Wrap Text
Unaudited results for the half year ended
December 31 2018
Bid Corporation Limited
("Bidcorp" or "the Group" or "the company")
Incorporated in the Republic of South Africa
Registration number: 1995/008615/06
Share code: BID
ISIN: ZAE000216537
Unaudited results for the half-year ended
December 31 2018
Bidcorp
- is a complete Foodservice offering
- serves multiple customer segments
- is internationally diversified across developed and emerging markets
- people are entrepreneurial and incentivised to be so
- has a proven decentralised business model and best practice learnings are widely shared
- growth is organic, acquisitive-organic through bolt-ons, and acquisitive
- believes that balance sheet strength with low debt is a strong competitive advantage
- proprietary technology enhances customer relationships and efficiencies
It's all about the
- food
- service
- technology
Financial highlights
- Continuing HEPS +9,2%
700,2 cents
H1F2018: 641,0 cents
Constant currency, HEPS +7,1%
- Continuing trading profit +8,3%
R3,3 bn
H1F2018: R3,0 bn
Constant currency, trading profit +6,5%
- Cash generated by continuing operations before working capital +14,8%
R3,9 bn
H1F2018: R3,4 bn
- Interim dividend declared +10,7%
310,0 cents
- Segment trading profit % growth
Australasia +4,7% United Kingdom +17,9%
Europe +19,9% Emerging Markets -13,6%
Condensed interim consolidated statement of profit or loss for the
Half-year ended Year ended
December 31 June 30
2017 2018
2018 Unaudited % Unaudited
R000s Unaudited Re-presented* change Re-presented*
Continuing operations
Revenue 66 413 585 60 873 527 9,1 118 205 621
Cost of revenue (50 902 290) (46 939 264) (8,4) (90 749 470)
Gross profit 15 511 295 13 934 263 11,3 27 456 151
Operating expenses (12 233 948) (10 908 997) (12,1) (21 490 808)
Trading profit 3 277 347 3 025 266 8,3 5 965 343
Share-based payment expense (58 347) (53 531) (99 236)
Acquisition costs (8 613) (14 630) (35 541)
Net capital items (4 897) 21 124 (58 391)
Operating profit 3 205 490 2 978 229 7,6 5 772 175
Net finance charges (143 246) (135 445) (5,8) (227 912)
Finance income 52 103 42 340 84 502
Finance charges (195 349) (177 785) (312 414)
Share of profit of associates and jointly controlled entities 32 942 29 270 52 378
Profit before taxation 3 095 186 2 872 054 7,8 5 596 641
Taxation (751 981) (714 650) (5,2) (1 368 818)
Profit for the period from continuing operations 2 343 205 2 157 404 8,6 4 227 823
Discontinued operations
Loss after taxation from discontinued operations (455 011) (74 547) (662 713)
Profit for the year 1 888 194 2 082 857 (9,3) 3 565 110
Attributable to:
Shareholders of the Company 1 872 734 2 072 051 3 542 923
From continuing operations 2 327 745 2 146 598 8,4 4 205 636
From discontinued operations (455 011) (74 547) (662 713)
Non-controlling interest from continuing operations 15 460 10 806 22 187
1 888 194 2 082 857 3 565 110
Shares in issue ('000)
Total 335 404 335 404 335 404
Weighted 333 162 332 570 332 725
Diluted weighted 333 776 333 524 333 651
Continuing operations (cents)
Basic earnings per share 698,7 645,5 8,2 1 264,0
Diluted basic earnings per share 697,4 643,6 8,4 1 260,5
Headline earnings per share 700,2 641,0 9,2 1 282,9
Diluted headline earnings per share 698,9 639,2 9,3 1 279,3
Total operations (cents)
Basic earnings per share 562,1 623,1 (9,8) 1 064,8
Diluted basic earnings per share 561,1 621,2 (9,7) 1 061,9
Headline earnings per share 680,5 618,8 10,0 1 127,4
Diluted headline earnings per share 679,2 617,0 10,1 1 124,3
Distributions per share (cents) 310,0 280,0 10,7 560,0
* Refer to 'Preparation and results' note
Condensed interim consolidated statement of other comprehensive income for the
Half-year ended Year ended
December 31 June 30
2018 2017 2018
R000s Unaudited Unaudited Audited
Profit for the period 1 888 194 2 082 857 3 565 110
Other comprehensive income 442 741 (350 397) 1 179 542
Items that may be classified subsequently to profit or loss 442 741 (350 397) 1 177 096
Foreign currency translation reserve
Increase (decrease) in foreign currency translation reserve 443 530 (350 067) 1 178 884
Financial assets held at fair value through other comprehensive income - - -
Fair value loss - - (1 329)
Reclassified to profit of loss - - 1 329
Cash flow hedges (789) (330) (1 788)
Fair value loss arising during the period (1 063) (407) (2 208)
Taxation relief for the period 274 77 420
Items that will not be reclassified subsequently to profit or loss
Defined benefit obligations - - 2 446
Remeasurement of defined benefit obligations - - 2 657
Taxation charge for the period - - (211)
Total comprehensive income for the period 2 330 935 1 732 460 4 744 652
Attributable to
Shareholders of the Company 2 305 219 1 723 102 4 698 321
Non-controlling interest 25 716 9 358 46 331
2 330 935 1 732 460 4 744 652
Headline earnings for the
Half-year ended Year ended
December 31 June 30
2017 2018
2018 Unaudited % Unaudited
R000s Unaudited Re-presented* change Re-presented*
Headline earnings
The following adjustments to profit attributable to
shareholders were taken into account in the calculation
of continuing headline earnings:
Profit attributable to shareholders of the Company from
