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The Bidvest Group Limited - Results for the half year ended December 31 2004
The Bidvest Group Limited
Registration Number 1946/021180/06
ISIN ZAE000050449 Share Code BVT
("Bidvest" or "the Group" or "the Company")
Creating value and building strength from diversity
Results for the half year ended December 31 2004
Revenue up 41,6% to R31,5 bn
Trading income up 30,9% to R1,48 bn
Headline earnings per share increased by 29,1% to 319,5c
Distribution per share increased by 18,0% to 133,8c
The interim results announcement is available on the Bidvest website.
www.bidvest.com
Consolidated Income Statements
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2004 2003 2004
Restated Percentage
R000"s Unaudited Unaudited change Audited
Revenue 31 447 147 22 211 643 41,6 51 262 212
Trading income 1 481 114 1 131 232 30,9 2 552 698
Trading income
before translation
gains (losses) 1 480 769 1 138 479 30,1 2 550 247
Translation gains
(losses) 345 (7 247) 2 451
Income from
associates 11 011 10 949 27 645
Share of retained
earnings 6 573 9 308 24,691
Dividends received 4 438 1 641 2 954
Amortisation of
goodwill - (35 532) (77 622)
Net capital items (1 205) (13 924) (40 157)
Net operating income 1 490 920 1 092 725 36,4 2 462 564
Net finance expense (127 374) (52 898) (168 902)
Income before
taxation 1 363 546 1 039 827 31,1 2 293 662
Taxation (392 890) (290 540) (678 079)
Income after taxation 970 656 749 287 29,5 1 615 583
Outside shareholders"
interest (3 482) (44 218) (74 759)
Income attributable
to shareholders 967 174 705 069 37,2 1 540 824
Number of shares
in issue
(weighted 000"s) 302 991 302 085 300 643
Headline earnings
per share (cents) 319,5 247,5 29,1 546,7
Earnings per share
(cents) 319,2 233,4 36,8 512,5
Distribution per
share (cents)* 133,8 113,4 18,0 250,2
HEADLINE EARNINGS
The following adjustments to income attributable to shareholders were taken into
account in the calculation of headline earnings:
Income attributable
to shareholders 967 174 705 069 1 540 824
Net amortisation
of goodwill - 33 928 75 009
Amortisation of
goodwill - 35 532 77 622
Outside shareholders"
interest - (1 604) (2 613)
Net loss on disposal
and discontinuance
of businesses 1 528 11 146 26 202
Loss on disposal
and discontinuance
of businesses 2 021 17 133 38 595
Taxation (493) (5 530) (12 392)
Outside shareholders"
interest - (457) (1)
Net loss (surplus) on
disposal of assets (565) (2 474) 1 090
Loss (surplus) on
disposal of assets (816) (3 209) 1 562
Taxation - 369 (472)
Outside shareholders"
interest 251 366 -
Amortisation of
goodwill in
associates - 132 401
Headline earnings 968 137 747 801 29,5 1 643 526
Rand/Sterling exchange rates
Opening rate 11,285 12,457 12,457
Closing rate 10,870 11,826 11,285
Average rate 11,433 11,718 11,939
The Group has changed its accounting policies with regard to secondary tax on
companies and business combinations in accordance with recently amended
statements of Generally Accepted Accounting Practice. Secondary tax on companies
is now treated as part of the tax charge in the income statement as opposed to
an appropriation of equity. The Group no longer provides for amortisation of
goodwill arising from business combinations.
The change in accounting policies in respect to secondary tax on companies has
resulted in an additional charge to income, net of outside shareholders
interest, of R8,7 million for the half year (2003: R1,3 million) and the results
for the half year to December 31 2003 have been restated to reflect this change.
Had this change not taken place, the headline earnings per share for the half
year would have been 322,4 cents per share (2003: 248,0 cents per share), an
increase of 30,0%, and earnings per share would have been 297,4 cents per share
(2003: 233,8 cents per share) an increase of 27,3%.
The adoption of the new practice with regard to business combinations has
resulted in goodwill amortisation amounting to R73,0 million in the current year
not being charged against income. There is no requirement to restate the
comparative results.
