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THE BID VEST GROUP LIMITED
AUDITED RESULTS FOR THE YEAR ENDED JUNE 30 2000
FINANCIAL HIGHLIGHTS
- OPERATING INCOME UP 70%
- INCOME ATTRIBUTABLE TO SHAREHOLDERS UP 34%
- HEADLINE EARNINGS PER SHARE UP 26%
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED JUNE 30
2000 1999 PERCENTAGE
R'000 R'000 CHANGE
TURNOVER 26 427 620 14 646 145 +80,4
OPERATING INCOME 1 223 660 720 496 +69,8
NET FINANCE INCOME 221 161 583
INCOME BEFORE TAXATION 1 223 881 882 079 +38,7
TAXATION (281 667) (218 462)
INCOME AFTER TAXATION 942 214 663 617 +42,0
INCOME FROM ASSOCIATES 25 623 28 235
OUTSIDE SHAREHOLDERS'
INTEREST (73 453) (24 848)
INCOME ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 894 384 667 004 +34,1
NUMBER OF SHARES IN ISSUE
(WEIGHTED 000) 288 554 271 483
HEADLINE EARNINGS PER
SHARE (CENTS) 310,0 245,7 +26,2
DIVIDENDS PER SHARE
(CENTS)* 150,3 127,3 +18,1
- INTERIM 72,0 59,8
- FINAL 78,3 67,5
*INCLUDES CAPITALISATION ISSUES AT MARKET VALUE AT DATE OF THE AWARD.
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30
2000 1999
R'000 R'000
CAPITAL EMPLOYED
SHAREHOLDERS' INTEREST 3 199 822 3 146 200
OUTSIDE SHAREHOLDERS' INTEREST 302 772 52 098
DEFERRED TAX (134 213) (234 174)
INTEREST-BEARING DEBT 89 789 35 006
3 458 170 2 999 130
EMPLOYMENT OF CAPITAL
FIXED ASSETS 2 052 281 1 699 152
INVESTMENTS 835 007 568 679
NET CURRENT ASSETS 570 882 731 299
CURRENT ASSETS 4 277 715 4 355 479
NET LIQUID FUNDS 444 560 467 489
CURRENT LIABILITIES - INTEREST FREE (4 151 393) (4 091 669)
3 458 170 2 999 130
NUMBER OF SHARES IN ISSUE (000) 289 638 286 417
NET ASSET VALUE PER SHARE (CENTS) 1 105 1 098
STATEMENT OF CHANGES IN SHAREHOLDERS' INTEREST
FOR THE YEAR ENDED JUNE 30
2000 1999
R'000 R'000
SHAREHOLDERS' INTEREST AT THE BEGINNING
OF THE YEAR 3 146 200 2 689 337
SHARE CAPITAL ISSUED 161 1 966
- IN TERMS OF THE SHARE INCENTIVE
SCHEME 58 96
- FOR THE ACQUISITION OF TRADING
OPERATIONS, SUBSIDIARIES, ASSOCIATES
AND OTHER INVESTMENTS - 1 536
- FOR CASH - 41
- CAPITALISATION ISSUE 103 293
SHARE PREMIUM ARISING ON SHARES
ISSUED 16 306 1 343 416
- IN TERMS OF THE SHARE INCENTIVE
SCHEME 16 338 19 933
- FOR THE ACQUISITION OF TRADING OPERATIONS,
SUBSIDIARIES, ASSOCIATES AND OTHER
INVESTMENTS - 1 285 845
- FOR CASH - 39 600
- COSTS (32) (1 962)
MOVEMENT IN NON-DISTRIBUTABLE RESERVES 67 009 3 908
MOVEMENT IN RETAINED INCOME (29 854) (892 427)
- INCOME ATTRIBUTABLE TO SHAREHOLDERS 894 384 667 004
- DIVIDENDS AND CAPITALISATION ISSUES (306 032) (28 710)
- SECONDARY TAX ON COMPANIES (382) -
- PRIOR YEAR ADJUSTMENT ARISING ON
CHANGE IN ACCOUNTING POLICIES - 144 115
- GOODWILL, TRADEMARKS AND TRADE NAMES
WRITTEN OFF (617 824) (1 674 836)
SHAREHOLDERS' INTEREST AT THE END OF
THE YEAR 3 199 822 3 146 200
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30
2000 1999
R'000 R'000
CASH RETAINED FROM OPERATIONS
OPERATING INCOME 1 223 660 720 496
DEPRECIATION AND OTHER NON-CASH ITEMS 354 846 224 566
CHANGE IN NET WORKING CAPITAL (293 514) (85 806)
FIXED ASSET REPLACEMENT (NET) (460 105) (288 983)
CASH GENERATED FROM OPERATIONS 824 887 570 273
NET FINANCE INCOME 221 161 583
TAXATION PAID (190 638) (176 033)
CASH FLOW FROM OPERATIONS 634 470 555 823
DIVIDENDS PAID
- COMPANY (305 929) (28 416)
- SUBSIDIARY (31 776) (5 334)
NET CASH RETAINED 296 765 522 073
NET ACQUISITION OF TRADING
OPERATIONS AND INVESTMENTS (679 359) (3 023 553)
PROCEEDS ON ISSUE OF INSTRUMENTS
- COMPANY 16 365 1 345 089
- SUBSIDIARY 219 181 30 339
CASH OUTFLOW (147 048) (1 126 052)
SEGMENTAL ANALYSIS
FOR THE YEAR ENDED JUNE 30
2000 1999 PERCENTAGE
TURNOVER R'000 R'000 CHANGE
BIDFREIGHT 10 123 915 8 148 959 24,2
BIDOFFICE 2 413 841 2 095 419 15,2
BIDPAC 655 026 646 945 1,2
BIDSERV 996 981 781 118 27,6
CATERPLUS 12 024 220 2 842 414 323,0
- LOCAL 1 245 888 1 102 141 13,0
- FOREIGN 10 778 332 1 740 273 519,3
COMBINED FOODS 638 970 622 800 2,6
RENFIN 394 952 212 503 85,8
INTER GROUP ELIMINATIONS (820 285) (704 013) 16,5
26 427 620 14 646 145 80,4
OPERATING INCOME
BIDFREIGHT 311 171 158 627 96,2
BIDOFFICE 172 286 128 311 34,3
BIDPAC 87 180 90 390 (3,6)
BIDSERV 90 242 67 804 33,1
CATERPLUS 289 746 113 677 154,9
- LOCAL 98 513 77 861 26,5
- FOREIGN 191 233 35 816 433,9
COMBINED FOODS 69 046 70 701 (2,3)
RENFIN 62 736 34 093 84,0
INVESTMENT AND OTHER INCOME 107 722 26 180 311,5
GROUP PROPERTIES 33 531 30 713 9,2
1 223 660 720 496 69,8
COMMENT
THE RESULTS FOR THE YEAR ARE A SOUND ACHIEVEMENT IN THE FACE OF EXTREMELY
DIFFICULT TRADING AND ECONOMIC CONDITIONS. BIDVEST'S MANAGEMENT HAVE APPLIED
THEMSELVES WITH ENERGY AND ENTHUSIASM AND CAN BE PROUD OF WHAT HAS BEEN
ACHIEVED. HEADLINE EARNINGS PER SHARE INCREASED BY 26,2% TO 310,0 CENTS,
DESPITE AN INCREASE IN THE NUMBER OF SHARES IN ISSUE. REFERENCE IS MADE TO THE
CONTENTS OF THE NOTE "CHANGE IN ACCOUNTING POLICIES" WHICH IF NOT IMPLEMENTED
WOULD HAVE RESULTED IN A HEADLINE EARNINGS PER SHARE INCREASE OF 27,2% FROM
261,0 TO 332,1 CENTS. BIDVEST HAS MAINTAINED A COMPOUND GROWTH RATE IN EARNINGS
PER SHARE OF 31,9% OVER NINE YEARS AND SHOWED AN ORGANIC GROWTH OF
APPROXIMATELY 20% THIS YEAR.