continuing operations 2 327 745 2 146 598 4 205 636
Net impairments 4 897 198 90 321
Goodwill - - 58 079
Property, plant and equipment 4 897 - 25 833
Intangible assets - 198 5 347
Investment at fair value through OCI - - 1 329
Associate - - 267
Taxation relief - - (534)
Net loss on disposal of interest in subsidiary - - 9 050
Gain from bargain purchase - (3 040) (4 222)
Net capital profit on disposal of property, plant and
equipment - (11 970) (10 389)
Property, plant and equipment - (17 100) (15 318)
Taxation charge - 5 130 4 929
Insurance proceeds received in relation to the impairment
of property, plant and equipment - - (21 974)
Headline earnings from continuing operations 2 332 642 2 131 786 9,4 4 268 422
Condensed interim segmental analysis for the
Half-year ended Year ended
December 31 June 30
2017 2018
2018 Unaudited % Unaudited
R000s Unaudited Re-presented* change Re-presented*
Revenue
Bidfood
Australasia 16 047 837 15 864 241 1,2 30 030 647
United Kingdom 17 208 760 15 637 658 10,0 30 265 100
Europe 22 451 594 19 555 009 14,8 39 234 279
Emerging Markets 10 705 394 9 816 619 9,1 18 675 595
66 413 585 60 873 527 9,1 118 205 621
Trading profit
Bidfood 3 319 487 3 061 787 6 043 247
Australasia 980 922 937 090 4,7 1 967 280
United Kingdom 856 706 726 463 17,9 1 430 025
Europe 979 866 816 982 19,9 1 618 219
Emerging Markets 501 993 581 252 (13,6) 1 027 723
Corporate (42 140) (36 521) (77 904)
3 277 347 3 025 266 8,3 5 965 343
* Refer to 'Preparation and results' note
Condensed interim consolidated statement of cash flows for the
Half-year ended Year ended
December 31 June 30
2017 2018
2018 Unaudited Unaudited
R000s Unaudited Re-presented* Re-presented*
Cash flows from operating activities 414 116 (68 246) 2 427 578
Operating profit 3 205 490 2 978 229 5 772 175
Dividends from associates and jointly controlled entity - 25 000 25 000
Acquisition costs 8 613 14 630 35 541
Depreciation and amortisation 642 287 566 718 1 156 326
Non-cash items 52 217 (179 704) (232 521)
Cash generated by operations before changes in working capital 3 908 607 3 404 873 6 756 521
Changes in working capital (1 450 864) (1 832 520) (965 419)
Cash generated by operations 2 457 743 1 572 353 5 791 102
Net finance charges paid (137 672) (112 272) (213 443)
Taxation paid (679 662) (794 959) (1 423 711)
Dividends paid (939 132) (838 511) (1 777 643)
Net operating cash flows from discontinued operations (287 161) 105 143 51 273
Cash effects of investment activities (1 632 931) (1 583 276) (3 136 908)
Additions to property, plant and equipment (1 268 473) (1 054 512) (2 315 516)
Acquisition of businesses, subsidiaries and associates (337 512) (588 231) (965 611)
Additions to intangible assets (69 848) (59 357) (123 872)
Proceeds on disposal of property, plant and equipment 29 248 112 250 292 005
Proceeds on disposal of investments 21 180 11 583 26 902
Proceeds on disposal of intangible assets - 436 5 775
Proceeds on disposal of interests in subsidiaries and associates - - 16 946
Amounts advanced to associates - - (11 643)
Investments acquired - - (45 575)
Net investing cash flows from discontinued operations (7 526) (5 445) (16 319)
Cash effects of financing activities 317 585 347 043 708 841
Borrowings raised 2 526 433 2 762 115 5 381 256
Borrowings repaid (2 090 041) (2 455 488) (4 711 152)
Receipts from non-controlling interests 2 551 5 587 5 495
Payments to vendors for acquisition (179 021) (69 834) (160 037)
Proceeds on disposal of treasury shares 57 663 104 663 193 279
Net decrease in cash and cash equivalents (901 230) (1 304 479) (489)
Cash and cash equivalents at beginning of period 6 643 149 6 348 049 6 348 049
Exchange rate adjustment 95 191 7 005 295 589
Cash and cash equivalents at end of period 5 837 110 5 050 575 6 643 149
Cash and cash equivalents comprise:
Cash and cash equivalents 5 279 911 5 194 090 5 927 352
Cash and cash equivalents of discontinued operations 594 267 (89 744) 715 797
Bank overdrafts included in short-term portion of
interest-bearing borrowings (37 068) (53 771) -
5 837 110 5 050 575 6 643 149
* Refer to 'Preparation and results' note
Condensed interim consolidated statement of financial position as at
December 31 June 30
2018 2017 2018
R000s Unaudited Unaudited Audited
ASSETS
Non-current assets 30 649 023 26 754 387 29 711 793
Property, plant and equipment 13 378 632 10 956 738 12 497 123
Intangible assets 500 188 866 298 949 252
Goodwill 14 958 417 13 329 559 14 539 284
Deferred taxation asset 943 417 885 375 941 851
Defined benefit pension surplus 19 380 17 134 19 380
Interest in associates 223 826 163 230 215 045
Investment in jointly controlled entities 429 432 409 228 401 113
Investments and loans 195 731 126 825 148 745
Current assets 33 216 575 28 943 760 32 219 601
Inventories 9 871 456 8 492 071 9 081 056
Trade and other receivables 14 592 113 12 780 760 14 583 086
Assets classified as held-for-sale 3 473 095 2 402 441 2 590 657
Cash and cash equivalents 5 279 911 5 268 488 5 964 802
Total assets 63 865 598 55 698 147 61 931 394
EQUITY AND LIABILITIES
Capital and reserves 28 250 170 24 599 573 26 788 904
Attributable to shareholders of the Company 27 977 450 24 461 324 26 544 452
