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THE BIDVEST GROUP LIMITED - RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2003
THE BIDVEST GROUP LIMITED
Registration Number: 1946/021180/06
ISIN: ZAE000050449
Share Code: BVT
URL: www.bidvest.com
CURRENCY STRENGTH BLUNTS GOOD TRADING PERFORMANCE FROM BIDVEST
HIGHLIGHTS
- Margins improved to 5,1% from 4,6%
- Headline earnings per share increased by 2,0% to 248,0 cents
- Operating income pre-translation losses up 1,4% to R1,14 billion
- Revenue down 9,6% to R22,2 billion
- Bidvest plc headline earnings up 22% in sterling but down 8% in rand terms
- 8% organic growth in operating income for domestic operations
- Distribution per share increased by 5% to 113,4 cents
Overview
Improved operating margins and an otherwise good trading performance helped
Bidvest mitigate the effects of a rampant rand for the six months to 31 December
2003.
The Group"s operating margins improved to 5,1% from 4,6%. Stripping out the
Group"s offshore businesses and the effects of currency translations, Bidvest"s
domestic businesses delivered organic operating income growth of 8%.
"This is satisfactory given the weaker economic environment prevalent for much
of the second half of 2003," says chairman Brian Joffe.
Cash generation from the underlying businesses remains strong. The Group remains
in a net ungeared position, with ample capacity to fund current and future
acquisitions.
The Group reported a 2% increase in headline earnings per share to 248,0 cents
for the period. The major cause of the slowdown was due to the drag created by
the strong rand. The Group earns approximately a quarter of its operating profit
outside southern Africa, principally in the UK and Australasia.
"The rand has appreciated 25% against sterling since the previous interim period
in 2002," says chairman Brian Joffe. "Provided we do not see the same level of
currency volatility going forward, our financial results in the second half
should better reflect the trading performance of our underlying businesses."
The impact of the strong rand was not confined to the offshore businesses. Many
of Bidvest"s domestic operations experienced deflationary margin pressure and
revenue on the foreign currency denominated businesses declined appreciably,
most notably Safcor Panalpina adds Joffe.
Black Economic Empowerment
Dinatla Investment Holdings (Pty) Limited, the black empowerment consortium,
acquired 15% of Bidvest following shareholders" approval of the deal in November
2003. BEE ownership of Bidvest has now increased to approximately 35%. As part
of the initiative, Bidvest has appointed three consortium members to the board
as non-executive directors. In addition, a number of Historically Disadvantaged
Individuals have been employed as senior divisional executives.
Bidvest management is committed to transformation and the board is constituting
a Transformation Committee to oversee the process which will encompass all the
elements of the recently promulgated Broad Based Black Empowerment Act.
Acquisition of McCarthy Limited
Bidvest announced on November 5 2003 that, subject to the fulfilment of certain
conditions precedent, it had agreed to purchase the McCarthy shares held by a
consortium of banks and to make an offer to acquire all the ordinary stated
capital of McCarthy Limited. McCarthy shareholders holding in excess of 98% of
the ordinary shares have accepted the offer by Bidvest and it is the intention
of Bidvest to compulsorily acquire the remaining minority shareholders
interests. McCarthy will be consolidated into the Group"s results with effect
from January 2004.
Prospects
Joffe says management is confident that at current exchange rates, the impacts
of the deflationary pressures experienced by many of the Group"s operations are
largely behind them. Based on the current economic conditions, management is
budgeting for real growth in headline earnings per share for the full year to
June 30 2004 excluding McCarthy"s, which will further bolster Bidvest"s
performance.
The Services Division
The Services Division comprises Bidfreight, a leading freight management group
in southern Africa; Bidserv, operating in the outsourcing market for cleaning,
laundry, security and other services; and Rennies Financial Services, southern
Africa"s leading travel-related financial services group.
Bidfreight Terminals, which operates storage terminals and container depots at
South African ports and inland locations, performed well reporting a 23%
increase in operating income. The results reflect strong commodity export growth
out of Durban, underpinned by contracts entered into by South African exporters.