*Includes distribution from share premium.
Segmental Analysis
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2004 2003 Percentage 2004
R000"s Unaudited Unaudited change Audited
REVENUE
The Services
Division 8 959 691 8 159 742 9,8 16 392 541
Bidfreight 7 229 849 6 910 562 4,6 13 568 808
Bidfreight southern
Africa 6 582 951 6 155 817 6,9 12 105 642
Bidcorp 646 898 754 745 (14,3) 1 463 166
Bidserv 1 392 075 932 810 49,2 2 165 517
Renfin 337 767 316 370 6,8 658 216
The Foodservice
Products Division 11 933 279 10 699 263 11,5 22 266 741
Bidvest United
Kingdom 7 921 313 7 342 981 7,9 14 161 750
Bidvest
Australasia 2 351 502 1 865 104 26,1 5 176 737
Caterplus 1 104 060 994 489 11,0 1 967 570
Combined Foods 556 404 496 689 12,0 960 684
The Commercial
Products Division 4 128 467 3 884 095 6,3 7 777 656
Bidoffice 2 639 127 2 556 102 3,2 5 140 677
Office Products 1 671 117 1 558 331 7,2 3 210 918
Printing and
Paper Conversion 968 010 997 771 (3,0) 1 929 759
Bid Industrial
Products 1 489 340 1 327 993 12,1 2 636 979
The Automotive
Products Division
McCarthy 6 933 450 - - 5 904 843
Corporate Services 135 024 140 572 (3,9) 341 033
Bidvest Network
Solutions 27 112 25 547 6,1 50 298
mymarket.com 4 650 3 883 19,8 7 908
Namsov 103 262 111 142 (7,1) 282 827
Inter-group
eliminations (642 764) (672 029) - (1 420 602)
31 447 147 22 211 643 41,6 51 262 212
TRADING INCOME
The Services
Division 425 974 350 862 21,4 728 484
Bidfreight 228 240 189 789 20,3 395 440
Bidfreight
southern Africa 222 801 209 040 6,6 417 273
Bidcorp 5 439 (19 251) - (21 833)
Bidserv 131 685 88 526 48,8 205 600
Renfin 66 049 72 547 (9,0) 127 444
The Foodservice
Products Division 495 899 438 121 13,2 889 581
Bidvest United
Kingdom 256 092 227 520 12,6 459 948
Bidvest
Australasia 68 257 61 348 11,3 137 954
Caterplus 101 330 91 195 11,1 170 343
Combined Foods 70 220 58 058 20,9 121 336
The Commercial
Products Division 293 884 296 503 (0,9) 636 944
Bidoffice 196 303 218 443 (10,1) 433 206
Office Products 116 426 119 738 (2,8) 257 065
Printing and
Paper Conversion 79 877 98 705 (19,1) 176 141
Bid Industrial
Products 97 581 78 060 25,0 203 738
The Automotive
Products Division
McCarthy 238 367 - - 217 606
Corporate Services 26 990 45 746 (41,0) 80 083
Bidvest Network
Solutions (3 772) (2 690) - 578
mymarket.com (4 821) (2 907) - (7 709)
Namsov (4 160) 1 505 - 35 201
Investment and
other income 15 994 28 996 (44,8) 7 392
Bidprop 23 749 20 842 13,9 44 621
1 481 114 1 131 232 30,9 2 552 698
Consolidated Balance Sheets
as at December 31
December 31 June 30
2004 2003 2004
R000"s Unaudited Unaudited Audited
ASSETS
Non-current assets 7 057 707 4 946 247 6 406 635
Fixed assets 3 880 924 3 594 415 3 663 846
Intangible assets 2 082 386 697 524 1 959 223
Deferred tax 237 664 238 429 262 727
Investments and advances 828 661 376 826 498 853
Banking and other advances 28 072 39 053 21 986
Current assets 11 588 987 9 808 515 11 542 389
Other current assets 10 230 368 7 613 120 9 237 228
Liquid funds 1 358 619 2 195 395 2 305 161
Total assets 18 646 694 14 754 762 17 949 024
EQUITY AND LIABILITIES
Capital and reserves 6 820 990 6 247 422 6 426 618
Shareholders" interest 6 655 620 5 564 689 6 056 612
Outside shareholders" interest 165 370 682 733 370 006
Non-current liabilities 1 785 083 976 764 1 242 783
Deferred taxation 69 466 111 853 89 554
Post-retirement obligations 219 363 182 075 225 040
Life assurance fund 8 890 - 5 106
Long-term portion of interest
bearing borrowings 1 487 364 682 836 923 083
Current liabilities 10 040 621 7 530 576 10 279 623
Other current liabilities 7 736 960 6 179 311 8 166 917
Current portion of interest
