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BVT - The Bidvest Group - Unaudited Results for the half year ended

Release Date: 05/03/2007 07:00
Code(s): BVT
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BVT - The Bidvest Group - Unaudited Results for the half year ended 31 December 2006 and distribution declaration The Bidvest Group Registration number 1946/021180/06 Share code: BVT ISIN: ZAE000050449 Results for the half year ended December 31 2006 - Revenue R47,9 billion up by 25,2% - Operating profit R2,1 billion up by 22,7% - Headline earnings R1,4 billion up by 22,7% - Headline earnings per share 452,4 centsup by 22,7% - Distribution per share 198,0 cents up by 22,2% Condensed consolidated income statement Half-year ended Year ended December 31 June 30 2006 2005 Percentage 2006 R000`s Unaudited Unaudited change Audited Revenue 47 871 908 38 240 127 25,2 77 276 493 Cost of revenue (38 766 (30 879 (61 589 554) 816) 806) Gross profit 9 105 354 7 360 311 23,7 15 686 687 Other income 89 614 66 557 140 331 Operating expenses (7 092 (5 712 (12 135 537) 780) 511) Sales and (4 193 (3 271 (7 215 distribution costs 545) 066) 356) Administration (1 918 (1 526 (3 606 expenses 124) 729) 424) Other costs (980 868) (914 985) (1 313 731) Operating profit 2 102 431 1 714 088 22,7 3 691 507 Net finance charges (224 989) (164 412) (342 392) Finance income 36 931 24 336 66 295 Finance charges (261 920) (188 748) (408 687) Share of profit of 37 667 23 458 48 846 associates Dividends 8 031 1 597 4 991 received Share of retained 29 636 21 861 43 855 earnings Profit before 1 915 109 1 573 134 21,7 3 397 961 taxation Income tax expense (519 089) (420 640) (933 418) Profit for the 1 396 020 1 152 494 21,1 2 464 543 period Attributable to: Shareholders of 1 367 690 1 123 290 21,8 2 388 717 the Company Minority 28 330 29 204 75 826 shareholders 1 396 020 1 152 494 21,1 2 464 543 Shares in issue Total 300 520 301 364 299 154 Weighted 299 566 299 595 299 976 Diluted weighted 307 756 315 484 313 826 Basic earnings per 456,6 374,9 21,8 796,3 share (cents) Headline earnings 452,4 368,6 22,7 804,6 per share (cents) Diluted basic 444,4 356,1 24,8 761,2 earnings per share (cents) Diluted headline 440,3 350,0 25,8 769,1 earnings per share (cents) Distributions per 198,0 162,0 22,2 369,0 share (cents)# #Includes distribution from share premium Headline earnings The following adjustments to profit attributable to shareholders were taken into account in the calculation of headline earnings: Income attributable 1 367 690 1 123 290 21,8 2 388 717 to shareholders of the Company Impairment of - - 14 174 goodwill and other intangibles Net loss (surplus) (6 055) (27 952) 19 951 on disposal and closure of businesses Profit on (7 355) (32 927) (29 212) disposal and closure of businesses Tax charge 1 300 4 975 49 638 Minority interest - - (475) Net loss (profit) (8 369) 7 280 (11 915) on disposal of property, plant and equipment Loss (profit) on (9 340) 8 730 (15 689) disposal of property, plant and equipment Tax charge 971 (1 450) 3 774 (relief) Negative goodwill - - (2 457) recognised in income Negative goodwill - - (3 780) recognised in income Minority interest - - 1 323 Share of net 1 900 1 552 5 059 capital profit in associates Headline earnings 1 355 166 1 104 170 22,7 2 413 529 Rand/sterling exchange rates Opening rate 13,205 11,957 11,957 Closing rate 13,822 11,012 13,205 Average rate 13,745 11,560 11,435 Segmental analysis Half-year ended Year ended December 31 June 30 2006 2005 Percentage 2006
R000`s Unaudited Unaudited change Audited REVENUE Bidfreight 9 561 473 7 687 248 24,4 15 601 922 Bidserv 2 580 492 2 256 785 14,3 4 639 125 Bidvest Europe 15 016 630 10 365 954 44,9 22 132 036 Bidvest 4 131 006 3 387 328 22,0 6 505 802 Australasia Bidfood 2 065 580 1 751 085 18,0 3 518 035 Bid Industrial 4 177 153 3 199 473 30,6 6 722 172 and Commercial Products Bidpaper Plus 975 801 871 429 12,0 1 844 784 Bid Auto 9 640 189 8 315 108 15,9 16 197 055 Corporate 701 107 626 271 11,9 1 295 421 Services Namsov 189 875 170 877 11,1 387 605 Ontime 504 235 447 244 12,7 893 231 Automotive Investment and 6 997 8 150 (14,1) 14 585 other income Revenue from 48 849 431 38 460 681 27,0 78 456 352 continuing businesses Revenue from - 470 052 470 052 businesses disposed of Inter-Group (977 523) (690 606) (1 649 eliminations 911) 47 871 908 38 240 127 25,2 77 276 493 OPERATING