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BVT - The Bidvest Group Limited - Press release
The Bidvest Group Limited
Incorporated in the Republic of South Africa
Registration number 1946/021180/06
Share code: BVT
ISIN: ZAE000050449
("Bidvest" or "the Company")
Press release
REVENUE UP 25% TO R48 billion
HIGHLIGHTS
* Revenue up 25,2% to R47,9 billion
* Operating profit up 22,7%
* Headline earnings per share up 22,7%
* Diluted HEPS up 25,8%
* Distribution up 22,2% to 198,0 cents per share
* Strong operational performance across most Group businesses
* Strong cash flows, offset by conscious decision to invest in working
capital
BIDVEST has announced what chief executive Brian Joffe describes as "most
pleasing results" with operating profit up by 22,7% on revenue growth of
25,2% for the six months ended 31 December 2006.
Joffe says the Group is yet to fully realise the benefits of roughly R3
billion capital expenditure already incurred, much of which was expended in
the freight and McCarthy businesses.
Headline earning per share (HEPS) increased by 22,7% and diluted HEPS by
25,8% respectively. Operating profit increased by 22,7% 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 star performer of the Group was Bid Industrial and Commercial Products,
with a 75,7% increase in trading profit, helped by an exceptionally strong
performance from the electrical wholesaling businesses of Voltex. Bidvest
Australasia lifted trading profit by 43,9%, on the back of a strong trading
performance, while also benefitting from the translation benefits of a
weaker rand. McCarthy posted another strong performance with trading profit
up 22,3%.
Cash generation was impacted by the drive for market share, a shift in the
profile of some customers, normal seasonal factors, a strategic decision to
invest in working capital, particularly vehicle stock and wholesale
products. The amendment to certain credit terms of revenue collections
negatively affected Bidfreight`s cash flows. The refinancing of the Dinatla
BEE transaction, and increased tax payments also affected cash flows. The
utilisation of working capital is expected to remedy itself in the next
period.
The Group`s balance sheet remains strong with an interest cover of more
than 9 times (2005:10 times).
Joffe says the refinancing of the Dinatla transaction represents "a major
milestone for the Group, and we welcome the significant creation of wealth
for our BEE partners. Ongoing operational transformation continues to make
progress across the Group"
Distribution
The distribution to shareholders out of share premium, in lieu of a
dividend, increased 22,2% to 198,0 cents a share (2005: 162,0 cents a
share).
Prospects
Joffe says the expected slow-down in the South African consumer boom should
be ameliorated by the ramp-up of investment in infrastructure projects
leading up to the 2010 World Cup Soccer tournament and beyond.
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.
Joffe remains excited about the prospects in South Africa. "The Group is
invested in higher growth markets and is optimistic of continuing to
achieve above average returns and growth for the full year to June 2007".
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. Trading profit was below expectations
due to lower volumes, particularly in South African Bulk Terminals,
Bidfreight Port Operations and Rennies Distribution Services. Despite the
lower volumes, the businesses traded well in a challenging environment, and
Bulk Connections was able to maintain its trading profit due to the
improved facilities and the ability to handle a wider range of products.
Island View Storage and SADC Freight performed well, with both businesses
handling increased volumes.
Safcor Panalpina, South Africa`s largest freight forwarder, posted a record
growth in revenue, but margin pressure resulted in slower growth in trading
profit. Marine performed well, with the positive results largely
attributable to increased volumes in containerised traffic and car
carriers.
Bidserv
Bidserv had a good trading period, lifted by excellent results 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. Revenue grew 14,3% to R2,6
billion, and trading profit was up 17,3% to R305,6 million.
Aviation Services had an excellent trading period, and continues to enjoy
strong organic growth while bedding down a number of small acquisitions. It
is also aggresively pursuing other airport-related services. 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 has achieved breakeven and 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 billion and trading profit improved 19,2% to
R342,2 million, helped by the currency translation benefits of a weaker
rand.
3663 First for Foodservice in the UK had a good trading period despite the
loss of the UK Ministry of Defense contract, though this was partially
offset by new business gains.
Multitemp is well positioned for growth, having expanded capacity to handle
its non-food range. Margin management remains the key focus in Frozen,
Fresh and Chilled and the opening of several new depots will improve
efficiency.
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.