THE YEAR WAS CHARACTERISED BY RELATIVELY LOW ECONOMIC ACTIVITY, AND REDUCED
CONSUMER SPENDING. IN ADDITION THE EXPECTED MILLENNIUM BOOM IN TOURISM, TRAVEL,
HOTEL USAGE, CATERING AND THE RESTAURANT TRADE DID NOT MATERIALISE AS PEOPLE
CHOSE TO STAY AT HOME AMID Y2K TECHNOLOGY FEARS. A CONTINUING SPATE OF BOMB
ATTACKS IN CAPE TOWN ALSO DETERRED FOREIGN VISITORS. IN ADDITION, A DECLINE IN
PRODUCTION VOLUMES, EXACERBATED BY THE UNEVEN DISTRIBUTION OF PUBLIC HOLIDAYS
IN APRIL, HAD A NEGATIVE IMPACT ON FACTORY RECOVERIES. THE FLOODS IN MOZAMBIQUE
AND PARTS OF SOUTH AFRICA, AND THE POLITICAL LAND CRISIS IN ZIMBABWE FURTHER
EXACERBATED THE DIFFICULT TRADING CONDITIONS.
PROSPECTS
GROWTH OPPORTUNITIES IN SOUTH AFRICA ARE STILL SUBSTANTIAL AND THE GROUP, WITH
ITS COMMITTED, ENTREPRENEURIAL AND OPPORTUNISTIC MANAGEMENT, ATTENTION TO
DETAIL, STRONG COST CONTROLS AND STRONG BALANCE SHEET WILL CONTINUE TO LOOK FOR
AND EXPLOIT OPPORTUNITIES WHEREVER THEY ARISE.
BIDVEST'S DISTRIBUTION CAPACITY HAS BEEN THE CORNERSTONE OF ITS STRATEGY AND
THE FUTURE USE OF THE INTERNET FOR E-COMMERCE, TOGETHER WITH BIDVEST'S PHYSICAL
INFRASTRUCTURE, MAKES AN INTERESTING AND POTENTIALLY UNIQUE COMBINATION.
BIDVEST PLANS TO TAKE A LEAD ROLE IN THE PROVISION OF BUSINESS-TO-BUSINESS
E-COMMERCE SOLUTIONS IN SOUTH AFRICA ENABLING ELECTRONIC TRADE TO GROUP
COMPANIES, CUSTOMERS, SUPPLIERS AND OTHERS.
WITH THE IMPLEMENTATION OF A COMMON NETWORKING PLATFORM, THE GROUP INTENDS TO
CREATE A 'SUPER-PORTAL' THROUGH WHICH ALL BIDVEST COMPANIES AND CLIENTS, BOTH
LOCALLY AND INTERNATIONALLY CAN TRADE. IT IS ANTICIPATED THAT THIS WILL TAKE
TIME TO IMPLEMENT AND THAT THE FINANCIAL BENEFITS ARE SOME WAY OFF.
THE COMMITMENT TO RESTRUCTURE STATE ASSETS AND THE PRIVATISATION BLUEPRINT
DRAWN UP BY GOVERNMENT WILL HAVE A POSITIVE IMPACT ON BIDVEST'S BUSINESS UNITS.
ORGANIC GROWTH IS SUFFICIENT TO SUSTAIN GOOD RETURNS AND WILL STRENGTHEN WITH
THE IMPROVING SOUTH AFRICAN ECONOMY. THE EXPLOITATION OF THE UNTAPPED SYNERGIES
WITHIN THE LOCAL GROUP AND THE DEVELOPMENT OF THE SYNERGIES BETWEEN BIDVEST'S
OFFSHORE AND SOUTH AFRICAN OPERATIONS WILL FURTHER COMPOUND SUCH GROWTH.
THE GROUP CONTINUES TO SEEK ACQUISITIVE GROWTH OPPORTUNITIES BOTH NATIONALLY
AND INTERNATIONALLY WHERE A FIT WITH ITS STRATEGIC FOCUS ON SERVICE, TRADING
AND DISTRIBUTION IS MET AND WHERE IT WILL ENSURE THE GROUP A MAJOR MARKET
POSITION.
SOUTH AFRICA IS AN EMERGING MARKET ECONOMY. FURTHER GROWTH IS EXPECTED TO COME
FROM BIDVEST'S UNDERLYING COMPANIES, WHICH WILL BENEFIT AS THE HUGE EMERGING
MIDDLE CLASS ASPIRE TO IMPROVE THEIR LIVING STANDARDS, AND BEGIN TO PARTICIPATE
IN THE ECONOMY.
BIDVEST HAS, OVER THE YEARS, OPERATED IN A DIFFICULT ECONOMIC ENVIRONMENT IN
SOUTH AFRICA. IT IS BELIEVED THAT THE ECONOMY IS TURNING AND REAL GDP GROWTH IS
FORECAST. BIDVEST IS INVESTED IN GROWTH SECTORS IN INDUSTRY AND WILL BENEFIT
FROM THIS IMPROVEMENT. SOUTH AFRICA HAS ENTERED A NEW ECONOMIC ERA WITH LOWER
INFLATION, LOWER INTEREST RATES, LOWER TAXATION AND REAL GDP GROWTH. BIDVEST IS
LEAN AND WELL POISED FOR FUTURE GROWTH, BOTH IN SOUTH AFRICA AND ABROAD.
CHANGE IN ACCOUNTING POLICIES
IN ACCORDANCE WITH RECENTLY AMENDED GENERALLY ACCEPTED ACCOUNTING PRACTICE WITH
REGARD TO DEFERRED TAX, THE GROUP HAS CHANGED ITS ACCOUNTING POLICY AND NOW
RECOGNISES DEFERRED TAX ASSETS WHEN IT IS PROBABLE THAT SUFFICIENT TAXABLE
PROFITS WILL BE AVAILABLE. THIS CHANGE WAS EFFECTED THROUGH A PRIOR YEAR
ADJUSTMENT AND HAS RESULTED IN AN ADDITIONAL TAXATION CHARGE OF R63,8 MILLION
FOR THE CURRENT YEAR (1999 - R41,6 MILLION). HAD THIS CHANGE IN ACCOUNTING
POLICY NOT TAKEN PLACE, THE HEADLINE EARNINGS PER SHARE FOR THE YEAR WOULD HAVE
BEEN 332,1 (1999 - 261,0) CENTS PER SHARE, AN INCREASE OF 27,2%.
IN ADDITION THE GROUP HAS NOT ACCOUNTED FOR THE FINAL DIVIDEND ANTICIPATING THE
CHANGE IN GENERALLY ACCEPTED ACCOUNTING PRACTICE IN THIS REGARD. THIS CHANGE
HAS NO IMPACT ON THE GROUP'S EARNINGS.