PROFIT Bidfreight 278 968 249 954 11,6 536 917 Bidserv 305 591 260 501 17,3 562 539 Bidvest Europe 341 152 286 298 19,2 651 223 Bidvest Australasia 156 540 108 777 43,9 219 403 Bidfood 167 494 160 755 4,2 279 253 Bid Industrial and 322 157 183 340 75,7 483 320 Commercial Products Bidpaper Plus 114 771 103 485 10,9 214 710 Bid Auto 355 023 290 172 22,3 621 264 Corporate Services 44 040 60 552 (27,3) 108 698 Bidprop 35 685 26 487 34,7 58 039 Namsov 17 042 42 264 (59,7) 75 925 Ontime Automotive 1 348 (3 440) 7 348 Investment, other income and corporate costs (10 035) (4 759) (32 614) Trading profit - 2 085 736 1 703 834 22,4 continuing businesses* - businesses - (13 943) disposed of TRADING PROFIT 2 085 736 1 689 891 23,4 3 657 000 Net capital profits 16 695 24 197 44 901 Impairment of - - (14 174) goodwill and other intangibles Negative goodwill arising on acquisition of subsidiary - - 3 780 OPERATING PROFIT 2 102 431 1 714 088 22,7 3 691 507 Certain intersegmental transfers of operations took place during the period. Comparitive figures have been restated for these transfers. Condensed consolidated cash flow statement Half-year ended Year ended December 31 June 30
2006 2005 2006 R000`s Unaudited Unaudited Audited Cash flows from operating activities Operating profit 2 110 462 1 715 685 3 696 498 (including dividend from associates) Depreciation and other 519 412 450 428 954 879 non-cash items Cash generated by 2 629 874 2 166 113 4 651 377 operations before changes in working capital Changes in working capital (2 306 002) (1 102 335) (161 019) Cash generated by 323 872 1 063 778 4 490 358 operations Net finance charges paid (177 625) (124 651) (258 582) Taxation paid (702 759) (491 854) (863 495) Distribution of share (610 602) (509 890) (992 408) premium by Company Dividends paid by (17 308) (12 414) (23 184) subsidiaries (1 184 422) (75 031) 2 352 689 Cash flows of investment activities Net additions to vehicle (104 434) (127 417) (298 251) rental fleet Net additions to property, (791 453) (755 640) (1 454 153) plant and equipment Net additions to intangible (59 608) (34 462) (100 613) assets Net acquisition of subsidiaries, businesses, associates and investments (347 650) (1 098 997) (515 355) (1 303 145) (2 016 516) (2 368 372) Cash flows of financing activities Proceeds from shares issued 25 117 72 702 180 274 Net purchase of treasury (323 600) - (508 810) shares Net borrowings raised (447 710) 1 046 183 1 171 313 (repaid) (746 193) 1 118 885 842 777 Net increase (decrease) in (3 233 760) (972 662) 827 094 cash and cash equivalents Net cash and cash 2 546 995 1 497 683 1 497 683 equivalents at the beginning of the period Currency adjustments 84 841 (70 258) 222 218 Net cash and cash (601 924) 454 763 2 546 995 equivalents at the end of the period Net cash and cash equivalents are made up as follows: Cash and cash equivalents 2 469 541 1 915 326 3 255 457 Bank overdrafts shown as (3 071 465) (1 460 563) (708 462) current portion of borrowings (601 924) 454 763 2 546 995 Condensed consolidated balance sheet December 31 June 30 2006 2005 2006 R000`s Unaudited Unaudited Audited ASSETS Non-current assets 11 506 804 9 235 611 10 606 995 Property, plant and 5 952 292 4 843 288 5 511 253 equipment Intangible assets 334 978 325 454 378 808 Goodwill 3 319 112 2 618 259 3 123 722 Deferred tax 327 726 294 687 398 411 Interest in associates 606 225 560 576 574 893 Investments and advances 801 425 530 522 544 923 Banking advances 165 046 62 825 74 985 Current assets 18 798 097 15 175 806 17 387 506 Vehicle rental fleet 583 760 376 572 479 326 Inventories 6 336 313 4 857 270 5 092 821 Short-term portion of 151 607 74 796 142 718 banking advances Trade and other 9 256 876 7 590 972 8 417 184 receivables Cash and cash equivalents 2 469 541 1 915 326 3 255 457 Non-current assets held - 360 870 - for resale Total assets 30 304 901 24 411 417 27 994 501 EQUITY AND LIABILITIES Total equity 9 825 909 7 867 039 9 158 695 Shareholders` interest 9 614 290 7 684 639 8 928 995 Minority shareholders` 211 619 182 400 229 700 interest Non-current liabilities 3 514 003 3 048 415 3 677 777 Deferred taxation 130 297 56 023 202 907 Life assurance fund 43 648 33 372 32 795 Long-term portion of 2 997 389 2 637 579 3 093 184 borrowings Post-retirement 196 714 201 040 221 092 obligations Long-term portion of 293 - 278 banking liabilities Operating lease liability 145 662 120 401 127 521 Current liabilities 16 964 989 13 495 963 15 158 029 Trade and other payables 12 536 872 10 438 314 12 562 695 Provisions 273 890 248 863 324 667 Vendors for acquisition 12 188 2 385 41 795 Taxation 319 933 373 019 501 245 Short-term portion of 154 544 124 137 113 265 banking liabilities Short-term portion of 3 667 562 2 240 271 1 614 362 borrowings Non-current liabilities - 68 974 - held for resale Total equity and 30 304 901 24 411 417 27 994 501 liabilities Net tangible asset value 1 983 1 573 1 814 per share (cents) Condensed consolidated statement of changes in equity Half-year ended Year ended December 31 June 30 2006 2005 2006
