| Mon 22 Aug 2005, 9:53 | | Bidvest - Presss Release |
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Bidvest - Presss Release
The Bidvest Group Limited
Incorporated in the Republic of South Africa
Registration number 1946/021180/06
Share code: BVT
ISIN: ZAE000050449
(`Bidvest`)
Presss Release
BIDVEST DELIVERS PLEASING 26% GROWTH IN HEADLINE EARNINGS PER SHARE
HIGHLIGHTS
- Revenue up 22,5% to R62,8 billion
- Trading income up 24.4% to R3,2 billion
- Attributable profit increases by 34,1% to R2,1 billion
- Headline earnings per share up 26,2% to 686,6 cents
- Turnaround at Bidcorp
- Distribution increases 22,3% to 306,0 cents per share
BIDVEST has reported a 26,2% growth in headline earnings per share to 686,6
cents, lifted by strong performances across most group businesses.
CE Brian Joffe singled out McCarthy`s, Bidserv, the International Foodservice
businesses and Voltex for their good performances, adding that the operational
turnaround at Bidcorp and the strong performance of the freight businesses
contributed to the group`s overall improvement in earnings. The acquisitions of
the minority interests of the previously listed offshore subsidiaries have also
positively impacted the Group`s results. Trading income reached R3,2 billion
(2004: R2,5 billion), an increase of 24,4%. Excluding the impacts of the
acquisition of McCarthy`s in January 2004, the balance of the Group grew trading
income by 14,5%.
`These results benefited from a strong domestic economy in SA, particularly in
the automotive, construction and freight markets. Conditions in some of our
wholesale businesses were less buoyant, yet we managed to achieve positive
growth in virtually all businesses which is a credit to our management and
staff,` says Joffe.
At the group level, Bidvest grew revenue by 22,5% to R62,8 billion (2004: R51,3
billion) and trading income by 24,4% to R3,2 billion (2004: R2,5 billion).
Income attributable to shareholders increased by 34,1% to R2,1 billion (2004:
R1,5 billion), helped by a change in accounting for goodwill.
Two of the larger acquisitions made during the year were that of the minority
shareholders in Bidcorp plc who were bought out at a cost of Sterling 22
million, and the acquisition of roughly 20% of Tiger Wheels which was acquired
for R288 million with the aim of increasing the Group`s exposure to the after
sales market in the automotive industry.
Post year end, Bidvest announced the acquisition from Koninklijke Ahold N.V of
Deli XL, market leader in the wholesale foodservice business in the Netherlands
and Belgium, for which funding of Euro 145 million has been secured. This
acquisition will make a positive contribution to group results in the next
financial period.
Cash generation was strong throughout the year, particularly so in the second
half of the year. Working capital management improved significantly from the
half year position.
Joffe says the group has continuously increased its gearing to take advantage of
the current low interest rate environment, adding that the group has ample
financial capacity for future growth. Net debt increased from R0,7 billion to
R1,0 billion after accounting for capital expenditure of R1,2 billion and a
share buy-backs costing R532 million. Gearing was up slightly at 14% from 12% in
the previous year.
Bidvest`s credit rating of AA- (zaf) was reaffirmed by Fitch Ratings following
the announcement of the pending acquisition of Deli XL, while its BEE rating was
upgraded to `A`, highlighting progress made on the transformation front.
He adds that the internationalisation of the group`s foodservice interests will
accelerate with the pending acquisition of Deli XL. Other opportunities in
continental Europe and the far East continue to be explored.
The group has made good progress in meeting its empowerment charter obligations,
and the relationship with BEE partner Dinatla continues to develop and evolve.
Joffe says pending changes to the board structure will better reflect the
group`s regional interests, and more details will be released in due course.
PROSPECTS
Joffe says though Bidvest is by nature an acquisitive and opportunistic group, a
major portion of its growth over the last 18 years has been organic. `Within
South Africa, there are many opportunities for growth through acquisition in
businesses allied or complimentary to our core focus of services, distribution
and trading, which will be aggressively pursued.`
`We continue to internationalise our foodservice business which will be
accelerated by the acquisition of Deli XL as well as seeking out new
opportunities where we believe we can bring our entrepreneurial culture to
bear.`
Joffe adds that Bidvest`s businesses are in above average growth markets, which
will assist the Group in achieving its primary objective of delivering better
than average returns for shareholders. Consumer-led growth in South Africa
appears to be sustainable and is underpinned by the increasing disposable income
of an emerging middle class.
Joffe says Bidvest expects to deliver real growth in earnings in the coming
financial year.
