Wrap Text
Bid Corporation Limited Results for the year ended June 30 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
Bid Corporation Limited Results for the year ended June 30 2018
Our strategic vision
Management is focused on growth opportunities; organically in our current markets through attaining the
appropriate business mix by selling more products to our existing customers and gaining new customers; via
in-territory bolt-on acquisitions to expand our geographic reach and expanding our product ranges; and via
larger acquisitions to enter new markets. Despite our appetite for acquisitions, we remain disciplined in
our approach to accessing the "right" opportunities.
Bidcorp's entrepreneurial and decentralised business model, the depth and experience of our management
teams and the strength of the Group's culture has set up the Group for sustained growth in the future.
It's all about the food
Financial highlights
Continuing HEPS +9,1%
1 286,3 cents
2017: 1 179,2 cents
Constant currency, HEPS +9,2%
Continuing trading profit +8,7%
R6,0 bn
2017: R5,5 bn
Constant currency, trading profit +9,1%
Segment trading profit % growth in constant currency (excluding acquisitions and disposals)
Australasia +4,4% United Kingdom +8,7%
Europe +30,0% Emerging Markets (0,4)%
Cash generated by continuing operations before working capital +10,6%
R6,9 bn
2017: R6,2 bn
Final dividend declared +12,0%
280,0 cents
Summary consolidated statement of profit or loss
for the year ended June 30
2017
2018 Audited %
R000s Audited Re-presented change
Continuing operations
Revenue 119 359 635 110 468 151 8,0
Cost of revenue (90 749 470) (83 945 122) (8,1)
Gross profit 28 610 165 26 523 029 7,9
Operating expenses (22 650 290) (21 038 100) (7,7)
Trading profit 5 959 875 5 484 929 8,7
Share-based payment expense (99 236) (94 113)
Acquisition costs (35 541) (46 084)
Net capital items (203 143) 135 697
Operating profit 5 621 955 5 480 429 2,6
Net finance charges (231 145) (215 723) (7,1)
Finance income 84 542 96 752
Finance charges (315 687) (312 475)
Share of profit of associates and jointly controlled entity 52 378 25 055
Profit before taxation 5 443 188 5 289 761 2,9
Taxation (1 348 749) (1 246 641) (8,2)
Profit for the year from continuing operations 4 094 439 4 043 120 1,3
Discontinued operations
Loss after taxation from discontinued operations (529 329) (11 239)
Profit for the year 3 565 110 4 031 881
Attributable to:
Shareholders of the company 3 542 923 4 008 287
From continuing operations 4 072 252 4 019 526
From discontinued operations (529 329) (11 239)
Non-controlling interest from continuing operations 22 187 23 594
3 565 110 4 031 881
Shares in issue
Total ('000) 335 404 335 404
Weighted ('000) 332 725 332 065
Diluted weighted ('000) 333 651 332 795
Continuing operations
Basic earnings per share (cents) 1 223,9 1 210,5 1,1
Diluted basic earnings per share (cents) 1 220,5 1 207,8 1,1
Headline earnings per share (cents) 1 286,3 1 179,2 9,1
Diluted headline earnings per share (cents) 1 282,7 1 176,6 9,0
Total operations (cents)
Basic earnings per share (cents) 1 064,8 1 207,1
Diluted basic earnings per share (cents) 1 061,9 1 204,4
Headline earnings per share (cents) 1 127,4 1 181,0
Diluted headline earnings per share (cents) 1 124,2 1 178,4
Distributions per share (cents) 560,0 500,0 12,0
Summary consolidated statement of other comprehensive income
for the year ended June 30
2017
2018 Audited
R000s Audited Re-presented
Profit for the year 3 565 110 4 031 881
Other comprehensive income 1 179 542 (2 786 306)
Items that may be reclassified subsequently to profit or loss 1 177 096 (2 792 316)
Foreign currency translation reserve
Increase (decrease) in foreign currency translation reserve 1 178 884 (2 793 654)
Financial assets held at fair value through other comprehensive income - -
Fair value loss (1 329) (43 379)
Reclassified to profit or loss 1 329 43 379
(Decrease) increase in fair value of cash flow hedges (1 788) 1 338
Fair value (loss) gain arising during the year (2 208) 1 652
Taxation relief (charge) for the year 420 (314)
Items that will not be reclassified subsequently to profit or loss
Defined benefit obligations 2 446 6 010
Remeasurement of defined benefit obligations during the year 2 657 6 393
Deferred taxation charge (211) (383)
Total comprehensive income for the year 4 744 652 1 245 575
Attributable to
Shareholders of the company 4 698 321 1 230 657
Non-controlling interest 46 331 14 918
4 744 652 1 245 575
Headline earnings reconciliation
for the year ended June 30
2017
2018 Audited
R000s Audited 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 4 072 252 4 019 526
Net impairments 235 073 383 228
Goodwill 200 216 176 174
Property, plant and equipment 28 448 93 727
Intangible assets 5 347 94 384
Investment at fair value through OCI 1 329 43 379
Associate 267 -
Taxation relief (534) (24 436)
Net loss (profit) on disposal of interests in subsidiaries
and interest of associate 9 050 (465 882)
Loss (profit) on disposal of subsidiaries 9 050 (510 232)
Profit on disposal of interest in associate - (11 804)
Taxation charge - 56 154
Gain from bargain purchase (4 222) -
Insurance proceeds received in relation to the
impairment of property, plant and equipment (21 974) -
Net capital profit on disposal of property, plant,
equipment and intangible assets (10 389) (21 175)
Property, plant and equipment (15 318) (7 122)
Intangible assets - (14 203)
Taxation charge 4 929 150
Headline earnings from continuing operations 4 279 790 3 915 697