bearing borrowings 2 303 661 1 351 265 2 112 706
Total equity and liabilities 18 646 694 14 754 762 17 949 024
Number of shares in issue 304 729 299 632 302 156
Net tangible asset value
per share (cents) 1 501 1 624 1 356
Statement of Changes in
Shareholders" Interest for the half year ended December 31
Half year ended Year ended
December 31 June 30
2004 2003 2004
Restated
R000"s Unaudited Unaudited Audited
Shareholders" interest at the
beginning of the year 6 056 612 5 412 659 5 412 659
Share capital issued 129 (153) (26)
- in terms of the share
incentive scheme 129 - 127
- repurchase of shares
by subsidiary - (153) (153)
Share premium arising on
shares issued (109 962) (467 419) (559 852)
- in terms of the share
incentive scheme 95 262 112 83 617
- refund of share premium
to shareholders (205 142) (350 643) (528 163)
- repurchase of shares by
subsidiary - (116 888) (115 264)
- share issue costs (82) - (42)
Movement in non-distributable
reserves (53 192) (85 467) (172 579)
- foreign currency translation
reserve (53 192) (85 467) (169 698)
- on acquisition of business - - 1 313
- transferred to distributable
reserves - - (4 194)
Movement in retained income 762 033 705 069 1 376 410
- income attributable to
shareholders 967 174 705 069 1 540 824
- dividends (205 141) - (168 608)
- transfer from
non-distributable reserves - - 4 194
Shareholders" interest at the
end of the period 6 655 620 5 564 689 6 056 612
Consolidated Cash Flow Statements
for the half year ended December 31
Half year ended Year ended
December 31 June 30
2004 2003 2004
Restated
R000"s Unaudited Unaudited Audited
Cash flow from operating
activities (198 177) 320 500 2 798 728
Net operating income 1 490 920 1 092 725 2 462 564
Depreciation and other
non-cash items 300 023 386 732 795 780
Changes in working capital (1 208 216) (815 593) 502 505
Cash generated by operations 582 727 663 864 3 760 849
Net finance expense (91 563) (20 761) (102 907)
Taxation paid (473 664) (306 452) (645 451)
Dividends paid - Company (205 141) - (168 608)
- subsidiaries (10 536) (16 151) (45 155)
Cash effects of investment
activities (1 375 626) (625 031) (3 136 445)
Net additions to fixed assets (590 576) (495 846) (909 602)
Net disposals (additions) to
intangible assets 5 026 (6 230) (14 817)
Net acquisition of subsidiaries,
businesses, associates and
investments (790 076) (122 955) (2 212 026)
Cash effects of financing
activities (220 558) (444 010) 314 018
Proceeds from shares issued
- Company 95 309 112 83 702
- subsidiaries - 765 1 009
Purchase of treasury shares - (117 041) (115 417)
Distribution of share premium (205 142) (350 643) (528 163)
Net borrowings raised (repaid) (110 725) 22 797 872 887
Net decrease in cash and cash
equivalents (1 794 361) (748 541) (23 699)
Net cash and cash equivalents
at the beginning of the year 2 100 982 2 220 344 2 220 344
Currency adjustments (10 927) (46 206) (95 663)
Net cash and cash equivalents
at the end of the period 295 694 1 425 597 2 100 982
Net cash equivalents are made
up as follows:
Cash on hand and in the bank 1 358 619 2 195 395 2 305 161
Bank overdrafts shown as
current portion of interest
bearing debt (1 062 925) (769 798) (204 179)
295 694 1 425 597 2 100 982
Message to shareholders
Overview and financial summary
The Group has delivered satisfactory results with a 29,1% increase in headline
earning per share. The continued strength of the rand and ongoing deflationary
effects on prices of many products challenged management. The acquisitions of
McCarthy Limited and the minority interests of Bidvest plc are included in the
interim results for the first time.
