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The Bidvest Group Limited - Audited Results For The Year Ended June 30 2005
The Bidvest Group Limited
Registration number 1946/021180/06
ISIN ZAE000050449
Share code BVT
Audited results for the year ended June 30 2005
creating value and building strength from diversity
Revenue R62,8 billion +22,5%
Trading income R3,2 billion +24,4%
Headline earnings* R2,1 billion +27,1%
Headline earnings per share* 686,6 cents +26,2%
Distribution per share 306,0 cents +22,3%
Consolidated income statements for the year ended June 30
2004 Percentage 2003
R000"s 2005 Restated change Restated
Revenue 62 811 776 51 262 212 22,5 47 073 375
Trading income 3 164 646 2 544 074 24,4 2 239 662
Amortisation of
goodwill - (77 622) (63 952)
Impairment of
goodwill (10 292) - -
Capital items (17 225) (40 157) (61 548)
Net operating income 3 137 129 2 426 295 29,3 2 114 162
Net finance expense (277 680) (168 902) (110 982)
Share of retained
income of associates 28 428 23 840 29 393
Income before
taxation 2 887 877 2 281 233 26,6 2 032 573
Taxation (822 510) (674 606) (600 570)
Income after
taxation 2 065 367 1 606 627 28,6 1 432 003
Attributable to
outside shareholders (11 174) (74 759) (97 451)
Income attributable
to shareholders 2 054 193 1 531 868 34,1 1 334 552
Number of shares in
issue (weighted 000) 302 700 300 643 308 116
Headline earnings
per share (cents ) 686,6 544,0 26,2 463,8
Earnings per share
(cents) 678,6 509,5 33,2 433,1
Diluted earnings
per share (cents) 654,8 503,1 30,2 429,0
Distribution per
share (cents)- 306,0 250,2 22,3 220,0
- interim 133,8 113,4 108,0
- final 172,2 136,8 112,0
-Includes distribution from share premium
HEADLINE EARNINGS
The following adjustments to income attributable to shareholders were taken into
account in the calculation of headline earnings:
Income attributable
to shareholders 2 054 193 1 531 868 1 334 552
Net impairment and
amortisation of
goodwill 10 292 75 009 61 449
Impairment and
amortisation of
goodwill 10 292 77 622 64 887
Outside shareholders"
interest - (2 613) (3 438)
Net loss on disposal
and discontinuance of
businesses 6 595 26 202 11 626
Loss on disposal and
discontinuance of
businesses 6 054 38 595 36 130
Tax charge (relief) 1 822 (12 392) (16 017)
Outside shareholders"
interest (1 281) (1) (8 487)
Net loss on disposal
of assets 6 172 1 090 19 233
Loss on disposal
of assets 11 171 1 562 25 418
Tax relief (4 978) (472) (7 385)
Outside shareholders"
interest (21) - 1 200
Amortisation of
goodwill in associate - 851 935
Net share of capital
items in associates 1 108 401 1 240
Headline earnings 2 078 360 1 635 421 27,1 1 429 035
Rand/Sterling
exchange rates
Opening rate 11,285 12,457 15,905
Closing rate 11,957 11,285 12,457
Average rate 11,532 11,939 14,288
*Change in accounting policies
The Group has changed its accounting policies with regard to the expensing of
operating leases which have fixed determinable escalation clauses and the
amortisation of goodwill in accordance with recently amended statements of
Generally Accepted Accounting Practice and interpretations thereto. The Group no
longer provides amortisation on goodwill and goodwill is now subject to an
annual impairment test. Leases with fixed determinable escalation clauses are
now expensed on a straight-line basis over the period of the leases as opposed
to an incurred basis.
The change in accounting policies with respect to leases has resulted in an
additional charge to trading income of R19,1 million (2004: R11,6 million; 2003:
R4,5 million) and a decrease in taxation of R5,5 million (2004: R3,5 million;
2003: R1,3 million). Had this change not taken place the headline earnigs per
share would have been 691,4 (2004: 546,7; 2003: 464,5) cents per share, an
increase of 26,5%.
The adoption of the new practice with regard to business combinations has
resulted in goodwill amortisation of R150,3 million not being charged against
income in the current year. There are no requirements to restate the comparative
results.