R000`s Unaudited Unaudited Audited Shareholders` interest Issued share capital 15 026 15 068 14 958 - balance at the 14 958 14 971 14 971 beginning of the period - in terms of the share 232 97 238 incentive scheme - net movement in (164) - (251) treasury shares Share premium arising on 319 507 2 112 306 1 228 660 shares issued - balance at the 1 228 660 2 549 591 2 549 591 beginning of the period - in terms of the share 458 845 72 736 180 217 incentive scheme - refund of share premium (610 602) (509 890) (992 408) to shareholders - net movement in (757 396) - (508 559) treasury shares - share issue costs - (131) (181) Foreign currency 1 012 747 (28 608) 807 033 translation reserve - balance at the 807 033 466 019 466 019 beginning of the period - realised on disposal of - - (20 562) subsidiaries - arising during the 205 714 (494 627) 361 576 period Statutory reserves 10 549 6 846 10 013 - balance at the 10 013 6 039 6 039 beginning of the period - transfer to retained 536 807 3 974 income Equity-settled share-based 130 634 82 126 107 724 payment reserve - balance at the 107 724 57 828 57 828 beginning of the period - arising during the 22 910 24 298 49 896 period Movement in retained 8 125 827 5 496 901 6 760 607 earnings - balance at the 6 760 607 4 374 418 4 374 418 beginning of the period - profit attributable to 1 367 690 1 123 290 2 388 717 shareholders - change in fair value of (1 934) - 1 446 available-for-sale equity securities - transfer to statutory (536) (807) (3 974) reserves 9 614 290 7 684 639 8 928 995 Minority shareholders` interest - balance at the 229 700 173 558 173 558 beginning of the period - attributable profit 28 330 29 204 75 826 - dividends and (17 308) (12 414) (23 184) capitalisation issues - share of movement in 775 (89) 2 659 foreign currency translation reserve - share of movement in equity-settled share-based payment reserve 71 138 154 - changes in shareholding (29 949) (7 997) 687 211 619 182 400 229 700 Total equity 9 825 909 7 867 039 9 158 695 Message to shareholders Overview and financial summary The Group produced most pleasing results for the six months ended December 31 2006. Headline earnings per share and diluted headline earnings per share increased by 22,7% and 25,8% respectively. Trading profit, from continuing businesses, increased by 22,4% and revenue grew 25,2% to R47,9 billion, with strong operational performances recorded by most of the Group`s businesses. Trading margin decreased slightly from 4,4% to 4,3% reflecting a change in the mix of the profit contribution from the divisions. The benefits from the share buy- back in respect of the refinancing of the Dinatla transaction enhanced the diluted earnings. The weakening of the rand, particularly against sterling, improved the translation of the Group`s foreign-based businesses. The rand traded at an average R13,75 against sterling, compared to R11,56 in the prior period. Cash generation from operations was impacted by the drive for market share, a shift in the profile of some customers, normal seasonality and a conscious, strategic investment in working capital, particularly new vehicle stock and some wholesale products. The amendment to certain credit terms of revenue collections negatively affected Bidfreight`s working capital. The utilisation of working capital is expected to remedy itself in the next period. The Dinatla transaction and increased tax payments also utilised funds. However, the Group`s balance sheet remains strong with an interest cover of more than 9 times (2005:10 times). Transformation Bidvest welcomes the finalisation and release of the BBBEE codes of good practice, marking a further step in the transformation of the country. The Group is undertaking an exercise