COMPARATIVE FIGURES HAVE BEEN RESTATED WHERE APPROPRIATE.
DIVIDEND DECLARATION AND CAPITALISATION ISSUE IN LIEU OF DIVIDEND
NOTICE IS HEREBY GIVEN THAT A FINAL CASH DIVIDEND OF 50,4 (1999 - 34,1) CENTS
PER SHARE HAS BEEN DECLARED AND A CAPITALISATION ISSUE OF SHARES HAS BEEN
AWARDED IN THE RATIO OF 0,5535 NEW SHARES PER 100 SHARES HELD, BEING EQUIVALENT
TO 27,9 (1999 - 33,4) CENTS PER SHARE IN LIEU OF DIVIDEND TO MEMBERS REGISTERED
IN THE BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON SEPTEMBER 15 2000. THE
TOTAL VALUE AWARDED TO SHAREHOLDERS IS 78,3 (1999 - 67,5) CENTS PER SHARE.
SHARE CERTIFICATES IN RESPECT OF THE CAPITALISATION SHARES AND CHEQUES IN
RESPECT OF THE FINAL CASH DIVIDEND AND/OR FRACTIONAL ENTITLEMENTS WILL BE
POSTED TO MEMBERS AT THEIR REGISTERED ADDRESSES OR ELECTRONICALLY TRANSFERRED
TO THEIR BANK ACCOUNTS, ON OR ABOUT SEPTEMBER 22 2000.
IN TERMS OF A SPECIAL RESOLUTION PASSED AT THE ANNUAL GENERAL MEETING HELD ON
NOVEMBER 16 1999, IT WAS AGREED THAT DIVIDENDS AND/OR FRACTIONAL PAYMENTS
AMOUNTING TO R10 OR LESS WOULD BE AGGREGATED AND DONATED TO THE BIDVEST
CHAIRMAN'S FUND TRUST, FOR DISTRIBUTION TO CHARITABLE INSTITUTIONS.
APPLICATION WILL BE MADE TO THE JOHANNESBURG STOCK EXCHANGE FOR THE
CAPITALISATION SHARES TO BE LISTED WITH EFFECT FROM THE COMMENCEMENT OF
BUSINESS ON SEPTEMBER 20 2000.
FOR AND ON BEHALF OF THE BOARD
B JOFFE M CHIPKIN
EXECUTIVE CHAIRMAN DEPUTY CHAIRMAN
JOHANNESBURG
AUGUST 28 2000
DIRECTORS
B JOFFE (EXECUTIVE CHAIRMAN), M CHIPKIN (DEPUTY CHAIRMAN), AJ BEHRMANN, IA
BERMAN, NG CANCA, LI CHIMES, BR CHIPKIN, E ELLERINE, AM GRIFFITH, CH KRETZMANN
(ALTERNATE J ARAUJO), S KOSEFF, D MASSON, PF NHLEKO, P NYMAN, JL PAMENSKY, LP
RALPHS, TH REITMAN (BRITISH), FEA ROBARTS, DK ROSEVEAR, AC SALOMON (ALTERNATE
HL GREENSTEIN), CE SINGER, PC STEYN (ALTERNATE LG BOYLE), R WAINER, CE WATT, PD
WOMERSLEY (ALTERNATE RW GRAHAM).
COMPANY SECRETARY
MS VILJOEN
TRANSFER SECRETARIES
MERCANTILE REGISTRARS LIMITED, 11 DIAGONAL STREET, JOHANNESBURG, 2001.
PO BOX 1053, JOHANNESBURG, 2000.
REGISTERED OFFICE
MILNER PLACE, SUNNYSIDE OFFICE PARK, 4 CARSE O'GOWRIE ROAD, PARKTOWN, 2193.
PO BOX 87274, HOUGHTON, 2041.
REGISTRATION NUMBER
1946/021180/06
THE BIDVEST GROUP
BIDVEST HAS A MARKET CAPITALISATION OF R14 BILLION, WHICH MAKES IT THE
COUNTRY'S LARGEST SERVICE COMPANY AND SEVENTH-LARGEST INDUSTRIAL COMPANY ON THE
JOHANNESBURG STOCK EXCHANGE. FOCUSED ON SERVICE, TRADING AND DISTRIBUTION,
WHICH ALSO ENCOMPASSES LIGHT MANUFACTURING, IT HAS THE HIGHEST POSSIBLE
LIQUIDITY RATING ON THE JSE AND IS CURRENTLY THE ELEVENTH (RANKED BY VALUE)
MOST WIDELY HELD SHARE BY THE UNIT TRUST INDUSTRY WITH 102 FUNDS HOLDING ITS
STOCK AS AT JUNE 2000.
* HEADLINE EPS + 26%
* ATTRIBUTABLE PROFIT + 34%
* OPERATING INCOME + 70%
* TURNOVER + 80%
* HEADLINE EPS, EXCLUDING NEW ACCOUNTING POLICY, WOULD HAVE INCREASED 27,2%
* BIDVEST PLC FLOURISHES AND INVESTS IN THE FUTURE
* BIDVEST TO CAPITALISE ON E-COMMERCE AND LEVERAGE ECONOMIES OF SCALE
* STRONG ORGANIC GROWTH AND SOUND INTERNATIONAL PERFORMANCE
BRIAN JOFFE, CHAIRMAN, COMMENTED:
"THE ENERGY AND ENTHUSIASM OF BIDVEST MANAGEMENT HAS ENSURED STRONG ORGANIC
GROWTH FOR THIS PERIOD, DESPITE A SLUGGISH SOUTH AFRICAN ECONOMY WHICH HAS
STRUGGLED TO PARTICIPATE IN THE GLOBAL RECOVERY. WE REMAIN OPTIMISTIC THAT THE
LOCAL ECONOMY HOLDS SUBSTANTIAL GROWTH OPPORTUNITIES WHILE BIDVEST PLC IS
POISED TO BUILD ON ITS ACHIEVEMENTS IN THE INTERNATIONAL ARENA."
28 AUGUST 2000
ENQUIRIES:
THE BIDVEST GROUP LIMITED TEL: + 27 (0) 11 481 4129
BRIAN JOFFE, CHAIRMAN
JACK HOCHFELD, GROUP CORPORATE FINANCE TEL: + 27 (0) 11 481 4103
CELL: + 27 (0) 82 459 7051
COLLEGE HILL JOHANNESBURG TEL: + 27 (0) 11 447 3030
TOM ALLISON
BRENDAN TEMPLETON
BIDVEST
BIDVEST HAS DELIVERED STRONG ORGANIC GROWTH DESPITE THE SLUGGISH ECONOMIC
CONDITIONS DURING THE YEAR UNDER REVIEW. FOR THE YEAR ENDED JUNE 30 2000,
ATTRIBUTABLE PROFIT INCREASED BY 34,1% TO R894,4 MILLION. HEADLINE EARNINGS PER
SHARE INCREASED BY 26,2% TO 310,0 (1999: 249,7) CENTS PER SHARE; A FIGURE WHICH
WOULD HAVE INCREASED BY 27,2% TO 332,1 CENTS A SHARE BUT FOR A CHANGE IN
ACCOUNTING POLICIES, WHICH IS REFERRED TO BELOW. TURNOVER FOR THE YEAR
INCREASED BY 80,4% TO R26,4 BILLION (1999: R14,6 BILLION) AND OPERATING INCOME
GREW 69,8% TO R1 223,7 MILLION (1999: R720,5 MILLION).
