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BVT - The Bidvest Group Limited - Audited results for the year

Release Date: 30/08/2010 07:05
Code(s): BVT
Wrap Text

BVT - The Bidvest Group Limited - Audited results for the year ended June 30'2010 THE BIDVEST GROUP LIMITED ("Bidvest") (Incorporated in the Republic of South Africa) Registration number: 1946/021180/06 Share code: BVT ISIN ZAE000117321 Audited results for the year ended June 30'2010 R109,8 billion Revenue 2,3% decrease R5,6 billion Trading profit 8,1% increase 1'070,0 cents Headline earnings per share 15,1% increase R8,0 billion Cash generated by operations 18,3% increase 432,0 cents Distributions per share 13,7% increase Summarised analysis of Group earnings on constant currency The average rand exchange rate strengthened against both sterling(14,47 in 2009 to 12,05 in 2010) and the euro (12,35 in 2009 to 10,60 in 2010). On a constant average currency basis (which restates the current income statement using the previous year`s average exchange rate) revenue would have been up 4,2% (reported: down 2,3%), trading profit would have been up 11,9% (reported: up 8,1%) and HEPS would have been up 19,3% (reported: up 15,1%). Comment Pleasing results were achieved for the year ended June 30 against the backdrop of extended recessionary conditions and a strong South African exchange rate. Headline earnings per share (HEPS) increased by 15,1% to 1'070,0 cents per share while basic earnings per share increased by 14,4% to 1'063,6 cents per share. The appreciation of the rand against sterling and the euro, which had a negative impact on translation of the earnings of foreign operations equivalent to 4,2% of HEPS. The results included those of the acquired Nowaco group with effect from July'1'2009. However, no contribution to HEPS arose, due to the expensing of associated once-off acquisition costs combined with the issue of new shares to fund the acquisition. The Group delivered a much improved second half trading performance. Consumer demand for foodservice products held up, particularly in the Asia Pacific region. In South Africa, commodity exports improved, new vehicle sales staged an improvement and demand for outsourced services increased. The infrastructure and construction industry remained subdued impacting demand for electrical and business furniture products. Concerted efforts by operational management to optimise inventory levels and manage debtor delinquencies ensured an improvement in returns on funds employed across all regions. Cash generated by operations after working capital changes improved by 18,3% to R8,0 billion (2009: R6,7 billion). The Group continued to invest in property, plant and equipment to ensure medium-term growth and sustainability. Hosting of the 2010 FIFA World CupTrade Mark proved a major sporting and organisational success for South Africa, which will result in significant medium-term economic opportunities. However, near term benefits accruing to Bidvest failed to meet expectations with no material impact on the results. Adverse factors included fewer than expected foreign tourists, extended holidays by educational institutions and unpredicted leisure behavioural patterns by stay-at-home South Africans. Financial overview Revenue fell 2,3% to R109,8 billion (2009: R112,4 billion), impacted by lower import revenue in Safcor Panalpina, price deflation and the impact of the appreciating rand. Deflation was evident in all geographies as lower demand drove product prices down. Many operations achieved market-share gains as they traded aggressively and took advantage of market weakness. Operating expenses were well controlled across the Group, reflecting a decline on the prior year. The trading margin improved to 5,1% (2009: 4,6%). Headline earnings were impacted by abnormal charges of R61,2 million relating to acquisition costs, mostly attributable to our new Eastern European businesses. Previously, these once-off acquisition costs would have been capitalised to the cost of the investment, but under the revised IFRS 3 accounting standard are now included as an expense in headline earnings, impacting HEPS negatively by 2,1%. Our balance sheet remains strong and appropriately capitalised. Net debt declined to R3,8 billion (2009: R4,1 billion), assisted by a R0,7 billion reduction in working capital and despite additional debt funding of R1,7 billion for the Nowaco group acquisition. Interest cover improved to 7,2 times from 4,8 times in 2009, reflecting significant borrowing capacity. Net debt to equity at 23,1% shows pleasing improvement (2009: 29,2%). Net finance charges declined 26,3% to R758,5 million. Exposure to the short end of the funding market in South Africa`s falling interest rate environment was also beneficial. Bidvest`s attitude to gearing remains appropriate in the current climate. In December 2009, Fitch Ratings affirmed the Group`s rating at A+ with a stable outlook while Moody`s rated the Group at A1.za also with a stable outlook. Acquisition of Nowaco group Nowaco and Farutex management have integrated seamlessly into