Recently acquired Deli XL is bedding down well, and is successfully
pursuing new business opportunities on the Continent, where the hospitality
market is enjoying steady growth.
Horeca Trade, albeit small, achieved record sales and a significantly
improved trading profit.
Bidvest Australasia
Bidvest Australasia had an exceptional trading period, with trading profit
up 43,9% on a 22,0% growth in revenue. While the result is flattered by the
weaker rand, Bidvest Australasia managed to grow trading profit by 25,2% in
Australian dollars, and increased trading margin to an all-time high of
3,6%. Virtually all of this growth has been organic.
The Foodservice division grew trading profit 16,8%, and all branches are
trading profitably.
Hospitality produced an excellent performance, and is well positioned for
further growth following the conclusion of several small acquisitions
resulting in a wider geographic footprint. The intention is to expand this
business into a leading national player. It was also a good trading period
for the Quick Service Restaurants division, which will increase capacity to
cope with the increased volumes.
Bidvest First for Foodservice New Zealand grew trading profit by 29% in
local currency and lifted its trading margin to a record 4,6%. New
Zealand`s "full" employment means skilled staff are in short supply,
placing pressure on costs. The business has been organised into three
focused areas, wholesale, fresh and logistics, to better position it for
further growth.
Bidfood
Revenue increased 18,0% to R2,1 billion, with trading profit up just 4,2%.
All catering supply businesses produced good results. Caterplus grew market
share after aggressive marketing and broadening its range of products to
existing customers. Crown Foods and Specialty posted good trading results,
and Vulcan improved its performance, with exports a continued area of
focus. Bidbake suffered from intense competition, higher costs and lower
margins, delivering a disappointing result. Corrective action is being
taken.
Bid Industrial and Commercial Products
It was an exceptional period for this division, with trading profit up
75,7% to R322,2 million on a 30,6% increase in revenue. All divisions
traded well and at higher levels of business activity.
Voltex Electrical Distribution delivered exceptional results, benefiting
from good trading conditions across all areas of the business. The new
acquisition Versalec continued its strong performance. The construction
sector remains buoyant as many infrastructure developments commence. 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. Waltons`
Gauteng region delivered a much improved performance, with strong sales
growth. Kolok, Afcom GE Hudson and Buffalo Executape all delivered strong
trading results.
Bidpaper Plus
Revenue grew 12% to R1 billion and trading profit was up 10,9% to R114,8
million in a competitive market. Lithotech benefited from a substantial
investment in new equipment and the completion of a major contract for
election forms. Personalisation and Mail achieved strong growth despite
prolonged industrial action. The Labels business was impacted by a
competitive market, but e-Solutions continues to make good progress.
Silveray Statmark made good headway by focusing on efficiencies, and Lufil
reported strong sales growth, alongside its ongoing focus on 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. Demand for new vehicles remained
robust during the trading period, though margins are under pressure due to
aggressive new vehicle pricing strategies and price competition from the
used vehicle market. There are signs of a slow-down in demand following
last year`s increases in interest rates.
The acquisition of Shell Autoserv, subject to the approval of competition
authorities, adds a nationwide network for the servicing of both out-of-
warranty and our range of Chinese vehicles, which will be launched in May
2007. The intention is to rebrand the business as McCarthy Value Centres.
Burchmores delivered an improved performance due to the increase in
repossessions from banks, and Budget Rent a Car performed well on the back
of a marked increase in rental days, though rental rates were under
pressure. Yamaha Distributors performed well despite an increasingly
competitive market, aggravated by 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, had a poor trading period due
to lower sales and high recall costs.
Corporate Services
The booming property market lifted Bid Property`s trading profit. The
Namibian fishing businesses were hurt by lower catches, while Ontime
Automotive in the United Kingdom made a small contribution to profit in a
difficult market.
ISSUED ON BEHALF OF: THE BIDVEST GROUP LIMITED
BY: CLEAR DISTINCTION COMMUNICATIONS
BIDVEST CONTACTS: Brian Joffe (CE)
Tel: (011) 772 8704
David Cleasby (Investor Relations)
Tel : (011) 772 8706
Mobile: (083) 228 1810
CONSULTANCY CONTACT: Carol Dundas
Tel: (011) 444 0650
Mobile: (083) 447 6648
Date: 05/03/2007 07:02:01 Supplied by www.sharenet.co.za
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