THE YEAR'S STRONG PERFORMANCE WAS BUILT ON THE BIDVEST'S STRONG HISTORIC RECORD
WHICH SHOWS IT HAS MAINTAINED A COMPOUND GROWTH RATE IN EARNINGS PER SHARE OF
31,9% OVER NINE YEARS AND AN ORGANIC GROWTH RATE DURING THE YEAR OF ABOUT 20%.
THE BIDVEST TEAM HAS APPLIED ITSELF WITH ENERGY AND ENTHUSIASM AND CAN BE PROUD
OF WHAT IT HAS ACHIEVED.
GENERAL TRADING CONDITIONS WERE NOT FAVOURABLE, DESPITE EXPECTATIONS THAT THE
LOCAL ECONOMY WOULD HAVE ITS FAIR SHARE OF THE GLOBAL RECOVERY AS A RESULT OF
HIGHER COMMODITY PRICES AND INCREASED INTERNATIONAL INVESTMENT. LOW ECONOMIC
ACTIVITY, LACKLUSTRE CONSUMER SPENDING, AND THE FEAR OF Y2K TECHNOLOGY FALLOUT
DEPRESSED THE EXPECTED MILLENNIUM BOOM IN TOURISM, TRAVEL, HOTEL USAGE,
CATERING AND THE RESTAURANT TRADE. THE CONTINUING SPATE OF BOMB ATTACKS IN CAPE
TOWN HAS ALSO DETERRED FOREIGN VISITORS. IN ADDITION, A DECLINE IN PRODUCTION
VOLUMES AND THE UNEVEN DISTRIBUTION OF PUBLIC HOLIDAYS IN APRIL, WHICH HAD A
NEGATIVE IMPACT ON FACTORY RECOVERIES, THE FLOODS IN MOZAMBIQUE AND IN PARTS OF
SOUTH AFRICA, AND THE POLITICAL LAND CRISIS IN ZIMBABWE FURTHER EXACERBATED THE
DIFFICULT TRADING CONDITIONS AND DETRACTED FROM THE PROGRESS WE HAVE MADE AND
HOPED TO MAKE IN THESE MARKETS.
INTERNATIONAL ECONOMIC GROWTH ALSO STUMBLED IN THE FIRST QUARTER AND THE PULL
BACK ON WALL STREET SEVERELY IMPACTED THE JOHANNESBURG STOCK EXCHANGE AND
GENERAL MARKET SENTIMENT. THE LAGGING EFFECT OF HIGH INTEREST RATES AND
CONTINUING HIGH OIL PRICE HAS ALSO CONTRIBUTED TO LOWER CONSUMER EXPENDITURE.
GROWTH OPPORTUNITIES IN SOUTH AFRICA REMAIN SUBSTANTIAL AND BIDVEST, WITH ITS
COMMITTED, ENTREPRENEURIAL AND OPPORTUNISTIC MANAGEMENT, ATTENTION TO DETAIL,
STRICT COST CONTROL AND STRONG BALANCE SHEET, WILL CONTINUE TO ANTICIPATE AND
EXPLOIT OPPORTUNITIES WHEREVER THEY ARISE. BIDVEST'S STRONG HEAD OFFICE TEAM IS
ABLY SUPPORTED BY A DECENTRALISED MANAGEMENT THAT IS ENCOURAGED TO RETAIN ITS
ENTREPRENEURIAL FOCUS.
BIDVEST'S DISTRIBUTION CAPACITY HAS BEEN THE CORNERSTONE OF ITS STRATEGY AND
THE FUTURE USE OF THE INTERNET FOR E-COMMERCE, TOGETHER WITH BIDVEST'S
FORMIDABLE PHYSICAL INFRASTRUCTURE, MAKES A UNIQUE, PROFITABLE COMBINATION.
BIDVEST'S E-COMMERCE INITIATIVE WILL INITIALLY ENABLE IT TO CEMENT AND EXPLOIT
ITS SYNERGIES AND TO REDUCE PROCESS COSTS. THESE E-COMMERCE INITIATIVES ARE
ANOTHER STEP ON THE CONTINUED DRIVE TO IMPROVE THE EFFICIENCIES OF BIDVEST'S
DISTRIBUTION BUSINESS.
BIDVEST PLANS TO TAKE A LEADING ROLE IN THE PROVISION OF BUSINESS-TO-BUSINESS
E-COMMERCE SOLUTIONS IN SOUTH AFRICA, ENABLING ELECTRONIC TRADE TO BIDVEST
COMPANIES, CUSTOMERS, SUPPLIERS AND OTHERS. BIDVEST POTENTIALLY OWNS THE
LARGEST IT NETWORK IN SOUTH AFRICA AND INTENDS CAPITALISING ON ITS INTELLECTUAL
PROPERTY THROUGH I-FUSION. WHEN ONE COMBINES THIS WITH ITS LOGISTICS AND
DISTRIBUTION BUSINESSES, BIDVEST'S E-COMMERCE POTENTIAL WILL BE UNPARALLELED.
THROUGH THE ACQUISITION OF I-FUSION, BIDVEST INTENDS PROCEEDING WITH THE
IMPLEMENTATION OF A COMMON NETWORKING PLATFORM, AND TO CREATE A 'SUPER PORTAL'
THROUGH WHICH ALL BIDVEST COMPANIES AND ITS EXTENSIVE CLIENT BASE, LOCALLY AND
INTERNATIONALLY, CAN TRADE. IT IS ANTICIPATED THAT THIS WILL TAKE SOME TIME TO
IMPLEMENT AND THAT THE FINANCIAL BENEFITS WILL ONLY BE FELT IN THE FUTURE.
THE INHERENT SYNERGIES BETWEEN THESE EXISTING ADVANTAGES WILL FORM THE SOLID
FOUNDATION THAT WILL ELEVATE BIDVEST TO THE FOREFRONT OF MODERN, IT-BASED
BUSINESS DEALING IN SOUTH AFRICA. WHEN THIS IS INCORPORATED INTO RENFIN'S NEW
BANKING FOCUS (SEE BELOW), IT IS EASY TO UNDERSTAND WHY BIDVEST SEES ITSELF AS
POISED AT THE GATEWAY TO A VAST ARENA OF FUTURE PROFITABILITY AND GROWTH.
FOLLOWING THE PURCHASE OF ONS EERSTE VOLKSBANK AND THE AWARD BY THE RESERVE
BANK OF A FULL BANKING LICENCE, BIDVEST HAS CREATED RENNIES BANK LIMITED.
RENFIN INTENDS USING THE LICENCE FOR A CONTROLLED EXPANSION OF ITS FOREIGN
CURRENCY TRADING, WHICH HAD PREVIOUSLY BEEN RESTRICTED TO TRAVEL FOREX, AND IT
WILL BE ABLE TO OFFER FULL TRADE AND TRADE-RELATED FINANCE AND ASSET-BACKED
FINANCING. GIVEN THE HUGE IMPORT AND EXPORT CUSTOMER BASE IN BIDFREIGHT, RENFIN
HAS SIGNIFICANT TRADE-FINANCING OPPORTUNITIES AND THIS COULD BE OFFERED AS PART
OF A COMPLETE LOGISTICS PACKAGE WITH A GLOBAL REACH. (FOR MORE DETAILS, SEE OUR
DIVISIONAL REVIEWS.)