Bidvest. Results are in line with pre-acquisition expectations despite tougher economic conditions in Eastern Europe. Transformation Transformation within the South African businesses remains a strategic imperative. The Group continues to focus and improve on the broad-based elements of the scorecard. Significant progress in all businesses is evident and management remains firmly committed to the journey of transforming. Bidvest is currently a Level 4 contributor to B-BBEE with many operations rated at Level 3 or better. Consolidated income statement for the year ended June 30 Percentage R000s 2010 2009 change Revenue 109 789 207 112 427 831 (2,3) Cost of revenue (86 778 366) (89 482 780) Gross income 23 010 841 22 945 051 0,3 Other income 424 725 198 815 Operating expenses (17 880 870) (18 007 297) 'Sales and distribution costs (12 115 597) (12 726 832) 'Administration expenses (4 069 739) (3 955 068) 'Other costs (1 695 534) (1 325 397) Trading profit 5 554 696 5 136 569 8,1 'Acquisition costs (61 202) - 'Non-trading items - (164 240) 'Net capital items (30 151) (37 701) Operating profit 5 463 343 4 934 628 10,7 Net finance charges (758 479) (1 029 243) (26,3) 'Finance income 64 408 40 982 'Finance charges (822 887) (1 070 225) Share of profit of associates 40 983 49 238 'Dividends received 30 785 29 298 'Share of current year 10 198 19 940 earnings
Profit before taxation 4 745 847 3 954 623 20,0 Taxation (1 301 059) (1 046 344) Profit for the year 3 444 788 2 908 279 18,4 Attributable to: 'Shareholders of the Company 3 345 175 2 802 386 19,4 'Minority shareholders 99 613 105 893 3 444 788 2 908 279 18,4 Shares in issue 'Total 319 006 304 995 'Weighted (`000) 314 510 301 462 'Diluted weighted (`000) 316 439 303 109 Basic earnings per share 1 063,6 929,6 14,4 (cents) Diluted basic earnings per 1 057,1 924,5 14,3 share (cents) Headline earnings per share 1 070,0 930,0 15,1 (cents) Diluted headline earnings per 1 063,4 924,9 15,0 share (cents) Distributions per share 432,0 380,0 13,7 (cents)* 'Interim 207,0 190,0 'Final 225,0 190,0
*Includes distribution from share premium and capitalisation issue Consolidated statement of other comprehensive income for the year ended June 30 R000s 2010 2009 Profit for the year 3 444 788 2 908 279 Other comprehensive income (expense) for the year net of tax 'Decrease in foreign currency translation (675 601) (1 277 229) reserve 'Increase (decrease) in fair value of (12 831) 2 428 available-for-sale financial assets ' Increase (decrease) in fair value of (17 877) 2 523 available-for-sale financial assets before tax 'Taxation 5 046 (95) Total comprehensive income for the year 2 756 356 1 633 478 Attributable to: 'Shareholders of the Company 2 661 125 1 527 585 'Minority shareholders 95 231 105 893 2 756 356 1 633 478
Consolidated statement of other comprehensive income for the year ended June 30 R000s 2010 2009 Profit for the year 3 444 788 2 908 279 Other comprehensive income (expense) for the year net of tax 'Decrease in foreign currency (675 601) (1 277 229) translation reserve 'Increase (decrease) in fair value of (12 831) 2 428 available-for-sale financial assets ' Increase (decrease) in fair value of (17 877) 2 523 available-for-sale financial assets before tax 'Taxation 5 046 (95)
Total comprehensive income for the year 2 756 356 1 633 478 Attributable to: 'Shareholders of the Company 2 661 125 1 527 585 'Minority shareholders 95 231 105 893 2 756 356 1 633 478 Segmental analysis for the year ended June 30 Percentag e
R000s 2010 2009 change REVENUE 'Bidvest Freight 15 941 865 18 647 915 (14,5) 'Bidvest Services 7 927 750 8 105 904 (2,2) 'Bidvest Foodservice 58 389 859 59 005 013 (1,0) ''Europe 35 460 797 36 984 511 (4,1) ''Asia Pacific 17 547 642 17 067 597 2,8 ''Southern Africa 5 381 420 4 952 905 8,7 'Bidvest Industrial and 8 643 601 9 290 941 (7,0) Commercial Products 'Bidvest Paperplus 2 091 926 1 933 415 8,2 'Bidvest Automotive 17 297 510 15 626 260 10,7 'Bidvest Namibia 1 949 205 1 616 381 20,6 'Bidvest Corporate 444 034 727 033 (38,9) ''Ontime Automotive 410 674 703 855 (41,7) ''Corporate 33 360 23 178 43,9 112 685 114 952 (2,0) 750 862 Inter Group eliminations (2 896 (2 525 - 543) 031) 109 789 112 427 (2,3) 207 831 TRADING PROFIT 'Bidvest Freight 794 284 770 742 3,1 'Bidvest Services 1 126 008 1 181 160 (4,7) 'Bidvest Foodservice 2 046 017 1 759 087 16,3 ''Europe 897 771 770 634 16,5 ''Asia Pacific 729 375 602 533 21,1 ''Southern Africa 418 871 385 920 8,5 'Bidvest Industrial and 421 286 596 882 (29,4) Commercial Products 'Bidvest Paperplus 248 311 224 186 10,8 'Bidvest Automotive 424 102 264 384 60,4 'Bidvest Namibia 367 891 294 367 25,0 'Bidvest Corporate 205 850 79 138 160,1 ''Bidvest Properties 176 637 144 602 22,2 ''Ontime Automotive (16 115) (49 816) - ''Corporate 45 328 (15 648) -