This business accounts for the largest portion of Bidfreight"s operating income.
International Forwarding"s performance was negatively impacted by the strong
rand, as a large portion of its revenue is linked to the foreign currency value
of imports. Lower domestic interest rates also impacted the financial results,
as the business also finances client disbursements. Joffe says management coped
well under difficult circumstances.
Bidcorp plc, Bidvest"s 57% owned London Stock Exchange listed subsidiary which
provides services to the automotive, shipping and property sectors, had a
difficult trading period characterised by intense competition and margin
pressure. Joffe says management focus is now on operating efficiencies,
increased capacity utilisation and achieving greater turnover.
Bidserv traded well with operating income up 25%. Demand for outsourced cleaning
and hygiene services provided by the Prestige Group and Steiner Hygiene remain
buoyant, supported by a growing blue-chip client base and steady annuity income.
Magnum Security had a difficult period, which is symptomatic of conditions
throughout the security industry. Margins are substantially below levels of two
years ago, the result of over-trading and low barriers to industry entry.
Renfin"s Travel operations performed well in flat travel market conditions,
reporting a 25% gain in operating income. Rennies Bank suffered from the
slowdown in inbound tourism, which impacted demand for its foreign exchange
services, resulting in a substantial drop in operating income.
The Foodservice Products Division
This division comprises Bidvest plc, the Group"s offshore foodservice company
listed on the Luxembourg and Australian Stock Exchanges; Caterplus, a
distributor of food products to the catering, hospitality and leisure
industries; and Combined Foods, which manufactures and distributes a range of
products to the bakery, meat and food processing industries.
Bidvest plc posted an excellent 22% rise in headline earnings per share to 8,72
pence. Converted back to rand, however, the results show a decline of 8%.
Operating income rose 24% to GBP24,7 million on a 14% gain in revenue to
GBP785,8 million. Bidvest plc in this period accounted for about 41% of The
Bidvest Group"s revenue and 25% of its operating income. The results were buoyed
by higher margins, the result of an ongoing focus on cost containment and
improvements in operational efficiencies.
In the Caterplus business, Catering Supplies delivered a 12% rise in operating
income in what were difficult trading conditions, characterised by weaker demand
from the hospitality sector and currency-induced deflationary pressures in key
product lines. These deflationary pressures are expected to ease going forward.
The Frozen Foods operation managed to hold market share and volume sales remain
brisk, however, profitability was impacted due to a relatively poor festive
season in the hospitality sector coupled with the aforementioned deflationary
pressures. There was a decline in value of major imported foodstuffs.
Speciality, a distributor of imported and locally produced luxury foods, traded
well, reporting a 4% gain in operating income. This was achieved despite intense
competition from opportunistic importers. Vulcan-Caars reported a material
decline in operating income, primarily due to declining domestic demand and
competition. Trading conditions should improve over the next six months as the
business benefits from several large international orders.
In Combined Foods, both Crown National and Chipkins Bakery Supplies performed
well with both businesses benefiting from improved efficiencies and expanded
margins.
The Commercial Products Division
This division comprises Bidoffice, which supplies, manufactures and distributes
office supplies and consumables; Bidpac, a supplier of packaging and stationery
products; and Voltex, South Africa"s pre-eminent distributor and wholesaler of
electric cable and accessories.
The Bidoffice Stationery division was adversely affected by lower margins due to
the strength of the rand, although sales volumes remained strong. Office
Automation had a good trading period, bolstered by the acquisition of Oce
Printing Systems. Office Furniture performed well and exceeded budget for the
period.
Lithotech, the backbone of the Printing division, had an excellent six months
benefiting from improved margins and a better sales mix. Lithotech France, which
manufactures and distributes business forms, reported a loss, impacted by poor
sales growth and a sluggish European economy. Many of the contract tenders which
the business was precluded from gaining when it was in liquidation are coming up
again which should assist in its turnaround.
Bidpac reported operating income of R65 million, on par with the previous
interim results. All businesses in this division suffered from the general
destocking in the industry as customers moved to take advantage of more frequent
price reductions. Buffalo Executape and Ramset achieved good results without
sacrificing margins or profitability. Silveray increased market share in the
commercial stationery sector.