Non-controlling interest 272 720 138 249 244 452
Non-current liabilities 5 615 162 7 302 669 8 203 640
Deferred taxation liability 711 785 730 332 776 085
Long-term portion of borrowings 3 710 446 5 518 253 6 070 473
Post-retirement obligations 50 358 41 123 48 489
Long-term of vendors for acquisition 299 461 66 270 300 315
Long-term of puttable non-controlling interest liabilities 305 106 411 648 356 522
Long-term portion of provisions 432 505 505 055 534 655
Long-term portion of lease liabilities 105 501 29 988 117 101
Current liabilities 30 000 266 23 795 905 26 938 850
Trade and other payables 18 199 848 16 239 432 18 868 611
Short-term portion of provisions 121 997 155 962 243 397
Short-term portion of vendors for acquisition 55 469 283 911 234 709
Short-term portion of puttable non-controlling interest liabilities 1 155 977 1 017 736 1 122 068
Liabilities classified as held-for-sale 3 403 101 2 751 815 2 613 207
Taxation 435 788 393 879 367 846
Short-term portion of borrowings 6 628 086 2 953 170 3 489 012
Total equity and liabilities 63 865 598 55 698 147 61 931 394
Number of shares in issue ('000) 335 404 335 404 335 404
Net tangible asset value per share (cents) 3 732 3 061 3 296
Net asset value per share (cents) 8 341 7 293 7 914
Condensed interim consolidated statement of changes in equity for the
Half-year ended Year ended
December 31 June 30
2018 2017 2018
R000s Unaudited Unaudited Audited
Equity attributable to shareholders of the Company
Stated capital 5 428 016 5 428 016 5 428 016
Treasury shares (550 341) (690 524) (601 908)
Balance at beginning (601 908) (795 187) (795 187)
Shares disposed of in terms of share option scheme 57 663 104 663 193 279
Shares purchased for share option scheme (6 096) - -
Foreign currency translation reserve 5 930 430 3 969 653 5 497 156
Balance at beginning 5 497 156 4 318 272 4 318 272
Increase (decrease) in foreign currency translation reserve 433 274 (348 619) 1 178 884
Hedging reserve (1 239) 1 008 (450)
Balance at beginning (450) 1 338 1 338
Fair value loss (1 063) (407) (2 208)
Deferred taxation recognised directly in reserve 274 77 420
Equity-settled share-based payment reserve 331 184 (29 415) 325 383
Balance at beginning 325 383 20 914 20 914
Arising during period 59 948 55 113 102 346
Deferred taxation recognised directly in reserve - - 145
Utilisation during the period (57 663) (131 257) (193 279)
Transfer to retained earnings 3 516 25 815 395 257
Retained earnings 16 839 400 15 782 586 15 896 255
Balance at beginning 15 896 255 14 574 861 14 574 861
Attributable profit 1 872 734 2 072 051 3 542 923
Dividends paid (939 132) (838 511) (1 777 643)
Changes in shareholding of subsidiaries - - (53 876)
Remeasurement of defined benefit obligations - - 2 446
Remeasurement of puttable option 13 059 - 2 801
Transfer from equity-settled share-based payment reserve (3 516) (25 815) (395 257)
27 977 450 24 461 324 26 544 452
Equity attributable to non-controlling interests of the Company
Balance at beginning 244 452 123 306 123 306
Total comprehensive income 25 716 9 358 46 331
Attributable profit 15 460 10 806 22 187
Movement in foreign currency translation reserve 10 256 (1 448) 24 144
Dividends paid (7 351) (969) (24 357)
Share of movement on reserves 358 (409) 3 022
Changes in shareholding 9 545 140 459 342 342
Transfer to puttable non-controlling interest liability - (133 496) (246 192)
272 720 138 249 244 452
Total equity 28 250 170 24 599 573 26 788 904
Comment
Bidcorp's performance overall was in line with management expectations, considering the differing economic realities
of its developed and emerging market exposures. Headline earnings per share (HEPS) increased by 9,2% to 700,2 cents
per share (H1F2018: 641,0 cents), with basic earnings per share (EPS) increasing by 8,2% to 698,7 cents per share
(H1F2018: 645,5 cents). Currency volatility across major currencies positively impacted our rand-translated results
for the period. On a constant currency basis, HEPS grew by 7,1%.
Trading across developed market geographies remained positive, despite cost pressures, persistent low food inflation
and moderate economic growth. Good top-line growth combined with gross-margin gains alleviated cost inflation.
Europe again delivered a standout performance, particularly eastern Europe. UK Foodservice continued to perform very
well and Bidfresh continued on its recovery trajectory. Australia benefited from its previous infrastructure investments
while continuing to rationalise its exposure to lower-margin customers. New Zealand achieved both top-line and margin
growth, offsetting cost pressures. South Africa performed admirably, despite tough economic conditions. Greater China
struggled, hampered by the after-effects of the loss of a major dairy products agency and dairy market crisis, which
constrained gross margins and added costs as rapid range diversification proceeded.
Discontinued operations
Consequent to our previously announced strategy of exiting the UK Contract Distribution activities, Bidcorp has
classified all of its UK Logistics' activities as discontinued, the details of which are reported below.