5 633 750 5 169 946 9,0 'Share-based payment expense (79 054) (33 377) - 5 554 696 5 136 569 8,1 Consolidated condensed statement of cash flows for the year ended June 30 R000s 2010 2009 Cash flows from operating activities 4 856 127 3 322 584 'Operating profit (including dividends 5 532 999 4 963 926 from associates) 'Depreciation and amortisation 1 870 465 1 744 350 'Other non-cash items (104 214) 171 384 'Cash generated by operations before 7 299 250 6 879 660 changes in working capital 'Changes in working capital 684 970 (130 792) 'Cash generated by operations 7 984 220 6 748 868 'Net finance charges paid (659 634) (1 024 829) 'Taxation paid (1 166 914) (1 223 496) 'Distributions by- Company (1 267 899) (1 144 096) '- subsidiaries (33 646) (33 863) Cash effects of investment activities (4 846 526) (1 862 306) 'Net additions to vehicle rental fleet (382 822) (157 177) 'Net additions to property, plant and (2 332 242) (1 960 676) equipment 'Net additions to intangible assets (140 118) (182 635) ' Net disposal (acquisition) of subsidiaries, businesses, associates and investments (1 991 344) 438 182 Cash effects of financing activities 993 372 (1 035 300) 'Proceeds from shares issued - Company 1 233 119 51 116 '- subsidiaries 300 772 - 'Net issue (purchase) of treasury 23 714 (6 371) shares 'Net borrowings raised (repaid) 175 385 (322 868) 'Net decrease in bank overdrafts (739 618) (757 177)
Net increase in cash and cash 1 002 973 424 978 equivalents Net cash and cash equivalents at the 3 212 425 3 038 618 beginning of the year Exchange rate adjustment (76 676) (251 171) Net cash and cash equivalents at end of 4 138 722 3 212 425 year Consolidated statement of financial position as at June 30 R000s 2010 2009 ASSETS Non-current assets 19 371 091 16 119 562 'Property, plant and equipment 10 367 571 9 409 702 'Intangible assets 651 094 512 286 'Goodwill 5 709 169 3 966 950 'Deferred tax asset 426 822 378 603 'Defined benefit pension surplus 129 850 120 985 'Interest in associates 656 865 449 889 'Investments 1 157 190 908 884 'Banking and other advances 272 530 372 263 Current assets 23 973 829 22 364 822 'Vehicle rental fleet 915 042 684 205 'Inventories 8 030 752 7 443 252 'Short-term portion of banking and other 350 086 279 862 advances 'Trade and other receivables 10 539 227 10 745 078 'Cash and cash equivalents 4 138 722 3 212 425 Total assets 43 344 920 38 484 384 EQUITY AND LIABILITIES Capital and reserves 17 392 937 14 297 627
'Attributable to shareholders of the 16 736 503 13 929 Company 132 'Minority shareholders 656 434 368 495 Non-current liabilities 4 669 207 4 155 520 'Deferred tax liability 378 992 255 402 'Life assurance fund 13 734 20 672 'Long-term portion of borrowings 3 448 501 2 990 232 'Post-retirement obligations 394 527 460 803 'Long-term portion of provisions 235 253 218 972 'Long-term portion of operating lease 198 200 209 439 liabilities Current liabilities 21 282 776 20 031 237 'Trade and other payables 15 032 357 14 570 716 'Short-term portion of provisions 251 635 297 080 'Vendors for acquisition 539 15 629 'Taxation 364 558 262 080 'Short-term portion of banking liabilities 1 080 366 591 200 'Short-term portion of borrowings 4 553 321 4 294 532 Total equity and liabilities 43 344 920 38 484 384 Number of shares in issue 319 006 304 995 Net tangible asset value per share (cents) 3 253 3 098 Net asset value per share (cents) 5 246 4 567 Consolidated statement of changes in equity for the year ended June 30 R000s 2010 2009 Shareholders` interest Issued share capital 15 950 15 249 '- balance at beginning of the year 15 249 15 029 '- shares issued during the year 693 56 '- capitalisation issue - 166 '- net movement in treasury shares 8 (2) Share premium arising on shares issued (2 263 (2 251 264) 031) '- balance at beginning of the year (2 251 (1 456 154) 264)
'- shares issued during the year 1 236 462 51 060 '- capitalisation issue - (166) '- refund of share premium to (1 267 (839 525) shareholders 899) '- net movement in treasury shares 23 706 (6 371) '- share issue costs (4 036) (108) Foreign currency translation reserve 20 527 691 746 '- balance at beginning of the year 691 746 1 968 975 '- arising during the year (671 219) (1 277 229) Statutory reserves 15 215 13 033 '- balance at beginning of the year 13 033 13 049 '- transfer from (to) retained earnings 2 182 (16) Equity-settled share-based payment 328 640 253 936 reserve '- balance at beginning of the year 253 936 220 559 '- arising during the year 74 704 33 377 Movement in retained earnings 18 619 202 15 206 432 '- balance at the beginning of the year 15 206 432 12 706 171 '- attributable profit 3 345 175 2 802 386 '- change in fair value of available-for- (12 831) 2 428 sale financial assets '- dividends paid - (304 569) '- transfer of reserves as a result of 82 608 - changes in shareholding of subsidiaries '- transfer from (to) statutory reserves (2 182) 16 Capital and reserves attributable to 16 736 503 13 929 132 shareholders of the Company Minority shareholders '- balance at beginning of the year 368 495 310 456 '- attributable profit 99 613 105 893 '- dividends paid (33 646) (33 863) '- movement in foreign currency (4 382) (4 607) translation reserve '- movement in equity-settled share- 5 525 60 based payment reserve '- issue of shares in subsidiaries 300 772 - '- changes in shareholding 2 665 (9 444) '- transfer of reserves as a result of (82 