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The Bidvest Group Limited
("Bidvest" or "the Group")
Share Code: BVT ISIN Code: ZAE000008132
Results for the Half Year Ended December 31, 2001
*Revenue up by 36,6% to R19,8bn (2000:R14,5bn)
* Operating income up by 30,9% to R930m (2000: R710m)
* Headline earnings up by 21,2% to R639m (2000:R528m)
* Income attributable to shareholders up by 18,9% to R625m (2000: R526m)
* Headline earnings per share up by 18,9% to 215,9c (2000: 181,6c)
* Distribution per share up by 11,1% to 90,0c (2000: 81,0c)
* Strong operational performance across the Group
* Strong performance from Bidvest plc, in hard currency, which contributed
27,1% (2000:20,3%) to Group operating income, and 22,9% (2000:15,4%) to
Group attributable income
* SA operations delivered organic growth of approximately 20%
* Increase in weighted number of shares in issue and Group tax rate
* Other highlights:
- Renfreight integrated into Safcor Panalpina
- Empowerment group acquires 25% stake in Rennies Travel
- Purchase of the minorities of I-Fusion
- Magnum Security acquired
* Acquisitions post reporting date:
- UK listed Bidcorp plc (formerly Jacobs Holdings plc)
- Voltex Holdings Limited- pending
- Paragon Business Communications Limited- pending
* mymarket.com roll out continues with strong support from customers and
suppliers
* Rand devaluation presents opportunities for the Group
* AA- debt rating awarded to Bidvest - the highest rating yet awarded to a
SA corporate by international rating agency Fitch Ratings
Brian Joffe, Chairman, commented:
"The Group has reported very good results, despite the increase in the
group's tax rate and the average weighted number of shares in issue. If one
excludes the impact of the weaker exchange rate on our results, our
underlying performance remained strong. We have entered into a period of
opportunity for Bidvest, which we will pursue aggressively. Bidvest has a
strong balance sheet, committed management and staff and remains well
positioned to further develop its strategy of organic and acquisitive growth
in South Africa and abroad. "
February 18, 2002
Enquiries:
The Bidvest Group Limited Tel: + 27 (0) 11 481 4100
Brian Joffe, Executive Chairman Tel: + 27 (0) 11 481 4129
Jack Hochfeld, Group Corporate Finance Tel: + 27 (0) 11 481 4103
David Cleasby, Group Corporate Finance Tel: + 27 (0) 11 481 4104
College Hill Johannesburg Tel: + 27 (0) 11 447 3030
Nick Elwes
Robyn Hunt
Overview
Bidvest reported strong results for the period under review, with an
increase in revenue of 37% to R20 billion (2000: R14 billion) and growth in
operating income of 31% to R930 million (2000: R710 million). The operating
margin of 4,7% similarly to that of the comparative period. Headline
earnings increased 21% to R639 million (2000: R528 million) and headline
earnings per share grew 19% to 215,9 cents (2000: 181,6 cents), despite a
higher tax rate and an increased weighted average number of shares in issue.
Bidvest plc reported commendable results, in hard currency, and contributed
27% to Group operating income (2000: 20%), and 23% (2000: 15%) to Group
attributable income.
The South African businesses achieved organic growth of approximately 20%.
An interim cash dividend of 63 cents and a distribution out of share premium
of 27,0 cents in lieu of a dividend, a total distribution of 90,0 cents per
share (2000: total distribution of 81,0 cents per share) has been awarded to
members registered in the books of the Company at the close of business on
March 8 2002.
The Rand's devaluation has created substantial export opportunities for
Bidvest, which management are fully committed to exploit. The cost of
imported product has made locally manufactured goods from Bidpac more
competitive.
Bidvest is considering the issuance of a corporate bond, which is dependent
on the achievement of the desired level of interest rate.
Independent Corporate Issuer Rating
International rating agency Fitch Ratings assigned the Group a long-term
national rating of AA- (zaf) and a short term rating of F1. "This is the
most favourable corporate rating yet issued by Fitch Ratings to a corporate
in South Africa and endorses the Group's successful strategy whilst
highlighting the overall strength of Bidvest's operations."
Operational Review
Services Division
Bidfreight
Bidfreight produced strong results increasing operating profit by 24% with
good performances from Rennies Ships Agency and the Namibian operations.
Renfreight was integrated into and merged with Safcor Panalpina, which was
largely prompted by the recent alignment of Renfreight with the Swiss based
Panalpina Group, the longstanding international forwarding partners to
Safcor Panalpina. The amalgamation will not only lead to rationalisation
benefits, but will also provide a single focused South African operation
which is well positioned to fully service its existing client base. Early
indicators are that the merger has been a success and accepted by both
customers and staff. The full benefits will be realised in the coming year.
The Terminals division delivered a solid performance. Bidfreight was
affected by the strike actions in Portnet, as SACD are reliant on container
movements to and from the deep-sea terminals. Marine suffered as ships were
diverted from or avoided the ports. The well-publicised performance of
Spoornet continues to impact on efficiencies and the ability of the coal
terminal to export to capacity. Bidfreight are looking to assist in solving
these issues, by encouraging the move of cargo traffic from road back to
rail through constructive dialogue with both Portnet and Spoornet.
Bidserv
Bidserv reported good results for the period, 16% ahead of last year with
the trend to outsourcing continuing, driven by the successes in the core
`soft services' businesses (cleaning, security and hygiene). The laundry
operation showed signs of improvement and the janitorial supplies division
also performed well. Magnum Security was acquired with effect from July 1
2001 and the merger with Shield Security has created the third largest
guarding company in South Africa.