Summary consolidated segmental analysis
for the year ended June 30
2017
2018 Audited %
R000s Audited Re-presented change
REVENUE
Bidfood
Australasia 30 030 647 29 440 177 2,0
United Kingdom 31 419 114 29 529 666 6,4
Europe 39 234 279 32 217 257 21,8
Emerging Markets 18 675 595 19 281 051* (3,1)
119 359 635 110 468 151 8,0
TRADING PROFIT
Bidfood 6 037 779 5 540 029 9,0
Australasia 1 967 280 1 951 691 0,8
United Kingdom 1 424 557 1 311 428 8,6
Europe 1 618 219 1 175 195 37,7
Emerging Markets 1 027 723 1 101 715* (6,7)
Corporate (77 904) (55 100)
5 959 875 5 484 929 8,7
* Includes 100% of Bakery Supplies (Chipkins Puratos), 50% of which was sold to Puratos NV in April 2017 and equity
accounted thereafter
Summary consolidated statement of cash flows
for the year ended June 30
2017
2018 Audited
R000s Audited Re-presented
Cash flows from operating activities 2 427 578 2 254 867
Operating profit 5 621 955 5 480 429
Dividends received from jointly controlled entity and associates 25 000 14 854
Acquisition costs 35 541 46 084
Depreciation and amortisation 1 192 963 1 166 887
Non-cash items (21 069) (512 172)
Cash generated by operations before changes in working capital 6 854 390 6 196 082
Changes in working capital (1 074 149) (497 235)
Cash generated by operations 5 780 241 5 698 847
Finance income received 80 785 96 752
Finance charges paid (296 437) (294 364)
Taxation paid (1 395 595) (1 341 242)
Dividends paid (1 777 643) (1 646 835)
Net operating cash flows from discontinued operation 36 227 (258 291)
Cash effects of investment activities (3 136 908) (2 230 046)
Additions to property, plant and equipment (2 319 586) (2 140 958)
Acquisition of businesses, subsidiaries and associates (965 611) (1 315 161)
Additions to intangible assets (123 917) (113 046)
Proceeds on disposal of property, plant and equipment 292 292 323 042
Proceeds on disposal of investments 26 902 680 235
Proceeds on disposal of intangible assets 5 775 11 848
Proceeds on disposal of interests in subsidiaries and associates 16 946 429 811
Advances to associates and increases in shareholding of associates (11 643) (80 575)
Investments acquired (45 575) (9 858)
Net investing cash flows from discontinued operation (12 491) (15 384)
Cash effects of financing activities 708 841 1 471 746
Borrowings raised 5 381 256 5 499 736
Borrowings repaid (4 711 152) (4 086 098)
Receipts from (payments to) non-controlling interests 5 495 (56 509)
Payments to puttable non-controlling interests and vendors for acquisition (160 037) (39 927)
Proceeds on disposal of treasury shares 193 279 154 544
Net (decrease) increase in cash and cash equivalents (489) 1 496 567
Net cash and cash equivalents at the beginning of the year 6 348 049 5 505 509
Exchange rate adjustment 295 589 (654 027)
Net cash and cash equivalents at the end of the year 6 643 149 6 348 049
Net cash and cash equivalents comprise:
Cash and cash equivalents of continuing operations 5 964 802 6 497 938
Cash and cash equivalents of discontinued operation 678 347 (149 889)
6 643 149 6 348 049
Summary consolidated statement of financial position
as at June 30
2018 2017
R000s Audited Audited
ASSETS
Non-current assets 29 711 793 26 023 534
Property, plant and equipment 12 497 123 10 705 190
Intangible assets 949 252 907 151
Goodwill 14 539 284 12 791 153
Deferred taxation asset 941 851 922 847
Defined benefit pension asset 19 380 17 134
Interest in associates 215 045 172 206
Investment in jointly controlled entity 401 113 394 039
Investments and loans 148 745 113 814
Current assets 32 219 601 28 422 407
Inventories 9 081 056 8 261 665
Trade and other receivables 14 583 086 13 812 693
Assets classified as held-for-sale 2 590 657 -
Cash and cash equivalents 5 964 802 6 348 049
Total assets 61 931 394 54 445 941
EQUITY AND LIABILITIES
Capital and reserves 26 788 904 23 671 520
Attributable to shareholders of the company 26 544 452 23 548 214
Non-controlling interest 244 452 123 306
Non-current liabilities 8 203 640 6 751 961
Deferred taxation liability 776 085 743 471
Long-term portion of borrowings 6 070 473 5 247 641
Post-retirement obligations 48 489 41 657
Long-term portion of vendors for acquisition 300 315 82 377
Long-term portion of puttable non-controlling interest liabilities 356 522 118 028
Long-term portion of provisions 534 655 513 792
Long term portion of lease liabilities 117 101 4 995
Current liabilities 26 938 850 24 022 460
Trade and other payables 18 868 611 19 127 763
Short-term portion of provisions 243 397 223 945
Short-term portion of vendors for acquisition 234 709 379 474
Short-term portion of puttable non-controlling interest liabilities 1 122 068 1 077 168
Liabilities classified as held-for-sale 2 613 207 -
Taxation 367 846 404 288
Short-term portion of borrowings 3 489 012 2 809 822
Total equity and liabilities 61 931 394 54 445 941
Net tangible asset value per share (cents) 3 296 2 937
Net asset value per share (cents) 7 914 7 021
Summary consolidated statement of changes in equity
for the year ended June 30
2018 2017
R000s Audited Audited
Equity attributable to shareholders of the company 26 544 452 23 548 214
Stated capital 5 428 016 5 428 016
Treasury shares (601 908) (795 187)
Balance at the beginning of the year (795 187) (949 731)
Shares disposed in terms of share option scheme 193 279 154 544
Foreign currency translation reserve 5 497 156 4 318 272
Balance at the beginning of the year 4 318 272 7 111 926
Increase (decrease) in foreign currency translation reserve 1 178 884 (2 793 654)