Consolidated cash flow statements
for the year ended June 30
R000"s 2004 2003
R000"s 2005 Restated Restated
Cash flow from operating
activities 2 200 553 2 294 515 1 341 261
Operating income net of
capital items 3 147 421 2 503 917 2 178 114
Depreciation and other
non-cash items 650 423 742 849 746 026
Changes in working capital 179 449 514 083 (257 445)
Cash generated by operations 3 977 293 3 760 849 2 666 695
Net finance expense (204 472) (102 907) (110 982)
Taxation paid (742 364) (645 451) (521 617)
Dividends paid and distribution
of share premium by Company (812 592) (672 821) (640 738)
Dividends paid by subsidiaries (17 312) (45 155) (52 097)
Cash effects of investment
activities (2 052 310) (3 136 445) (1 167 628)
Net additions to fixed assets (1 208 518) (909 602) (991 232)
Net additions to intangible
assets (8 333) (14 817) (8 442)
Net acquisition of
subsidiaries, businesses,
associates and investments (835 459) (2 212 026) (167 954)
Cash effects of financing
activities (797 723) 818 231 95 220
Proceeds from shares issued
- Company 177 061 83 702 31 710
- subsidiaries - 1 009 7 670
Purchase of treasury shares (532 058) (139 367) (404 676)
Net borrowings raised (repaid) (442 726) 872 887 460 516
Net increase (decrease) in
cash and cash equivalents (649 480) (23 699) 268 853
Net cash and cash equivalents
at the beginning of the year 2 100 982 2 220 344 2 202 331
Currency adjustments 46 181 (95 663) (250 840)
Net cash and cash equivalents
at the end of the year 1 497 683 2 100 982 2 220 344
Net cash equivalents are made
up as follows:
Cash on hand and in the bank 1 707 932 2 305 161 2 360 561
Bank overdrafts shown as
current portion
of interest-bearing debt (210 249) (204 179) (140 217)
1 497 683 2 100 982 2 220 344
Consolidated balance sheets
as at June 30
2005 2004 2003
R000"s Restated Restated
ASSETS
Non-current assets 8 159 796 6 478 993 4 925 648
Fixed assets 4 274 941 3 663 846 3 493 246
Intangible assets 2 585 062 1 979 045 689 218
Deferred taxation 256 701 301 894 240 444
Investments and advances 1 001 892 512 222 384 072
Banking and other advances 41 200 21 986 118 668
Current assets 12 735 170 11 542 389 9 666 838
Other current assets 11 027 238 9 237 228 7 306 277
Liquid funds 1 707 932 2 305 161 2 360 561
Total assets 20 894 966 18 021 382 14 592 486
EQUITY AND LIABILITIES
Capital and reserves 7 564 401 6 368 419 6 054 208
Shareholders" interest 7 388 482 5 998 413 5 363 416
Outside shareholders" interest 175 919 370 006 690 792
Non-current liabilities 1 765 498 1 242 782 972 049
Deferred taxation 61 670 89 553 115 823
Post-retirement obligations 218 752 225 040 190 179
Life assurance fund 13 265 5 106 -
Long term portion of
interest-bearing borrowings 1 471 656 923 083 665 583
Long term portion of banking
liabilities 155 - 464
Current liabilities 11 565 067 10 410 181 7 566 229
Other current liabilities 10 289 726 8 297 475 6 864 425
Current portion of
interest-bearing borrowings 1 275 341 2 112 706 701 804
Total equity and liabilities 20 894 966 18 021 382 14 592 486
Number of shares in issue (000) 299 421 302 169 302 679
Net tangible asset value
per share (cents) 1 604 1 330 1 544
Statements of changes in
shareholders" interest
for the year ended June 30
2004 2003
R000"s 2005 Restated Restated
Shareholders" interest at
the beginning of the year 5 998 413 5 363 416 5 563 617
Share capital issued (137) (26) (427)
- in terms of the share
incentive scheme 240 127 62
- repurchase of shares by
subsidiary (377) (153) (489)
Share premium arising on
shares issued (962 310) (559 852) (537 993)
- in terms of the share
incentive scheme 177 349 83 617 31 780
- refund of share premium to
shareholders (607 450) (504 213) (165 454)