BIDVEST HAS SUCCESSFULLY INCORPORATED ITS 100% ACQUISITION OF ISLAND VIEW
STORAGE (IVS), THE BULK LIQUID AND GAS STORAGE COMPANY. IVS IS A NATURAL
EXTENSION TO BIDVEST'S EXISTING STORAGE FACILITIES AND IS LESS PRONE TO
FLUCTUATIONS IN IMPORT AND EXPORT VOLUMES. IVS IS A HIGHLY CASH-GENERATIVE
BUSINESS WITH A STRONG MANAGEMENT TEAM, IT HAS WELL-MANAGED ASSETS, AN ISO 9000
ACCREDITATION AND A SOLID CUSTOMER BASE.
IN THE PAST, HIGH INTEREST RATES AND A STRONG SHARE PRICE MADE BIDVEST DEBT
AVERSE. CURRENT CONDITIONS ARE MORE FAVOURABLE TO INCREASE GEARING AND, GIVEN
THE OPPORTUNITY FOR INVESTMENT, BIDVEST WOULD DEFINITELY CONSIDER FURTHER
FUNDING THROUGH ADDITIONAL DEBT, AND WOULD TARGET A DEBT-TO-EQUITY RATIO OF
40%. GEARING WOULD REDUCE ITS WEIGHTED AVERAGE COST OF CAPITAL. BIDVEST HAS A
STRONG BALANCE SHEET AND WILL CONTINUE TO MAXIMISE ITS CASH RESOURCES.
BIDVEST'S ORGANIC GROWTH IS SUFFICIENT TO SUSTAIN GOOD RETURNS AND WILL
STRENGTHEN WITH THE IMPROVING SOUTH AFRICAN ECONOMY. WITH THE EXPLOITATION OF
THE UNTAPPED SYNERGIES WITHIN THE LOCAL OPERATION, AND AS THE SYNERGIES BETWEEN
BIDVEST'S OFFSHORE AND SOUTH AFRICAN OPERATIONS DEVELOP, THIS FORM OF GROWTH
WILL BE COMPOUNDED.
BIDVEST CONTINUES TO SEEK ACQUISITIVE GROWTH OPPORTUNITIES, LOCALLY AND
OFFSHORE, WHERE A FIT WITH ITS STRATEGIC FOCUS ON SERVICE, TRADING AND
DISTRIBUTION IS MET AND WHERE IT WILL OFFER BIDVEST A MAJOR MARKET POSITION.
BIDVEST REMAINS RELUCTANT TO TARGET HOW MUCH OF ITS EARNINGS WILL BE GENERATED
OFFSHORE SINCE ITS MEASURE OF SUCCESS REMAINS THE PERFORMANCE OF THE INDIVIDUAL
BUSINESS UNITS WHEREVER THEY MAY BE LOCATED.
IN LINE WITH ITS PHILOSOPHY OF ECONOMIC EMPOWERMENT OF PREVIOUSLY DISADVANTAGED
GROUPS THROUGH JOB CREATION AND ENRICHMENT, BIDVEST HAS TO DATE GENERATED R250
MILLION FOR GROUPS SEEKING TO REDRESS IMBALANCES OF THE PAST. BIDVEST'S 60 000
EMPLOYEES ARE ALSO BEING ACTIVELY EMPOWERED THROUGH TRAINING PROGRAMMES AND AN
EQUAL-OPPORTUNITY POLICY BASED ON MERIT AND PERFORMANCE. JOINT VENTURES WITH
PREVIOUSLY DISADVANTAGED GROUPS HAVE CONTRIBUTED TO BOTH THE COMMUNITIES IN
WHICH THEY OPERATE AND TO BIDVEST'S GROWTH.
LOCALLY, THE FULL POTENTIAL OF A SIZEABLE MIDDLE CLASS, EMERGING FROM
PREVIOUSLY DISADVANTAGED POPULATION GROUPS, THAT ASPIRES TO IMPROVE ITS LIVING
STANDARDS AS IT BEGINS TO PARTICIPATE IN SOUTH AFRICA'S EMERGING-MARKET ECONOMY
WILL BENEFIT BIDVEST'S UNDERLYING COMPANIES, WHICH ARE IDEALLY POISED TO TAKE
ADVANTAGE OF THIS DEMOGRAPHIC TREND.
THE COMMITMENT TO RESTRUCTURE STATE ASSETS AND THE PRIVATISATION BLUEPRINT
DRAWN UP BY GOVERNMENT COULD HAVE A POSITIVE IMPACT ON BIDVEST'S BUSINESS
UNITS. BIDFREIGHT, BIDVEST'S TERMINAL BUSINESS, HAS A DEPTH AND RANGE THAT IS
UNPARALLELED AND BIDVEST IS STRATEGICALLY AND PHYSICALLY WELL-PLACED IN RESPECT
OF PRIVATISATION. CATERPLUS, WHICH DOES NOT SUPPLY THE GOVERNMENT'S FOOD
REQUIREMENTS, COULD BENEFIT AS THE STATE OUTSOURCES ITS CATERING NEEDS WHICH
WILL SHIFT THE SUPPLY FROM THE MANUFACTURER TO THE FOODSERVICE SECTOR. BIDSERV,
COULD BENEFIT ONCE SECURITY, CLEANING, LAUNDRY AND OTHER CONTRACTS ARE
OUTSOURCED. SIMILARLY, BIDOFFICE AND RENNIES FINANCIAL SERVICES AND THE RENFIN
TRAVEL OPERATIONS COULD ALSO BENEFIT.
BIDVEST'S EXPANDING REACH IS CONFIRMATION THAT ITS STRATEGY OF CONTROLLED
ENTREPRENEURSHIP IS A DYNAMIC, SUCCESSFUL FORMULA. WHILE BIDVEST'S OPERATIONS
ARE RUN ON A DECENTRALISED BASIS, KEY ISSUES ARE MONITORED AND CONTROLLED FROM
THE CENTRE AND AT DIVISIONAL LEVEL. HEAD OFFICE IS ACTIVELY INVOLVED IN MANY
WAYS, RANGING FROM MOTIVATION TO ASSISTANCE WITH BUSINESS FUNCTION
IMPROVEMENTS, PROVIDING FOCUS, ADVICE ON ISSUES OF TACTICAL IMPORTANCE, OVERALL
STRATEGIC DIRECTION AS WELL AS ACQUISITION SUPPORT AND CORPORATE FINANCE. ALL
MAJOR ACQUISITIONS ARE REVIEWED AND IMPLEMENTED AT THE CORPORATE LEVEL.
HEAD OFFICE IS RESPONSIBLE FOR THE GOVERNANCE OF THE GROUP STRUCTURE AND
EXERCISES STRINGENT FINANCIAL CONTROL WITH DAILY, WEEKLY AND MONTHLY FLASH
REPORTING AT BOTH DIVISIONAL AND HEAD OFFICE LEVEL. MANAGEMENT REPORTS MONTHLY
AND THE BOARD MEETS QUARTERLY. BIDVEST MAKES USE OF BOTH INTERNAL AND, WHERE
NECESSARY, EXTERNAL AUDITORS WHO ALSO REVIEW ITS SIX-MONTHLY RESULTS.