Voltex"s cable and wire business experienced price deflation and squeezed
margins. Pricing pressure was less evident in the non-cable business, where
volumes remained largely unaffected. The anticipated benefits from a number of
infrastructural projects did not materialise due to delays in implementation.
Distribution
A distribution of 113,4 cents per share has been awarded.
Issued on behalf of: The Bidvest Group Limited
By: Cleardistinction Communications
Bidvest Contacts: Brian Joffe (Chairman)
Tel: (011) 772-8704
David Cleasby (Investor Relations)
Tel: (011) 772-8706
Consultancy Contact: Carol Dundas
Tel: (011) 444-0650
Mobile: 083 447-6648
The BidVest Group Limited
Results for the half-year ended December 31, 2003
Highlights
- Margins improved to 5,1% from 4,6%
- Headline earnings per share increased by 2,0% to 248,0 cents
- Operating income pre-translation losses up 1,4% to R1,14 billion
- Revenue down 9,6% to R22,2 billion
- Bidvest plc headline earnings up 22% in sterling but down 8% in rand terms
- 8% organic growth in operating income for domestic operations
- Distribution per share increased by 5% to 113,4 cents
- BEE equity ownership increased to approximately 35%
Consolidated statements of Income
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2003 2002 Percentage 2003
R"000 Unaudited Unaudited change Audited
Revenue 22 211 643 24 565 364 (9,6) 47 073 375
Operating income 1 132 873 1 128 347 0,4 2 244 121
Operating income
before translation
effects 1 140 120 1 124 621 1,4 2 259 197
Translation gains
(losses) (7 247) 3 726 (15 076)
Amortisation of
goodwill (35 532) (22 449) (64 887)
Net capital items (13 924) (877) (61 548)
Net finance expense (52 898) (36 865) (110 982)
Income before
taxation 1 030 519 1 068 156 (3,5) 2 006 704
Taxation (289 271) (299 607) (557 148)
Income after
taxation 741 248 768 549 (3,6) 1 449 556
Income from
associates 9 308 15 921 30 328
Trading profits 9 440 16 078 31 568
Share of capital items
and amortisation in
associates (132) (157) (1 240)
Outside shareholders"
interest (44 218) (52 158) (97 576)
Income attributable
to shareholders 706 338 732 312 (3,5) 1 382 308
Number of shares
in issue
(weighted 000) 302 085 310 402 308 116
Headline earnings
per share (cents) 248,0 243,2 2,0 479,0
Earnings per share
(cents) 233,8 235,9 (0,9) 448,6
Distribution per share
(cents)* 113,4 108,0 5,0 220,0
Headline earnings
The following adjustments
to income attributable
to shareholders were taken
into account in the
calculation of headline
earnings:
Income attributable to
shareholders 706 338 732 312 1 382 308
Net amortisation of
goodwill 33 928 20 543 61 449
Amortisation of
goodwill 35 532 22 449 64 887
Outside shareholders"
interest (1 604) (1 906) (3,438)
Net loss on disposal
and discontinuance of
businesses 11 146 3 285 11 626
Loss on disposal and
discontinuance of
usinesses 17 133 3 285 36 130
Tax relief (5 530) - (16 017)
Outside shareholders"
interest (457) - (8 487)
Net loss (surplus) on
disposal of fixed
assets (2 474) (1 391) 19 233
Loss (surplus) on disposal
of fixed assets (3 209) (2 408) 25 418
Tax charge (relief) 369 - (7 385)
Outside shareholders"
interest 366 1 017 1 200
Share of capital items
and amortisation in
associates 132 157 1 240
Headline earnings 749 070 754 906 (0,8) 1 475 856
Rand/Sterling exchange rates
Opening rate 12,457 15,905 (21,7) 15,905
Closing rate 11,826 13,860 (14,7) 12,457
Average rate 11,718 15,614 (25,0) 14,288
*Includes distribution from share premium.
