Wrap Text
Results for the half-year ended December 31, 2013
The Bidvest Group Limited
(“Bidvest” or “the Group” or “the Company”)
Incorporated in the Republic of South Africa
Registration number 1946/021180/06
Share code: BVT
ISIN: ZAE000117321
Results for the half-year ended December 31 2013
Highlights
- Revenue grew 18,9% to R89,6 billion (2012: R75,4 billion).
- EBITDA up 19,1% to R5,4 billion.
- EBITDA interest 10,9 times (2012: 12,9 times).
- Headline earnings up 16,7% to R2,6 billion.
- Revenue
R89,6 billion
+18,9%
- Headline earnings per share
842,3 cents
+16,2%
- NAV per share
9 350,0 cents
+23,8%
- Distribution per share*
398,1 cents
+22,9%
*Includes capitalisation issues at market value
Condensed consolidated income statement
for the Half-year ended Year ended
December 31 June 30
R’000 2013 2012 Percentage 2013
Unaudited Unaudited change Audited
Revenue 89 641 608 75 375 780 18,9 153 404 532
Cost of revenue (72 465 395) (60 728 367) (123 039 972)
Gross income 17 176 213 14 647 413 17,3 30 364 560
Other income 458 736 398 069 800 817
Operating expenses (13 390 240) (11 483 042) (23 490 150)
Sales and distribution costs (8 696 356) (7 423 646) (15 610 550)
Administration expenses (3 073 849) (2 595 606) (5 002 728)
Other costs (1 620 035) (1 463 790) (2 876 872)
Trading profit 4 244 709 3 562 440 19,2 7 675 227
Share-based payment expense (77 028) (59 636) (119 650)
Acquisition costs (25 900) (3 103) (14 181)
Net capital items 63 819 (4 143) (102 476)
Operating profit 4 205 600 3 495 558 20,3 7 438 920
Net finance charges (497 293) (352 857) (764 546)
Finance income 37 152 39 519 76 659
Finance charges (534 445) (392 376) (841 205)
Share of profit of associates 34 204 88 485 161 824
Dividends received 17 597 20 510 64 466
Share of current period earnings 16 607 67 975 97 358
Profit before taxation 3 742 511 3 231 186 15,8 6 836 198
Taxation (954 138) (853 291) (1 783 782)
Profit for the period 2 788 373 2 377 895 17,3 5 052 416
Attributable to:
Shareholders of the Company 2 693 344 2 261 759 19,1 4 772 432
Minority shareholders 95 029 116 136 279 984
2 788 373 2 377 895 17,3 5 052 416
Shares in issue
Total 314 556 312 775 313 555
Weighted (’000) 313 726 312 224 312 577
Diluted weighted (’000) 316 468 314 547 314 379
Basic earnings per share (cents) 858,5 724,4 18,5 1 526,8
Diluted basic earnings per share (cents) 851,1 719,1 18,4 1 518,1
Headline earnings per share (cents) 842,3 725,1 16,2 1 560,6
Diluted headline earnings per share (cents) 835,0 719,7 16,0 1 551,6
Distributions per share (cents)* 398,1 324,0 22,9 720,0
*Includes capitalisation issues at market value.
for the Half-year ended Year ended
December 31 June 30
2013 2012 Percentage 2013
R’000 Unaudited Unaudited change Audited
Headline earnings
The following adjustments to profit attributable to
shareholders were taken
into account in the calculation of headline earnings:
Profit attributable to shareholders of the Company 2 693 344 2 261 759 19,1 4 772 432
Impairment of property, plant and equipment; goodwill and
intangible assets 12 423 5 001 101 101
Property, plant and equipment 1 700 6 969 3 536
Goodwill - - 29 328
Intangible assets 16 184 - 98 637
Tax relief (5 461) (1 968) (30 400)
Net loss on disposal of interests in subsidiaries and disposal
and closure of businesses - - 12 779
Loss on disposal and closure - - 17 749
Tax relief - - (4 970)
Profit on disposal, impairment and reversal of impairment of
investments in associates (23 510) (3 003) (41 230)
Impairment of investments in associate - - 75 000
Reversal of impairment of investments in associate - - (80 000)
Net profit on change in shareholding in associates (23 510) (3 003) (47 988)
Tax charge - - 11 758
Net loss on disposal of property, plant and equipment 1 512 144 4 183
Property, plant and equipment 2 100 177 6 214
Tax relief (588) (33) (2 031)
Net fair value adjustment arising on acquisition of control
of associates (60 293) - -
Non-headline items included in equity- accounted earnings of
associated companies 18 976 - 28 755
Headline earnings 2 642 452 2 263 901 16,7 4 878 020
Condensed consolidated statement of other comprehensive income
for the Half-year ended Year ended
December 31 June 30
R’000 2013 2012 2013
Unaudited Unaudited Audited
Profit for the period 2 788 373 2 377 895 5 052 416
Other comprehensive income (expense)
Items that may be classified subsequently to profit or loss
Increase in foreign currency translation reserve 1 370 490 704 366 1 836 112
Increase (decrease) in fair value of available-for-sale financial assets 1 884 1 517 (9 306)
Increase (decrease) in fair value of cash flow hedges (1 563) - 42 581
Fair value gains arising during the period (2 171) - 58 722
Tax relief (charge) 608 - (16 141)
Total comprehensive income for the period 4 159 184 3 083 778 6 921 803
Attributable to:
Shareholders of the Company 4 057 306 2 963 173 6 621 460
Minority shareholders 101 878 120 605 300 343
4 159 184 3 083 778 6 921 803
Condensed consolidated statement of cash flows
for the Half-year ended Year ended
December 31 June 30
2013 2012 2013
R’000 Unaudited Unaudited Audited
Cash flows from operating activities 139 263 (614 515) 2 666 069
Operating profit 4 205 600 3 495 558 7 438 920
Dividends from associates 17 597 20 510 64 466
Acquisition costs 25 900 3 103 14 181
Depreciation and amortisation 1 212 964 1 052 145 2 097 264
Other non-cash items (301 276) (161 709) (356 413)
Cash generated by operations before changes 5 160 785 4 409 607 9 258 418
in working capital
Changes in working capital (2 166 507) (2 522 867) (1 891 175)