IN ACCORDANCE WITH RECENTLY AMENDED GENERALLY ACCEPTED ACCOUNTING PRACTICE WITH
REGARD TO DEFERRED TAX, BIDVEST HAS CHANGED ITS ACCOUNTING POLICY AND NOW
RECOGNISES DEFERRED TAX ASSETS WHEN IT IS PROBABLE THAT SUFFICIENT TAXABLE
PROFITS WILL BE AVAILABLE. THIS CHANGE HAS RESULTED IN AN ADDITIONAL TAXATION
CHARGE OF R63,8 MILLION FOR THE CURRENT YEAR (1999: R41,6 MILLION).
A FINAL CASH DIVIDEND OF 50,4 (1999: 34,1) CENTS PER SHARE HAS BEEN DECLARED
AND A CAPITALISATION ISSUE OF SHARES HAS BEEN AWARDED IN THE RATIO OF 0,5535
NEW SHARES PER 100 SHARES HELD, BEING EQUIVALENT TO 27,9 (1999: 33,4) CENTS PER
SHARE IN LIEU OF DIVIDEND TO MEMBERS REGISTERED IN THE BOOKS OF THE COMPANY AT
THE CLOSE OF BUSINESS ON SEPTEMBER 15 2000. THE TOTAL VALUE AWARDED TO
SHAREHOLDERS IS 78,3 (1999: 67,5) CENTS PER SHARE.
BIDVEST HAS PROVED ITS ABILITY TO PERFORM WELL IN SOUTH AFRICA'S DIFFICULT
ECONOMIC ENVIRONMENT OVER THE PAST SEVERAL YEARS AND IT IS BELIEVED THE GROUP
WILL BENEFIT FROM THE EXPECTED UPSWING IN THE ECONOMY AND THE REAL GDP GROWTH
THAT IS FORECAST. THE COUNTRY HAS ENTERED A NEW ECONOMIC ERA, WITH LOWER
INFLATION, LOWER TAXATION, LOWER INTEREST RATES AND REAL GDP GROWTH. BIDVEST IS
INVESTED IN GROWTH SECTORS IN INDUSTRY AND WILL BENEFIT FROM THIS IMPROVEMENT
AS IT IS LEAN AND WELL-POISED FOR FUTURE GROWTH, LOCALLY AND ABROAD.
OPERATIONAL REVIEW
BIDFREIGHT
DESPITE SUBDUED TRADING CONDITIONS, OPERATING INCOME SURGED 96,2% YEAR ON YEAR,
AND NOW STANDS AT R311,2 MILLION, MAKING BIDFREIGHT, A 25,4% CONTRIBUTOR TO
BIDVEST'S OPERATING INCOME. YEAR-ON-YEAR IMPROVEMENTS FLOWED PARTLY FROM NEW
CLIENT ACQUISITIONS, BUT MORE SPECIFICALLY FROM A PROGRAMME OF FOCUSED COST
REDUCTION AND THE BENEFITS OF A STRATEGIC REPOSITIONING OF MANY OF BIDVEST'S
OPERATIONS.
THE RENNIES ACQUISITION WAS BEDDED DOWN WITH A SIGNIFICANT COST REDUCTION OVER
THE PREVIOUS YEAR, ALTHOUGH LOWER INTEREST RATES REDUCED REVENUE IN RENFREIGHT
CIRCLE AND SAFCOR. ALL TERMINAL ACTIVITIES EXPERIENCED STRONG ORGANIC GROWTH
AND THE IVS ACQUISITION HAS HAD A POSITIVE IMPACT ON PROFITS WHILE NICHE
LOGISTICS OPERATIONS ARE NOW ALL PROFITABLE AND THE TREND TO OUTSOURCING WILL
PROVIDE FURTHER GROWTH. FOLLOWING THE ZIMBABWE TURMOIL AND THE MOZAMBIQUE
FLOODS, WHICH RETARDED MANICA'S ACTIVITIES, THE AFRICAN OPERATIONS ARE BEING
DOWNSIZED TO FOCUS MORE ON HARD-ASSET/LOW-RISK BUSINESS.
BIDOFFICE
WALTONS IMPRESSED WITH A RECORD YEAR, WHICH SHOULD NOT DETRACT FROM THE
DIVISION'S OTHER MAIN PERFORMERS - KOLOK, MINOLCO, LITHOTECH, CONTRACT, AND
DAUPHIN; ALL DELIVERED ON THE PROMISE INHERENT IN STRONG TRADING OUTLINED IN
OUR INTERIMS. THEY ARE WELL-POISED FOR E-COMMERCE TRADE AND FOR THE ANTICIPATED
BENEFITS OF GOVERNMENT OUTSOURCING. ORGANIC GROWTH IN OPERATING INCOME WAS MOST
SATISFACTORY AND IS EXPECTED TO CONTINUE, WITH ONLY BIDOFFICE'S FURNITURE
DIVISION AFFECTED BY ADVERSE TRADING CONDITIONS. FURNITURE IS EXPECTED TO
IMPROVE FOLLOWING CONSOLIDATION AND RATIONALISATION.
KOLOK'S IMPROVED FOCUS WAS ACCOMPANIED BY MASSIVE GROWTH IN HEWLETT PACKARD
CONSUMABLES DISTRIBUTION. WALTON'S CONTINUING, BUOYANT 'BACK-TO-SCHOOL' TRADE
DID NOT DETRACT FROM THE SUCCESSFUL INTEGRATION OF OFFICEMART AND ITS
COMPLEMENTARY SKILLS SET, AND SOME SUCCESS WAS ACHIEVED IN THE CONVERSION OF
RETAIL STORES. LITHOTECH, IN AN ENDORSEMENT OF BIDVEST'S ENTREPRENEURIAL
PHILOSOPHIES, SECURED LUCRATIVE DEMUTUALISATION AND MOZAMBIQUE BALLOT
CONTRACTS. LITHOTEC IS REFOCUSING TO EMBRACE INFORMATION TECHNOLOGY-BASED
ACTIVITIES.
BIDPAC
BIDPAC PRODUCED SATISFACTORY RESULTS, GIVEN THE DIFFICULT BUSINESS ENVIRONMENT
IN WHICH IT OPERATED LAST YEAR. LACKLUSTRE ECONOMIC GROWTH, EXACERBATED BY
GENERAL DE-STOCKING WITHIN THE COMPANY'S CUSTOMER BASE RETARDED TRADE.
MANUFACTURING VOLUMES OVER A BROAD RANGE OF PRODUCTS DECLINED AND THE RESULTANT
LOWER ECONOMIES OF SCALE AND UNEVEN DISTRIBUTION OF APRIL PUBLIC HOLIDAYS
IMPACTED ON ITS OVERALL PERFORMANCE.
BUT EXCELLENT EXPENSE MANAGEMENT IN THE MANUFACTURING, SELLING AND DISTRIBUTION
KEPT INCREASES WELL BELOW THE INFLATION RATE. BIDPAC WAS THUS ABLE TO MAINTAIN
GROSS AND OPERATING MARGINS, A COMMENDABLE END RESULT GIVEN THE CONDITIONS.
SUCCESSFUL ASSET MANAGEMENT, FURTHER REDUCTIONS IN BAD DEBTS AND GOOD RETURN ON
FUNDS AS WELL AS AN ENHANCED COMPUTER INFRASTRUCTURE BODE WELL FOR THE FUTURE.