to compare our existing charter to the new requirements. A process of realignment may need to take place. The refinancing of the Dinatla transaction was a major milestone in our BEE strategy and we welcome the significant creation of wealth for our BEE partners. Ongoing operational progress continues to be achieved across the Group. Divisional review Bidfreight Bidfreight`s trading profit grew by 11,6% to R279,0 million on a 24,4% increase in revenue to R9,6 billion. While the trading profit is below expectation, primarily as a result of reduced volumes, particularly in South African Bulk Terminals, Bidfreight Port Operations and Rennies Distribution Services, the businesses traded well. Trading profit from Bulk Connections was maintained due to the improved facilities and the ability to handle a wider range of products. Higher volumes in Island View Storage resulted in a pleasing increase in trading profit. SACD Freight performed well, with increased container pack and unpack activity. Safcor Panalpina, South Africa`s largest freight forwarder, showed a record growth in revenue, however margins were under pressure, and trading profit, whilst still well up, did not match the same percentage increase. Marine performed well, with the positive results largely attributable to increased volumes in containerised traffic and car carriers. Bidserv Bidserv delivered good results in a challenging trading environment. Revenue grew 14,3% to R2,6 billion, though trading profit was up 17,3% to R305,6 million, with some exceptional performances from TMS Group, TopTurf, Aviation Services and Rennies Bank. Bid Travel, Steiner and Bidserv Industrial Products performed well, with excellent performances from Giant Workwear and Clockwork Clothing. TopTurf secured a number of significant contracts which are now under construction. Aviation Services has positioned itself as a very exciting business through a series of small acquisitions, and is aggressively pursuing other airport-related services. The consequence of the security and cleaning industry strikes impacted negatively on Magnum Shield and Prestige. The security business is in the process of being restructured which may result in an impairment to the carrying value. The other Bidserv businesses had mixed results. MyMarket continues to gain market share. Group Procurement is playing an increasingly important role within the Group. Bidvest Europe Revenue was up 44,9% to R15,0 billion and trading profit improved 19,2% to R341,1 million. The weakening of the rand against sterling enhanced the translation of Bidvest Europe`s results.The trading performance of 3663 First for Foodservice in the UK was solid, although the impact of the loss of the MoD contract and unusual bad debts are being felt. Trading profit was marginally down, but sales in all businesses continue to be robust. Several major new contracts have been secured. Best practice and joint opportunities continue to be successfully pursued with Deli XL. Additional costs in establishing Multitemp`s non- food range were incurred, ahead of the January 1 2007 implementation. Margin management remains the key focus in Frozen, Fresh and Chilled and the opening of several new depots will improve efficiencies. Barton Meat has shown consistent margin improvement. Contract Distribution showed a particularly strong improvement in sales, but cost pressures and operational issues limited the growth in trading profit. Deli XL Netherlands improved its performance in line with management expectations. While their institutional market is under pressure, their total hospitality market continues to grow. Deli XL Belgium continues to make steady progress. Horeca Trade, albeit small, achieved record sales and a significantly improved trading profit. Bidvest Australasia Bidvest Australasia traded extremely well, growing revenue and trading profit by 22,0% and 43,9% respectively, in rand terms. Bidvest Australia grew trading profit 25,2% in Australian dollars, increasing its trading margin to 3,6%, an all-time high. Growth achieved has nearly all been organic. Foodservice grew trading profit 16,8% with every branch trading profitably and improvements in both Melbourne and Sydney. The focus remains on growing the street business. Hospitality produced an excellent performance with a significant increase in trading profit. Several small acquisitions were made and further