OPERATIONAL REVIEW
The Services Division
This division comprises Bidfreight, Bidcorp, Bidserv and Rennies Financial
Services.
Bidfreight grew revenue to 7,5% to R14,6 billion (2004: R13,6 billion) and
trading income by 26,1% to R498,6 million (2004: R395,4 million). The Southern
Africa division reported strong second half performance, helped by good import
volumes which helped offset lower exports. Lower export coal volumes had a
negative impact on the Bluff Mechanical Appliance performance. Terminals
renegotiated the majority of its leases with the National Ports Authority for a
further 20 years, and will embark on a capital expenditure programme of about
R1,0 billion over the next three years to upgrade and expand terminal capacity.
Safcor Panalpina reported a much-improved result due to increased airfreight
cargoes, despite the reduced value per unit of cargo handled. The previous
year`s result was negatively impacted by rand strength. It was also a good year
for Marine`s liner business, which reported a strong turnaround from the
previous year. This improved result was helped by a robust world trading
shipping environment and relative currency stability.
Though Bidcorp reported a 10,1% decline in revenue to R1,3 billion (2004: R1,5
billion), the company reported a R38 million turnaround from the R21,8 million
trading loss in 2004. Following the closure of the Dunkerque route in November
2004 and a subsequent right-sizing of the business, Shipping achieved a credible
trading result. Ontime Automotive whose primary business distributes vehicles on
behalf of OEM`s, had a poor performance in very difficult conditions, compounded
by the 10% decline in car sales in the UK during the year. All the other
Automotive businesses showed some improvement.
Bidserv grew revenue by 33,5% to R 2,9 billion (2004: R2,2 billion) and trading
income by a commendable 40,5% to R 288,8 million (2004: R205,6 million). Some
23% of this growth was organic, the rest of the growth came from acquisitions.
The Cleaning, Hygiene and Greens divisions are performing well, while the
laundry operations are reaping the benefits of investment in state-of-the-art
facilities made in previous years.
Bidserv`s Security division performed satisfactorily, assisted by the full
benefits of the IPS acquisition, while new management was appointed at Magnum
Shield to realise the full potential of this business. The recently established
aviation services business, BidAir is performing to expectations.Fedex, the
courier franchise improved over the period but subsequent to year end, will be
merged with Supaswift, though Bidserv will remain a strategic investor. The
Industrial and Janitorial division performed well, helped by the acquisition of
G Fox.
It was a tough year for Rennies Financial Services (Renfin), which grew revenue
by 5,2% to R692,6 million (2004: R658,2 million), but trading income declined by
14,9% to R108,5 million (2004: R127,4 million). The travel businesses suffered
from a decline in average ticket prices while overrides on bulk sales have also
declined. SAA moved to zero commission on 1 May 2005 which has forced travel
agents to review their business models. Rennies was among the first to adopt a
fee-based revenue model ahead of the change and fallout in the industry
following this move is expected to present opportunities for consolidation.
Rennies Bank grew trading income 22% notwithstanding the ongoing strength and
lack of volatility in the Rand, which subdued dealing profits.
The Foodservice Products Division
This division is focused on the supply and distribution of foodservice products
and comprises operations in the United Kingdom, Australasia and Southern Africa.
Revenue increased by 6,8% to R23,8 billion (2004: R22,3 billion). Trading income
rose 14,4% to R1,0 billion (2004: R0,9 billion).
Bidvest United Kingdom reported a 9% increase in revenue to Sterling 1,3 billion
and a 14,3% growth in trading income to Sterling 45,7 million.
3663 First for Foodservice`s wholesale businesses exceeded budget both in terms
of growth in sales and trading income. The Multi-temp division achieved higher
margins despite rising cost pressures. The depot renewal and refurbishment
programme underway will improve efficiencies through economies of scale. It also
was a good year for the Frozen Division, and Central Distribution benefited from
contract gains and rising profitability. Barton Meat Company was impacted by
lost business but an improvement is expected next year.
Bidvest First for Foodservice in Australia, the largest business of its kind in
this market, grew trading income by 16% in local currency. Melbourne reported a
welcome turnaround in its business, and a similar turnaround is expected in
Sydney during the coming year.
It was an excellent year for Crean First for Foodservice in New Zealand, with
trading income up 75% in local currency. The company now has virtually
nationwide coverage and the focus going forward will be on leveraging this base
and expanding into the fresh/chilled and contract logistics areas,
Caterplus grew revenue by 11,2% to R2,2 billion (2004: R2,0 billion) and trading
income by 11,2% to R189,4 million (2004: R170,3 million). Catering Supplies had
an improved second half performance despite ongoing deflation in key product
lines. The Frozen division, helped by strategic supplier alliances, competed
aggressively for market share in the independent trade, thereby improving their
customer mix, while Vulcan had an excellent year with trading income up 33%
despite reduced export orders.