BIDPAC'S STATIONERY BUSINESSES - SILVERAY, HI-MAUR AND OZALID - PRODUCED
SATISFACTORY RESULTS AND THEY FURTHER IMPROVED THEIR LEADERSHIP POSITION AND
MARKET SHARE. BIDPAC HAS THE MANUFACTURING AND DISTRIBUTION CAPACITY TO MEET
INCREASED DEMAND WHEN THE LOCAL ECONOMY RECOVERS.
BIDSERV
THE DIVISION CONSOLIDATED ITS MARKET SHARE AND IS POISED TO BENEFIT FROM
OUTSOURCING TRENDS IN THE PRIVATE AND PUBLIC SECTORS. GOOD HALF-YEAR RESULTS
WERE BOLSTERED BY CONTINUING, STRONG PERFORMANCES, PARTICULARLY FROM STEINER
HYGIENE AND PRESTIGE CLEANING SERVICES, WHO CONSOLIDATED THEIR MARKET
LEADERSHIP POSITIONS; SHIELD SECURITY, WHICH MADE SIGNIFICANT INROADS INTO THE
SECURITY INDUSTRY; AND COMMERCIAL SUNDRIES AND QMS, WHO DELIVERED SUBSTANTIAL
IMPROVEMENTS IN PROFITABILITY.
THE LAUNDRY AND CLEANING DIVISIONS BENEFITED BY SECURING MAJOR, LONG-TERM
CONTRACTS ARISING FROM BUSINESSES OUTSOURCING NON-CORE FUNCTIONS. OUTSOURCING
IS BEING DRIVEN BY BELT TIGHTENING AND A GENERAL REFOCUSING ON CORE
COMPETENCIES IN THE PRIVATE SECTOR.
CATERPLUS
THE DIVISION THREW OFF THE EXTREME DEPRESSION IN THE CATERING MARKET TO BOOST
OPERATING INCOME BY 154,9% TO R289,7 MILLION. GROWTH IS EXPECTED TO CONTINUE ON
THE BACK OF NEW CONTRACTS, ADDITIONAL BENEFITS FROM THE BLUE MARINE ACQUISITION
AND ANTICIPATED GROWTH IN THE CONVENIENCE/FAST-FOOD SECTOR. THE 433,9% INCREASE
IN CATERPLUS'S FOREIGN CONTRIBUTION WAS LARGELY A RESULT OF THE INCORPORATION
OF 3663 FIRST FOR FOODSERVICE FOR THE FULL YEAR. THE INTENTION TO INCORPORATE
CATERPLUS INTO BIDVEST PLC AT THE APPROPRIATE TIME WILL CREATE THE LARGEST
FOODSERVICE COMPANY OUTSIDE THE UNITED STATES. THE 'FIRST FOR SERVICE' TRAINING
PROGRAMME HAS BEEN SUCCESSFULLY INTRODUCED TO SOUTH AFRICA FROM 3663 IN THE UK
AND SHOULD UNLOCK BENEFITS AS THIS CULTURE IS EMBRACED. IMPROVED BUYING
BENEFITS AND BETTER PERFORMANCE FROM PREVIOUSLY UNDER-PERFORMING BRANCHES WERE
ALSO ACHIEVED AND WILL CONTINUE TO UNDERPIN A VERY HEALTHY BOTTOM LINE. THE
REAL POTENTIAL OF CONSUMER PATTERNS TO CONVERGE WITH GLOBAL FOOD TRENDS, WHERE
PEOPLE COOK LESS AND SPEND MORE ON PREPARED FOOD, HOLDS EXCITING POTENTIAL AS
THE LOCAL ECONOMY BECOMES MORE SOPHISTICATED AND AFFLUENT.
COMBINED FOODS
CROWN NATIONAL, THE LEADING MANUFACTURER AND SUPPLIER OF PROCESSED FOODS AND
INGREDIENTS, MAINTAINED ITS POSITION AS MARKET LEADER, DESPITE DIFFICULT
TRADING CONDITIONS IN A HIGHLY COMPETITIVE MARKET. A MARKED DECREASE IN
CONSUMER SPENDING ON RED MEAT PRODUCTS HAD AN ADVERSE EFFECT ON BUSINESS. BAD
DEBTS ARISING FROM CASH-FLOW PROBLEMS IN THE INDUSTRY FURTHER AGGRAVATED THIS
PROBLEM. TO COMBAT THIS, CROWN HAS TAKEN POSITIVE ACTION THROUGH A MAJOR
REORGANISATION AIMED AT STREAMLINING OPERATIONS TO BE MORE FOCUSED AND
INNOVATIVE. CROWN HAS ADDED TO ITS CAPACITY FOR ORGANIC GROWTH AND IS POISED TO
TAKE ADVANTAGE OF ITS PROGRESSIVE ACTIONS, WITH A MINIMUM OF INVESTMENT
NCP PRODUCTS ARE SOLD IN LESOTHO, SWAZILAND, NAMIBIA AND BOTSWANA. ITS PRODUCTS
ARE SPLIT INTO THREE BROAD CATEGORIES - CONSUMER, BAKING AND BREWING - OF WHICH
NCP HAS THE GREATEST MARKET SHARE IN BREWING, PREDOMINANTLY INTO THE BEER
POWDER MARKET. NCP HAS PERFORMED SATISFACTORILY AND STRATEGIES TO IMPROVE
PROFITABILITY IN THE COMING YEAR HAVE BEEN IMPLEMENTED.
WE ANTICIPATE STRONG ORGANIC GROWTH TO COME FROM THE BRAND DEVELOPMENT
INITIATIVES UNDERWAY. OUR CONSUMER PRODUCT, "SUPERBAKE", WILL BE EXTENSIVELY
MARKETED THIS YEAR THROUGH BOTH PRINT AND BROADCAST ADVERTISING.
CHIPKINS BAKING SUPPLIES MAINTAINED ITS POSITION AS A NATIONAL, MARKET LEADER
IN THE INDUSTRY, OFFERING HIGH-QUALITY PRODUCTS AND A DEMONSTRATION BACK-UP
SERVICE. ONCE AGAIN IT PERFORMED ABOVE INFLATION, MAINTAINING ITS 10-YEAR
RECORD OF CONSISTENT, ORGANIC GROWTH.
EQUITY-ACCOUNTED INVESTMENT AND INVESTMENT INCOME
OUR INVESTMENTS IN COMPU-CLEARING, VOLTEX, RECLAMATION GROUP, SAFREN AND
VARIOUS OTHER INVESTMENTS AND FOREX PROFITS YIELDED A SATISFACTORY RETURN.
RENNIES FINANCIAL SERVICES
THE GRANTING OF A FULL BANKING LICENCE MEANS THE DIVISION IS NOW ABLE TO OFFER
FULL TRADE AND TRADE-RELATED FINANCE AND ASSET-BACKED FINANCING TO ENHANCE
BIDVEST'S EXTENSIVE ACTIVITIES VIA RENNIES BANK, WHICH INCLUDES RENNIES FOREIGN
EXCHANGE. APPLICATION HAS BEEN MADE FOR A FULL 'AUTHORISED DEALER'S LICENCE' TO
EXPAND THE RANGE OF FOREIGN EXCHANGE SERVICES, WHICH INCLUDE OUR OFFERING A
RANGE OF PRODUCTS TO CUSTOMERS.