geographic expansion, continuing the strategy of becoming a national player, is planned. The Quick Service Restaurants division performance was highly satisfactory. Capacity expansion has become necessary to cope with the increased volumes and the growth momentum. Bidvest First for Foodservice New Zealand traded strongly, with trading profit up 29,0% in local currency and a record trading profit margin of 4,6%. With "full" employment, skilled staff are in short supply, placing pressure on costs. The business has been organised into three focused areas, Wholesale, Fresh and Logistics, better positioning the businesses for further growth. Bidfood Revenue increased 18,0% to R2,1 billion with trading profit increasing 4,2%. Caterplus is showing the benefits of refocusing and produced good results, increasing revenue through being aggressively competitive and selling a broader range of products to the existing customer base. Market share improved significantly. Bidbake`s performance was very disappointing as a result of intense competition, the high level of competitive imports and reduced offtake from customers who export their products. Corrective action is being taken. Crown Foods produced excellent results, benefiting from astute procurement and equipment sales. Specialty continues to deliver exceptional results, notwithstanding capacity constraints which are being addressed. Vulcan improved their performance, with exports a continued area of focus. Bid Industrial and Commercial Products Revenue increased 30,6% to R4,2 billion while trading profit was up 75,7% to R322,1 million. All divisions traded well and at much higher levels of business activity. Voltex Electrical Distribution delivered exceptional results, benefiting from good trading conditions across all spheres of the business. The new acquisition, specialist business Versalec, continued its strong performance. The construction sector remains buoyant with the commencement of many infrastructure developments. South Africa`s shortage in electrical generation capacity has positioned Voltex to assist in demand-side-management programmes. Stationery and Office Furniture contributed strongly to the division`s good performance. The performance of Waltons Stationery Gauteng region improved significantly, delivering strong sales growth. Kolok maintained its market position despite strong ongoing competition, growing trading profit appreciably. Furniture traded well and carries forward a strong order book. Afcom GE Hudson showed a marked increase in trading profit, with much effort being made in balancing imports and in-house production. Buffalo Executape delivered strong trading results on the back of the new range of retail DIY products. Bidpaper Plus Revenue grew 12,0% to R1,0 billion and trading profit was up 10,9% to R114,8 million. Lithotech performed well. The significant investment in printing and conversion machinery produced good results and the completion of a major election contract boosted revenue. Personalisation and Mail achieved strong growth despite prolonged industrial action. Labels were impacted by a very competitive market, but e-Solutions continues to make good progress. Silveray Statmark showed a steady improvement focusing on efficiency improvements. Lufil, relocated to Bidpaper Plus, continues to grow sales aggressively while seeking to expand and improve efficiencies in its paper conversion operations. Bid Auto McCarthy`s achieved a 15,9% growth in revenue to R9,6 billion and a 22,3% rise in trading profit to R355,0 million. While the robust level of new vehicle demand continues, there is ongoing margin erosion as a result of the aggressive new vehicle pricing strategies and the knock-on effect on used vehicle pricing. Recent increases in interest rates are slowing demand and current trading conditions are tightening. The acquisition of Shell Autoserv, subject to the approval of competition authorities, will add a nationwide network for the servicing of both out-of- warranty and our range of new Chinese vehicles. The business will be rebranded and form part of McCarthy Value Centres. Burchmores delivered an improved performance due to the increase in repossessions from banks. Budget Rent a Car performed well with rental days showing a sharp increase, but rental rates remain under pressure. Yamaha Distributors performed well despite an increasingly competitive