UK Contract Distribution (CD)
Performance significantly improved on the second half of F2018, though the business still recorded a small loss.
Service levels have improved and customer pricing has been substantially increased to more fully reflect the risk
and reward of these activities.
Bidcorp continues to run a broad sales process designed to achieve a controlled exit of this business.
PCL distribution business (PCL)
Trading in PCL (dairy distribution business for Arla) was poor and losses were incurred. Despite improved service
levels, profitability was significantly impacted by low revenue increases, higher distribution costs and a dispute on
transport rates. As noted previously, the business relationship with Arla has largely broken down and negotiations for
the sale of the major portion of these activities is underway. Accordingly, the intangible associated with this contract
has been fully impaired and further costs associated with the exit will be incurred in the second half particularly vehicle
fleet disposal costs.
Distribution
Bidcorp has declared an interim cash dividend of 310,0 cents per share, a 10,7% increase on the 2018 interim dividend.
Financial overview
Net revenue of R66,4 billion (H1F2018: R60,9 billion) grew by 9,1% (constant currency growth of 6,8%), reflecting real
growth in activity levels in all geographies. Despite significant cost pressures in fuel, wages and energy, food
inflation in our core foodservice markets remains low.
Gross profit percentage increased to 23,4% (H1F2018: 22,9%), reflecting further freetrade growth in the mix as well as
trading through the higher cost base.
Operating expenses increased due to ongoing wage pressure in many economies and higher fuel and energy costs. The Group's
overall cost of doing business increased to 18,4% (H1F2018: 17,9%) on higher sales and distribution activity and the
cost of invested operational capacity.
Group trading profit rose 8,3% to R3,3 billion (H1F2018: R3,0 billion). Trading margin was maintained at 4,9%.
Share-based payment costs increased to R58,3 million (H1F2018: R53,5 million) on the back of further long-term
incentivisation of staff across the Group. Lower acquisition costs reflect slightly lower acquisitive activity as
management bedded down acquisitions made in previous periods.
Net finance charges were 5,8% higher at R143,2 million (H1F2018: R135,4 million), in line with overall trading profit
growth. Bidcorp remains well capitalised, with trading profit interest cover at 22,9 times (H1F2018: 22,3 times). We
retain adequate headroom for further organic and acquisitive growth; however, we remain conscious of the need to balance
gearing and shareholder returns.
The Group's financial position remains strong, a positive attribute in volatile global markets. Investments in fixed
assets reflect both replacement and expansionary capital expenditure to accommodate increased capacity and facility
modernisation. Net debt is R5,1 billion (H1F2018: R3,2 billion), impacted by normal first-half working capital absorption
and ongoing investment.
Cash generated by operations before working capital absorption was R3,9 billion, an increase of 14,8% over H1F2018.
Lower utilisation of working capital of R1,5 billion (H1F2018: R1,8 billion) is pleasing in the face of higher activity
levels, tighter supplier terms and impacts from recent acquisitions not fully in the base. Monthly average net working
capital days remained consistent at 11 days (H1F2018: 10 days). Free cash flow (excluding dividends paid) was better than
H1F2018 by R0,9 billion, largely due to higher cash flow from operations and lower working capital absorption.
Acquisitions
Several small bolt-on acquisitions were made, the most significant of which entailed the acquisition of the remaining
minority of the D&D bolt-on acquisition in Italy and 100% of Igartza in Spain. Investments totalled R337,5 million.
Focus remains on bolstering systems and infrastructure while extracting synergies and efficiencies from recent acquisitions
in Germany and Iberia.
Prospects
Bidcorp remains focused on growth opportunities in the wholesaling of food and allied products to the eat-out-of-home
market; organically through achieving the appropriate customer mix, by selling more products and gaining new customers;
via in-territory bolt-on acquisitions to expand our geographic reach or to expand our product ranges; and via strategic
acquisitions to enter new markets, as and when these arise.
Our mantra of "it's all about the food, the service and the technology" articulates our aim of delivering customer
satisfaction backed by high service levels, efficient infrastructure and fit-for-purpose cost-effective products.
Fresh produce, meat, value-add processing and supply chain procurement initiatives all remain areas of further potential
across all businesses in the Group. Our bespoke global ecommerce and CRM platform continues to evolve and embrace our
best worldwide intellectual property, all leveraged for the greater benefit of the Group. Our service capability
continues to improve as we further invest in our decentralised infrastructure programme to fulfil the strategic objective
of getting as close as possible to the customer base. Shared innovations across the Group greatly enhance our speed of
business development.
We retain significant financial headroom to enable us to decisively capitalise on the right opportunities, either
organic or acquisitive, while always remaining disciplined in our overriding approach.
Financially, the Group is strong and we expect cash generation to remain robust. Our objective is to generate
above-average returns in each of our businesses in their home markets, notwithstanding macro-considerations and
short-term volatility in various markets.
Bidcorp's strength lies in the experience of its entrepreneurial management teams who thrive within our decentralised
Group culture. Despite some short-term challenges in our emerging markets, the fundamental demographic and industry
drivers of our global foodservice markets remain positive, positioning the Group to continue to deliver real earnings
growth for the full year.
Divisional performance
Australasia
The region performed strongly. Revenue was up 1,2% to R16,0 billion (H1F2018: R15,9 billion). Trading profit rose 4,7%
to R980,9 million (H1F2018: R937,1 million), demonstrating the benefit of the continuing strategic move away from the
lower margin customer portfolio.