608) - changes in shareholding of subsidiaries 656 434 368 495 Total equity 17 392 937 14 297 627 Divisional review Bidvest Freight Bidvest Freight did well in a difficult year, improving trading profit by 3,1% to R794,3 million (2009: R770,7 million). This improvement was achieved despite a 14,5% revenue decline to R15,9 billion (2009: R18,6 billion). The revenue mix improved as the lost revenue was low-margin clearing and forwarding business. Bulk trade drove profitability gains. Island View Storage put in a good performance and excellent results were achieved by South African Bulk Terminals. Export forest products, steel and imported bulk products contributed to a record year at Bidfreight Port Operations. Bulk Connections performed strongly, boosted by increased manganese volumes. Rennies Distribution Services produced a strong profit turnaround as the benefits of cost control and restructuring were realised. A significant fall in demand for imported consumer products impacted clearing and forwarding and container handling. At Safcor Panalpina, restructuring was necessary as billings to customers dropped, exacerbated by lower interest rates and a strong rand. SACD Freight performed well by containing costs as imported container volumes fell. Stringent cost control and cash management contributed to a good result at Marine. Manica had a difficult year, compounded by falling aid cargoes. Capital expenditure of R503 million included investments in new tankage in Richards Bay and an SACD Freight facility in Cape Town. Lease conditions for Island View Storage facilities in Richards Bay and Bulk Connections in Durban were renegotiated with Transnet. The K Line agency business within Rennies Ships Agency was reconstituted as a joint venture. Bulk commodities demand is expected to remain high. Continued pressure is anticipated across imported volumes of consumer products. Bidvest Services Bidvest Services achieved pleasing results in the face of challenging trading conditions for most of the year. Trading profit of R1,1 billion was 4,7% down (2009: R1,2 billion). Revenue dipped 2,2% to R7,9 billion (2009: R8,1 billion). The 2010 FIFA World CupTrade Mark was positive particularly for Prestige which benefited through both hospitality cleaning and toilet hire. TopTurf also benefited from tournament-related contracts particularly hospitality floral design. However Bidvest Bank and Bidtravel were disappointed at their contribution arising out of the event. Steiner did exceptionally well following a management restructure, as did the security cluster of businesses. Prestige put in a strong performance throughout the year and showed market share gains. Laundry operations returned satisfactory results despite low hotel occupancies. A fourth-quarter revival assisted Industrial Products. Konica Minolta excelled and had a very good year as did Global Payment Technologies. TMS Group performed well below expectation but remedial action has been instituted. The Greens division performed well particularly Pureau Water while TopTurf was impacted by cuts to project work. Cutbacks in corporate travel were negative for Bidtravel, which put in a disappointing performance. Bidair underperformed and a restructure is underway. Bidvest Bank, impacted by low interest rates and a strong rand, performed below expectation. The asset- based finance business, McCarthy Fleet Solutions, has been integrated into Bidvest Bank. Cash flows strengthened and asset management improved. B-BBEE scores also showed pleasing improvement. Prestige, Magnum and Steiner and other companies are being re-branded to emphasise the Bidvest linkage. Bidvest Foodservice Overall the performance as a refocused division was satisfactory. Across such a geographically diverse division, individual business performances differed. Trading profit, including the Nowaco and Farutex acquisition, rose 16,3% to R2,0 billion (2009: R1,8 billion). At R58,4 billion, revenue was 1,0% lower (2009: R59,0 billion). Excluding this acquisition, on a like-for-like basis, revenue was down 7,8%, primarily a result of adverse exchange rate movements. Bidvest Asia Pacific put in another excellent performance. Results from all contributors were above expectation as Asian economies quickly shook off the effects of the financial crisis and the Australian and New Zealand businesses maximised trading opportunities and their position as industry leaders. Bidvest Australia was affected by extremely challenging trading conditions in the second half, but nevertheless returned good results, with growth in both revenue and trading profit. Kele, a central Queensland foodservice wholesaler, was acquired towards the end of the year and performed in line with expectations. Major expansions to Cairns, Hobart and Adelaide were completed. Entry into the fresh produce market was initially disappointing, but the potential is evident. The flagship foodservice business put in a strong performance, grew market share and maintained margins despite deflationary pressure. Bidvest New Zealand faced a declining market and food deflation, yet