Hedging reserve (450) 1 338
Balance at the beginning of the year 1 338 -
Fair value (loss) gain incurred during the year (2 208) 1 652
Deferred taxation recognised directly in reserve 420 (314)
Equity-settled share-based payment reserve 325 383 20 914
Balance at the beginning of the year 20 914 (2 025)
Arising during the year 102 346 97 569
Deferred taxation recognised directly in reserve 145 22 824
Utilisation during the year (193 279) (154 544)
Transfer to retained earnings 395 257 57 090
Retained earnings 15 896 255 14 574 861
Balance at the beginning of the year 14 574 861 12 492 438
Attributable profit 3 542 923 4 008 287
Dividends paid (1 777 643) (1 646 835)
Changes in shareholding of subsidiaries (53 876) (121 790)
Remeasurement of defined benefit obligations 2 446 6 010
Remeasurement of puttable option 2 801 (48 076)
Transfer from equity-settled share-based payment reserve (395 257) (57 090)
Transfers of subsidiaries under common control - (29 924)
Transfer from non-controlling interests of the company - (28 159)
Equity attributable to non-controlling interests of the company 244 452 123 306
Balance at the beginning of the year 123 306 136 950
Total comprehensive income 46 331 14 918
Attributable profit 22 187 23 594
Movement in foreign currency translation reserve 24 144 (8 676)
Dividends paid (24 357) (15 758)
Share of movement on other reserves 3 022 (1 424)
Changes in shareholding 342 342 80 293
Transfer to puttable non-controlling interest liability (246 192) (119 832)
Transfer to retained earnings - 28 159
Total equity 26 788 904 23 671 520
Comment
Bidcorp has over a period of a few years been exiting low-margin logistics activities globally where they do not fit
into its model for its foodservice businesses and are thus non-core. As previously announced, pursuant to receiving
a credible and realistic commercial offer for the UK Contract Distribution (CD) business, Bidcorp took a decision
in December 2017 to treat CD as a discontinued operation. Accordingly the performance of the continuing operations
and the discontinued operation are reported separately.
Continuing operations
Bidcorp performed in line with our expectations, delivering solid results for the year ended June 30 2018.
Headline earnings per share (HEPS) increased by 9,1% to 1 286,3 cents per share (F2017: 1 179,2 cents),
with basic earnings per share (EPS) increasing by 1,1% to 1 223,9 cents per share (F2017: 1 210,5 cents).
Trading across all the geographies in which the Group's foodservice businesses operate remained positive.
Most businesses in the portfolio improved their performance in home currencies against a backdrop of low food
inflation and moderate economic growth.
Europe delivered a standout performance. UK Foodservice did well, delivering its best result ever; however, Fresh
disappointed somewhat. New capacity investments in Australia initially created some short-term underperformance but
their full-year performance achieved a commendable record result. New Zealand once again delivered a great performance.
In Asia, supplier dislocation and volatile currencies led to rampant price increases in dairy, impacting gross margins
and efficiencies. South Africa performed well in tough economic conditions.
Our strategic focus of growing our exposure to the independent customer base in our respective markets has driven real
organic growth. A few small acquisitions were concluded in the year to broaden our product range and geographic
extension, the benefits of which have not yet been realised.
The outbreaks of listeria in numerous parts of the world heightened food safety risks. Food testing protocols, systems
and recall procedures were all re-examined and strengthened to maintain the highest level of standards.
Discontinued operation
UK Contract Distribution (CD)
Performance was extremely poor and the business recorded significant losses, particularly in the second half of
the year. The exit of KFC in February and the accompanying redundancies and restructuring, the downscaling of properties
and vehicles, the subsequent onboarding of a part of the KFC contract, poor weather and reduced consumer confidence in
the chain segment of the market all contributed, as did additional costs in relation to the exit of the business.
We are in the process of finalising an agreement with the proposed purchaser of the business, a global business, and
they are in the final stages of clearing their internal approval formalities. We are hopeful of being able to announce
the details of this transaction in the next two weeks. Any transaction is still subject to regulatory competition
authority approval, which is anticipated to take up to four months to complete.
During the year, the management irregularities identified during 2015 and 2016 were settled against the former
business director and numerous other defendants. Significant legal costs were incurred in pursuing this matter, which
has been resolved to our satisfaction. Certain recoveries have been made but further recoveries are still expected,
including the finalisation of the insurance matter.
Distribution
Bidcorp has declared a final cash dividend of 280,0 cents per share, bringing the total distribution to shareholders
in F2018 to 560,0 cents.
Financial overview
Net revenue of R119,4 billion (F2017: R110,5 billion) grew by 8,0% (constant currency growth of 8,5%) reflecting real
growth in activity levels despite relatively benign inflation in the core foodservice markets in all geographies.