Cash generated by operations 2 994 278 1 886 740 7 367 243
Net finance charges paid (488 205) (350 554) (626 549)
Taxation paid (996 794) (989 659) (1 847 495)
Dividends paid by - Company (1 245 174) (1 071 895) (2 088 982)
- subsidiaries (124 842) (89 147) (138 148)
Cash effects of investment activities (3 609 472) (1 928 509) (3 168 357)
Net additions to vehicle rental fleet (204 925) (230 199) (282 486)
Net additions to property, plant and equipment (1 446 246) (1 027 939) (2 201 338)
Net additions to intangible assets (69 871) (129 356) (287 253)
Net acquisition of subsidiaries, businesses, (1 888 430) (541 015) (397 280)
associates and investments
Cash effects of financing activities 764 913 1 619 343 2 459 971
Proceeds from shares issued - Company 56 140 - -
- subsidiaries - 12 313 30 635
Net issue of treasury shares 146 062 94 675 151 539
Net borrowings raised 562 711 1 512 355 2 277 797
Net increase (decrease) in cash and cash equivalents (2 705 296) (923 681) 1 957 683
Net cash and cash equivalents at beginning of the period 7 092 155 4 615 458 4 615 458
Exchange rate adjustment 494 358 130 134 519 014
Net cash and cash equivalents at end of the period 4 881 217 3 821 911 7 092 155
Net cash and cash equivalents comprise:
Cash and cash equivalents 8 831 806 5 769 960 8 452 559
Bank overdrafts shown as short-term portion (3 950 589) (1 948 049) (1 360 404)
of interest-bearing debt
4 881 217 3 821 911 7 092 155
Condensed consolidated statement of financial position
as at December 31 June 30
2013 2012 2013
R’000 Unaudited Unaudited Audited
ASSETS
Non-current assets 33 018 858 26 500 511 28 820 557
Property, plant and equipment 15 623 272 12 995 524 13 872 872
Intangible assets 1 191 630 957 053 1 025 768
Goodwill 10 819 226 8 202 062 8 853 973
Deferred tax asset 652 066 333 413 519 828
Defined benefit pension surplus 101 439 100 362 101 794
Interest in associates 640 291 1 121 437 1 199 879
Investments 3 269 427 2 216 053 2 507 906
Banking and other advances 721 507 574 607 738 537
Current assets 43 906 568 33 299 948 37 857 862
Vehicle rental fleet 1 471 605 1 413 062 1 363 704
Inventories 13 881 131 10 840 306 11 839 302
Short-term portion of banking and other advances 134 531 204 979 276 173
Trade and other receivables 19 587 495 15 071 641 15 926 124
Cash and cash equivalents 8 831 806 5 769 960 8 452 559
Total assets 76 925 426 59 800 459 66 678 419
EQUITY AND LIABILITIES
Capital and reserves 30 579 172 24 627 162 27 550 719
Attributable to shareholders of the Company 29 410 400 23 618 620 26 373 592
Minority shareholders 1 168 772 1 008 542 1 177 127
Non-current liabilities 9 511 280 6 876 294 8 937 319
Deferred tax liability 619 347 487 580 604 586
Life assurance fund 30 617 30 369 30 174
Long-term portion of borrowings 7 945 308 5 542 690 7 469 635
Post-retirement obligations 310 224 382 850 312 739
Long-term portion of provisions 483 694 288 230 371 353
Long-term portion of operating lease liabilities 122 090 144 575 148 832
Current liabilities 36 834 974 28 297 003 30 190 381
Trade and other payables 24 652 248 19 286 934 21 858 775
Short-term portion of provisions 594 015 467 376 363 136
Vendors for acquisition 136 477 81 485 113 971
Taxation 274 287 169 041 299 967
Short-term portion of banking liabilities 2 062 659 1 819 287 2 024 236
Short-term portion of borrowings 9 115 288 6 472 880 5 530 296
Total equity and liabilities 76 925 426 59 800 459 66 678 419
Net tangible asset value per share (cents) 5 531 4 623 5 260
Net asset value per share (cents) 9 350 7 551 8 411
Condensed consolidated statement of changes in equity
for the Half-year ended Year ended
December 31 June 30
2013 2012 2013
R’000 Unaudited Unaudited Audited
Shareholders’ interest
Issued share capital 16 397 16 387 16 387
Balance at beginning of the period 16 387 16 387 16 387
Shares issued during the period 10 - -
Share premium arising on shares issued 193 615 137 485 137 485
Balance at beginning of the period 137 485 137 485 137 485
Shares issued during the period 56 204 - -
Share issue costs (74) - -
Foreign currency translation reserve 4 544 695 2 065 946 3 181 802
Balance at beginning of the period 3 181 802 1 366 049 1 366 049
Realisation of reserve on disposal of subsidiaries and associates (748) - -
Arising during the period 1 363 641 699 897 1 815 753
Hedging reserve 41 018 - 42 581
Balance at beginning of the period 42 581 - -
Fair value gains arising during the period (2 170) - 58 722
Deferred tax recognised directly in reserve 607 - (16 141)
Equity-settled share-based payment reserve 277 793 177 127 255 319
Balance at beginning of the period 255 319 165 237 165 237
Arising during the period 76 817 11 890 119 414
Deferred tax recognised directly in reserve 1 515 - 15 859
Utilisation during the period (55 858) - (45 191)
Retained earnings 26 042 966 23 130 685 24 592 164
Balance at beginning of the period 24 592 164 21 948 681 21 948 681
Attributable profit 2 693 344 2 261 759 4 772 432
Change in fair value of available-for-sale financial assets 1 884 1 517 (9 306)
Dividends paid (1 245 174) (1 071 895) (2 088 982)
Transfer of reserves as a result of changes in shareholding of subsidiaries - (9 377) (30 661)
Transfer from other reserves 748 - -
Treasury shares (1 706 084) (1 909 010) (1 852 146)
Balance at beginning of the period (1 852 146) (2 003 685) (2 003 685)
Shares disposed of in terms of share incentive scheme 146 062 94 675 151 539
29 410 400 23 618 620 26 373 592
Equity attributable to minority shareholders of the Company
Balance at beginning of the period 1 177 127 969 299 969 299