Revenue for the six months ended December 31 2004 increased by 41,6% to R31,5
billion. For translation purposes, the rand appreciated by 2,4% against sterling
to an average rate of R11,43. Trading income increased by 30,9% to R1,48 billion
but margins dropped from 5,1% to 4,7% largely on account of the lower margin
McCarthy Motor business.
Cash generation from the underlying businesses remains strong, but seasonal
working capital requirements, increased capital expenditure and acquisitive
activity resulted in a net utilisation of funds. The Group"s net gearing
increased to 35,7% but a marked improvement is expected in the second half of
the year.
Divisional review
The Services Division
Bidfreight
Bidfreight southern Africa produced a steady performance considering ongoing
rand strength which had a significant impact on export volumes. Trading income
grew by 6,6% to R222,8 million on a 6,9% increase in revenue to R6,6 billion.
Terminals produced a good result in difficult trading conditions where export
volumes of coal and steel shrunk offset to some extent by good imports of
agricultural products and containerised cargos. Safcor Panalpina delivered an
improved result despite the ongoing appreciation of the rand against the dollar
and lower interest rates, which affected disbursement fees. Marine improved its
operational performance particularly in the liner business, notwithstanding rand
strength. Manica continues to operate in volatile economic and political
environments.
In the United Kingdom, Bidcorp"s Shipping and Automotive businesses other than
the Volume Transport business delivered improved results. The Volume Transport
business continues to be impacted by tough trading conditions.
Bidserv
Bidserv delivered a good performance notwithstanding margin pressure in certain
areas of the business. The results benefitted from the contribution from
strategic acquisitions. Revenue grew 49,2% to R1,39 billion and trading income
increased 48,8% to R131,7 million.
The Cleaning division continues to perform well with good sales growth
prospects. Hygiene grew steadily and new cross border opportunities are being
investigated. Laundries performed very well consolidating its leading position
in the South African market. The newly constituted Security division is
performing to expectations. The Greens division has performed well. The Aviation
division was assisted by a superb performance from Express Air Services and
Fedex continues to improve. New service offerings are being pursued to enhance
the Aviation business. The Industrial and Janitorial division, including the
acquisition of G. Fox, did particularly well.
Rennies Financial Services
Renfin"s revenue was 6,8% higher at R337,8 million however trading income
decreased by 9,0% to R66,0 million.
While the strong rand is discouraging tourist travel into South Africa, it has
not had the expected effect of stimulating outbound corporate travel and the
Group"s travel operations saw a continuation of the flat trends noted in the
prior year. Travel"s trading revenue reflected an increase of 7,0% and, although
expenses were well controlled, trading income fell by 25,0%. The introduction of
zero commission from May 1 2005 is a very welcome development and one for which
the division is well prepared. The conversion to a fee based remuneration model
is progressing according to plan in all the travel companies.
Rennies Bank delivered an improved performance following the implementation of
cost reduction initiatives and a pleasing growth in trading in the retail
network. Dealing profits were impacted by the further appreciation of the rand
across the main basket of trading currencies.
The Foodservice Products Division
Bidvest United Kingdom (3663)
3663 increased trading income in sterling by 14,3%. Overall performance was
affected by the poor summer weather and tighter trading conditions. All
divisions improved both in terms of sales and trading income. Multi-temps"
revenue growth offset higher costs of distribution and accommodation resulting
from the depot refurbishment programme. Cost savings remain an area of focus for
the Frozen division. Central Distribution improved its trading performance,
achieving efficiency gains in distribution. The fresh/chilled product extensions
through Swithenbank and Barton Meat continue to make progress. The overall
margin increased despite the reduction in activity of the Ministry of Defence in
Kuwait.