- repurchase of shares by
subsidiary (531 681) (139 214) (404 187)
- share issue costs (528) (42) (132)
Movement in non-distributable
reserves 483 996 (172 579) (474 927)
- foreign currency translation
reserve 482 197 (169 698) (474 927)
- on acquisition of business - 1 313 -
- transferred from (to)
distributable reserves 1 799 (4 194) -
Movement in retained income 1 868 520 1 367 454 813 146
- income attributable to
shareholders 2 054 193 1 531 868 1 334 552
- dividends and capitalisation
issues (205 142) (168 608) (475 284)
- credit goodwill transferred
to retained income 21 268 - -
- prior year adjustment - - (46 122)
- transfer from non-
distributable reserves (1 799) 4 194 -
Shareholders" interest at the
end of the year 7 388 482 5 998 413 5 363 416
Segmental analysis
for the year ended June 30
2004 Percentage 2003
R000"s 2005 Restated change Restated
REVENUE
Trading division
The Services Division 18 166 619 16 392 541 10,8 18 010 174
Bidfreight 14 583 212 13 568 808 7,5 15 633 109
Bidfreight southern
Africa 13 268 320 12 105 642 9,6 13 676 421
Bidcorp 1 314 892 1 463 166 (10,1) 1 956 688
Bidserv 2 890 769 2 165 517 33,5 1 735 005
Renfin 692 638 658 216 5,2 642 060
The Foodservice
Products Division 23 782 200 22 266 741 6,8 22 557 416
Bidvest United Kingdom 14 836 523 14 161 750 4,8 15 348 018
Bidvest Australasia 5 691 085 5 176 737 9,9 4 385 736
Caterplus 2 188 544 1 967 570 11,2 1 970 925
Combined Foods 1 066 048 960 684 11,0 852 737
The Commercial
Products Division 8 282 407 7 777 656 6,5 7 584 909
Bidoffice 5 289 021 5 140 677 2,9 5 109 289
Office products 3 387 385 3 210 919 5,5 2 717 279
Printing and paper
conversion 1 901 636 1 929 758 (1,5) 2 392 010
Bid Industrial
Products 2 993 386 2 636 979 13,5 2 475 620
The Automotive
Products Division
McCarthy 13 628 958 5 904 843 130,8 -
Corporate Services 331 845 341 034 (2,7) 376 027
mymarket.com 10 860 7 909 3 255
Bidvest Network
Solutions 52 598 50 298 90 665
Namsov fishing 268 387 282 827 282 107
Intergoup eliminations (1 380 253) (1 420 603) (1 455 151)
62 811 776 51 262 212 22,5 47 073 375
TRADING INCOME
Trading division
The Services Division 895 912 728 484 23,0 719 005
Bidfreight 498 636 395 440 26,1 396 234
Bidfreight southern
Africa 482 143 417 273 15,5 395 400
Bidcorp 16 493 (21 833) 834
Bidserv 288 783 205 600 40,5 166 713
Renfin 108 493 127 444 (14,9) 156 058
The Foodservice
Products Division 1 017 407 889 581 14,4 843 449
Bidvest United Kingdom 531 554 459 948 15,6 449 611
Bidvest Australasia 165 389 137 954 19,9 119 823
Caterplus 189 376 170 343 11,2 179 817
Combined Foods 131 088 121 336 8,0 94 198
The Commercial
Products Division 681 114 636 944 6,9 613 342
Bidoffice 440 193 433 206 1,6 439 513
Office products 270 884 257 066 5,4 257 792
Printing and paper
conversion 169 309 176 140 (3,9) 181 721
Bid Industrial
Products 240 921 203 738 18,3 173 829
The Automotive
Products Division
McCarthy 500 917 217 606 130,2 -
Corporate Services 69 296 71 459 (3,0) 63 866
mymarket.com (9 650) (7 709) (7 242)
Bidvest Network
Solutions (6 035) 578 (5 042)
Bidprop 48 978 44 621 40 795
Namsov fishing 12 589 35 201 31 497
Investment and other
income 23 414 (1 232) 3 858
3 164 646 2 544 074 24,4 2 239 662
*Basis of preparation of financial statements
The Group results as at June 30 2005 have been prepared in terms of South
African Generally Accepted Accounting Practice. With effect from July 1 2005
the Group will adopt International Financial Reporting Standards and is
currently quantifying the impact of this change. The effect of this transition
will be disclosed in the interim results for the six months to December 31 2005
and the 2006 annual report.