Attributable profit 95 029 116 136 279 984
Dividends paid (124 842) (89 147) (138 148)
Movement in foreign currency translation reserve 6 849 4 469 20 359
Movement in equity-settled share-based payment reserve 211 - 236
Issue of shares by subsidiaries - 12 313 30 635
Transactions with minorities 14 398 (13 905) (15 899)
Transfer of reserves as a result of changes in shareholding of subsidiaries - 9 377 30 661
1 168 772 1 008 542 1 177 127
Total equity 30 579 172 24 627 162 27 550 719
Condensed segmental analysis
for the Half-year ended Year ended
December 31 June 30
2013 2012 Percentage 2013
R’000 Unaudited Unaudited change Audited
REVENUE
Bidvest South Africa 39 540 042 34 095 396 16,0 69 266 131
Automotive 10 979 648 10 474 481 4,8 20 704 970
Consumer Products 687 332 - -
Electrical 2 334 720 2 174 265 7,4 4 527 394
Financial Services 848 722 812 363 4,5 1 458 683
Freight 13 962 104 11 924 386 17,1 25 114 347
Industrial 1 010 422 777 008 30,0 1 528 760
Office 2 360 962 2 152 183 9,7 4 245 566
Paper Plus 2 404 293 2 027 366 18,6 4 031 330
Rental and Products 1 130 441 1 069 752 5,7 2 208 649
Services 2 626 491 1 591 891 65,0 3 239 334
Travel and Aviation 1 194 907 1 091 701 9,5 2 207 098
Bidvest Foodservice 49 382 683 40 796 943 21,0 82 716 213
Asia Pacific 16 414 062 14 199 570 15,6 28 626 542
Europe 29 616 442 23 596 580 25,5 48 156 247
Southern Africa 3 352 179 3 000 793 11,7 5 933 424
Bidvest Namibia 1 842 789 1 681 438 9,6 3 597 158
Bidvest Corporate 722 826 485 198 49,0 973 698
Properties 191 181 166 584 14,8 339 034
Corporate and investments 531 645 318 614 66,9 634 664
91 488 340 77 058 975 18,7 156 553 200
Inter Group eliminations (1 846 732) (1 683 195) (3 148 668)
89 641 608 75 375 780 18,9 153 404 532
TRADING PROFIT
Bidvest South Africa 2 396 836 2 030 855 18,0 4 223 653
Automotive 332 666 307 310 8,3 640 956
Consumer Products 57 449 - -
Electrical 90 070 78 669 14,5 224 614
Financial Services 332 700 334 124 (0,4) 594 883
Freight 540 160 451 996 19,5 979 402
Industrial 64 635 47 404 36,3 86 030
Office 162 001 130 711 23,9 324 259
Paper Plus 195 047 175 369 11,2 281 292
Rental and Products 218 748 197 441 10,8 435 825
Services 197 425 121 186 62,9 276 465
Travel and Aviation 205 935 186 645 10,3 379 927
Bidvest Foodservice 1 453 282 1 163 905 24,9 2 488 149
Asia Pacific 671 672 560 837 19,8 1 211 408
Europe 576 158 420 382 37,1 936 242
Southern Africa 205 452 182 686 12,5 340 499
Bidvest Namibia 218 228 249 270 (12,5) 592 223
Bidvest Corporate 176 363 118 410 48,9 371 202
Properties 178 963 156 964 14,0 324 015
Corporate and Investments (2 600) (38 554) 93,3 47 187
4 244 709 3 562 440 19,2 7 675 227
Message to shareholders
Commentary
The Group delivered good trading results for the half year ended December 31 2013 in a period characterised by
significant investment activity. Economic conditions remain challenging in many geographies in which we operate. Headline
earnings per share increased by 16,2% to 842,3 cents per share.
Bidvest South Africa delivered pleasing results in most divisions buoyed by the acquisitions of Home of Living Brands
Limited (HoLB) (effective July 1 2013) and Mvelaserve Limited (effective November 1 2013). Bidvest Food’s results
reflect improved performances in all operations. Bidvest Namibia recorded a decline in trading profit where the lower
fishing results were not fully offset by improved results of the commercial businesses.
Bidvest is an international service, trading and distribution business which derives 35,5% of its trading profit from
outside South Africa. Accordingly, currency volatility has had a positive impact on reported rand results. The average
rand exchange rate weakened against major currencies in which the Group operates, in particular against the euro and
sterling.
Financial overview
Revenue grew 18,9% to R89,6 billion (2012: R75,4 billion). The major increases occurred in Bidvest Asia Pacific (R2,2
billion) and Bidvest Europe (R6,0 billion) which reflects organic growth as well as assistance from currency effects on
translation. Acquisitions accounted for R1,8 billion of the growth.
Gross margin declined slightly due to business and some margin pressure, particularly where currency depreciation has
impacted the cost of goods sold. Operating expenses increased by 16,6% however on a constant currency basis, the
increase was 7,4%. Excluding the effects of the material acquisitions, like for like costs were well controlled and increased
by only 3,9%.
The Group grew trading profit by 19,2% to R4,2 billion (2012: R3,6 billion). Trading margin held up well at 4,7%
(2012: 4,7%), where the small gross margin decline was negated by excellent cost management.
Net finance charges increased R144,4 million to R497,3 million (2012: R352,9 million), a function of greater utilisation of
working capital arising from pockets of weak asset management, various investments and acquisitions made and the conversion
of larger foreign finance charges at higher average exchange rates.
The Group’s financial position remains robust. Bidvest’s attitude to gearing remains prudent while retaining adequate
headroom to accommodate acquisition opportunities. Net debt has increased to R8,2 billion (2012: R6,2 billion) driven
principally by the absorption of working capital in line with normal cyclical trends combined with the cash utilised for
investments and acquisitions. Normalised interest cover has declined to 8,5 times (2012: 10,0 times) but remains
comfortably in excess of the Group’s self-imposed targets.