Bidvest Australasia
The Australasian region has shown a pleasing performance growing trading income
in Australian dollars by 21,6%. In particular, Crean (New Zealand) increased
trading income by 67,8% in local currency. Australia continues to consolidate
its position as the country"s leading foodservice products distributor, offering
an unparalleled distribution network and a broad service spectrum. The two
largest markets namely Sydney and Melbourne, still continue to underperform even
though there was a significant turnaround in Melbourne. Crean"s national network
is nearing completion and the focus for growth is on extracting organic
opportunities. Business development opportunities, to further enhance the
service offering into fresh/chilled and contract logistics, continue to be
sought.
Caterplus
Revenue increased by 11,0% to R1,1 billion and trading income grew by 11,1% to
R101,3 million.
Caterplus" dry groceries" results were marginally down on the prior period.
Frozen competed aggressively for increased market share, particularly in the
street trade and pursued strategic supplier alliances. Speciality delivered a
good result notwithstanding volatile trading conditions. Vulcan benefited from
its export momentum into Africa and grew trading income by 58,0%. A number of
strategic acquisitions were made to enhance the product offering which
contributed positively to the divisions" results.
Combined Foods
The momentum achieved by Crown National in the previous year continued with an
excellent performance contributing to the division"s revenue increase of 12,0%
to R556,4 million and trading income increase of 20,9% to R70,2 million.
Crown National increased sales to major local customers. The demand for own
manufactured ingredients increased substantially.
Within Bidbake, Bakery Supplies achieved volume growth and market share gains
notwithstanding aggressive competition and price deflation of up to 7,0% on
certain product lines. Baking Products maintained volumes with increased sales
to plant and independent bakeries at the expense of yeast sales to chain stores.
Rationalisation of the distribution channels continues to deliver savings and
efficiencies.
The Commercial Products Division
The operations within The Commercial Products Division have been more
effectively grouped to align management expertise and operational skills while
ensuring a clearer customer focus as a first stage in the divisions"
reorganisation. The new groupings are: Bidoffice-Office Products (Stationery,
Furniture and Automation), Bidoffice-Printing and Paper Conversion (Lithotech,
Statmark and Silveray) and Bid Industrial Products (Voltex and Afcom/Buffalo
Executape). The segmental analysis has been amended to reflect these new
groupings.
Bidoffice
Office Products
Revenue increased by 7,2% to R1,7 billion and trading income was 2,8% lower at
R116,4 million.
The overall trading environment was characterised by deflationary pressures
resulting in static and declining gross margins, particularly in the stationery
division. All players depressed prices to maintain market share. Waltons"
trading income declined despite unit volume growth. Kolok produced acceptable
results and the expansion of it"s product range is expected to benefit the
business.
Furniture delivered a strong performance with improved contributions from all
businesses.
Automation benefited from favourable trading conditions with trading income
increasing by 25,0%. A number of large contracts have been recently secured.
Printing and Paper Conversion
Revenue overall was 3,0% down at R0,97 billion with trading income down 19,1% to
R79,9 million. Revenue was negatively impacted by price decreases but the
businesses generated volume increases and market share growth.
Lithotech SA continues to focus on value-added products and services in response
to the declining demand for its more mature products. Low paper prices impacted
margins and the cost base was consciously increased by investment in new product
lines.
Lithotech France delivered a poor result due to margin pressure from ongoing
price reductions whilst suffering from capacity constraints in its long run
production lines. Further rationalisation will be implemented to improve the
ongoing operational performance.
Silveray had a difficult period experiencing price deflation in the face of
cheaper imports but increased volumes and market share.
Bid Industrial Products
Revenue increased 12,1% to R1,49 billion while trading income increased 25,0% to
R97,6 million.
Voltex"s revenue grew by 13,1% to R1,28 billion and trading income increased by
35,8% to R60,9 million. The strategic initiatives to up-skill in order to
broaden its market penetration continues to progress satisfactorily. Most
businesses traded more profitably in a buoyant market, improving overall
margins.