Statements of changes in shareholders" interest
for the half year ended december 31
Half year ended Year ended
December 31 June 30
2003 2002 2003
R"000 Unaudited Unaudited Audited
Shareholders" interest at
the beginning of the period 5 412 659 5 563 617 5 563 617
Share capital issued (153) (51) (427)
- in terms of the share
incentive scheme - 35 62
- repurchase of shares by
subsidiary (153) (86) (489)
Share premium arising on
shares issued (467 419) (52 922) (537 993)
- in terms of the share
incentive scheme 112 21 240 31 780
- refund of share premium to
shareholders (350 643) - (168 797)
- net repurchase of shares
by subsidiary ( 116 888) (74 099) (400 844)
- share issue costs - (63) (132)
Movement in foreign currency
translation reserve (85 467) (306 297) (474 927)
Movement in retained income 705 069 394 843 862 389
- income attributable to
shareholders 706 338 732 312 1 382 308
- net dividends and
capitalisation issues - (309 830) (475 284)
- secondary tax on companies (1 269) (27 639) (44 635)
Shareholders" interest at the
end of the period 5 564 689 5 599 190 5 412 659
Consolidated Balance sheets
at December 31
December 31 June 30
2003 2002 2003
R"000 Unaudited Unaudited Audited
Assets
Non-current assets 5 014 424 4 889 800 4 927 958
Fixed assets 3 594 415 3 474 061 3 493 246
Intangible assets 697 524 667 229 689 218
Deferred taxation 238 429 199 229 219 340
Investments and advances 376 826 374 471 384 072
Banking and other advances 107 230 174 810 142 082
Current assets 9 740 338 9 764 886 9 643 424
Other current assets 7 544 943 7 818 756 7 282 863
Liquid funds 2 195 395 1 946 130 2 360 561
Total assets 14 754 762 14 654 686 14 571 382
Equity and liabilities
Capital and reserves 6 247 422 6 335 140 6 103 451
Shareholders" interest 5 564 689 5 599 190 5 412 659
Outside shareholders"
interest 682 733 735 950 690 792
Non-current liabilities 1 032 211 436 139 1 007 749
Deferred taxation 111 853 164 734 115 824
Post-retirement obligations 182 075 182 701 190 179
Long-term portion of
interest-bearing borrowings 682 361 70 032 665 583
Banking liabilities 55 922 18 672 36 163
Current liabilities 7 475 129 7 883 407 7 460 182
Other current liabilities 6 179 311 6 533 993 6 794 077
Current portion of
interest-bearing borrowings 1 295 818 1 349 414 666 105
Total equity and
liabilities 14 754 762 14 654 686 14 571 382
Number of shares in
issue (000) 299 632 310 526 302 679
Net tangible asset value
per share (cents) 1 624 1 588 1 561
Consolidated Cash flow statements
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2003 2002 2003
R"000 Unaudited Unaudited Audited
Cash flow from operating
activities 288 363 (119 730) 1 506 715
Operating income net of
capital items 1 118 949 1 127 470 2 182 573
Depreciation and other
non-cash items 360 508 348 795 746 026
Changes in working capital (815 593) (941 766) (261 904)
Cash generated by operations 663 864 534 499 2 666 695
Net finance expense (52 898) (36 865) (110 982)
Taxation paid (306 452) (277 656) (521 492)
Dividends paid
- Company - (311 892) (475 284)
- subsidiaries (16 151) (27 816) (52 222)
Cash effects of investment
activities (625 031) (596 856) (1 167 628)
Net additions to fixed
assets (495 846) (439 726) (991 232)
Net additions to intangible
assets (6 230) 1 564 (8 442)
Net acquisition of subsidiaries,
businesses, associates
and investments (122 955) (158 694) (167 954)
Cash effects of financing
activities (411 873) (138 334) (70 234)
Proceeds from shares issued
- Company 112 21 212 31 710
- subsidiaries 765 5 693 7 670
Purchase of treasury shares (117 041) (74 185) (401 333)