delivered pleasing revenue and trading profit growth. The core foodservice business put in another strong performance. E-commerce sales now represent more than a third of revenue. Fresh achieved continued growth. Additional bad debt provisions were raised as economic prospects remain challenging. Angliss Singapore achieved revenue and profit growth as market sentiment rebounded strongly. A gourmet fine food division was created to address the fine food market. Angliss Greater China operations put in a strong performance across all businesses, achieving record trading profits. Bidvest Europe had to contend with recessionary conditions and its immediate aftermath in the UK and continental Europe. A further constraint on trading results was incurred by acquisition charges and the cost of UK depot closures. Nevertheless, results, excluding contributions from Nowaco and Farutex, were in line with expectations. Trading profit was significantly higher once the contributions of the Eastern European businesses were included. Asset management improved and cash generation was solid. 3663 First for Foodservice in the UK has been restructured into two standalone units, 3663 Wholesale and Bidvest Logistics. Both entities put in a creditable performance in difficult trading conditions. 3663 Wholesale was impacted by lower volumes, however, these improved late in the year. Expense and margin management were focus areas. Various options are under consideration in respect of servicing the fresh market. Bidvest Logistics benefitted from operational efficiencies achieved in both warehousing and distribution. Deli XL Belgium did well to achieve improved margins and trading profit growth despite the recession. Deli XL Netherlands performed to expectation despite intense pressure on sales in both the institutional and hospitality markets. Distribution, labour and overhead expenses were well managed. Nowaco in the Czech Republic and Slovakia performed well despite the prolonged impacts of the financial crisis. Flat revenues were countered by stringent margin management and cost controls. Farutex delivered a commendable trading result. Revenue has recovered following the loss of a major contract early in the financial year. A new depot in Lodz was opened in November 2009. The UAE business and the new Saudi Arabian joint venture performed in line with expectations and are profitable. Southern Africa The domestic food businesses performance was mixed in challenging conditions as food deflation set in and cash-strapped consumers down-traded. 2010 FIFA World CupTrade Mark benefits were not as strong as hoped and occurred much later than anticipated. Hospitality industry volumes rose, but industrial catering business remained flat while prolonged school holidays meant the educational component of the institutional eating market was adversely affected. Bidvest Foodservice SA (formerly Caterplus) had an excellent fourth quarter, but trading profit for the year was flat. The business grew market share in a contracting market as business travel, conferencing and the domestic holiday market came under pressure. 2010 FIFA World CupTrade Mark volumes were not as large as expected, though the business launched a concerted effort to maximise the opportunity. Throughout the year, margins remained under pressure. Expenses were well controlled and credit extension rigorously managed. Exports continued to grow. A catering equipment distributor was acquired. Bidfood Ingredients achieved a pleasing overall performance in challenging conditions, impacted by lower commodity product volumes and deflation across major product lines. This resulted in a dip in revenue, though trading profit showed pleasing growth. Strong profit performances were put in by the Crown factory, Chipkins Bakery Group and NCP. Stock levels were increased in anticipation of higher 2010 FIFA World CupTrade Mark sales, but the expected increase failed to materialise. Debtors collections improved significantly, as did cash generation and return on funds employed. The Crown and Chipkins factories gained ISO 22'000 accreditation. Speciality achieved record revenue and trading profit on the back of a good second half. However, sales during the 2010 FIFA World CupTrade Mark were lower than expected. The business benefited from increased in-home eating and a high in-store presence. Several new products were introduced to the brand bouquet while the Goldcrest range was expanded. Bidvest Industrial and Commercial Products Bidvest Industrial and Commercial Products was impacted by reduced demand as a result of the recessionary climate, lower construction activity and the winding down of major infrastructure projects. Despite World Cup disruptions, fourth-quarter improvements were registered. However, overall results were disappointing. Revenue fell 7,0% to R8,6 billion (2009: R9,3 billion), while trading profit dropped 29,4% to R421,3 million (2009: R596,9 million). Despite the weak trading environment, cash flow improved. Capital expenditure was deferred, inventories cut and funds employed reduced. Expenses were