Audit report
The consolidated results for the year have been audited by KPMG Inc and their
unqualified audit report is available for inspection at the Company"s registered
office.
Investor presentation
Details of the presentation to investors will be available on the Bidvest
website from 14:00 on August 22 2005.
Message to shareholders
Overview and financial highlights
Bidvest delivered pleasing results, benefiting from buoyant economic conditions,
particularly in the automotive, construction and freight markets. Challenging
trading conditions resulting from deflation and the effects of the strong
currency restricted growth in certain of the South African wholesale businesses.
Our foreign foodservice businesses continue to deliver good returns in their
respective geographies. Although attention is still required to correct small
areas of under-performance, management and staff are to be congratulated on a
solid overall performance.
McCarthy Limited, acquired in January 2004, delivered record results with
Bidvest benefiting from its inclusion for the full financial year. McCarthy has
derived advantage from Bidvest"s financial strength and group resources. The
acquisitions of the minority interests of the previously listed offshore
subsidiaries have positively impacted the Group"s results. Particularly pleasing
is the progress achieved in the previously loss-making Bidcorp plc.
On July 15 2005 Bidvest announced it had reached agreement with Koninklijke
Ahold N.V to acquire Deli XL B.V., the market-leading delivered foodservice
wholesaler in the Netherlands and Belgium. This acquisition is expected to
become effective in early September 2005 and will be earnings-enhancing for the
period of its inclusion in the Group"s results in the financial year to June
2006.
Financial highlights
Revenue grew 22,5% to R62,8 billion (2004: R51,3 billion) and trading income
reached R3,2 billion (2004: R2,5 billion), an increase of 24,4%. Excluding the
benefits of the McCarthy acquisition, the Group"s trading income would have
increased by 14,5%. The Group achieved headline earnings per share growth of
26,2% to 686,6 cents (2004: 544,0 cents). The change in accounting policies with
respect to operating leases has resulted in an additional charge to trading
income of R19,1 million (2004: R11,6 million). Had this change not taken place,
headline earnings per share would have been 691,4 cents per share (2004: 546,7
cents per share), an increase of 26,5%.
The average rand translation rate appreciated against sterling by 3,4%. On a
constant currency translation of foreign businesses, headline earnings per share
would have been 692,2 cents, an increase of 27,2%.
Income attributable to shareholders increased by 34,1% to R2,1 billion (2004:
R1,5 billion), benefiting from the new practice of accounting for goodwill,
which does not require the restatement of comparatives.
Bidvest took an opportunity arising from market weakness to repurchase a further
7,5 million shares at a cost of R532,1 million. The full benefits of the
repurchases on headline earnings per share will be evident in the next financial
year.
Total distribution to shareholders increased 22,3% to 306,0 cents per share
(2004: 250,2 cents per share).In terms of the Dinatla scheme of arrangement, all
Dinatla"s normal dividends and distributions accrue to the scheme participants
or their successors and not to Dinatla itself. As a result, the final
distribution per share to shareholders increased by 16,3% to 200,34 cents per
share.
The balance sheet remains strong and cash generation has been significant.
Working capital generated R1,4 billion in the second half of the financial year,
a vast improvement from the half-year position.
An annual compound growth rate in headline earnings per share of 26,5% per year
has been achieved over the last 14 years.
Bidvest"s gearing was consciously increased to benefit from the low interest
rate environment, leveraging returns to shareholders. Management is comfortable
with current borrowing levels, retaining ample capacity to fund growth. At year-
end, the gearing ratio was 13,7% (2004: 11,5%) with interest cover of 11 times.
GBP25 million was utilised to fund the buyout of minority shareholders in
Bidcorp plc in August 2004 and a facility for a further Euro 145 million has
been arranged for the pending acquisition of Deli XL. The acquisitions of the
minority interests of Bidvest plc and Bidcorp plc have allowed management
unrestricted access to funds and released cash resources to repay some
borrowings.
Bidvest"s credit rating of AA- (zaf) was reaffirmed by Fitch Ratings following
the announcement of the pending acquisition of Deli XL. Bidvest has been
upgraded to an `A" empowerment rating by Empowerdex, highlighting progress made
on the transformation front.