Gross profit percentage was maintained at 24,0% despite our focus on freetrade growth which allowed some businesses to
sacrifice margins to grow volumes and absorb some price increases in the face of rapid inflation in the dairy category.
Operating expenses remained well controlled despite ongoing wage pressure in many economies and generally higher fuel
costs. The overall cost of doing business across the Group remained at 19,0% despite higher sales and distribution
activity and additional invested capacity.
Group trading profit increased by 8,7% to R6,0 billion (F2017: R5,5 billion) and the trading margin was maintained
at 5,0%.
Share-based payment costs increased to R99,2 million (F2017: R94,1 million) on the back of further long-term
incentivisation of staff across the Group. Acquisition costs of R35,5 million (F2017: R46,1 million) were incurred
reflecting slightly lower acquisitive activity compared to the previous year.
Net finance charges were 7,1% higher at R231,1 million (F2017: R215,7 million). Bidcorp remains well capitalised, with
trading profit interest cover at 25,8 times (F2017: 25,4 times). We retain adequate headroom for further organic and
acquisitive growth; however, remain conscious of the need to balance debt capacity and shareholder returns.
The Group's financial position remains strong, a positive attribute in volatile global markets. Total fixed assets
have grown reflecting both replacement and expansionary capital expenditure. Net debt is R3,6 billion impacted by
ongoing investment and bolt-on acquisitions.
Cash generated by operations before working capital absorption was R6,9 billion, an increase of 10,6% over F2017.
There has been greater utilisation of working capital in the year, reflecting higher activity levels, tighter supplier
terms, some excess stocking due to the listeria crisis in South Africa and impacts from recent acquisitions. However,
monthly average net working capital days remained flattish at 11 days (F2017: 10 days). Free cash flow (excluding
dividends paid) was positive at R1,0 billion after investment activities absorbed R3,1 billion.
Acquisitions
Bolt-on acquisitions were made in Australia, Netherlands, Spain, New Zealand, South Africa, Greater China and Turkey.
Total investments were R965,6 million. New geography expansion included Pier 7, a small foodservice business based in
Germany and a niche horeca business in Portugal which has been integrated under Bidfood Iberia. The benefits of these
investments will be evident in the medium-term as we bolster systems and infrastructure and extract synergies and
efficiencies.
Prospects
The Group comprises businesses concentrated on the wholesaling and distribution of food and aligned products to the
eat-out-of-home market.
Our focus on customer satisfaction backed by high service levels, efficient infrastructure and fit-for-purpose product
ranges should continue to deliver real volume growth. Our "last mile" delivery capability continues to improve as we
roll-out our decentralised infrastructure programme. Our mantra of "it's all about the food" guides our desire to achieve
the correct customer mix.
Fresh produce, meat, value-add processing and supply chain initiatives all remain areas of unexploited potential,
which assists in bolstering our value-add proposition. Our culture of sharing innovations across the Group ensures
that the speed of business development is greatly enhanced.
Our bespoke global ecommerce and CRM platform, continues to evolve and embrace our best worldwide IP, all leveraged
for the greater benefit of the Group.
Bidcorp remains focused on growth opportunities; organically in our current markets through attaining the appropriate
business and customer mix by selling more products and gaining new customers; via in-territory bolt-on acquisitions to
expand our geographic reach and expanding our product ranges; and via strategic acquisitions to enter new markets.
We retain significant financial headroom giving the Group the ability to act decisively to capitalise on the right
opportunities, either organic or acquisitive, whilst always remaining disciplined in our approach.
Financially, the Group is strong and we expect cash generation to remain robust. Despite currency volatility in our
global marketplace, our objective remains to generate above average returns in each of our businesses in their home
markets.
Despite some short-term challenges, we remain optimistic that the fundamental drivers of our global foodservice
markets remain positive. Bidcorp's strength lies in the depth and experience of its entrepreneurial management teams
who thrive in the decentralised business model, a recipe that positions the Group well for continued real growth
in the year ahead.
Divisional performance
Australasia
The region performed strongly. Despite growth tracking below trend, both Australia and New Zealand set new
records. Revenue moved 2,0% higher to R30,0 billion (2017: R29,4 billion). Trading profit rose marginally by
0,8% to R2,0 billion (2017: R2,0 billion). Results reflect continued focus on the successful freetrade strategy
and the management mission to remain "all about the food". The future here continues to look bright.
Australia put in a strong performance. Trading profit lagged the prior year at the half-year mark, but by year-end
was up 2,5%. This was an outstanding result in a year of transformation and some internal disruption.
Revenue rose 4,7%, though this included the sales contribution from recent small acquisitions. The sales effort was
exceptional as three of the biggest branches went through major changes during the year.
Margins were maintained, despite pressures in Foodservice. As expected, expenses increased as new branches bedded in.
Payroll costs were well contained.
Strong bases have now been established in Australia's most densely populated cities - Melbourne, Sydney and Brisbane
- creating platforms for long-term gains, and this is already showing benefits.
Foodservice performed reasonably well. The number of Foodservice branches rose to 40, all of which were profitable.
Melbourne's branches made outstanding gains in the throes of their restructure. The alcohol category was rolled out
to Foodservice branches. Freetrade sales again grew.
Supply Solutions made big progress. New product development was the key feature of the year with over 100 new product
lines introduced.