aggressively managed. ERP rollouts continued. All contributors to the Office Products business faced a tough trading environment and margin squeeze. Furniture companies were hard hit by corporate spending cutbacks. Extended school holidays and price deflation impacted Waltons, contributing to a disappointing year. Kolok delivered solid results despite currency volatility. Electrical Wholesale was hard hit by lower construction activity, though sales improved in the second half. The level of building plan approvals remain depressed. Depot and branch infrastructure was downsized. Revenue at Packaging and Catering Equipment was flat. Activity picked up in the final quarter and Vulcan did well from 2010 FIFA World CupTrade Mark contracts. Bidvest Materials Handling (suppliers of forklifts and previously part of McCarthy Heavy Equipment) was integrated into Packaging and Catering. Bidvest Paperplus Bidvest Paperplus performed well in a challenging market. Revenue of R2,1 billion was up 8,2% (2009: R1,9 billion). Trading profit rose 10,8% to R248,3 million (2009: R224,2 million). Returns on funds employed and cash generation improved. Investment in new property, plant and equipment was trimmed from R83 million to R44 million. No major export contracts were won, but this was offset by 2010 FIFA World CupTrade Mark contracts gained. Margins were well managed. Rotolabel performed strongly from an already good base and the Wholesale Stationery Distribution business delivered much-improved results. Take-up of the Parker pen agency was beneficial. Personalisation and Mail entrenched its position as the top profit contributor. Print Sales and Distribution was impacted by low demand for traditional print but maximised 2010 FIFA World CupTrade Mark opportunities. Alternative Products continues to grow. Bidvest Automotive Performance as a whole across the restructured and decentralised division was satisfactory. Trading profit rose 60,4% to R424,1 million (2009: R264,4 million). Revenue at R17,3 billion was 10,7% higher (2009: R15,6 billion). Following extensive rationalisation and restructuring over the past two years, the McCarthy Motor Group staged a strong turnaround. Trading profit more than doubled to R208 million despite a 4% decline in vehicle sales to 72 291 units. Increased emphasis on used vehicle trading resulted in an improvement of 34% in profit contribution, despite lower sales volumes. Parts and service revenues increased. Strong performances were put in by Toyota, VW/Audi, Mercedes, BMW/Mini and Land Rover franchises. Burchmores did well. The insurance and financing business McCarthy Financial Services is transitioning to a multi-channel business model while retaining its strong automotive linkages. Pleasing results were recorded. Record penetration levels were achieved across all major product lines. Underwriting profits exceeded expectations and an equity recovery bolstered the investment portfolio returns. Budget Car and Van Rental results were weaker, a result of international and domestic travel cutbacks. Industry price-cutting depressed rates. Vehicle utilisation and rental days were below expectation. The 2010 FIFA World CupTrade Mark did not provide the substantial upturn in demand as was expected. Pre-event up-fleeting led to overstocking as corporate travel declined during the tournament. The Door2Door and Chauffer division did well. Yamaha Distributors results were disappointing as a consequence of the further significant weakening in the demand for leisure products. Margins were also under pressure as a result of yen strength and aggressive, price based competition. Encouraging market share improvements were recorded in virtually all segments. Bidvest Namibia Bidvest Namibia listed successfully on the Namibian Stock Exchange in October 2009. Results were in line with listings prospectus projections despite an additional once-off BEE charge arising out of the conclusion of the Ovanhu transaction. Revenue was up 20,6% to N$1,9 billion (2009: N$1,6 billion). Trading profit of N$367,9 million (2009: N$294,4 million) was up 25,0%. The fisheries businesses did exceptionally well, underpinned by a strong performance by Namsov`s core horse mackerel operation. A new vessel was acquired for N$210 million. Cash generation was strong. Results within Bidvest Commercial Holdings were mixed. Several acquisition opportunities are being pursued. Bidvest Corporate Group-wide initiatives are being pursued to extract further synergistic benefits across the decentralised Group. Corporate continued to evaluate acquisition opportunities. The positioning of the Bidvest brand is gaining momentum and the alignment of operational branding to `Bidvest` continues. Bidvest Property Holdings continued to successfully manage and grow its significant strategic portfolio. Ontime Automotive in the UK delivered a small loss, an improved result in a challenging market. Prospects Weak economic conditions created by the global financial crisis appear to have stabilised yet activity levels in many geographies are likely to remain subdued. In many of our