Distribution of share premium
to shareholders (350 643) - (168 797)
Net borrowings raised
(repaid) 54 934 (91 054) 460 516
Net increase (decrease) in
cash and cash equivalents (748 541) (854 920) 268 853
Net cash and cash equivalents
at the beginning of the
period 2 220 344 2 202 331 2 202 331
Currency adjustments (46 206) (154 808) (250 840)
Net cash and cash equivalents
at the end of the period 1 425 597 1 192 603 2 220 344
Net cash equivalents are
made up as follows:
Cash on hand and in
the bank 2 195 395 1 946 130 2 360 561
Bank overdrafts shown as
current portion of
interest-bearing debt (769 798) (753 527) (140 217)
1 425 597 1 192 603 2 220 344
Segmental analysis
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2003 2002 Percentage 2003
R"000 Unaudited Unaudited change Audited
Revenue
The Services
Division 8 270 884 9 398 787 (12,0) 18 292 281
Bidfreight 6 155 817 7 015 740 (12,3) 13 676 421
Bidcorp plc 754 745 1 113 447 (32,2) 1 956 688
Namsov Fishing 111 142 122 132 (9,0) 282 107
Bidserv 932 810 833 433 11,9 1 735 005
Rennies Financial
Services 316 370 314 035 0,7 642 060
The Foodservice
Products Division 10 699 263 12 227 027 (12,5) 22 557 416
Bidvest plc 9 208 085 10 764 086 (14,5) 19 733 754
Caterplus 994 489 1 021 572 (2,7) 1 970 925
Combined Foods 496 689 441 369 12,5 852 737
The Commercial
Products Division 3 884 095 3 826 074 1,5 7 584 909
Bidoffice 2 337 297 2 340 844 (0,2) 4 743 195
Bidpac 410 531 393 114 4,4 730 579
Voltex 1 136 267 1 092 116 4,0 2 111 135
Corporate Services 29 430 34 263 (14,1) 93 920
I-Fusion 25 547 32 948 (22,5) 90 665
mymarket.com 3 883 1 315 195,3 3 255
Intergroup
eliminations (672 029) (920 787) (1 455 151)
22 211 643 24 565 364 (9,6) 47 073 375
Operating income
The Services
Division 352 367 367 911 (4,2) 750 502
Bidfreight 209 040 195 170 7,1 395 400
Bidcorp plc (19 251) 1 000 834
Namsov Fishing 1 505 11 205 (86,6) 31 497
Bidserv 88 526 70 748 25,1 166 713
Rennies Financial
Services 72 547 89 788 (19,2) 156 058
The Foodservice
Products Division 438 121 453 134 (3,3) 843 449
Bidvest plc 288 868 309 272 (6,6) 569 434
Caterplus 91 195 95 569 (4,6) 179 817
Combined Foods 58 058 48 293 20,2 94 198
The Commercial
Products Division 296 503 290 848 1,9 613 342
Bidoffice 186 728 180 710 3,3 393 845
Bidpac 64 969 62 133 4,6 103 069
Voltex 44 806 48 005 (6,7) 116 428
Corporate Services 45 882 16 454 178,9 36 828
I-Fusion (2 690) (3 540) 24,0 (5 042)
mymarket.com (2 907) (3 391) 14,3 (7 242)
Group services,
investment and other
income 30 637 4 907 524,4 8 317
Group properties 20 842 18 478 12,8 40 795
1 132 873 1 128 347 0,4 2 244 121
Margins % % % %
The Services Division 4,26 3,91 9,0 4,10
Bidfreight 3,40 2,78 22,3 2,89
Bidcorp plc (2,55) 0,09 0,04
Namsov Fishing 1,35 9,17 (85,3) 11,16
Bidserv 9,49 8,49 11,8 9,61
Rennies Financial
Services 22,93 28,59 (19,8) 24,31
The Foodservice Products
Division 4,09 3,71 10,2 3,74
Bidvest plc 3,14 2,87 9,4 2,89
Caterplus 9,17 9,36 (2,0) 9,12
Combined Foods 11,69 10,94 6,9 11,05
The Commercial Products
Division 7,63 7,60 0,4 8,09
Bidoffice 7,99 7,72 3,5 8,30
Bidpac 15,83 15,81 0,1 14,11
Voltex 3,94 4,40 (10,5) 5,51
5,10 4,59 11,1 4,77
Comment
Overview and financial summary
Improved operating margins and a good trading performance helped the Group
mitigate the significant impact of the strong rand, not only in the translation
of foreign earnings but also in foreign currency denominated revenues and the
deflationary effects on prices. Operating management is to be commended on an
admirable performance in difficult and volatile trading conditions.