Fresh sales fell, but margins were well managed. Meat continues to gain traction as we refine our route-to-market
model. Overall both the Fresh and Meat divisions were profitable, but still not at desired levels. The new Festival
acquisition performed below expectation and will improve in the future once fully integrated.
New Zealand did well to grow revenue and trading profit in a sluggish market. Spending on new distribution centres to
handle continued growth added to the cost base and the business's biggest branch - Auckland Foodservice - had a tough
year.
Foodservice performed solidly and Imports put in another stellar performance. Hamilton moved to a new distribution
centre, as did Nelson, Timaru and Invercargill.
Fresh had a challenging year as extreme weather conditions disrupted supply and impacted pricing. Processing results
were mixed. Newly acquired Prepared Foods failed to meet initial expectations and additional investment was required.
United Kingdom
The UK businesses did well, with the Foodservice business achieving excellent results. Revenue grew 6,4% to
R31,4 billion (2017: R29,5 billion). Trading profit increased by 8,6% to R1,4 billion (2017: R1,3 billion).
The core Foodservice and Fresh businesses are in good condition and well positioned for future growth.
Bidfood UK achieved growth in revenue and trading profit despite low consumer demand and restaurant closures.
National Account margins strengthened and freetrade sales showed continued growth. Own brands and specialist pillar
range sales gained further momentum - all indicators that strategic goals are being achieved.
Sales pressures sharpened in the third quarter as business and consumer sentiment hit a low ebb. Customer confidence
returned in the fourth quarter and sales picked up. Margins overall were well managed. Overheads were higher than
expected as labour costs rose and the national driver shortage persisted. Overtime became a significant item at
some depots, driven by higher freetrade activity levels.
New trading depots bedded down in Royton and Penrith. Specialist operations performed well, except the Channel Islands
business which is taking a little longer to restructure than anticipated.
Customer migration to the latest version of the online "Bidfood Direct" platform was completed.
Fresh performed below expectations. However, a platform for renewed growth has been laid.
Challenges related to the move of the Hensons meat business from the ageing site in King's Cross, London, to a
purpose-built facility in Woolwich. Some customers were lost and staff left. A new team and new processes are
revitalising the business in the new facility.
At Seafood, timely succession planning resulted in the deployment of a new management team at Daily Fish. Average
sales to independents rose and customer numbers increased.
Oliver Kay, the fresh fruit and vegetables business, opened a new depot in Birmingham designed to improve customer
service and reduce cost inefficiencies. Scotland operations derived knock-on benefits and Campbells Produce staged
an impressive turnaround.
In PCL, management has dedicated significant effort to improve service levels. However, profitability has been
impacted. Discussions are underway with the client in order to match activity and service level expectations with
profitable returns.
Europe
Europe was the standout performer this year, as the economies generally delivered continued growth. Revenue rose
21,8% to R39,2 billion (2017: R32,2 billion) while trading profit rose 37,7% to R1,6 billion (2017: R1,2 billion).
Investment made in prior years established a strong foundation on which we capitalised in improved market
conditions.
Netherlands optimised a strong finish to the year. Rising revenue and trading profits were assisted by the first
contribution of the small bolt-on acquisition, Van de Mheen. The deal was finalised in March.
The National Accounts business grew and regional horeca sales rose strongly. As anticipated, Catering volumes were
under pressure. Institutional sales fell on the prior year. However, within the hospitality sector, pleasing growth
in independent volumes was secured. The ongoing simplification processes in the business continue to deliver the
desired benefits.
Belgium delivered its best ever results. Revenue and trading profit exceeded expectations while margins were well
protected and cash generation was strong.
The horeca and institutional channels did especially well. Contributions from Catering and Logistics were marginally
below expectations.
The online "My BidOne" platform, implemented at Makady and Langens, had a positive impact on the wholesale horeca
business. Initial work has begun on the planned merger of the Limburg-based businesses, Makady and Langens.
Improvements continue at Bestfood (acquired in 2016).
DAC Italy achieved strong growth in revenue and trading profit, with a positive contribution from new acquisition,
D&D. Pleasing momentum was evident in the core DAC business. Quartiglia Food Service, acquired in the previous year,
met expectations. Trading profits still topped projections, even without the D&D contribution.
Work to integrate D&D into the DAC systems will begin early in the new period.
Sales into the street or independent channel now account for more than 80% of volumes. Product sales to DAC's
international trading markets (including other Bidfood companies) gained momentum, with own-brands accounting for
a significant part of the total mix.
Iberia developed momentum as the Guzman business created a platform for strategic growth. Revenue and trading profits
were bolstered by contributions from new acquisitions, Frustock (our operation in Portugal) and Saenz Horeca (a meat
and hospitality specialist). Continued political uncertainty in and around Barcelona affected sales in this important
region. Costs increased as systems, sales force and infrastructure were strengthened. Though overall results were below
expectations, the base is now set for future growth.
Growth of independent business was an important feature of the year. The Barcelona warehouse was expanded and the
sales force beefed up. Frustock performed in line with expectations.
Czech Republic and Slovakia performed excellently, securing good profit and volume growth on the back of a buoyant
consumer market.
Horeca Gastro benefited from positive consumer sentiment and the middle-class trend to increased out-of-home eating.
Quality service underpinned continued growth. Good spring and summer weather drove strong ice cream sales,
contributing to the excellent results.
Retail was buoyed by rising consumer incomes and growing focus on quality and reputable brands. Growth was achieved
in many value-add products as market demand rose and shopping at upmarket malls became part of the lifestyle. Sales
of fresh fish and meat exceeded expectations.