Cash generated by operations before working capital changes increased 17,0% to R5,2 billion (2012: R4,4 billion). The
Group absorbed R2,2 billion (2012: R2,5 billion) of working capital reflecting growth and strategic stocking in a number
of businesses. Returns on funds employed on an average basis has declined from 29,6% in 2012 to 28,7% in 2013. Net
working capital days have increased slightly to a net 16 days (2012: net 15 days).
Fitch Ratings affirmed the Group’s national long-term rating at ‘AA(zaf)’ in January 2014. Moody’s continue to rate
the Group at A1.za with a stable outlook.
Acquisitions
Bidvest acquired the 71,7% of HoLB it did not already own for R538,0 million, effective on July 1 2013. Bidvest also
purchased the minority shareholding of outsourcing firm Mvelaserve. At the time of the offer, Bidvest already owned just
under 35%. The R846,6 million cash transaction became effective from November 1 2013.
The Group also made a number of smaller acquisitions. Integration of all these businesses are progressing well. Total
net investments in the period totalled R1,9 billion.
In January 2014, the Group acquired an additional 44,5 million shares in Adcock Ingram for a consideration of R3,1 billion
bringing its total interest to 34,5%.
Directorate
In terms of the notice of AGM, Mr Stephen Koseff did not make himself available for re-election at the AGM and
therefore retired from the board. As previously announced, Mr Matamela Cyril Ramaphosa (Cyril) resigned from the board
effective from the date of the AGM. The board and management of Bidvest wish to thank Stephen and Cyril for their valued
dedication and contribution to the development of Bidvest over many years.
In addition, Mr Lebogang Joseph Mokoena (Lebogang) resigned as alternate director to Mr Alfred da Costa. The board
also wishes to thank Lebogang for his valid contribution.
The following directors were also appointed in the period:
Mrs Nompumelelo Thembekile Madisa (Mpumi) as an executive director; Mrs Sibongile Masinga (Bongi) and Mrs Florah
Nolwandle Mantashe (Nolwandle) as independent non-executive directors.
The board welcomes Mpumi, Bongi and Nolwandle to Bidvest.
Prospects
Economic conditions in our global business remain challenging and volatile. Growth rates are anticipated to tick up
across many regions. Management remains committed to the decentralised and entrepreneurial business model as the best
methodology in dealing with the diverse nature of the Group’s activities to ensure accountability and responsibility, the
cornerstone of the “Bidvest” culture.
Trading conditions in South Africa are anticipated to remain tough, compounded by the impacts of rising inflation and
declining demand. The weakening rand presents both a risk as well as a trading opportunity. Further opportunities will
be sought in consumer products where the strategy is to expand our exposure to the distribution of FMCG products without
direct retail exposure. Divisional teams continue to focus on delivering organic growth while seeking out acquisitive
opportunities to complement our existing service offering. Progress has been slower than expected in developing the
“Africa” strategy in our products-related businesses due to lack of infrastructure in the affected countries.
In Europe, renewed optimism of a sustained economic recovery is evident. The growth in the Asia Pacific region remains
positive for the continued expansion of our wholesale model. Management is focused on expanding exposure to the independent
foodservice customers and growing the national footprint of the fresh offering. Innovative value adding solutions for
customers using technology will enable continued growth. Good progress is being achieved in mainland China which bodes well
for our exposure to this developing foodservice market. Opportunities to add new product ranges and expand local footprints
both via organic and acquisitive growth will be pursued across all businesses.
Management focus is on improving asset management in order to increase returns in our existing businesses as well as
on recent investments made. Our financial position remains sound and we see many opportunities to expand our footprint
and our product and service offering, both locally and abroad. Management are confident that the ‘Bidvest people’ will
deliver on their commitment in producing another improved performance for the full year ending June 2014.
DIVISIONAL REVIEW
Bidvest South Africa
The division achieved pleasing revenue and trading profit growth in challenging market conditions, buoyed by acquisitions, in
particular Home of Living Brands Limited and Mvelaserve Limited. Revenue increased 16,0% to R39,5 billion (2012: R34,1 billion).
Trading profits increased by 18,0% to R2,4 billion with good growth from Bidvest Freight (19,5%), Bidvest Industrial (36,3%),
Bidvest Office (23,9%) and Bidvest Services (62,9%).
Bidvest Automotive achieved some pleasing gains, despite pressure on the car industry and a fall in national new unit
sales. Revenue moved 4,8% higher to R11,0 billion (2012: R10,5 billion) while trading profit was up 8,3% at R332,7 million
(2012: R307,3 million). McCarthy’s digital marketing campaign bolstered sales activity in the face of the industry slowdown. New
vehicle sales dipped marginally and new vehicle margins stayed under pressure. Used vehicle trading volumes remained subdued. Parts
margins were also under pressure, though service margins benefited from rigorous expense management. Mercedes-Benz and Land Rover
dealerships did well. Performance at the multiple franchises is receiving focused management attention. Continued industry pressure
is expected in the second half.
Bidvest Consumer Products, comprising of Home of Living Brands which was acquired effective from July 1 2013, grew
revenue in a difficult retail market - to R687,3 million. Trading profit was R57,5 million. Retail sell-through moved
higher, notably in December, and export sales into sub-Saharan Africa grew. Currency effects were negative, but costs were
aggressively managed to minimise margin squeeze. The focus of major retailers on private label business in the domestic
market created a continuing challenge for brands.
Bidvest Electrical returned solid trading results, with revenue up 7,4% to R2,3 billion (2012: R2,2 billion). Trading
profit rose 14,5% to R90,0 million (2012: R78,7 million). Electrical division performed ahead of expectations and the
branding and branch upgrades are nearly complete. The new Meadowlands store in Soweto made good progress. Atlas Cables put
in a strong performance after effective remedial action and consolidation onto one site. Versalec’s order book is
looking promising. Lighting went through a difficult period and the integration of retail into Waco was completed. The Voltex
app. - an industry first - was successfully launched. Cabstrut had an outstanding six months and Sanlic returned to
profit. Acquisition opportunities are being pursued.
Bidvest Financial Services businesses put in a satisfactory performance in a highly competitive market with trading
profit flat at R332,7 million. Capital levels, ratios and liquidity were strong for both the Bank and Insurance
businesses.