Bidcorp plc
In January 2002 (post the reporting date) the Group acquired a controlling
interest in the London-listed freight company Bidcorp plc (formerly Jacobs
Holdings plc) which will create a base to expand freight and outsourcing
services in the United Kingdom and Europe. Bidcorp plc should benefit as
Bidfreight and Bidserv take the opportunity to internationalise their
businesses. Bidfreight customers could benefit from an increasingly
comprehensive and efficient logistics service, from point of origin to final
destination, whilst Bidserv will be able to capitalise on international
outsourcing opportunities. The intention is to focus and restructure the
business. Rodger Graham, Chairman of Bidfreight Terminals, has been
appointed Chief Executive of Bidcorp plc and will oversee the restructuring
and expansion plans.
Rennies Financial Services
Rennies Financial Services had a difficult first half following September
11, which saw an immediate decline in turnover for both the travel and forex
divisions. In response to these events immediate cost curtailment measures,
which were embraced by employees, were introduced and the quick action
helped maintain profitability. The division's empowerment credentials were
further strengthened with the sale of a 25% stake in Rennies Travel to Women
Development Business Investment Holdings. Rennies Financial Services
acquired a 60% stake in Travel Connections. With South Africa's popularity
as a holiday destination increasing, there has been some improvement in both
the tourism and Forex businesses.
Foodservice Products Division
Caterplus
Caterplus' local performance exceeded expectation notwithstanding the flat
market conditions. Through the careful control of assets and minimising the
tendency to chase unprofitable business, growth and returns have been
maintained. Caterplus has retained its competitive edge by being a broad-
based distributor covering both ends of the dining spectrum, from "fast
food" to hotels and restaurants.
Bidvest plc produced good results, in hard currency, for the period under
review. Turnover increased by 29% and operating profit improved by 22% in
Sterling, a 75% increase in Rand terms. All divisions of 3663 First for
Foodservice in the United Kingdom performed well. John Lewis, acquired with
effect from June 1 2001, was fundamentally restructured and integrated into
the Australian business, leading to short-term disruptions which impacted on
some branches. The full benefits of the acquisition are still to be
realised. Bidvest plc has a strong balance sheet and is seeking to pursue
acquisitions in other geographical areas.
Combined Foods
Combined Foods had a mixed first half with an excellent performance from
Crown National whilst NCP Yeast continued to perform satisfactorily in a
difficult market.
Commercial Products Division
Bidoffice
Bidoffice produced an excellent set of results with the stationery division
being the main contributor. Kolok performed well doubling turnover and
gaining market share, following the collapse of a competitor. Lithotech also
performed strongly and benefited from servicing the prestigious national
census contract. Cecil Nurse was impacted by the insolvency of a major
supplier. Through the rationalisation and redesign of its entire product
range, and the creation of an innovative offering, Cecil Nurse should show
improvement later in the year.
On January 16 2002 the Competition Tribunal approved the acquisition of
Paragon Business Communications Limited. Once the acquisition becomes
unconditional, Paragon will be merged with Lithotech.
Bidpac
Bidpac had a reasonable half-year in a static market, recording a 5%
increase in operating income, which reflects excellent expense control and
asset management with a greater focus on margin management. Bidpac continues
to maximise its leading market position, whilst the currency devaluation has
created a level of local price protection and has opened opportunities for
an aggressive export drive. For the first time in a number of years, most of
Bidpac's factories are working to greater capacity. The Packaging Closure
division consolidated its position with increased demand from international
customers who rely on high levels of product quality. Silveray had a
satisfactory first half and will aggressively be focusing on export
opportunities. It is anticipated that market consolidation will continue
providing further opportunities for Bidpac.
Voltex
Bidvest announced its intention to acquire the remaining 68% of Voltex
Holdings Limited. Approvals are still required from the competition
authorities and shareholders. Voltex will become part of the Commercial
Products Division, further strengthening the critical mass of the division.
Voltex complements Bidvest's value strategy to be invested in service,
distribution and trading businesses.
BidIT
I-Fusion
Bidvest completed the acquisition of the minority shareholding of I-Fusion
Holdings Limited. I-Fusion's core activities are networking and networking
services. I-Fusion has been significantly downsized and is expected to
return to profitability in the next period
Mymarket.com
Mymarket.com continues its roll out both in South Africa and the United
Kingdom. A number of non-Bidvest companies have chosen to use the platform,
recognising the strategic value of the portal, as a route to market.
Prospects
The primary objective of Bidvest's management team is to maximise margins
and the return on funds employed. Management believe that the reported
returns can be further enhanced.
With the Rand still struggling against international currencies Bidvest will
continue to maximise export opportunities as an increasing number of
international players turn to South African companies to provide both
products and services.
The Group has a strong balance sheet both locally and abroad, and is well
placed to take advantage of acquisition opportunities that may arise in
South Africa, the United Kingdom, Europe, Australasia, and the United States
of America.
In the period ahead, the acquisitions of Bidcorp plc (formerly Jacobs
Holdings plc) a London listed freight company, Voltex and Paragon should
further enhance the Group's earnings.
Bidvest remains committed to its strategic focus as an acquisitive growth
company. This can only be achieved through a combination of good management,
critical mass and cash generative businesses.
The Group is confident that the results for the year will reflect above
average earnings growth.
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