THE LEVERAGING OF THE IMMENSE BUYING POWER OF THE COMBINED TRAVEL BUSINESSES
CONTRIBUTED POSITIVELY TO EARNINGS, WHICH GREW BY 35% OVER THE PREVIOUS YEAR.
E-COMMERCE AND THE ON-LINE BOOKING PRODUCT WILL POSITION RENFIN AHEAD OF
COMPETITORS AND GIVE IT THE ELECTRONIC INTERNET BASE, WHICH IS SO IMPORTANT FOR
ITS FUTURE.
THE USUAL SEASONAL TRAVEL IN THE LEAD UP TO NEW YEAR DID NOT MATERIALISE DUE TO
Y2K FEARS AND THE FORECAST MILLENNIUM EFFECT WAS HAMPERED BY VERY HIGH PRICES
AND FOREIGN TOURIST CANCELLATIONS BROUGHT ABOUT BY THE CAPE TOWN BOMBINGS. THE
EARLY MONTHS OF THE SECOND HALF OF THE YEAR WERE FLAT, BUT A TREND TO
SIGNIFICANTLY STRONGER GROWTH EMERGED IN THE CLOSING MONTHS AND APPEARS TO BE
CONTINUING.
BIDVEST PLC
INTERNATIONALLY, BIDVEST PLC CONTINUED FROM STRENGTH TO STRENGTH. TURNOVER
INCREASED BY 492% TO GBP1 BILLION (1999: GBP145 MILLION) AND OPERATING INCOME
GREW BY 417% TO GBP19 MILLION (1999: GBP3 MILLION). BIDVEST PLC ACCOUNTED FOR
11% OF THE GROUP'S ATTRIBUTABLE INCOME. BIDVEST PLC'S STRATEGY AND FOCUS REMAIN
CLEARLY DEFINED IN FOODSERVICE DISTRIBUTION. STRATEGIC ACQUISITIONS IDENTIFIED
IN AUSTRALIA AND NEW ZEALAND HAVE BEEN CAPITALISED ON AND ARE NOW TRADING WELL.
CUSTOMERS IN THE UK HAVE OPERATIONS AND REQUIRE SERVICE IN EUROPE AND BIDVEST
THEREFORE SEES AN OPPORTUNITY TO EXPAND ACCORDINGLY. EXPANSION INTO THE UNITED
STATES OF AMERICA IS ALSO A POSSIBILITY. IN TIME, IT IS INTENDED TO INCORPORATE
CATERPLUS, CURRENTLY OWNED BY BIDVEST, INTO BIDVEST PLC, WHICH IT IS BELIEVED
WILL CREATE THE LARGEST FOODSERVICE COMPANY OUTSIDE THE UNITED STATES.
3663 FIRST FOR FOODSERVICE
3663 FIRST FOR FOODSERVICE HAS ALREADY JUSTIFIED ITS INCLUSION INTO BIDVEST AND
THE TRADING PERFORMANCE IN THE FIRST FULL YEAR HAS BEEN MOST SATISFACTORY, WITH
SIGNIFICANT INCREASES ACHIEVED IN OPERATING PROFIT AND RETURN ON FUNDS
EMPLOYED. GROWTH HAS BEEN ORGANIC, BUT BIDVEST PLC CONTINUES TO SEEK
COMPETITIVE ACQUISITION OPPORTUNITIES IN THE UNITED KINGDOM THAT WILL FURTHER
DISTRIBUTION AND NATIONAL COVERAGE. WHOLESALE WAS A STAR PERFORMER AND THE
DIVISION IS ON TRACK FOR INCREASED MARGIN IMPROVEMENT ON THE BACK OF A NEW,
REBRANDED PRODUCT RANGE. 3663 WAS VOTED THE BEST "WHOLESALE SERVICE PROVIDER"
IN THE UK FOR THE SECOND YEAR RUNNING. 3663 HAS CREATED ITS OWN BUYING
DEPARTMENT AND THE RESULTANT BUYING BENEFITS WILL STILL FLOW THROUGH. TODAY,
3663 IS A LEADING UK FOODSERVICE DISTRIBUTOR, WITH 33 DEPOTS NATION-WIDE.
THE MINISTRY OF DEFENCE GBP3 MILLION CONTRACT IS PROVIDING INVALUABLE
EXPERIENCE IN MANAGING OPEN-BOOK CONTRACTS WHICH WILL BE CRUCIAL FOR THE
DEVELOPMENT OF SIMILAR BUSINESS IN CONTRACT DISTRIBUTION. CONTRACT DISTRIBUTION
TOOK SOME INVESTMENT TO TURN AROUND, BUT MANAGEMENT IS PROUD OF ITS ACHIEVEMENT
IN RETURNING THIS DIVISION TO PROFITABILITY AFTER IT WAS BOUGHT FROM BOOKER AS
A LOSS-MAKING CONCERN.
MANAGEMENT IS CONFIDENT THAT ADDITIONAL BENEFITS, ESPECIALLY FROM THE NEWLY
FORMED BUYING DEPARTMENT, WILL RESULT IN FURTHER PROGRESS, DESPITE A SLIGHT
WEAKENING IN MARKET CONDITIONS. 3663 FIRST FOR FOODSERVICE CONTINUES TO LOOK
FOR FURTHER ACQUISITIONS.
BIDVEST AUSTRALIA
AUSTRALIAN MARGINS IMPROVED IN A CONSOLIDATING INDUSTRY. IT IS PARTICULARLY
PLEASING THAT THE AUSTRALIAN BUSINESS HAS NOW ACHIEVED NATIONAL COVERAGE, AND
OPERATES 14 BUSINESS UNITS ALONG THE EASTERN SEABOARD. EXCELLENT ORGANIC AND
ACQUISITIVE GROWTH INCREASED SALES AND OPERATING PROFITS DURING THE PERIOD,
BUILT ON A CONTINUING FOCUS ON MARGIN MANAGEMENT AND IMPROVEMENT, EXPENDITURE
CONTROL, AND ASSET MANAGEMENT. THE SIDNEY OLYMPIC GAMES IS AN UNKNOWN FACTOR AT
THIS STAGE.
CREAN FOODSERVICE
CREAN FOODSERVICE WAS ACQUIRED IN APRIL AND IS THE LARGEST INDEPENDENT
DISTRIBUTOR IN NEW ZEALAND WITH AN EXCELLENT INDUSTRY REPUTATION FOR SERVICE.
IT CONTRIBUTED TO BIDVEST PLC FOR ONLY THE LAST QUARTER OF THE FINANCIAL YEAR,
BUT HAS ACHIEVED AN IMPRESSIVE PERFORMANCE YEAR ON YEAR.
IMPROVED TRADING CONDITIONS AND FOCUS AS WELL AS PLANS TO EXPAND INTO THE SOUTH
ISLAND MARKET HOLD EXCITING POTENTIAL FOR GROWTH.
THE INTERNATIONAL COMPANIES ARE WELL-REPRESENTED IN GEOGRAPHICAL AND PRODUCT
SPREAD AND THEIR RESULTS HAVE BEEN PLEASING. ONCE BIDVEST PLC REACHES CRITICAL
MASS, WE INTEND SEEKING A LISTING ON THE LONDON STOCK EXCHANGE. BIDVEST PLC IS
CURRENTLY LISTED ON THE AUSTRALIAN AND LUXEMBOURG STOCK EXCHANGES WITH A MARKET
CAPITALISATION OF GBP240 MILLION.
-ENDS-
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