Output at the factories was consistently high. Highest production was achieved in Sous-Vide lines, ready meals, red
meat and ice cream.
Germany recorded a small loss. Sales at the recently acquired business failed to meet expectations. Margins were
impacted by high levels of operational expenses at the branches and the poor quality of some National Account
businesses.
Hamburg depot moved into a new warehouse in April and Munich will move to a new warehouse in the new period.
Vienna maintained solid margin management and performed well. We are setting up a solid foundation in Germany
to facilitate further expansion in due course.
Poland delivered substantial revenue growth. Market share improved and profit forecasts were exceeded.
Freetrade growth continued at a high rate, now accounting for more than 70% of all volumes. We have become one
of the major players in this market. Margins were well managed as terms were revised on some National Accounts.
Expansion of the Gdansk and Poznan operations were completed.
Innovation continues. Asian cuisine is a growth area and Farutex has begun to serve this sector. Early results
are encouraging. Online capability has the potential to drive further sales gains while investment in warehousing
creates the capacity to pursue ongoing growth.
Pressure on the wage bill persists as a result of low unemployment levels.
Baltics showed continued improvement. Revenue at the now-profitable Lithuanian operations continues to rise.
Latvia did well off the back of sales growth and improved expense control. Performance improvements across the
Baltic markets are driven by growing foodservice volumes. Work to implement ecommerce solutions has begun.
Emerging Markets
Emerging Markets delivered a mixed bag of results in uncertain economic environments. On a like-for-like basis
(50% of South Africa's bakery business was sold in April 2017) these businesses continue to deliver commendable
results. Revenue dropped 3,1% to R18,7 billion (2017: R19,3 billion) and trading profit fell 6,7% to R1,0 billion
(2017: R1,1 billion).
Bidcorp Food Africa (BFA) delivered good results in tough economic conditions. Margin and expense management was
excellent, with overall expenses growth well below inflation. Trading profit rose despite deflation in Bidfood (BF)
and some parts of Chipkins Puratos (CP).
South Africa's listeriosis crisis had material effects on Crown Food Group (CFG). BF was impacted to a lesser extent.
BF delivered excellent results. First contribution of newly acquired fruit and veg distributor, Famous Fresh, was
recorded from February. Sales into the independent channel continued to grow. National Accounts business declined
marginally while business with industrial caterers ticked higher. Online orders via the "myBidfood" platform account
for more than 60% of revenue.
CFG's results were impacted by the listeriosis outbreak, with ingredients for processed meat products hard hit. The lost
sales impact was material while stock on hand rose, impacting working capital. CFG entered the wholesale channel to
support its brands and own manufactured products. The "Crown 247" ecommerce platform was implemented.
CP made excellent progress. Introductions of its unique brands began in January. Changes to manufacturing processes
are under way. Upskilling continues and the Puratos influence is starting to manifest itself in terms of quality and
innovation.
Greater China saw profits dip, impacted by a tough second half. Sales were up on prior year, but lagged expectations.
Hong Kong failed to meet budget, hit by a slowdown in the foodservice market and the global dairy crisis. Fierce
competition at the upper end of the market created added pressure.
Him Kee dry goods did relatively well. A good performance at Miumi, the Japanese foods specialist, was underpinned
by increasing sales of frozen fish products.
Our new seafood business, Linson Global Seafood Trading, did well. Macau was impacted by price cutting by market
entrants. Hong Kong plans a series of new brand introductions in the new period.
Mainland China recorded a fall in sales and experienced strong margin pressure. Competition in the dairy category
was intense. Work continued on the development of the product mix and brand portfolio. To reduce dependence on dairy,
major subsidiaries in Beijing, Shanghai and Guangzhou redoubled efforts to build sales across a broader product range.
Renewed growth will be sought through strong focus on hotels and restaurants, meat imports and the provision of
chilled and processed meats to the foodservice channel. A strong sales push is planned in second-tier cities such
as Shandong, Qingdao, Nanjing, Yunnan, Xiamen, Nanning and Jilin.
Singapore secured continued improvements in revenue and trading profit. Foodservice again grew sales and margins were
well managed. Sales at the Miumi division grew strongly. The marine, international trading and consumer operations were
under pressure, though a consumer turnaround was evident following new brand introductions. Gourmet Partner sales rose
and Food Pride surpassed expectation. Bidfood Malaysia (formerly Aeroshield) performed in line with budget.
Brazil secured revenue growth on the prior year, but volumes fell short of plan. Margins were under pressure in
challenging socio-political conditions. However, profits were maintained. Fourth quarter results were impacted by
World Cup soccer (which kept patrons out of restaurants) and a nationwide truck strike.
Work has begun to standardise systems used by the core Irmaos Avelino business and Mariusso, the distribution business
acquired in the previous period.
Chile performed strongly. Revenue growth was highly satisfactory. Launch of the Viña del Mar branch boosted volumes.
The processed meat and particularly the seafood category showed good growth, though at lower margins. Internal controls
and debtor collections improved. Late in the year, the "myBidfood" ecommerce platform was launched. Continued sales
growth is projected.
Middle East achieved second-half gains following the implementation of a recovery plan, with sales approaching the
levels of the prior year. Margin improved and steps to contain expenses proved successful. Horeca UAE faced sales
challenges as several poor performing brands were discontinued. Al Diyafa, Saudi Arabia, delivered good revenue and
trading profit growth. Horeca, Oman, recorded consistent growth and Bahrain's results were outstanding. Early progress
by Horeca Jordan was encouraging.