Strategic review
Bidvest operates in diverse industries and across various areas of the economy,
all subject to their own dynamics. The challenge of deflation and the ongoing
impacts of a strong rand has necessitated innovative and creative solutions in
order to maintain and grow market shares. Even in a growth economy, initiative
and innovation are essential if market leadership is to be maintained and
enhanced. Our solid results are further confirmation of the resilience of
Bidvest"s entrepreneurial business model and the depth of the Group"s
management.
Bidvest is by nature an acquisitive and opportunistic company yet organic growth
has constituted a major part of the Group"s achievements over the past 18 years.
Within South Africa, many opportunities exist for growth through acquisition in
businesses allied or complimentary to the Group"s core focus of services,
distribution and trading. The internationalisation of our foodservice interests
will gain momentum with the pending acquisition of Deli XL. Other opportunities
in continental Europe and the Far East continue to be explored.
Business highlights
BEE and the Dinatla dimension
Among the most important projects in progress at Bidvest is the implementation
of processes and activities to cement broad-based black economic empowerment.
Divisional companies have increased their spend on preferential procurement,
skills development and corporate social investment in line with the Bidvest
Charter. Senior black and female appointments have been made in various
divisions. Further implementation of scorecard elements is envisaged in the
coming year.
The partnership with Dinatla continues to develop and evolve. Wherever possible
we offer business opportunities at local and regional level to Dinatla
affiliates while our empowerment partners cooperate with Bidvest companies in
the pursuit of new business.
Acquisition of 20% of Tiger Wheels Limited
Bidvest acquired approximately 20% of Tiger Wheels to develop a greater exposure
to the after-sales market in the automotive industry.
Restructure of the Board
The Board has agreed in principle to reduce the size of the statutory Bidvest
board and to create regional boards, encompassing southern Africa, UK and
continental Europe and Australasia. In doing so, the Board is conscious of the
need to preserve the fabric of the Bidvest executive team, who have played such
a large part in the success of the Group. Further details will be provided in
due course.
Prospects
Deflation and intense competition created by ongoing rand strength have enabled
management to grow market shares to offset declining selling prices. Capacity
expansion will ensure the Group"s businesses are well placed to capitalise on
growth opportunities. The consumer-led growth in South Africa appears to be
sustainable, underpinned by the increasing disposable income of an emerging
middle class, which bodes well for the positive momentum in the country. Our
businesses are in above-average growth markets which will assist in the delivery
of above-average returns to stakeholders. Those businesses which currently
underperform, remain the subject of intense focus.
The acquisition of Deli XL presents an exciting opportunity to integrate and
further develop a market-leading foodservice business in the Netherlands and
Belgium. Initial focus will fall on the implementation of a turnaround strategy
with core emphasis on extracting procurement value.
Further acquisitive and organic opportunities will continue to be sought, both
locally and internationally. Management is confident of meeting stakeholders"
expectations and showing real growth in earnings across all the Group"s
businesses.
Operational review
THE SERVICES DIVISION
Bidfreight
Revenue increased by 7,5% to R14,6 billion (2004: R13,6 billion) and trading
income rose 26,1% to R498,6 million (2004: R395,4 million).
Bidfreight southern Africa: Bidfreight southern Africa delivered a strong second
half performance assisted by good import volumes which offset lower exports.
Trading income grew by 15,5% to R482,1 million, achieved on a 9,6% increase in
revenue to R13,3 billion.
Terminals benefited from the strong demand for imports of agricultural products
coupled with excellent performance of the repositioned South African Container
Depots in the containerised goods market. The successful conclusion of the lease
negotiations with the National Ports Authority has laid the foundation for
capacity expansion and upgrades in many terminals. Difficult trading conditions
were experienced in Bluff Mechanical Appliance due to lower export volumes of
coal. Safcor Panalpina delivered a strong trading result on the back of
increased airfreight cargoes despite the reduced value per unit of cargo handled
arising from ongoing rand strength.
Marine"s liner business produced a significant turnaround resulting in a much-
improved operational performance notwithstanding the impact of rand strength on
the dollar-denominated business. Manica"s contribution to Bidfreight was muted
due to ongoing volatile economic and political environments in many sub-Saharan
countries.
Bidcorp: Revenue decreased by 10,1% to R1,3 billion (2004: R1,5 billion).
However, Bidcorp posted a significant turnaround with trading income of R16,5
million (2004: R21,8 million loss).