businesses, the asset bases and cost structures were scrutinised in view of the new economic reality. Where necessary, decisive action has been taken to ensure we are best placed in the `new normal` economic reality. The Group remains committed to its decentralised business model which has proven resilient over a sustained period of economic upheaval. New management appointments in a number of businesses has enabled succession, whilst launching these businesses onto their next growth path. The Asia Pacific businesses are benefitting from the regional economic environment and remain confident of growth in the year ahead. Focus remains on achieving sustainable revenues and improved operational efficiencies whilst expanding the business model into new product ranges. In the UK, overall economic growth remains anaemic. Opportunities are being sought to expand our European presence in the hospitality and fresh sectors. We remain very positive about the potential of the Eastern European region. The rate of recovery in the South African economy remains uncertain despite evidence to the contrary. The benefits of a lower interest rate environment has yet to improve consumer demand significantly. Focus remains on ensuring we remain efficient low cost service providers of choice. Our businesses are well resourced and competitively placed to benefit from any recovery. Our financial position remains strong with conservative gearing and ample capacity to seek out further strategic acquisition opportunities. Our focus remains on delivering acceptable returns from funds employed. Working capital management continues to receive attention, however, some absorption will be evident as and when trading volumes pick up. We remain confident that the momentum seen in the second half of 2010 will result in an improved trading performance in the year ahead. We are budgeting for real growth in earnings. MC Ramaphosa B Joffe Chairman Chief executive Johannesburg August 28'2010 Dividend Notice is hereby given that a final cash dividend of 225,0 (2009 a distribution out of share premium: 190,0) cents per share, has been awarded to members recorded in the register of the Company at the close of business on Thursday, September 23'2010. The salient dates applicable to the cash dividend are as follows: Last day to trade cum dividend: Thursday, September 16'2010 First day to trade ex dividend: Friday, September 17'2010 Record date: Thursday, September 23'2010 Payment date: Monday, September 27'2010 Share certificates may not be rematerialised or dematerialised during the period Friday, September 17'2010 to Thursday, September 23'2010, both days inclusive. Shareholders are advised the payment of the final cash dividend will attract Secondary Tax on Companies at a rate of 10%. For and on behalf of the board CA Brighten Company secretary Johannesburg August 28'2010 Basis of presentation of financial statements These condensed financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International financial reporting standards and ("IFRS"), the interpretations adopted by the International Accounting Standards board, South African interpretations of Generally Accepted Accounting Practice and include disclosure as required by IAS 34: Interim Financial Reporting. The report has been prepared using accounting policies that comply with IFRS which are consistent with those applied in the financial statements for the year ended June 30' 2009. The Group has, however, adopted of the following new and modified standards and interpretations, in response to changes to IFRS. IFRS 2 - Amendments to IFRS 2 Share-based Payment - vesting conditions and cancellations IFRS 3, IAS 27, IAS 28 and IAS 31 - Comprehensive revision on applying the acquisition method affecting the standards: Business Combinations; Consolidated and Separate Financial Statements; Investments in Associates; Interests in Joint Ventures IFRS 7 - Financial Instruments: Disclosure IFRS 8 - Operating Segments IAS 1 - Presentation of Financial Statements IAS 16 - Property, Plant and Equipment IAS 19 - Employee Benefits IAS 23 - Borrowing Costs IAS 32 - Financial Instruments: Presentation IAS 39 - Financial Instruments: Recognition and Measurement IFRIC 16 - Hedges of a Net Investment in a Foreign Operation IFRIC 17 - Distributions of Non-Cash Assets to Owners IFRIC 18 - Transfer of Assets from Customers The adoption of the amendments to IFRS 3 has resulted in costs relating to acquisitions of R61,2 million being charged to profit during the year as compared to prior years, where these costs were included as part of the cost of the acquisitions. Changes to IAS 27 have resulted in a surplus of R82,6 million resulting from change in shareholding in a subsidiary being recognised directly in equity as apposed to being included in profit for the year. As a result of the change in accounting standards in respect of IFRS 3 and IAS 27 profit attributable to shareholders of the company has reduced by R143,8 million. Had this change not taken place basic earnings per share for the year would have been 1'109,3 cents an increase of 