Bidvest Bank achieved pre-tax profit of R187,5 million (2012: R197,3 million), down 5%. The dip reflects pressure on
non-interest revenue and lower leasing income. The bank remained strongly cash generative and secured exceptional retail
growth on rand weakness and increased inbound tourism. Customer numbers continued to grow, with South African-resident
customers up by 11 000 a month and corporate clients up by 90 a month. The asset base increased by 5% to R4,7 billion
while deposits rose 13,7% to R2,2 billion. Transactional banking, card business and treasury made good contributions.
Leasing revenue dropped, however a healthy new business pipeline exists.
Bidvest Insurance recorded profit before tax of R98,6 million (2012: R76,7 million), with gross written premiums
significantly up on the comparative period. Market penetration of the new Bodyguard and Tyreguard products exceeded
expectations. Claims and operating expenses were well managed and the net underwriting result was ahead of budget. Investment
income achieved pleasing growth on excellent results by the equity portfolio.
Bidvest Freight overall performed well, though individual business performance was mixed. Revenue was up 17,1% at
R14,0 billion (2012: R11,9 billion). Trading profit rose 19,5% to R540,2 million (2012: R452,0 million). Operating margins
improved. The bulk liquids business of IVS suffered as chemical volumes dropped. SABT performed well in the face of
fluctuating wheat and maize volumes. BPL results were bolstered by rand weakness with the warehousing division performing
particularly well. BPO put in a stellar performance, especially stevedoring while benefiting from cement and fertiliser
imports. SACD Freight’s container depot operations were impacted by a second quarter slowdown in volumes. New business is
being pursued. Bulk Connections delivered strong results, with a 22% increase in throughput to 2,3 million tons. Manica’s
general freight business struggled however the investment into systems is starting to bear fruit.
Bidvest Industrial performed satisfactorily, benefiting from the first-time contribution of newly acquired Academy
Brushware. Revenue, up 30,0%, reached R1,0 billion (2012: R777,0 million). Trading profit rose 36,3% to R64,6 million
(2012: R47,4 million). Cash generation improved significantly and operating expenses were well controlled. Rand volatility
created challenges. Academy Brushware performed strongly and further growth opportunities will be explored. Afcom returned
improved results as volumes improved from manufacturing capacity upgrades. Berzacks results were softer due to contract
losses. Focused management attention is being applied to the business. Materials Handling had a difficult six months
but good orders are evident. Buffalo Executapes grew sales, but rand effects were negative. Vulcan produced excellent results
as the introduction of bakery equipment lines gained traction. Yamaha achieved improved results with market share gains.
Bidvest Office returned pleasing results in challenging market conditions. At R2,4 billion (2012: R2,2 billion),
revenue was up 9,7%. Trading profit of R162,0 million (2012: R130,7 million) was 23,9% higher. Changes to the sales mix
helped contain margin pressures. Operating expenses were carefully managed. Waltons performed satisfactorily on the back of a
good ‘back-to-school’ period. The Technology group was impacted by rand weakness, especially against the euro. Konica
Minolta continues to demonstrate its resilience through business cycles with a compelling offer and good results. Develop
is starting to produce pleasing results. Medical is gaining traction and its offering will soon be extended. The
Furniture group benefited from improved manufacturing capability and the sales operations did well.
Bidvest PaperPlus delivered a much improved performance, assisted by strong contributions from Lithotech and Kolok.
Top-line growth was targeted across all the businesses and revenue rose 18,6% to R2,4 billion (2012: R2,0 billion).
Trading profit of R195,0 million (2012: R175,4 million) was 11,2% higher. Gains were achieved following the decentralisation
of operations in key businesses. Lithotech benefited from higher volumes, buoyed by election project work. Bidvest Data
completed the full integration of conventional laser print and mail with electronic services. Expenses were well managed.
Bidvest Packaging performed in line with expectations with both Lufil and Sprint contributing strongly. Silveray
Stationery traded strongly, benefiting from streamlined distribution channels. Kolok sales hit record levels as careful
management of exchange rate movements helped to optimise margins. Its new Mozambique venture traded well.
Bidvest Rental and Products produced solid results in difficult trading conditions. Revenue rose 5,7% to R1,1 billion
while trading profit moved 10,8% higher to R218,7 million (2012: R197,4 million). Operational performance was mixed.
Steiner performed admirably and RoyalServe rental customers were well integrated into the business. The Laundry group
produced good results, though operations are challenged to maintain high levels of contract renewal. Industrial Products
faced pressure on volumes and margins. Progress is being made in its Africa expansion. Puréau’s results were impacted by a
poor December, additions to its product range are planned. Execuflora performed strongly on lower volumes, drawing
benefit from rigorous expense management. Hotel Amenities had an encouraging six months, though volumes dropped. Steripic
faced challenges and Masterguard had a difficult six months.
Bidvest Services achieved excellent growth. Trading results include the first contribution of the Mvelaserve
businesses, Total Facilities Management Company (TFMC), RoyalMnandi, Royalserve Cleaning, SA Water and Velocity. Revenue rose
65,0% to R2,6 billion (2012: R1,6 billion). Trading profit was up 62,9% at R197,4 million (2012: R121,2 million). Bidvest
Managed Solutions (including Prestige) performed in line with expectations, though TopTurf was impacted by the loss of a
key contract. Magnum was impacted by delays in signing off project work within the technology cluster although Bidtrack
performed well. TMS maintained momentum comfortably exceeding budget. Integration of the Mvelaserve business has gone
off well. TFMC managed margins well and put in a positive performance as did RoyalMnandi, the outsourced catering
business. Royalserve Cleaning faced challenges however improvements are expected. SA Water and Velocity, the road repair
business, are focused on improved performance.
Bidvest Travel and Aviation delivered commendable results with revenue up 9,5% at R1,2 billion. Trading profit rose
10,3% to R205,9 million (2012: R186,6 million). BidTravel achieved growth though customers down-traded and sector volumes
declined. The challenge of finding replacement business sharpened. Budget Rent A Car returned improved results,
increasing rental days, principally off more replacement business. The average holding cost per vehicle fell as did accident and
insurance costs. E-tolling challenges were handled well. Bidair Services put in an excellent performance, growing
revenue from increased passenger services and flight frequency. High cash generation was achieved. On-time and baggage
performance statistics remained better than global norms. Bidvest Lounges returned outstanding results despite a dip in
cumulative passenger numbers.