Following the closure of the Dunkirk route in November 2004 and a subsequent
rightsizing of the business, Shipping achieved a credible trading result. Ontime
Automotive made progress in a number of businesses however, Volume
Distribution"s poor performance reflects challenging market conditions. Asset
values in ships and property continue to underpin the Group"s investment.
Bidserv
Bidserv"s revenue increased by 33,5% to R2,9 billion (2004: R2,2 billion) and
trading income rose 40,5% to R288,8 million (2004: R205,6 million).
Bidserv recorded good results benefiting from acquisitions and strong organic
growth. Both the Cleaning and Hygiene divisions performed well and continue to
seek growth opportunities. The laundry operations, benefiting from state-of-the-
art facilities, delivered impressive growth consolidating their market-leading
position. The Security division performed satisfactorily, assisted by the full
benefits of the International Payment Systems acquisition. New management at
Magnum Shield is moving the business forward. The Greens division has performed
in line with expectations, establishing a national footprint. BidAir, the
recently established aviation services business, benefited from a strong
performance from Express Air Services. Fedex delivered an improved result. It is
the intention to merge Fedex with the business of Supaswift, in which Bidserv
will remain a strategic investor. The acquisition of G. Fox helped to bulk up
the Industrial and Janitorial division, which performed well overall.
Rennies Financial Services
Renfin"s revenue increased by 5,2% to R692,6 million (2004: R658,2 million).
Trading income decreased 14,9% to R108,5 million (2004: R127,4 million).
Renfin"s travel businesses were impacted by lower real average ticket prices,
falling overrides and their success in managing down the travel spend of
corporate clients. Trading income decreased by 27%, even though expenses were
well managed. The travel industry underwent a metamorphosis with the
introduction of zero commission on May 1 2005 by South African Airways. The
travel businesses proactively adopted the fee-based remuneration model ahead of
this change and early indications are that yields are improving. Industry
pricing has yet to settle down and it is anticipated that opportunities for
consolidation will emerge.
Rennies Bank grew trading income 22%, notwithstanding the ongoing strength and
lack of volatility in the rand, which subdued dealing profits. All companies in
the division finished the year with momentum and a growing customer-base.
Expenses were well controlled following the cost-saving initiatives implemented
in the prior year.
THE FOODSERVICE PRODUCTS DIVISION
Revenue increased by 6,8% to R23,8 billion (2004: R22,3 billion). Trading income
rose 14,4% to R1,0 billion (2004: R0,9 billion).
International Foodservice Products
Bidvest United Kingdom: Revenue of 3663 First for Foodservice increased by 9,0%
to GBP1,3 billion (2004: GBP1,2 billion). Trading income rose by 14,3% to
GBP45,7 million (2004: GBP40,0 million). 3663 First for Foodservice"s wholesale
businesses exceeded budget, in terms of sales and trading income.
The Multi-temp division achieved higher margins despite cost pressures resulting
from higher distribution and accommodation costs. The depot
replacement/refurbishment programme is gathering pace, enabling efficiencies
through economies of scale. The Frozen division consolidated the Swithenbank
operations, resulting in improved margins and trading profitability. Barton Meat
Company was impacted by lost business but is expected to make a positive
contribution next year.
Central Distribution benefited from contract wins, recording a much-improved
performance and profitability despite distribution cost pressures, particularly
as a result of the introduction of the Working Time directive. The dedicated MOD
operation performed above expectation, despite reduced activity in Kuwait.
The strategy driving growth remains the introduction of product range extensions
while ensuring 3663"s traditional base in grocery and frozen food distribution
continues to deliver good returns. Recent terrorist attacks in London are likely
to affect tourism-spend. However, it is too early to quantify the potential
impact.
Bidvest Australasia: Bidvest Australasia"s revenue increased by 9,9% to R5,7
billion (2004: R5,2 billion) and trading income rose 19,9% to R165,4 million
(2004: R137,9 million).
Bidvest First for Foodservice in Australia grew trading income by 16,2% in local
currency. Excluding the retail-focused Alice Springs business which was sold in
June 2004, trading income grew 20,6%. Bidvest Australia focused on the
consolidation of new acquisitions to strengthen its position as the country"s
leading foodservice products distributor, offering an unparalleled distribution
network and a broad-service spectrum. Melbourne delivered an improved
performance and Sydney, after focused attention, is expected to turn around in
the year ahead. In New Zealand, Crean First for Foodservice delivered an
excellent performance, increasing trading income by 75,0% in local currency.