Revenue for the six months ended December 31 2003 declined by 9,6% to R22,2
billion largely due to the translation effects of the Group"s foreign
businesses. For translation purposes, the rand appreciated by 25% against
Sterling to a rate of R11,72. Operating income before translation losses
increased by 1,4% to R1,14 billion and margins improved to 5,1% from 4,6%.
Headline earnings per share improved by 2,0% to 248,0 cents per share.
Cash generation from the underlying businesses remains strong. The Group remains
in a net ungeared position with ample capacity to fund current and future
acquisitions.
Divisional review
The Services Division
Bidfreight
Bidfreight turned in a satisfactory performance in light of current market
conditions where rand strength had a significant impact on a number of
businesses. Operating income grew by 7,1% to R209,0 million, despite a 12,3%
decrease in revenue to R6,2 billion.
Terminals performed well, particularly in the handling of steel and forest
products. Export volumes in most commodities remained constant. Safcor Panalpina
was impacted directly by the rand"s appreciation which decreased the rand value
of foreign currency denominated billings and falling interest rates which
affected disbursement fees.
Marine had a poor operational performance compounded by reduced revenue due to
rand strength. With effect from January 1 2004, Bidlog"s operations have been
relocated within the Group with Textile and International Logistics falling
under Rennies Cargo Terminals and FedEx and EAS being grouped within Bidserv"s
aviation business cluster.
Manica continues to operate in volatile economic and political environments.
Rennies Technology Logistics continued to underperform and was sold during the
period.
Bidcorp plc"s results were impacted by tough trading conditions and intense
pressure on margins resulting in an operating loss from continuing operations of
R19,3 million. Following the poor performance, management focus is now on
operating efficiencies, increased capacity utilisation and achieving greater
revenue. A full review of Bidcorp plc"s results is available on the Bidvest
website at www.bidvest.com.
Namsov, the Namibian fishing business in which the Group has an effective 33%
interest but which is consolidated, had poor results impacted by the strength of
the Namibian currency against the US dollar and the catch conditions.
Bidserv
Bidserv turned in a good performance in spite of intense margin pressure in many
areas of the business. Revenue grew 11,9% to R932,8 million and operating income
increased 25,1% to R88,5 million.
Both Steiner and Prestige recorded improved results and the laundry operations
continued their impressive turnaround. Magnum Shield performed satisfactorily in
an industry still in turmoil and suffering from a number of insolvencies. Magnum
Shield should benefit from new contract wins going forward. A number of small
acquisitions were made enhancing the division"s service offering.
Rennies Financial Services
Revenue showed a marginal improvement to R316,4 million and in the face of a
substantially stronger currency, operating income decreased by 19,2% to R72,5
million. The travel businesses performed well in flat market conditions. Rennies
Bank had a disappointing result with a sharp decrease in operating income
primarily due to the impact of the strong rand and reduced encashments from
inbound tourists.
Cost containment remains a focal point of management in both the Travel and the
Bank operations. Progress continues in the conversion of traditional commission
revenues to fee-based income. Forex sales in dollar terms were maintained.
The strong rand, low inflation and the reduction in interest rates should see
businesses" and private individuals" travel increase. A number of small but
strategic acquisitions were made which will benefit the division"s performance
in the second half.
The Foodservice Products Division
Bidvest plc
Bidvest plc reported a superb set of results increasing operating income by
24,4% in Sterling however, the effects of translation into rands resulted in a
7% decline to R288,9 million. In the United Kingdom, 3663 First for Foodservice
performed well and gained market share. All divisions increasing operating
margins by achieving operational and buying improvements. Both the Australian
and New Zealand businesses had pleasing performances, gaining revenues and
expanding margins. Returns on the investment in national infrastructure continue
to improve. A number of acquisitions were made to enter new markets and further
enhance the service offering to customers. A full review of Bidvest plc"s
results is available on the Bidvest website at www.bidvest.com.