19,3% and headline earnings per share would have been 1'089,4 cents an increase of 17,1%. Results for the comparative years have not been restated as the transitional arrangements for both IFRS 3 and IAS 27 provide exemption from retrospective application. On review of how the operating segments are managed in accordance with IFRS'8 it was decided to remove the costs in respect of share- based payment expenses from each of the operating segments, and disclose this as a reconciling item in the segmental analysis of trading profit and segmental result, as this not a criteria used in the management of the various segments. In addition to this, the leasing and fleet management business previously included with Bidvest Automotive, has been reallocated to the Bidvest Services segment. The comparative year`s results have been restated to reflect these changes. Other than the above, the adoption of the new and modified standards and interpretations, has only altered disclosure with no impact on the Group`s results. Acquisitions The Group acquired 100% of the issued share capital of Nowaco Czech Republic s.r.o ("Nowaco"), a company incorporated in Czech Republic and 100% of the issued share capital of Farutex Sp.z.o.o ("Farutex"), a company incorporated in Poland (collectively "the Nowaco group") with effect from July'1'2009, for an enterprise value consideration of Euro250 million. The purchase consideration was settled with cash of Euro119 million and the assumption of Euro131 million debt. Nowaco group is the number one delivered wholesaler to the foodservice and independent retail markets in Central and Eastern Europe. Nowaco focuses on the Czech Republic and Slovakia while Farutex serves the Polish market. Euro130 million of the acquisition price was funded by cash, partly raised by the Company from an issue of shares and partly from the Group`s existing banking facilities, with the balance being funded by debt. The acquisition of the Nowaco Group will complement the existing international foodservice business of Bidvest in the United Kingdom, Europe, Australia, New Zealand and Asia. Central and Eastern Europe represents a strategic market with growth opportunities. A presence here will enable Bidvest to continue expanding its international interests in the foodservice industry with the objective of developing a leading global foodservice business. The acquisition provides a unique opportunity to acquire market-leading Central and Eastern European foodservice businesses, creating potential customer and purchasing synergies. The Nowaco group is a consistently highly profitable business with a strong management team and provides Bidvest with a foothold and entry point into the broader Central and Eastern European markets. Nowaco group contributed R4'094,8 million to revenue and R90,2 million to profit for the year, after taking account of the acquistion of R51,2 million costs arising on acquisition. A number of smaller acquisitions were also undertaken during the year. Their impact on the Group`s results was not material. June 30 R`000 2010 2009 Commitments Capital expenditure approved Contracted for 506 384 745 704 Not contracted for 247 226 252 231 753 610 997 935 Exchange rates The following exchange rates were used in the conversion of foreign interests and foreign transactions for the year: June 30 2010 2009 Rand/Sterling 'Closing rate 11,53 13,02 'Average rate 12,05 14,47 Rand/Euro 'Closing rate 9,34 11,05 'Average rate 10,60 12,35 Rand/Australian dollar 'Closing rate 6,56 6,34 'Average rate 6,71 6,67 Audit report The auditors, Deloitte & Touche, have issued their opinion on the Group`s financial statements for the year ended June'30'2010. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified audit opinion. These summarised financial statements have been derived from the Group`s financial statements and are consistent in all material respects, with the Group`s financial statements. A copy of their audit report is available for inspection at the company`s registered office. Any reference to future financial performance included in this announcement, has not been reviewed or reported on by the Company`s auditors. Analyst presentation The investor presentation will be available on the Bidvest website from 11:00 on August 30'2010. The Bidvest Group Limited Incorporated in the Republic of South Africa Registration number: 1946/021180/06 ISIN: ZAE000117321 Share code: BVT Directors Chairman MC Ramaphosa Independent non-executive DDB Band, LG Boyle*, MBN Dube, S Koseff, NP Mageza, D Masson, JL Pamensky, NG Payne, Adv FDP Tlakula Non-executive AA Da Costa (alternate LJ Mokoena), FJ Barnes*, RM Kunene, T Slabbert Executive B Joffe (Chief executive), BL Berson**, MC Berzack, DE Cleasby AW Dawe, LI Jacobs, P Nyman, SG Pretorius, LP Ralphs, AC Salomon (*British''**Australian) Company secretary CA Brighten Share 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 Contact details Telephone +27 (11) 772 8700 Facsimile +27 (11) 772 8970 e-mail info@bidvest.co.za or investor@bidvest.co.za
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