Australia had a reasonable first half, with sales slightly up on last year, a great result considering the exit of
further low-margin business in the period.
Continuing focus was given to freetrade customer space, which now represents 77% of total sales, up from 73%. In terms
of the metropolitan branch splits effected in F2018, all three regions are tracking well ahead of previous performance.
Supply Solutions continues to perform well while developing further exclusive brand lines and other light manufacturing
opportunities.
The key challenge is to drive continuing growth in a large, mature business - the strategic factor behind our move
into liquor following the Festival acquisition. Initial Festival results were disappointing, but opportunities abound in
the medium term, given improved operational performance.
New Zealand put in a credible first-half performance as consumers became increasingly cautious and many customers
reported tough trading conditions. Sales showed pleasing growth, margins firmed and expenses were well controlled as
branches focused on productivity improvements. Labour availability continues to be a challenge, as well as pressure on
wage rates.
Construction started at three more sites to ensure we can maintain our growth trajectory. All the 2018 new builds are
now delivering a positive return. Returns slipped slightly on the back of continued investment in property and related
assets.
United Kingdom
Notwithstanding uncertainty surrounding Brexit, revenue rose 10,0% to R17,2 billion (H1F2018: R15,6 billion) while
trading profit increased by 17,9% to R856,7 million (H1F2018: R726,5 million). Foodservice continues to deliver excellent
results, with Bidfresh refreshed and ready to deliver good growth.
Bidfood UK performed strongly, with sales and trading profit ahead of projections. Intense margin management delivered
the anticipated gains, a pleasing performance in view of persistent cost pressures in wages, fuel and energy prices.
The independent and multiple freetrade categories showed continued growth, both in margins and volumes. National
account volumes fell, but margins improved. The focus remains on exiting non-profitable business while improving
margins across our existing customer base.
New brand Unity Wines strengthened its market position despite the brand transition undertaken. Own brand product
growth was buoyant.
Bidfresh performance overall was flat. Seafood did well and margins improved. However, further losses were recorded at
Meat. Steps are being taken to drive renewed Meat growth. The Produce business has been restructured following its new
depot and geographical expansion. National accounts showed good growth. Independents face challenges in a slowing
economy. Cost efficiency is key going forward.
Europe
Europe continues to be the stand-out performer in the Group, with most businesses delivering good sales growth and
solid trading results. Eastern Europe jurisdictions continue to show record revenue growth, in spite of significant wage
pressures throughout the region. Revenue rose 14,8% to R22,5 billion (H1F2018: R19,6 billion) while trading profit rose
19,9% to R979,9 million (H1F2018: R817,0 million).
Netherlands maintained strong momentum, supported by a solid second-quarter performance. Sales and trading profit
exceeded expectation. Strong gains in the horeca channel more than offset a slowdown in other areas of the business,
notably in the healthcare market. Freetrade growth was unabated and beat expectations. Margins were supported by import
activities and some small price rises. Operational expenses rose. Labour availability remains a challenge.
Belgium performed strongly in both the horeca and institutional segments. Sales were above budget and margins well
managed. All customer segments showed growth, except the Catering channel. Development of the ecommerce customer
offering is ongoing.
Italy again performed strongly. Sales and trading profit growth was pleasing in view of the national economy slowdown.
Cash generated by operations rose significantly. Sales to Bidcorp sister companies continued to grow. Continued success
in the freetrade sector underscores recent gains. This will remain a point of focus in the second half, along with
continued integration of the D&D acquisition.
Czech Republic and Slovakia again recorded excellent first-half growth. Higher sales and better margins offset significant
wage pressures due to labour shortages. Sales of our Nowaco products were pleasing, thanks in part to a highly effective
TV campaign. Production numbers were positive overall. The Czech economy is slowing, but we are confident we can maintain
momentum. Further depot openings are planned to ensure we can effectively service our increasing customer base.
Poland had an outstanding first half, once again registering record sales. The business drew strategic benefit from
sustained investment in previous years. Growing sales to the independent street trade provided much of the impetus.
Contract reviews in the national accounts segment assisted margin management. Smart Food, the subsidiary that serves
Asian restaurants, is expanding its geographic reach. Our Food & Wine subsidiary continues to grow its wine sales and is
expanding into spirits.
Iberia (Spain and Portugal) performance is below expectations. However, steady progress is being made internally on
improving the business platforms and systems. The Barcelona region is still performing poorly, offset by good growth in
Madrid and Lisbon. Focus remains on growing the independent customer-base. Restructuring of the legacy Food4 business
impacted profitability. Frustock (Portugal) and newly acquired Igartza performed well.
Baltics achieved pleasing sales growth, driven by strong foodservice performance. Operations in both Latvia and
Lithuania recorded a profit. Construction of the new depot in Kaunas is progressing well.
Germany continued to underperform. Horeca sales rose and national accounts ticked higher, though expenses remained too
high. Additional management support has been deployed to assist our local operators. This remains a medium-term market
opportunity for us. We need to structure the base before attempting expansion.
Emerging Markets
This segment continues to navigate the challenging economic and political headwinds in these developing jurisdictions.
Even so, overall revenue was up 9,1% to R10,7 billion (H1F2018: R9,8 billion), with trading profit down 13,6% at
R502,0 million (H1F2018: R581,3 million), largely due to the impact of the mainland China results.
Africa was impacted by a challenged performance at Crown Food Group (CFG) as recovery by the processed meats sector
after last year's listeriosis crisis proved slow. Bidfood and Chipkins Puratos (CP), our 50% equity-accounted JV,
delivered excellent results, despite consumer pressure and cost rises well above food inflation. All businesses grew
volumes in targeted channels, but margins are under pressure. Bidfood secured further street trade gains. National accounts
declined slightly, but industrial catering sales rose. Sales through the MyBidfood ecommerce platform continue to expand.
