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THE BIDVEST GROUP LIMITED - Divisional Day - November 24 2015 - Management update on general trading conditions

Release Date: 24/11/2015 13:52
Code(s): BVT     PDF:  
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Divisional Day - November 24 2015 - Management update on general trading conditions

The Bidvest Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
Share code: BVT
ISIN ZAE000117321
("Bidvest" or "the Company")


Divisional Day – November 24 2015
Management update on general trading conditions


Shareholders are advised that the executive management of the group today
met with members of the financial community, including shareholders and
financial analysts, for an update on current market conditions and the Group’s
trading environment.

Management commented as follows:

1. Current market conditions and trading

   Bidvest Industrial Holdings (incorporating Bidvest South Africa and Bidvest
   Namibia)

      -   As noted in the 2015 financial results, trading conditions in South
          Africa have remained tough in the quarter ended September 30
          2015, a continuation of the environment experienced in the latter
          part of the 2015 financial year. October trading picked up a little.
          During these tough times, management are aggressively managing
          the cost base and funds employed in the businesses.
      -   The acquisition of Plumblink, an industrial products supply
          business, was concluded with effect from July 2015. Early
          indications are that its performance is in line with management’s
          expectations.
      -   Weak consumer demand in the automotive market, the impact of
          the decline in demand for commodities and the decline in the
          agricultural products exports have adversely affected a number of
          divisions. On the positive side, new asset based leasing contracts
          in Financial Services, the growth in the Industrials division
          combined with the inclusion of Plumblink for the first time and solid
          performances in Consumer Products, Electrical, Office and
          Paperplus divisions are supporting growth.
      -   Business development activities into our broad customer base are
          yielding positive results, with a number of new contracts having
          been acquired. This has been facilitated by effective cross-
          divisional cooperation to win new business and gain market share.
      -   Macro factors such as low growth, the weak currency and latterly
          drought conditions in many parts of the country are undermining
          business confidence in the South African economy.
      -   The overall trading results for the South Africa operations to the
          end of October are slightly ahead of those for the comparative
          period.
      -   Management continues to pursue opportunities to expand the
          range of services and products offered and the geographic footprint
          of the businesses.
      -   As a management principle, Bidvest Industrial Holdings will not be
          captive to the macro situation it faces and so the businesses are
          trading aggressively to perform at the forefront of their respective
          markets. Bolt-on acquisitions are considered as they arise.
      -   Amended BBBEE codes have been implemented by government
          and all businesses are making excellent progress in adapting to the
          changes that are required in the BBBEE journey.
      -   Business activity into Africa continues through exports with a focus
          of expanding our agent and dealer representation.
      -   The trading results in Bidvest Namibia are disappointing. Fishing
          continues to be negatively affected by the direct horse mackerel
          quota reduction as well as the availability of bought-in quota.
          Management continues to engage with the authorities in this regard
          in the interests of securing industry sustainability and remedies.
          Most of the Commercial operations are operating well. Remedial
          action is being aggressively undertaken in Food and Distribution in
          order to restore growth. With effect from August 2015, Bidvest
          Namibia acquired the Novel Motor Company which will serve to
          broaden the business base. Initial indications are that performance
          is in line with budgeted expectations. Overall business
          improvement strategies continue to be pursued.

Food Group (including Food South Africa)
      - The solid momentum achieved by the Food Group in the 2015
        financial year continued into the 1st quarter of the 2016 financial
        year. Solid results are being achieved by most of the component
        parts of the division with particularly pleasing performances in
        Bidvest Foodservice UK, Bidvest Czech Republic and Slovakia,
        Angliss Greater China and the Australasian region.
      - Trading results translated into South African Rand have been
        assisted by Rand weakness although the benefit is not material to
        the division.
      - The pleasing performance of the foodservice businesses has been
        achieved against a backdrop of minimal or non-existent food
        inflation. Costs remain well controlled although wage costs are
        under pressure in certain more buoyant economies as
        unemployment declines and staff shortages become real.
      - Management remains focused on executing on the strategic plan to
        balance their customer portfolios and to focus on adding value to
        our foodservice customer offering through innovation and service
        delivery.
      - Trading through October remained positive and a good result is
        expected for the half year to December 2015.

Corporate
      - Cumulative portfolio fair value and investment gains are higher than
          the comparative 1st quarter, but not significantly so.


2. General

       -   Acquisitions update:
               o Adcock Ingram:
                      - Based on the recently announced restructure of the
                         board and management, we expect this to position the
                         company for the next expansionary phase of its
                         development.
                      - As announced, the underperforming investments,
                         notably Africa and India, are being addressed.
       -   The internal restructuring of the Group as announced on October 7
           2015 is in progress.
       -   Management remains motivated and is optimistic despite difficult
           trading environments, particularly in Southern Africa. Innovation is a
           key driver as a means of managing margins, costs and returns.
       -   Management continues to seek out acquisition opportunities both
           locally and abroad.


A full recording of the presentation is available on the group’s website
www.bidvest.co.za

This management update has not been reviewed or reported on by the
Company’s independent auditors.
______________________________________________________________


Johannesburg
November 24, 2015

Sponsor
Investec Bank Limited

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