Caterplus
Revenue declined by 2,7% to R994,5 million and operating income declined by 4,6%
to R91,2 million.
Catering Supplies performed well notwithstanding the lower tourist numbers and
the deflationary effects in key product lines. The Frozen Foods division
maintained volumes but profitability was impacted by the decline in the value of
major imported frozen foodstuffs. Patleys traded well but was also affected by
lower gross profit on imported products and increased competition. Vulcan-Caars
have secured export orders which should see a much improved second half
performance.
Combined Foods
An excellent performance from Crown National saw the division"s revenue increase
by 12,5% to R496,7 million and operating income increase by 20,2% to R58,1
million.
Crown National benefited from increased sales to major customer segments.
Production facilities were rationalised with the opening of a new factory and
the improved efficiencies are being realised.
Chipkins Bakery Supplies improved its performance with customers focusing on
quality and service. The impact of product deflation has been offset by improved
trading margins and as a consequence, stockholding has been reduced
considerably. NCP Yeast benefited from increased sales to plant bakeries,
recording significantly improved profitability. Further rationalisation of
distribution channels with Chipkins Bakery Supplies should harness the synergies
between the businesses.
The Commercial Products Division
Bidoffice
Revenue was flat at R2,34 billion whilst operating income increased by 3,3% to
R186,7 million.
In the stationery division, Waltons and Kolok experienced pricing pressure due
to the strong currency and deflationary environment. Waltons suffered from
decreased margins on consumables and paper despite higher sales volumes. Kolok
continues to compete against the flood of `grey" imports but nevertheless
produced an acceptable result.
Office automation benefited from the acquisition of Oce Printing Systems.
Minolta experienced reasonable trading conditions but was constrained by limited
supply of stock from Japan.
Lithotech experienced an element of price deflation, however improved margins
and a better sales mix enabled the business to produce excellent results.
Lithotech France recorded a loss bedeviled by poor sales growth and the sluggish
European economy. As the business was in receivership at the time of
acquisition, Lithotech France was excluded from many of the sales tender
contracts available at the time. Many of these contracts are now coming up for
renewal.
Bidpac
Revenue increased by 4,4% to R410,5 million and operating income increased by
4,6% to R65,0 million.
Bidpac, in a volatile and uncertain environment, experienced general destocking
within its diverse customer base as customers sought to take advantage of
frequent price reductions. Manufacturing volumes declined as major exporters
felt the effects of the rand"s appreciation.
In the Packaging Closure division, Afcom GE Hudson experienced a fall in demand
from secondary exporters whilst Buffalo Executape and Ramset achieved good
results without sacrificing margins or profitability. Silveray increased market
share within the commercial stationery sector but the retail sector was
influenced by heightened competiton and destocking.
Voltex
Revenue grew 4,0% to R1,14 billion but operating income declined 6,7% to R44,8
million.
Difficult trading conditions prevailed and a general slowdown became evident in
certain markets. Voltex experienced margin pressure in the cable and wire
markets but the non-cable products remained largely unaffected. The anticipated
benefits from a number of infrastructural projects did not materialise due to
delays in implementation. Both Berzack Brothers and Eastmans continue to
contribute positively to the business.
Black Economic Empowerment
Dinatla Investment Holdings (Pty) Limited, the black economic empowerment
("BEE") consortium, acquired 15% of Bidvest following shareholders" approval of
the scheme of arrangement in November 2003. BEE equity ownership of Bidvest has
now been increased to approximately 35%. As part of the initiative, Bidvest has
appointed three consortium members to the Board as non-executive directors. In
addition, a number of historically disadvantaged individuals have been employed
as senior divisional executives.
Bidvest management is committed to transformation and the Board is constituting
a Transformation Committee to oversee the process, which will encompass all
elements of the recently promulgated Broad Based Black Empowerment Act.