With New Zealand"s geographic spread near completion, focus is on extracting
organic growth. Business development opportunities continue to be sought to
further enhance the service offering into fresh/chilled and contract logistics.
Caterplus
Caterplus"s revenue increased 11,2% to R2,2 billion (2004: R2,0 billion) and
trading income grew 11,2% to R189,4 million (2004: R170,3 million).
Catering Supplies delivered a much-improved second-half performance despite
ongoing deflation in key product lines. The Frozen division competed aggresively
for market share in the independent trade, improving its customer mix. Strategic
supplier alliances impacted positively on the business. Speciality traded well
and recorded most satisfactory results. Vulcan grew trading income 33% improving
margins despite lower than expected levels of export orders. Lufil and Hotel
Amenities Suppliers recorded results well ahead of expectations.
Combined Foods
Combined Foods" revenue increased by 11,0% to R1,1 billion (2004: R1,0 billion)
and trading income rose 8,0% to R131,1 million (2004: R121,3 million).
Crown National achieved good results despite deflationary conditions.
Satisfactory increases in sales to local customers were achieved and ingredient
production volumes increased substantially. The Bakery Supplies division of
Bidbake achieved volume growth and benefited from improved procurement. However,
these were negated by significant deflation in ingredient prices. Baking
Products maintained its market share with increased volumes of sales to plant
and independent bakeries. Further integration benefits will be achieved as the
new unified structures within Bidbake settle down.
THE COMMERCIAL PRODUCTS DIVISION
The operations within The Commercial Products Division have been regrouped to
more effectively align management expertise and operational skills while
ensuring a clearer customer focus. The new groupings are Bid Office: Office
Products (stationery and related) and Printing and Paper Conversion; and Bid
Industrial Products: Voltex and Packaging Closures.
Bidoffice
Bidoffice revenue increased 2,9% to R5,3 billion (2004: R5,1 billion) and
trading income increased 1,6% to R440,2 million (2004: R433,2 million).
Office Products: Office Products" revenue increased 5,5% to R3,4 billion (2004:
R3,2 billion) and trading income grew 5,4% to R270,9 million (2004: R257,1
million).
Trading conditions, influenced primarily by deflationary pressures and intense
competition, persisted with all players depressing pricing to maintain market
share. Waltons maintained its profitability. Unit volume growth was offset by
declining margin value in the paper and consumables sectors. The southern
Gauteng region is still operating below expectation, although management is
confident recent improvements are sustainable. Kolok delivered acceptable
results considering the effects of the strong rand and price cutting by
competitors to maintain market shares. Unit volumes increased by 23%.
Complementary product range extensions have provided Kolok with market potential
which will benefit the business.
The Furniture division benefited from a strong contribution from Cecil Nurse
while the other businesses continued to improve.
Office Automation grew trading income 38%, benefiting from buoyant trading
conditions and large contract wins. Minolta continues to consolidate its leading
position in the digital colour copying market.
Printing and Paper Conversion: Printing and Paper Conversion encompasses the
operating businesses of Lithotech (SA and France), Silveray Stationery (ex
Bidpac) and Statmark. Revenue was 1,5% down at R1,9 billion with trading income
down 3,9% to R169,3 million.
Revenue was negatively impacted by price decreases attributable to strong
competition and lower input costs. Margins were consciously reduced to maintain
market share.
Lithotech SA performed in line with expectations. Management continues to focus
on value-added products and services such as outsourced mailing and self-
adhesive labels in response to the declining demand for its traditional and
mature business. The improved contribution from value-added products offset the
decline experienced from mature lines.
Lithotech France had an improved second half but still delivered a loss of R10,6
million. Rationalisation of mismatched capacity was undertaken and management is
confident of an improvement in its operational performance. Silveray experienced
significant price deflation in the face of cheaper imports which, combined with
once-off reorganisation costs, negatively impacted profitability. Management
expects the results will be substantially better next year.
Bid Industrial Products
Bid Industrial Products encompasses the operating businesses of Voltex and the
Packaging Closures business of the former Bidpac (Afcom GE Hudson and Buffalo
Executape). Revenue increased 13,5% to R3,0 billion while trading income
increased 18,3% to R240,9 million.