Aktaes Turkey registered further sales gains and the level of loss was contained. Distribution costs rose on the back
of the weak Turkish lira. The purchase of the Efe distribution firm in Izmir and its nine-month contribution helped
Aktaes maintain momentum. Despite economic and political uncertainty, management remain optimistic about local market
prospects.
Corporate
Bidfood Procurement Community (BPC) sales rose and ever closer collaboration with Group operations led to new buying
opportunities. Seafood category development continued.
Change in directorate
Mr S Koseff, an independent non-executive director, assumed the role of chairman of the board on March 31 2018.
Mr B Joffe remains on the board as a non-executive director. The board expresses its sincere appreciation to Mr Joffe
for his services as chairman, particularly in leading the formation of Bidcorp, as well as its JSE listing on
May 30 2016, which were critical development phases for the Group.
The board welcomes Mr Koseff to the role of chairman and looks forward to the benefits of his extensive business
experience and acknowledged leadership record.
BL Berson
Chief executive
DE Cleasby
Chief financial officer
Dividend declaration
In line with the Group dividend policy, the directors declared a final gross cash dividend of 280,0 cents
(224,0 cents net of dividend withholding tax, where applicable) per ordinary share for the year ended
June 30 2018 to those members registered on the record date, being Friday, September 21 2018.
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: 280,0 cents
Net dividend amount per share: 224,0 cents
Issued shares at declaration date ('000): 335 404
Declaration date: Wednesday, August 22 2018
Last day to trade cum dividend: Tuesday, September 18 2018
First day to trade ex dividend: Wednesday, September 19 2018
Record date: Friday, September 21 2018
Payment date: Tuesday, September 25 2018
Share certificates may not be dematerialised or rematerialised between Wednesday, September 19 2018 and
Friday, September 21 2018, both days inclusive.
For and on behalf of the board
AK Biggs
Company secretary
Johannesburg
August 22 2018
Basis of presentation of summary consolidated financial statements
The summary consolidated financial statements are prepared in accordance with the JSE Limited Listings Requirements
for preliminary reports, and the requirement of the Companies Act of South Africa applicable to summary financial
statements. The Listings Requirements require preliminary 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 to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation
of the consolidated financial statements from which the summary financial statements were derived are in terms
of IFRS. The Group adopted the amendments to IAS 7 Statement of Cash Flows and IAS 12 Income Taxes during the
year. The adoption of these amendments did not result in any changes in the accounting policies and had no
effect on the results of the Group. Other than the adopted amendments above, the accounting policies are
consistent with those accounting policies applied in the preparation of the previous consolidated annual
financial statements. There was no significant impact from the adoption of IFRS 15 Revenue from Contracts
from Customers and IFRS 9 Financial Instruments as at July 1 2018. Therefore, no transition adjustments
have been processed to retained earnings.
Audit report
These summary consolidated financial statements for the year ended June 30 2018 have been audited by KPMG Inc,
who expressed an unmodified opinion thereon. The auditor expressed an unmodified opinion on the annual consolidated
financial statements from which these summary consolidated financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the
annual consolidated financial statements are available for inspection at the company's registered office, together
with the financial statements identified in the respective auditor's reports.
The auditor's report does not necessarily report on all of the information contained in this announcement.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial information
from the issuer's registered office.
Preparer of the financial statements
These summary 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 August 21 2018.
The directors are responsible for the preparation of the preliminary report and the correct extraction of the
financial information from the financial statements.
Subsequent events
There have been no material events subsequent to June 30 2018.
Acquisition of businesses and subsidiaries
Acquisitions
The Group made a number of small acquisitions during the year, namely:
- Festival City Food & Wine (Australia)
- Goldline Distributors Proprietary Limited (Australia)
- Pier 7 Holding GmbH (Germany)
- Frustock Foodservice, S.A. (Portugal)
- Carnicas Saez, S.L. (Spain)
- Jilin Food Service Limited (Mainland China)
- Linson Global Seafood Trading Limited (Hong Kong)
- D&D S.p.A. (Italy)
- Van de Mheen Foodservices B.V. (Netherlands)
- Prepared Produce (New Zealand)
- Aeroshield (Malaysia)
- Famous Fresh Holdings Proprietary Limited (South Africa)
- Efe Dagitim ve Pazarlama A.S. (Turkey)
These acquisitions form part of the Group's strategic expansion plans in the international foodservice industry.
Goodwill arose on the acquisitions as the anticipated value of future cash flows that were taken into account in
determining the purchase consideration exceeded the net assets or net liabilities acquired at fair value. 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.
There were no significant contingent liabilities identified in the businesses acquired.
The acquisitions increased the Group's revenue by R3,3 billion, and its trading profit by R22,5 million.
If these acquisitions had been effective on July 1 2017, the total contribution to revenue would have
been R4,6 billion and an increase in trading profit of R56,9 million.