Our private and exclusive labels remain a differentiator in the market. At CFG, the Six Bar acquisition has been integrated
into the business. CP grew across most channels, bolstered by good sales of own-manufactured products. Its
state-of-the-art wet plant opens soon.
Greater China faced pressures as the economy slowed. Some sales gains were registered. Margins slipped and profit fell
as expenses moved significantly higher as we expanded our product offering following the loss of our cornerstone dairy
products agency. This loss was unpreventable, the principal (a large New Zealand dairy company) made the strategic
decision to insource the selling function and outsource only the distribution component, which is not the type of activity
we choose to be involved in. The Guangzhou and Shanghai operations were under particular pressure in adjusting to the loss
of the dairy agency. Miumi, the Japanese food business, put in a strong showing. The second quarter 'festival effect'
boosted Hong Kong and Macau.
Work continued on the further diversification of the product mix. Hong Kong and Macau plan to continue the introduction
of new brands while stepping up investment in production centres. The hotel and restaurant channel and Chinese cuisine
are focus areas for mainland operations. The business is now poised to resume its growth strategy, with the aim of
repeating the performance levels seen in the previous 10 years.
Singapore achieved modest sales gains, but operating profit was slightly lower as a result of our Vietnam startup
costs. The Vietnam JV became operational late in the period. Our Singapore business is now performing better after being
transformed into a more traditional foodservice operation. Malaysia performed well, growing sales and margins.
Chile exceeded expectations. Volumes benefited from the October acquisition of Foodchoice. Organic growth remained the
biggest driver, supported by contributions from the Viña del Mar branch. Sales from two more branches (Foodchoice
Temuco and Antofagata) added to momentum.
Brazil achieved strong sales growth. Both the Irmaos Avelino and Mariusso components of the business reported solid
gains as the foodservice sector benefited from a more positive consumer mood following national elections. Gains were
underpinned by productivity improvements and the introduction of enhanced technology and reporting tools. We began the
launch of own brand products in numerous categories, drawing on the experience of Group businesses around the world.
Middle East sales and profit exceeded expectations while margins improved. Operating expenditure was well managed.
Dubai was under pressure. However, Abu Dhabi did well. Al Diyafa, the Saudi Arabian JV, recorded pleasing results,
driven by new account gains and a better product sales mix.
Turkey recorded big sales gains. Trading profit lagged budget but was up on the comparative period. Izmir-based EFE
put in an exceptional performance. Expenses were well controlled, but the weak Turkish lira drove some distribution costs
higher.
BL Berson
Chief executive
DE Cleasby
Chief financial officer
Dividend declaration
In line with the Group dividend policy, the directors declared an interim gross cash dividend of 310,0 cents (248,0 cents
net of dividend withholding tax, where applicable) per ordinary share for the half-year ended December 31 2018 to those
members registered on the record date, being Friday, March 22 2019.
The dividend has been declared from income reserves. A dividend withholding tax of 20% will be applicable to all
shareholders who are not exempt.
Share code: BID
ISIN: ZAE000216537
Company registration number: 1995/008615/06
Company tax reference number: 9040946841
Gross cash dividend amount per share: 310,0 cents
Net dividend amount per share: 248,0 cents
Issued shares at declaration date ('000): 335 404
Declaration date: Wednesday, February 20 2019
Last day to trade cum dividend: Monday, March 18 2019
First day to trade ex dividend: Tuesday, March 19 2019
Record date: Friday, March 22 2019
Payment date: Monday, March 25 2019
Share certificates may not be dematerialised or rematerialised between Tuesday, March 19 2019 and
Friday, March 22 2019, both days inclusive.
For and on behalf of the board
AK Biggs
Company secretary
Johannesburg
February 20 2019
Basis of presentation of the condensed interim consolidated financial statements
The condensed interim consolidated financial statements have been prepared in accordance with the JSE Limited Listings
Requirements for interim reports, and the requirement of the Companies Act of South Africa applicable for condensed
interim consolidated financial statements. The Listings Requirements require interim reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by Financial Reporting Standards Council, and include disclosure as required by IAS 34:
Interim Financial Reporting and the Companies Act of South Africa. The accounting policies applied in the preparation of
the condensed interim consolidated financial statements from which the condensed interim consolidated financial statements
were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the
previous consolidated annual financial statements.
In preparing these interim condensed consolidated financial statements, management make 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.
Acquisitions
The Group made a number of small acquisitions during the period, namely:
- Igartza, S.L. (Spain)
- D&D S.p.A. (Italy) - acquired remaining 30%
- Foodchoice (Chile)
- Six Bar Trading 409 CC (South Africa)
- KBC Foods (Australia)
These acquisitions form part of the Group's strategic expansion plans in the international foodservice industry. The
acquisitions have enabled the Group to expand its range of complementary products and services and, as a consequence,
has broadened the Group's base in the market place. Total investment in acquisitions was R337,5 million, and their
contribution to revenue and trading profit for the half-year ended December 31 2018 was R195,2 million and R11,0 million
respectively. There were no significant contingent liabilities identified in the businesses acquired.
Financial instruments
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques categorised as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (ie as prices) or indirectly (ie derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including
their levels in the fair value hierarchy for financial instruments measured at fair value. It does not include fair
value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a
reasonable approximation of fair value.