Bidvest Food Division
Overall performance was pleasing, both in translated rand terms as well as home currencies. Trading profit rose by 24,9% to
R1,5 billion (2012: R1,2 billion).
Asia Pacific
Bidvest Australia put in a solid performance showing growth in a zero-inflation environment. Sales increased, though
national accounts faced continued pressure and the exit from a low margin major account created capacity and opportunity.
Foodservice performed well, with good gains in the freetrade segment. Perth branch relocated to a state of the art new
facility to enable continued growth. Fresh produce and meat continued to grow as a national presence is established. A
small Fresh acquisition was made in regional New South Wales. Profitability improved at Hospitality following a
restructure of the business model. Logistics was challenged by rising costs, though sales improved, the long-term sustainability
of this business segment remains questionable.
Bidvest New Zealand’s impressive growth trajectory continued achieving satisfactory volume and profit improvements,
though the new niche retail operations faced teething problems as the model beds down. Operational cash flow remains
strong. Foodservice did well, buoyed by strong contributions from Christchurch, Auckland, Palmerston North, Queenstown and
Invercargill. Fresh again performed well. Logistics benefited from rising sales and storage revenue. Processing continued
to expand and now has four units in operation.
Angliss Greater China’s wider geographical reach and new product introductions and innovations drove pleasing
contributions from all businesses. The influx of mainland visitors and Asian inbound tourism boosted Hong Kong operations but
rising labour costs and inadequate infrastructure tempered profit growth. Rapid growth of sales and profitability is being
achieved in mainland China. Angliss Singapore’s journey to a fully fledged foodservice business is nearing completion
as non-profitable divisions were downsized or closed.
Deli Meals Chile continued to achieve strong sales growth across both its bakery and wholesale operations. An
acquisition opportunity is being explored. Brazil remains our next target market.
Bidvest Procurement Company has achieved strong growth as the range of sourced products widened and quantities rose
significantly, as we start to leverage our global scale.
Europe
In the UK, 3663 Wholesale put in a creditable performance with sales above expectation, however margin pressure
continued in the large contract arena. Infrastructure developments continued to enable more efficient distribution and
improved service levels. Improvements to the freetrade mix and margin management remain priorities. At Bidvest Logistics,
volumes remained strong resulting in a pleasing performance. Bidvest Fresh performed well as customer spend and average drop
value rose. Campbells, a Scottish meat business, was acquired in order to complement the fish and produce offering.
Deli XL Netherlands faced continued pressure however delivered an improved trading profit off intense management focus
and rationalisation. Revenues at DeliXL Belgium were flat after the loss of a large logistics customer, but trading
profits up as the business focused on the foodservice market through the HORECA sites. Bidvest Czech Republic and Slovakia
did well to protect margins and reduce expenses, and benefited from a good summer season. Foodservice volumes increased
but were under pressure in the multinational retail segment. Farutex in Poland put in a strong performance as margins
were well managed and our focus on the correct market segment continued. Bidvest Baltics achieved pleasing sales growth as
market share gains were achieved in Lithuania, Latvia and Estonia. Bidvest Middle East delivered a satisfactory
performance overall however were impacted by certain product price volatility and political turmoil.
Southern Africa
Bidvest Food Southern Africa secured pleasing sales and profit growth, though margin pressure intensified in a tough
economic environment. Investment focused on new multi-temperature sites at Polokwane and Bloemfontein, factory upgrades
at Crown and Bidvest Bakery Solutions and installation of new cream yeast facilities. Foodservice achieved good growth in
the industrial catering and national account segments. Export growth was encouraging. Cash generation improved and
Foodservice did well to manage expenses despite fuel and utility price hikes. Rollout of the multi-temperature strategy
continued. Crown Foods Group grew sales on a strong performance in the independent butchery and independent group segments.
Product diversification into dairy technology, away from traditional meat and poultry market, is yielding positive
results. Bidvest Bakery Solutions grew strongly in the independent craft market segment and across the confectionary
category. Margins were well managed. Exports into Africa continued to grow and expansion into Zambia, Malawi and Mauritius is
planned. Patleys achieved retail and wholesale growth while adding both domestic and international new brand principals.
Bidvest Namibia achieved revenue growth of 9,6% to NAD1,8 billion (2012: NAD1,7 billion), though trading profit dipped
to NAD218,2 million (2012: NAD249,3 million). Fishing volumes remained flat while expenses were driven higher by
additional quota costs. Horse mackerel prices fell, though currency weakness was beneficial. Pelagic operations did well.
Commercial businesses achieved strong revenue growth. Freight and logistics continued to perform well, underpinned by
offshore oil and gas exploration activities. Food and distribution put in a strong performance, though disruption in the
poultry industry remains a challenge. Commercial & Industrial Services achieved pleasing growth, with strong performances by
Minolco, Rennies Travel and Kolok. Waltons also did well.
Bidvest Corporate
Ontime Automotive rescue and recovery operations underperformed following the integration of the Midlands-based The
Mansfield Group, impacted by restructuring costs. The UK parking and vehicle services business delivered an improved
result. Bidvest Properties continued with its strategy of developing in-house properties for Group requirements.
DECLARATION OF SCRIP DISTRIBUTION WITH A CASH DIVIDEND ALTERNATIVE
Introduction
In order to enable the Group to avail itself of the numerous opportunities currently under consideration, as well as
enable shareholders to further participate in the growth of the Company, shareholders are advised that the board has
declared an interim distribution for the half-year ended December 31 2013, by way of the issue of fully paid ordinary
shares of 5 cents each as a scrip distribution payable to ordinary shareholders recorded in the register on the record date,
being Friday, April 11 2014 (scrip distribution).
Ordinary shareholders will be entitled, in respect of all or part of their shareholding, to elect to receive a gross cash
dividend of 378,0 cents per ordinary share in lieu of the scrip distribution, which will be paid only to those ordinary
shareholders who elect to receive the cash dividend, in respect of all or part of their shareholding, on or before 12:00 on
Friday, April 11 2014 (the cash dividend alternative).
