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Divisional Day - Management update on general trading conditions
The Bidvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT
ISIN ZAE000117321
("Bidvest" or "the Company")
Divisional Day - Management update on general trading conditions
Shareholders are advised that the executive management of the group today
met with members of the financial community, including shareholders and
financial analysts, for an update on current market conditions and the Group’s
trading environment.
Management commented as follows:
1. Current market conditions and trading
Bidvest South Africa and Bidvest Namibia
- As noted in the 2015 half year financial results, trading conditions in
South Africa remained tough in the six months to December 31
2014, a continuation of the environment experienced in the latter
part of the 2014 financial year. Generally poor trading conditions
have continued through the third quarter of the 2015 financial year.
April was a better trading month whilst May disappointed.
- Weak consumer demand and the unreliability of electricity supply
have contributed to slow growth and low business confidence in the
South African economy.
- The overall trading results for Bidvest South Africa to the end of the
third quarter are nevertheless ahead of those for the comparative
period.
- As a management principle, Bidvest will not be captive to the
macro situation it faces and so the businesses are trading
aggressively to perform at the forefront of their respective markets.
New or improved products and services continue to be offered.
Bolt-on acquisitions are considered as they arise.
- Further synergies from the integration process following the
acquisition of Mvelaserve Limited are being extracted. With effect
from January 31 2015 the Assets in Transit business, acquired as
part of the Mvelaserve deal, was sold.
- The acquisition of Plumblink, an industrial products supply
business, from Ethos Private Equity has been concluded subject to
the fulfilment of certain conditions. This will be effective from July
2015.
- In line with what was reported on in the first half of the financial
year, the trading results in Namibia continue to be negatively
affected by the horse mackerel quota reduction and the high cost of
bought-in quota and availability thereof. Management is
constructively engaged with the authorities in this regard in the
interests of securing industry sustainability and remedies. Most of
the Commercial operations are operating satisfactorily but, as
previously communicated, diversification and business
improvement strategies continue to be pursued. To this end, an
acquisition opportunity is being concluded which will further
diversify the business base.
Food Group (including Food South Africa)
- The solid momentum achieved by the Food Group in the first half of
the financial year continued into the 3rd quarter. Solid results are
being achieved from most of the component parts of the division
with particularly pleasing performances in the majority of
foodservice markets outside of South Africa.
- Trading results translated into South African rand have been
assisted by Rand weakness although the rate of Rand depreciation
has slowed compared to the first half of the financial year.
- Eliminating the effects of acquisitions, including the 60% interest in
DAC in Italy, 75% interest in PCL Logistics in the UK, the 60%
interest in Irmãos Avelino in Brazil, and the entry to the Spanish
market, the Food Group continues to deliver good organic growth
measured in local currencies.
- The continued satisfactory performance of the foodservice
businesses has been achieved against a backdrop of minimal or
non-existent food inflation. Costs remain well controlled although
wage inflation has resumed in certain geographies on the back of
improved economic fundamentals.
- The acquisitions in Italy (DAC) and the UK (PCL Logistics) that
were effective from July 2014 have bedded down well and are
trading in line with expectations. In April 2015, PCL Logistics
became wholly owned.
- Trading through April and May remained positive and a good result
is expected for the full financial year to June 2015.
Corporate
- Cumulative portfolio fair value and investment gains are significantly
lower in the first three quarters of financial year 2015 versus the
comparative period in financial year 2014.
2. General
- Acquisitions update:
o Adcock Ingram:
- Following the Bidvest offer to all shareholders, Bidvest
currently owns 37,0% of the voting shares in Adcock
Ingram pre the implementation of the new Adcock
Ingram BEE scheme.
- Adcock Ingram released a trading statement on SENS
on June 5 2015.
- Bidvest has concluded a co-operation agreement with
the PIC.
o Management continues to seek out acquisition opportunities
both locally and abroad.
- Amended BEE codes have been implemented by government.
Bidvest companies are making excellent progress in adapting to the
changes that are required.
- Management remains motivated and is optimistic despite difficult
trading environments, particularly in South Africa. Innovation is a
key driver as a means of managing margins, costs and returns.
A full recording of the presentation is available on the group’s website
www.bidvest.co.za
This management update has not been reviewed or reported on by the
Company’s independent auditors.
______________________________________________________________
Sandton
June 10, 2015
Sponsor
Investec Bank Limited
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