Non-current assets (liabilities) Current liabilities
Puttable Puttable
non- non-
controlling Vendors for controlling Vendors for
R000s interests Investments acquisition interests acquisition Total
December 31 2018
Financial assets measured at fair value - 78 410 - - - 78 410
Financial liabilities measured at fair value (305 106) - (299 461) (1 155 977) (55 469) (1 816 013)
December 31 2017
Financial assets measured at fair value - 61 911 - - - 61 911
Financial liabilities measured at fair value (411 648) - (66 270) (1 017 736) (283 911) (1 779 565)
June 30 2018
Financial assets measured at fair value - 56 288 - - - 56 288
Financial liabilities measured at fair value (356 522) - (300 315) (1 122 068) (234 709) (2 013 614)
Fair value Level 1 Level 2 Level 3 Total
December 31 2018
Financial assets measured at fair value - 6 167 72 243 78 410
Financial liabilities measured at fair value - - (1 816 013) (1 816 013)
December 31 2017
Financial assets measured at fair value - 8 163 53 748 61 911
Financial liabilities measured at fair value - - (1 779 565) (1 779 565)
June 30 2018
Financial assets measured at fair value - - 56 288 56 288
Financial liabilities measured at fair value - - (2 013 614) (2 013 614)
Inter-relationship between significant
Valuation technique Significant unobservable inputs unobservable inputs and fair value measurement
The expected payments are determined - EBITDA growth rates: 5% - 15% (H1F2018: 10% - 23%) The estimated fair value would increase (decrease) if:
by considering the possible scenarios - EBITDA multiples: 5,5x - 8,5x (H1F2018: 4,8x - 7x) - the EBITDA were higher (lower); or
of forecast EBITDAs, the amount to - Risk-adjusted discount rate: 0,5% - 9,0% - the risk-adjusted discount rate were lower (higher).
be paid under each scenario and the (H1F2018: 1,99% - 5,0%)
probability of each scenario. The
valuation models consider the present
value of expected payment, discounted
using a risk-adjusted discount rate.
Discontinued operations
In December 2017, management committed to a plan to discontinue the UK Contract Distribution (CD) business
segment which operates in the United Kingdom. By June 30 2018, Bidcorp was close to finalising its proposed
exit from this non-core segment. Costs associated with this anticipated exit were substantially provided for
and any further costs are unlikely to be significant. The CD business segment is a component of the Group's
United Kingdom business, the operations and cash flows of which can be clearly distinguished from the rest
of the Group. Post June 30 2018, the prospective purchaser of the CD business notified Bidcorp that for
its own internal reasons, it has decided not to proceed with the transaction. The CD business remains a
non-core activity in respect of Bidcorp's global foodservice operations. Accordingly, Bidcorp pursued
alternative exit proposals, and has engaged in a formal sale process, managed by independent advisers.
The sale process is ongoing at December 31 2018.
PCL's (dairy distribution business for Arla) performance for the half year was disappointing. Towards the end
of 2018, following a dispute with Arla,management committed to exit the PCL business by either selling the PCL
transport operations to Arla or to close down the PCL business. Heads of Terms are being negotiated with Arla,
and the sales process is ongoing at December 31 2018. An outcome is expected to be finalised before June 2019.
Further costs associated with the exit will be incurred in the second half of the financial year, including
trading losses and vehicle fleet disposal costs.
The results of the discontinued operations included in the Group's results are detailed below:
December 31 June 30
2017 2018
2018 Unaudited Unaudited
R000s Unaudited Re-presented* Re-presented*
Revenue 9 620 844 11 073 688 19 408 282
Cost of revenue (8 227 118) (9 582 438) (16 686 301)
Gross profit 1 393 726 1 491 250 2 721 981
Operating expenses (1 469 355) (1 579 080) (3 353 932)
Trading loss (75 629) (87 830) (631 951)
Share-based payment expense (1 601) (1 582) (3 110)
Net capital items (470 376) (811) (145 545)
Operating loss (547 606) (90 223) (780 606)
Net finance charges (5 610) (3 389) (8 459)
Finance income - 2 45
Finance charges (5 610) (3 391) (8 504)
Loss before taxation (553 216) (93 612) (789 065)
Taxation 98 205 19 065 126 352
Loss for the period from discontinued operations (455 011) (74 547) (662 713)
The following adjustments to profit attributable to
shareholders were taken into account in the calculation
of headline loss:
Loss attributable to shareholders of the Company from
discontinued operations (455 011) (74 547) (662 713)
Net impairments 389 359 657 145 394
Intangible assets 465 010 - -
Property, plant and equipment 5 366 811 3 408
Goodwill - - 142 137
Taxation relief (81 017) (154) (151)
Headline loss from discontinued operations (65 652) (73 890) (517 319)
Discontinued operations (cents)
Basic loss per share (136,6) (22,4) (199,2)
Diluted loss per share (136,3) (22,4) (198,6)
Headline loss per share (19,7) (22,2) (155,5)
Diluted headline loss per share (19,7) (22,2) (155,0)
* Refer to 'Preparation and results' note
December 31 June 30
2018 2017 2018
R000s Unaudited Unaudited Audited
Effect of the discontinued operations on the statement
of financial position of the Group
Assets classified as held-for-sale 3 473 095 2 402 441 2 590 657
Property, plant and equipment 313 467 219 769 212 090
Intangible assets 4 525 6 081 7 437
Deferred tax asset 7 752 499 1 338
Inventories 466 982 469 322 428 733
Trade and other receivables 1 959 650 1 684 627 1 161 229
Investments and loans 445 - 440
Taxation 126 007 22 143 101 043
Cash and cash equivalents 594 267 - 678 347
Liabilities classified as held-for-sale 3 403 101 2 751 815 2 613 207
Deferred tax liability 10 906 12 069 6 476
Long-term portion of provisions 183 847 52 313 30 013
Trade and other payables 3 114 250 2 501 452 2 576 718
Short-term portion of provisions 94 098 21 839 -
Bank overdrafts - 164 142 -
December 31 June 30
2017 2018
2018 Unaudited Unaudited
R000s Unaudited Re-presented* Re-presented*
Cash flows from discontinued operations
Net operating cash flows from discontinued operations (287 161) 105 143 51 273
Net investing cash flows from discontinued operations (7 526) (5 445) (16 319)
Net (decrease) increase in cash and cash equivalents (294 687) 99 698 34 954
Preparation and results
These half-year ended December 31 results have not been audited or reviewed by the Group's auditors. The
condensed interim consolidated financial statements have been prepared by CAM Bishop (CA)SA, under the
supervision of DE Cleasby CA(SA), and were approved by the board of directors on February 19 2019.