The cash dividend alternative will be paid out of income reserves. There are no STC credits available for utilisation.
A net cash dividend of 321,3 cents per ordinary share will apply to shareholders liable for the local 15% dividend
withholding tax and 378,0 cents per ordinary share for shareholders exempt from the dividend tax.
The new ordinary shares will, pursuant to the scrip distribution, be issued as a capitalisation of part of the share premium
account. The issued ordinary share capital as at February 27 2014 is 327 955 381 ordinary shares. The Company’s income tax
reference number is 9550162714.
Terms of the scrip distribution
The number of new ordinary shares to which ordinary shareholders will become entitled is determined in the ratio of
1,65000 shares for every 100 shares held on the record date. This is the equivalent of 398,1 cents per share based on the
five-day VWAP share price to February 25 2014 of R241,25 per share.
Fractions
Trading in the Strate environment does not permit fractions and fractional entitlements. Accordingly, where an
ordinary shareholder’s entitlement to new ordinary shares is calculated in accordance with the above formula and gives rise to
a fraction of a new ordinary share, such fraction of a new ordinary share will be rounded up to the nearest whole number
where the fraction is greater than or equal to 0,5 and rounded down to the nearest whole number where the fraction is
less than 0,5.
Circular and salient dates
A circular relating to the scrip distribution and the cash dividend alternative will be posted to ordinary shareholders on or about
Thursday, March 20 2014.
In accordance with the provisions of Strate, the electronic settlement and custody system used by the JSE, the relevant dates for the
scrip distribution/cash dividend alternative are as follows:
2014
Circular and form of election posted to ordinary shareholders on Thursday, March 20
Last day to trade in order to be eligible for the scrip distribution/cash dividend alternative
(“CUM” scrip distribution/cash dividend alternative) on Friday, April 4
Ordinary shares trade “EX” the scrip distribution/cash dividend alternative on Monday, April 7
Listing of maximum possible number of new ordinary shares that could be issued in terms of the
scrip distribution on Monday, April 7
Last day to elect the cash dividend alternative instead of the scrip distribution by 12:00 on Friday, April 11
Record date in respect of the scrip distribution/cash dividend alternative on Friday, April 11
Ordinary share certificates and dividend cheques posted and Central Securities Depository posted
and Central Securities Depository
Participant (CSDP)/broker accounts credited/updated (payment date) Monday, April 14
Maximum number of new ordinary shares listed adjusted to reflect the actual number of new ordinary
shares issued on or about Tuesday, April 15
All times provided in this announcement are South African local time. The above dates and times are
subject to change. Any changes will be released on SENS and published in the South African press.
Ordinary share certificates may not be dematerialised or rematerialised, nor may transfers between registers take place
between Monday, April 7 2014 and Friday, April 11 2014, both days inclusive.
Payment of the cash dividend alternative
To the extent elected by ordinary shareholders, the cash dividend alternative is declared in the currency of the Republic
of South Africa.
Where applicable, dividends in respect of certificated ordinary shares will be transferred electronically to ordinary
shareholders’ bank accounts on the payment date. In the absence of specific mandates, dividend cheques will be posted to
ordinary shareholders.
Ordinary shareholders who hold dematerialised shares will have their accounts at their CSDP or broker credited/updated
on Tuesday, April 15 2014.
Basis of presentation of condensed consolidated financial statements
These interim condensed consolidated financial statements have been prepared in accordance with IAS 34: Interim Financial
Reporting as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by the Financial Reporting Standards Council. They do not include all the information
required for a complete set of International Financial Reporting Standards (IFRS) financial statements. However, selected
explanatory notes are included to explain events and transactions that are significant to an understanding to the changes
in the Group’s financial position and performance since the last annual consolidated financial statements as at and for
the year ended June 30 2013.
In preparing these interim condensed consolidated financial statements, management makes judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income
and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended
June 30 2013.
Significant accounting policies
Except as described below, the accounting policies applied in these interim condensed consolidated financial statements
are the same as those applied in the Group’s consolidated financial statements as at and for the year ended June 30 2013. The
following changes in accounting policies are also expected to be reflected in the Group’s consolidated financial statements
as at and for the year ending June 30 2014.
Changes in accounting policies
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to
other standards, with a date of initial application of July 1 2013:
IFRS 10 - Consolidated Financial Statements
IFRS 11 - Joint Arrangements
IFRS 13 - Fair Value Measurement
IAS 19 - Employee Benefits
The nature and the effect of the changes are further explained below.
IFRS 10 - Consolidated Financial Statements
IFRS 10 addresses the divergence arising from the control-based principles in IAS 27 and the risks and rewards-based approach
in SIC 12, and, in addition, provides greater guidance on de facto control.
Management has reassessed the control conclusion for each of its investees at July 1 2013. No changes were identified and the
adoption of this new standard has thus had no impact on the financial results.
IFRS 11 - Joint Arrangements
IFRS 11 identifies two types of joint arrangements, joint operations and joint ventures, and prohibits the use of proportionate
consolidation for joint ventures.
Management has re-evaluated the Group’s involvement in the various joint arrangements and no changes in the accounting treatments
were identified.
IFRS 13 - Fair Value Measurement
IFRS 13 is a single cohesive standard consolidating the principles of fair value measurement and disclosures for financial
reporting. Fair value measurements of a non-financial asset will take into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its
highest and best use.
In accordance with the transitional provisions of IFRS 13, the Group has applied the new fair value measurement guidance prospectively.
Notwithstanding the above, the change had no significant impact on the measurements of the Group’s assets and liabilities.
IAS 19 - Employee Benefits
The revised IAS 19 changes the accounting for defined benefit plans and termination benefits. The most significant change relates to
the accounting for changes in defined benefit obligations and plan assets. The amendments required the recognition of changes in defined
benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the corridor approach permitted under the
previous version of IAS 19 and accelerate the recognition of past service costs. All actuarial gains and losses are recognised immediately
through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial
position to reflect the full value for the plan deficit or surplus.
Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a
“net interest” amount, which is calculated by applying the discount rate to the net defined benefit liability or asset.