Afcom GE Hudson produced improved results in a competitive market driven by
deflationary pressures and cheaper imports. Continued rand strength will
necessitate ongoing cost containment.
Buffalo Executape produced a solid set of results. New DIY initiatives and
further industry penetration will add further momentum to the business.
The Automotive Products Division
McCarthy
McCarthy generated revenue of R6,9 billion and trading income of R238,4 million.
New vehicle sales benefited from higher volumes with margins remaining under
pressure. Used vehicle sales were below expectation but indications are that the
market has bottomed out. A number of new and pre-owned dealerships were opened
with further investments in the pipeline. McCarthy"s financial services
businesses continue to deliver excellent results. Budget Rent A Car recorded
much improved results, with fleet utilisation running at record levels. Yamaha
distributors continues to benefit from the buoyant consumer market.
International interest in South Africa as an automotive market have opened up
some exciting opportunities for McCarthy.
Corporate Services
Namsov, the effective 31,0% owned Namibian fishing business, had poor results
impacted by catch sizes, fuel increases and the strength of the Namibian
currency against the US dollar.
Bidvest Network Solutions resourced-up to position the business for the long
term, which impacted the trading results.
mymarket.com continues to grow its customer base with business transactions
topping an annualised R1,2 billion. Additional investment is being made to
systems to enhance it"s strategic value to the Group as a whole.
Acquisition of 17% of Tiger Wheels Limited
On January 21 2005 Bidvest announced that it had acquired approximately 17% of
Tiger Wheels Limited, with an option for a further 3,0%.
Prospects
Ongoing rand strength and deflation have driven management to increase market
share and rationalise the cost base in the face of declining selling prices
across many of the Group"s businesses. Businesses not generating acceptable
returns will be subject to intense focus, which may result in asset
realisations. Asset management and cash flow across the Group is expected to
improve in the months ahead. Management is confident of showing real growth in
earnings in the second half of the financial year against the comparative period
which included the acquisition of McCarthy Limited and the minority interests of
Bidvest plc.
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 distribution out of share premium of
133,8 (2003: 113,4) cents per share, in lieu of a dividend, has been awarded to
members recorded in the register of the Company at the close of business on
Thursday, March 24 2005.
Shareholders are advised that the last day to trade "CUM" the distribution will
be Wednesday, March 16 2005. The shares will trade "EX" the distribution as from
Thursday, March 17 2005 and the record date will be Thursday, March 24 2005.
Share certificates may not be rematerialised or dematerialised during the period
Thursday, March 17 2005 to Thursday, March 24 2005 both days inclusive. Payment
will be made on Tuesday, March 29 2005.
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.
For and on behalf of the Board
M C Ramaphosa B Joffe
Chairman Chief Executive
Johannesburg
February 25 2005
Directors M C Ramaphosa (Chairman), B Joffe (Chief Executive), D D B Band, F J
Barnes*, B L Berson**, M C Berzack, L G Boyle*, N Cassim, L I Chimes, M Chipkin
(alternate B P Connellan), A A da Costa, M B N Dube, R W Graham, A M Griffith, L
I Jacobs (alternate L J Mokoena), C H Kretzmann, S Koseff, R M Kunene, D Masson,
B E Moffat (alternate T Slabbert), P Nyman, J L Pamensky, S G Pretorius,
L P Ralphs, T H Reitman*, D K Rosevear, A C Salomon (alternate H L Greenstein),
C E Singer, P C Steyn, P D Womersley *British **Australian
Company Secretary M A David
Transfer Secretaries Ultra Registrars (Pty) Limited, 11 Diagonal Street,
Johannesburg, 2001 South Africa. PO Box 4844, Johannesburg, 2000 South Africa.
Registered Office Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose,
Johannesburg, 2196 South Africa. PO Box 87274, Houghton, Johannesburg, 2041
South Africa.
URL www.bidvest.com
Date: 28/02/2005 07:01:59 AM Supplied by www.sharenet.co.za
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