market, impacted by increased landed costs together with sustained competitor activity and the ongoing parallel importation of Yamaha branded products. Financial Services delivered an exceptional performance, achieving record market penetration levels with their traditional insurance products. GAZ SA, the taxi distributorship, recorded poor sales volumes and incurred vehicle recall costs. Plans to completely restructure the business are being finalised. The new range of Chinese light commercial vehicles is due to be launched at the end of May 2007. Corporate Services New property developments have substantially improved Bid Property Holdings` trading profit. Namsov Fishing Enterprises, Bidvest`s 31%- owned Namibian fishing business, produced lower than expected results impacted by particularly bad catch rates and an alarming dominance of small fish. Namibian Sea Products, now 71% owned by Namsov, continues to battle with no pelagic fish catches. Ontime Automotive in the UK made a small contribution, impacted by ongoing difficult trading conditions in the volume distribution market. Prospects The consumer led boom in South Africa is slowing but the economic outlook remains positive as investment in infrastructure projects continue, in the lead up to the 2010 World Cup Soccer and beyond. There are substantial infrastructural development projects that need to take place throughout South Africa which could provide a further boost to the economy. Management focus in the period ahead will be on reducing the working capital investment notwithstanding higher operational activity. The Group continues to evaluate all underperforming assets with a focus on maximising returns. The benefits of the significant capital expenditure are still to fully materialise. Acquisition opportunities, both in South Africa and in our core foodservice market internationally, continue to be aggressively pursued. Progress is being made in the consolidation of the Group`s Namibian interests, with the view to introducing meaningful and sustainable resident ownership. The Group is invested in high growth markets and is optimistic of continuing to achieve above-average returns and growth for the full year to June 2007. For and on behalf of the Board MC Ramaphosa B Joffe Chairman Chief Executive Johannesburg March 2 2007 Distribution out of share premium Notice is hereby given that an interim cash distribution out of share premium of 198,0 cents (2005: 162,0 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 Friday March 30 2007. Shareholders are advised that the last day to trade "cum" the distribution will be Friday March 23 2007. The share will trade "ex" the distribution as from Monday March 26 2007 and the record date will be Friday March 30 2007. Share certificates may not be rematerialised or dematerialised during the period Monday March 26 2007 to Friday March 30 2007, both days inclusive. Payment will be made on Monday April 2 2007. Shareholders approval for the capital distribution was obtained at the annual general meeting held on October 31 2006. 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. MA David Johannesburg Company Secretary March 2 2007 The Bidvest Group Limited Incorporated in the Republic of South Africa ("Bidvest" or "the Group" or "the Company") Directors Executive: B Joffe (Chief Executive), FJ Barnes*, BL Berson**, MC Berzack, AW Dawe, LI Jacobs, CH Kretzmann, P Nyman (alternate DE Cleasby), SG Pretorius, LP Ralphs, AC Salomon. Non-executive: MC Ramaphosa (Chairman), DDB Band, LG Boyle*, AA Da Costa (alternate LJ Mokoena), MBN Dube, S Koseff, RM Kunene, G Marcus, D Masson, BE Moffat (alternate T Slabbert), JL Pamensky, NG Payne, Adv FDP Tlakula. (*British **Australian) Company Secretary MA David Transfer secretaries Link Market Services South Africa (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. Basis of preparation The accounting policies used in the preparation of the condensed interim financial statements are consistent with those used in the preparation of the financial statements for the year ended June 30 2006 and comply with International Financial Reporting Standards. Further information regarding our financial results can be found on the Bidvest website www.bidvest.com Date: 05/03/2007 07:00:03 Supplied by www.sharenet.co.za Produced by the JSE SENS Department.

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