Combined Foods had a reasonable year on the back of increased sales volumes,
particularly in Crown National. This was achieved despite deflationary pressures
in several of the underlying businesses. Crown National achieved satisfactory
increases in sales to local customers and ingredient production volumes
increased substantially Bidbake achieved benefits from procurement initiatives
and volume growth however these were negated by deflation on product
ingredients.
The Commercial Products Division
This division comprises Bid Office: Office Products (stationery and related) and
Printing and Paper Conversion; and Bid Industrial Products: Voltex and Packaging
Closures.
Bidoffice had a flat year with revenue and trading income slightly improved.
Trading was characterised by deflationary pressures and intense competition.
Waltons maintained its profitability where unit volume growth was offset by
declining margin value. Kolok delivered acceptable results despite the strong
rand and price slashing among competitors to maintain market shares. Unit
volumes grew 23%, and an extended product range augurs well for the future.
The performance of the Furniture division was lifted by a strong contribution
from Cecil Nurse, while Office Automation had an excellent year, growing trading
income by 38%.
Printing and Paper Conversion, comprising Lithotech (SA and France), Silveray
Stationery (ex Bidpac) and Statmark, saw revenue slide marginally by 1,5% and
trading income was down 3,9% to R169,3 million. This was largely the result of
price competition and lower margins.
Lithotech SA performed in line with expectations and continues to diversify away
from its traditional market in business forms to value-added services such as
outsourced mailing and labels. Lithotech France had an improved second half, but
the turnaround was insufficient to show a profit for the full year. Management
is confident of an improvement in its operational performance. Silveray suffered
price deflation arising from cheaper imports, and had to incur once-off
reorganisation costs. A turnaround in performance is expected in the coming
year.
Bid Industrial Products, encompassing the operating businesses of Voltex and the
Packaging Closures business of the former Bidpac division, grew revenue by 13,5%
to R3,0 billion and trading income by an impressive 18,3% to R 240,9 million.
Voltex had an excellent year as it pursues a strategic policy of broadening
market penetration to benefit from the commercial sector as well as the booming
construction market.
Packaging Closures lifted trading income in a highly competitive market, and
expects to capitalise on its market position by expanding the product range and
seeking out new markets in sub-Saharan Africa.
The Automotive Products Division
McCarthy`s, which now accounts for more than a fifth of group revenue, generated
trading income of R500,9 million for its first full year in the Bidvest stable.
Its results were boosted by low financing costs, a favourable economic
environment with rising disposable incomes and vehicle price stability. It
achieved record unit sales of 72,603 new and used vehicles, though margins came
under intense pressure. The same pressures were evident at Budget Rent A Car,
which nevertheless reported an improved result. Yamaha Distributors and McCarthy
Financial Services had excellent results, helping lift McCarthy`s trading margin
to a record 3,8% (2004: 3,4%). McCarthy`s and SANTACO secured the southern
Africa distribution rights for the range of Russian GAZ commercial vehicles, and
opportunities flowing from the planned recapitalisation of the taxi industry are
being aggressively pursued.
Corporate Services
mymarket.com, the e-commerce procurement platform, secured significant growth
through new business gains and increased utilisation of its services by existing
customers both locally and internationally. Annualised business transactions
currently top R6,0 billion.
Bidvest Network solutions, a provider of wide area network solutions to both
external clients and Group companies, lost R6,0 million primarily due to the
increase in expenses required to scale up the revenue base.
Bid Properties has recently undertaken numerous developments for Group companies
in respect of state of the art facilities.
Namsov , in which Bidvest has an effective 31,1% interest, generated trading
income of R12,6 million (2004: R35,2 million), was negatively impacted by the
overall trading market. Operationally the quality, quantity and efficiency of
the catch was excellent.
DISTRIBUTION
The final distribution to shareholders out of share premium, in lieu of a
dividend, increased 25,9% to 172,2 cents a share (2004: 136,8 cents a share).
The total value awarded to shareholders including the interim distribution
amounts to 306,0 cents per share (2004: 250,2 cents).
ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (CE)
Tel: (011) 772-8704
David Cleasby
(Investor Relations)
Tel : (011) 772-8706
Mobile: 083 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: (011) 444-0650
Mobile: 083 447-6648
Date: 22/08/2005 07:06:32 AM
Produced by the JSE SENS Department
