90,2
million to profit for the year, after taking account of the
acquistion of R51,2 million costs arising on acquisition.
A number of smaller acquisitions were also undertaken during the
year. Their impact on the Group`s results was not material.
June 30
R`000 2010 2009
Commitments
Capital expenditure approved
Contracted for 506 384 745 704
Not contracted for 247 226 252 231
753 610 997 935
Exchange rates
The following exchange rates were used in the conversion of foreign
interests and foreign transactions for the year:
June 30
2010 2009
Rand/Sterling
?Closing rate 11,53 13,02
?Average rate 12,05 14,47
Rand/Euro
?Closing rate 9,34 11,05
?Average rate 10,60 12,35
Rand/Australian dollar
?Closing rate 6,56 6,34
?Average rate 6,71 6,67
Audit report
The auditors, Deloitte & Touche, have issued their opinion on the
Group`s financial statements for the year ended June?30?2010. The
audit was conducted in accordance with International Standards on
Auditing. They have issued an unmodified audit opinion. These
summarised financial statements have been derived from the Group`s
financial statements and are consistent in all material respects,
with the Group`s financial statements. A copy of their audit report
is available for inspection at the company`s registered office. Any
reference to future financial performance included in this
announcement, has not been reviewed or reported on by the Company`s
auditors.
Analyst presentation
The investor presentation will be available on the Bidvest website
from 11:00 on August 30?2010.
The Bidvest Group Limited
Incorporated in the Republic of South Africa
Registration number: 1946/021180/06
ISIN: ZAE000117321
Share code: BVT
Directors
Chairman
MC Ramaphosa
Independent non-executive
DDB Band, LG Boyle*, MBN Dube, S Koseff, NP Mageza, D Masson, JL
Pamensky, NG Payne, Adv FDP Tlakula
Non-executive
AA Da Costa (alternate LJ Mokoena), FJ Barnes*, RM Kunene,
T Slabbert
Executive
B Joffe (Chief executive), BL Berson**, MC Berzack, DE Cleasby AW
Dawe, LI Jacobs, P Nyman, SG Pretorius, LP Ralphs, AC Salomon
(*British??**Australian)
Company secretary
CA Brighten
Share 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
Contact details
Telephone +27 (11) 772 8700
Facsimile +27 (11) 772 8970
e-mail info@bidvest.co.za or
investor@bidvest.co.za
domains@bidvest.co.za
Date: 30/08/2010 07:05:06 Produced by the JSE SENS Department.
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