The consolidated statement of profit or loss, consolidated statement of cash flows, segmental analysis and
related notes have been re-presented as a result of classifying the remaining UK logistics activities, PCL,
as a discontinued operation in the 2019 interim period, together with the related notes.
As a result of this disclosure change, the June 30 2018 consolidated statement of profit or loss, consolidated
statement of cash flows, segmental analysis and related notes have been described as "unaudited" in the 2019
interim financial statements contained herein.
The adoption of IFRS 9: Financial Instruments and IFRS 15: Revenue from Contracts from Customers, which became
effective from July 1 2018, has not had a material impact on the financial position or performance of the Group.
No transition adjustments have been processed to retained earnings.
IFRS 16: Leases will be adopted by the Group with effect from July 1 2019. Management's initial assessment of
IFRS 16 is that it will have an impact on the following areas (but not limited to):
- an overall increase in the Group's total assets, net debt and debt/equity ratio due to the inclusion of the
lease liability on statement of financial position;
- higher trading profit due to an element of the operating lease charge being disclosed as a finance charge;
and
- higher finance charges and lower trading interest cover levels due to the finance element of the current
lease charge being moved to the finance charges line on the statement of profit or loss.
Exchange rates
The following exchange rates were used in the conversion of foreign interests and foreign transactions
during the periods:
December 31 June
2018 2017 2018
Unaudited Unaudited Audited
Rand/Sterling
Closing rate 18,29 16,67 18,06
Average rate 18,34 17,65 17,27
Rand/Euro
Closing rate 16,49 14,80 16,00
Average rate 16,32 15,74 15,30
Rand/Australian dollar
Closing rate 10,15 9,65 10,15
Average rate 10,26 10,43 9,94
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 illustrative information, detailed below, has been prepared on the basis of applying the H1F2018 average rand
exchange rates to the H1F2019 foreign subsidiary income statements and recalculating the reported income of the
Group for the period.
For the half-year ended December 31
Illustrative
2018 at 2017
average
2018 2017 % exchange %
R000s Unaudited Unaudited change rates change
Continuing operations
Revenue 66 413 585 60 873 527 9,1 65 007 423 6,8
Trading profit 3 277 347 3 025 266 8,3 3 220 854 6,5
Headline earnings 2 332 642 2 131 786 9,4 2 286 551 7,3
Headline earnings per share (cents) 700,2 641,0 9,2 686,3 7,1
Constant currency per segment from
continuing operations
Revenue
Australasia 16 047 837 15 864 241 1,2 16 268 930 2,6
United Kingdom 17 208 760 15 637 658 10,0 16 559 783 5,9
Europe 22 451 594 19 555 009 14,8 21 665 880 10,8
Emerging Markets 10 705 394 9 816 619 9,1 10 512 830 7,1
66 413 585 60 873 527 9,1 65 007 423 6,8
Trading profit
Australasia 980 922 937 090 4,7 994 507 6,1
United Kingdom 856 706 726 463 17,9 824 398 13,5
Europe 979 866 816 982 19,9 944 695 15,6
Emerging Markets 501 993 581 252 (13,6) 498 326 (14,3)
Corporate office (42 140) (36 521) (41 072)
3 277 347 3 025 266 8,3 3 220 854 6,5
Average exchange rates are calculated using the arithmetic mean of the daily exchange rates over the reporting period.
Administration
Directors
Chairman: S Koseff
Lead independent director: DDB Band
Non-executive director: B Joffe
Independent non-executive: PC Baloyi, DD Mokgatle, NG Payne, H Wiseman*
Executive directors: BL Berson* (chief executive), DE Cleasby (chief financial officer)
*Australian
Company secretary
AK Biggs
Transfer secretaries
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
Rosebank Towers
15 Biermann Avenue
Rosebank, 2196
PO Box 61051, Marshalltown, 2107
Telephone +27 (11) 370 5000
Sponsor
The Standard Bank of South Africa Limited
30 Baker Street, RosebankSouth Africa, 2196
Independent auditor
PricewaterhouseCoopers
Registration number: 1998/012055/21
Waterfall City, 4 Lisbon Lane, Jukskei View
Midrand, 2090
Registered office
2nd Floor North Wing, 90 Rivonia Road, Sandton Johannesburg, 2196, South Africa
Postnet Suite 136, Private Bag X9976 Johannesburg, 2146, South Africa
Further information regarding our Group can be found on the Bidcorp website:
www.bidcorpgroup.com
February 20 2019
Date: 20/02/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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