Acquisition of McCarthy Limited
Bidvest announced on November 5 2003 that, subject to the fulfilment of certain
conditions precedent, it had agreed to purchase the McCarthy shares held by a
consortium of banks and to make an offer to acquire all the ordinary stated
capital of McCarthy Limited. McCarthy shareholders holding in excess of 98% of
the total ordinary shares have accepted the offer by Bidvest and accordingly it
is the intention of Bidvest to compulsorily acquire the remaining minority
shareholders" interests. McCarthy Limited will be consolidated into the Group"s
results with effect from January 2004.
Prospects
Management is confident that at current exchange rates, the impacts of the
deflationary pressures experienced by many of the Group"s operations are largely
behind them. Based on the current economic conditions, management is budgeting
for real growth in headline earnings per share for the full year to June 30
2004, excluding McCarthy Limited, which will further bolster Bidvest"s
performance.
Accounting policies
The results for the half-year have been prepared in accordance with South
African statements of Generally Accepted Accounting Practice. The accounting
policies used are consistent with those used in the financial statements for the
year ended June 30 2003.
The results for the comparative period have been restated to reflect the holding
of 2 062 180 Bidvest shares with a value of R97,4 million, held by a subsidiary
and previously included as investments and advances in the Group"s balance
sheet, as treasury shares.
Dividend declaration and distribution out of share premium
Shareholders" attention is drawn to the further announcement by Bidvest
regarding the distribution.
Notice is hereby given that an interim cash dividend of 56,7 cents per share and
a distribution out of share premium of 56,7 cents per share, in lieu of a
dividend, (collectively "the distribution"), has been awarded to members
recorded in the register of the Company at the close of business on Friday,
March 19 2004. The total value awarded to shareholders amounts to 113,4 (2002:
108,0) cents per share.
Shareholders are advised that the last day to trade "CUM" the distribution will
be Friday, March 12 2004. The shares will trade "EX" the distribution as from
Monday, March 15 2004 and the record date will be Friday, March 19 2004. Share
certificates may not be rematerialised or dematerialised during the period
Monday, March 15 2004 to Friday, March 19 2004 both days inclusive. Payment
will be made on Tuesday, March 23 2004.
In terms of the requirements of the Companies Act, the directors confirm that
after the payment of the distribution, the Company will be able to pay its debts
as they become due in the ordinary course of business, and its consolidated
assets, fairly valued, will exceed its consolidated liabilities.
In terms of article 56A of the Companies articles of association, dividends
amounting to R10 or less will be aggregated and donated to the Bidvest
Chairman"s Fund Trust, for distribution to charitable institutions.
For and on behalf of the Board
B Joffe F Titi Johannesburg
Executive Chairman Deputy Chairman February 20 2004
The Bidvest Group Limited
("Bidvest" or "the Group")
Directors
B Joffe (Executive Chairman), F Titi* (Deputy Chairman), DDB Band*, FJ Barnes
,
BL Berson#, MC Berzack, LG Boyle
, N Cassim*, LI Chimes, M Chipkin*, AA da
Costa*, MBN Dube, RW Graham, AM Griffith, LI Jacobs (Alternate LJ Mokoena), CH
Kretzmann, S Koseff*, RM Kunene*, D Masson*, BE Moffat* (Alternate T Slabbert),
P Nyman, JL Pamensky*, SG Pretorius, LP Ralphs, TH Reitman*
, DK Rosevear, AC
Salomon (Alternate HL Greenstein), CE Singer, PC Steyn, R Wainer, PD Womersley
*Non-executive
British
#Australian
Company Secretary
MA David
Transfer Secretaries
Computershare Limited, 70 Marshall Street, Marshalltown 2001, South Africa.
PO Box 61051, Marshalltown 2107, South Africa.
Registered Office
Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose 2196, South Africa.
PO Box 87274, Houghton 2041, South Africa.
Registration Number: 1946/021180/06
ISIN: ZAE000050449
Share Code: BVT
URL: www.bidvest.com
Date: 23/02/2004 07:04:23 AM Supplied by www.sharenet.co.za
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