The adoption of the changes to this statement has had a limited impact on the results of the Group as previously reported. No adjustment
has been made to the results for the half-year to December 31 2012 or the year to June 30 2013 as the amounts are considered to be
immaterial.
The impact of the change in policy will be included in the results for the year to June 30 2014.
Net acquisition of businesses, subsidiaries, associates and investments
The Group acquired the entire issued share capital of Home of Living Brands Holdings Limited (formerly Amalgamated Appliance Holdings Limited) (HOLB) that
it did not already own, being 71,7%, for a consideration of R532 million, with effect from July 1 2013; and the entire issued share capital of Mvelaserve
Limited (Mvela) that it did not already own, being 65,3%, for a consideration of R847 million, with effect from November 1 2013. Management believes that
these acquisitions will enable HOLB and Mvela to continue to service their customers more efficiently, with significantly enhanced offerings. HOLB and Mvela
will also benefit from being able to offer their products to the wider customer base of the Group.
The Group also made a number of smaller acquisitions during the period.
The acquisitions were funded from its existing cash resources.
The Group’s revenue for the period was enhanced by R687,3 million and R970,9 million and its trading profit by R57,4 million and R55,3 million from HOLB and
Mvela respectively. Management estimates that had Mvela been acquired with effect from July 1 2013, consolidated revenue would have been R91 553,0 million and
consolidated trading profit would have been R4 233,5 million.
The remeasurement of the Group’s existing 28,3% of HOLB and 34,7% of Mvela, resulted in a gain of R74,0 million and a loss of R13,7 million respectively. These
amounts have been included in net capital items in the condensed consolidated income statement for the period.
The final accounting for all the acquisitions had not been completed at the time that these interim condensed consolidated financial statements were issued.
However, the following table summarises the provisional amounts of assets acquired and liabilities assumed which have been included in these results from the
respective dates:
R’000 HoLB Mvela Other Total
Property, plant and equipment 19 588 414 324 241 793 675 705
Deferred taxation 5 346 164 298 (9 728) 159 916
Interest in associates - 8 508 8 326 16 834
Investments and advances - 18 380 443 553 461 933
Inventories 246 496 98 453 100 307 445 256
Trade and other receivables 178 425 1 119 945 97 306 1 395 676
Cash and cash equivalents 168 683 212 262 (1 806) 379 139
Borrowings - (327 699) (109 345) (437 044)
Trade and other payables and provisions (108 693) (1 297 823) (129 640) (1 536 156)
Taxation 1 691 (30 496) (4 091) (32 896)
511 536 380 152 636 675 1 528 363
Minority interest - 3 136 (17 534) (14 398)
Intangible assets 12 396 132 127 277 144 800
Goodwill 218 130 783 362 248 140 1 249 632
Net assets acquired 742 062 1 298 777 867 558 2 908 397
Settled as follows:
Cash and cash equivalents acquired (379 139)
Fair value of existing interests (661 401)
Acquisition costs 25 905
Net change in vendors for acquisition (5 332)
1 888 430
Subsequent event
Subsequent to the period ended December 31 2013, the Group acquired 44,5 million shares in Adcock Ingram Holdings Limited (Adcock) for a consideration of
R3 122,8 million.
Unaudited results
These results have not been audited or reviewed or reported on by the Group’s auditors. The interim condensed consolidated financial statements have been
prepared under the supervision of NEJ Goodwin CA(SA) and were approved by the board of directors on February 26 2013.
Exchange rates
The following exchange rates were used in the conversion of foreign interests and foreign transactions during the periods:
December 31 June 30
2013 2012 2013
Rand/sterling
Closing rate 17,32 13,72 15,05
Average rate 15,98 13,52 13,87
Rand/euro
Closing rate 14,45 11,21 13,13
Average rate 13,55 10,82 11,46
Rand/Australian dollar
Closing rate 9,32 8,80 9,05
Average rate 9,29 8,81 9,08
Supplementary pro forma information regarding the currency effects of the translation of foreign
operations on the Group
The pro forma financial information has been compiled for illustrative purposes only and is the responsibility of the board. Due to the nature of this
information, it may not fairly present the Group’s financial position, changes in equity and results of operations or cash flows. The pro forma
information has been compiled in terms of the JSE Listings Requirements and the Revised Guide on Pro Forma Information by SAICA.
The average rand exchange rate weakened against the major currencies in which the Group’s foreign operations trade, namely sterling (13,52 in 2012 to
15,98 in 2013), the euro (10,82 in 2012 to 13,55 in 2013) and the Australian dollar (8,81 in 2012 to 9,29 in 2013). The illustrative information,
detailed below, has been prepared on the basis of applying the 2012 average rand exchange rates to the 2013 foreign subsidiary income statements and
recalculating the reported income of the Group for the period.
For the half-year Illustrative 2013 at 2012
ended December 31 average exchange rates
Actual Percentage Actual Actual Percentage
2013 change 2012 2013 change
Revenue (Rm) 89 641,6 18,9 75 375,8 83 142,4 10,3
Trading profit (Rm) 4 244,7 19,2 3 562,4 4 095,6 15,0
Headline earnings (Rm) 2 642,5 16,7 2 263,9 2 542,4 12,3
HEPS (cps) 842,3 16,2 725,1 810,4 11,8
Administration
Directors
Chairperson: CWL Phalatse
Independent non-executive: PC Baloyi, DDB Band, AA da Costa, EK Diack, AK Maditsi, FN Mantashe, S Masinga, D Masson,
NG Payne, T Slabbert, Adv FDP Tlakula
Executive directors: B Joffe (Chief executive), BL Berson*, DE Cleasby, AW Dawe, NT Madisa, LP Ralphs (*Australian)
Company Secretary
CA Brighten
Transfer secretaries
Computershare Investor Services (Pty) Limited
Registration number 2004/003647/07
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107, South Africa
Telephone +27 (11) 370 5000
Telefax +27 (11) 688 7717
Sponsor
Investec Securities Limited
100 Grayston Drive, Sandown
Sandton, South Africa, 2196
Registered office
Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose
Johannesburg, 2196, South Africa
PO Box 87274, Houghton, Johannesburg, 2041, South Africa
Further information regarding our Group can be found on the Bidvest website:
www.bidvest.com
Date: 27/02/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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