Voltex"s revenue increased by 15,0% to R2,6 billion (2004: R2,3 billion) and
trading income rose 22,9% to R174,7 million (2004: R142,2 million). The
strategic initiative to broaden market penetration for growth continues. The
construction sector remains buoyant with many infrastructure projects in the
pipeline. New energy-saving initiatives have huge potential. All operations
traded well, improving overall margins to 6,7% (2004: 6,3%).
Afcom GE Hudson increased trading income by a credible 10,0% in an extremely
competitive market driven by low manufacturer demand, deflationary pressures and
cheaper imports. Market share was maintained and expenses were well controlled.
Buffalo Executape produced a solid set of results, growing trading income by
13,6%. Further industry penetration, new products and increased trade with sub-
Saharan Africa should enable a sustained improvement.
THE AUTOMOTIVE PRODUCTS DIVISION
McCarthy
McCarthy generated revenue of R13,6 billion and trading income of R500,9 million
for its first full year as part of Bidvest.
Buoyant trading conditions in the motor industry, arising from the favourable
macro-economic environment, vehicle price stability and low financing costs,
continued unabated. McCarthy"s motor franchises increased new and used vehicle
sales by 9,3% to a record 72 603 units, however, margins remained under intense
pressure. Four additional Pre-owned dealerships were opened bringing the total
new and used vehicle outlets to 98. Budget Rent a Car achieved much improved
results despite extremely competitive industry pricing. Excellent performances
from McCarthy"s financial services business and Yamaha Distributors ensured a
strong overall performance, improving McCarthy"s trading margin to an all-time
high of 3,8% (2004: 3,4%). McCarthy"s, in conjunction with the taxi association
SANTACO, has secured the southern Africa distribution rights for the Russian
range of GAZ commercial vehicles. Opportunities flowing from the planned
recapitalisation of the taxi industry are being aggressively pursued.
CORPORATE SERVICES
mymarket.com
mymarket.com secured significant growth through new business gains and increased
utilisation of its
e-commerce services by existing customers both locally and internationally.
Annualised business transactions currently top R6,0 billion. Expenses increased
as a result of further investment to enhance its strategic value to the Group.
New contract wins bode well for further growth.
Bidvest Network Solutions
Bidnet, a provider of wide area network solutions to both external clients and
Group companies, lost R6,0 million, primarily due to the increase in expenses
required to scale up the revenue base.
Bid Properties
Bidprop has recently undertaken numerous developments for Group companies.
Namsov fishing
Namsov, in which Bidvest has an effective 31,1% interest, generated trading
income of R12,6 million
(2004: R35,2 million), was negatively impacted by the overall trading market.
Operationally the quality, quantity and efficiency of the catch was excellent.
MC Ramaphosa B Joffe
Chairman Chief Executive
Distribution out of share premium
Shareholders" attention is drawn to the further announcement by Bidvest
regarding the distribution.
Notice is hereby given that a final cash distribution out of share premium of
172,2 cents per share
(2004: 136,8 cents), in lieu of a dividend, has been awarded to members recorded
in the register of the Company at the close of business on Friday, September 16
2005. The total value awarded to shareholders amounts to 306,0 cents per share
(2004: 250,2 cents).
Shareholders are advised that the last day to trade `cum" the distribution will
be on Friday, September 9 2005. The shares will trade `ex" the distribution as
from Monday, September 12 2005, and the record date will be Friday, September
16 2005. Share certificates may not be rematerialised or dematerialised during
the period Monday, September 12 2005 to Friday, September 16 2005, both days
inclusive. Payment will be made on Monday, September 19 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
MA David
Company Secretary
Johannesburg
August 19 2005
The Bidvest Group Limited
("Bidvest" or "the Group" or "the Company")
Directors
MC Ramaphosa (Chairman), B Joffe (Chief Executive), 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, G Marcus, 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, PD 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 2196, Johannesburg,
South Africa. PO Box 87274, Houghton 2041, Johannesburg, South Africa.
Registration number ISIN Share code URL
1946/021180/06 ZAE000050449 BVT www.bidvest.com
www.bidvest.com
Date: 22/08/2005 07:05:25 AM Supplied by www.sharenet.co.za
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