The impact of these acquisitions on the Group's results can be summarised as follows:
2018 2017
R000s Audited Audited
Property, plant and equipment (301 443) (264 945)
Intangible assets (26 283) (16 924)
Deferred taxation 3 914 (56 666)
Interest in associates (7 302) (89)
Investments and advances (4 548) (6 920)
Inventories (328 740) (126 784)
Trade and other receivables (317 441) (353 649)
Cash and cash equivalents 25 071 26 353
Borrowings 271 219 505 495
Trade and other payables and provisions 383 102 611 517
Taxation (1 263) 11 509
Net tangible fair value of (assets) liabilities acquired (303 714) 328 897
Goodwill (1 142 558) (1 417 544)
Gain from bargain purchase 4 222 -
Non-controlling interest 12 283 (53 626)
Total value of acquisitions (1 429 767) (1 142 273)
Less: Cash and cash equivalents assumed (25 071) (26 353)
Net movements in vendors for acquisition and puttable
non-controlling interest liabilities 524 768 (100 451)
Costs incurred in respect of acquisitions (35 541) (46 084)
Net amounts paid (965 611) (1 315 161)
In December 2017, management committed to a plan to discontinue the UK Contract Distribution (CD) business. As a
result, this operation has been classified as a discontinued operation.
CD was not previously classified as held-for-sale or as a discontinued operation. The comparative consolidated
statement of profit or loss and OCI has been re-presented to show the discontinued operation separately from
continuing operations.
The relevant requirements of IFRS 5 have been met for this classification.
The results of the discontinued operation included in the Group's results for the year ended June 30, are detailed
below:
2018 2017
R000s Audited Audited
Revenue 18 254 268 20 458 449
Cost of revenue (16 686 301) (18 622 873)
Gross profit 1 567 967 1 835 576
Operating expenses (2 194 450) (1 814 230)
Trading (loss) profit (626 483) 21 346
Share-based payment expense (3 110) (3 456)
Impairment of property, plant and equipment (793) (21 366)
Operating loss (630 386) (3 476)
Net finance charges (5 226) (3 446)
Finance income 5 11
Finance charges (5 231) (3 457)
Loss before taxation (635 612) (6 922)
Taxation 106 283 (4 317)
Loss for the year from discontinued operation (529 329) (11 239)
The following adjustments to profit attributable to shareholders were
taken into account in the calculation of discontinuing headline
(loss) earnings:
Loss attributable to shareholders of the company from discontinuing operation (529 329) (11 239)
Impairment of property, plant and equipment 793 21 366
Taxation relief (151) (4 060)
Headline (loss) earnings from discontinued operation (528 687) 6 067
Basic loss per share (cents) (159,1) (3,4)
Diluted basic loss per share (cents) (158,6) (3,4)
Headline (loss) earnings per share (cents) (158,9) 1,8
Diluted headline (loss) earnings per share (cents) (158,5) 1,8
2018
R000s Audited
Effect of the discontinued operation on the statement of
financial position of the Group
Assets classified as held-for-sale 2 590 657
Property, plant and equipment 212 090
Intangible assets 7 437
Deferred taxation asset 1 338
Investments and loans 440
Inventories 428 733
Trade and other receivables 1 161 229
Taxation 101 043
Cash and cash equivalents 678 347
Liabilities classified as held-for-sale 2 613 207
Deferred taxation liability 6 476
Long-term portion of provisions 30 013
Trade and other payables 2 576 718
2018 2017
R000s Audited Audited
Cash flows from discontinued operation
Net operating cash flows from discontinued operation 36 227 (258 291)
Net investing cash flows from discontinued operation (12 491) (15 384)
Net increase (decrease) in cash and cash equivalents 23 736 (273 675)
Capital commitments
The board of directors' policy is to maintain a strong capital base so as to sustain future development of the
businesses so that it can continue to provide benefits to its shareholders.
2018 2017
R000s Audited Audited
Capital expenditure approved
Contracted for 831 471 675 164
Not contracted for 1 015 846 873 494
1 847 317 1 548 658
Capital expenditure split
Property, plant and equipment 1 794 724 1 515 614
Computer software 52 593 33 044
1 847 317 1 548 658
It is anticipated that capital expenditure will be financed out of existing cash resources.
Financial instruments
Fair value hierarchy
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 (i.e. as prices) or indirectly (i.e. 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 assets (liabilities)
Puttable Puttable
non- Vendors non- Vendors
controlling Invest- for controlling for
R000s interests ments acquisition interests acquisition Total Level 1 Level 2 Level 3
June 30 2018
Financial assets
measured at
fair value - 56 288 - - - 56 288 - - 56 288
Financial
liabilities
measured at
fair value (356 522) - (300 315) (1 122 068) (234 709) (2 013 614) - - (2 013 614)
June 30 2017
Financial assets
measured at
fair value - 54 504 - - - 54 504 - 1 848 52 656
Financial
liabilities
measured at
fair value (118 028) - (82 377) (1 077 168) (379 474) (1 657 047) - - (1 657 047)
Valuation techniques and significant unobservable inputs
Valuation technique
The expected payments are determined by considering the possible scenarios of forecast EBITDA, the amount to be paid
under each scenario and the probability of each scenario. The valuation models consider the present value of expected
payment, discounted using a risk-adjusted discount rate.
Significant unobservable inputs
- EBITDA growth rates: 5% - 15% (2017: 10% - 23%)
- EBITDA multiples: 5,5x - 8,5x (2017: 4,8x - 7x)
- Risk-adjusted discount rate: 0,5% - 9,0% (2017: 1,99% - 5,0%)
Inter-relationship between significant unobservable inputs and fair value measurement
The estimated fair value would increase (decrease) if:
- the EBITDA was higher (lower); or
- the risk-adjusted discount rate were lower (higher).
Exchange rates
The following exchange rates were used in the conversion of foreign interests and foreign transactions
for the year ended:
June 30
2018 2017
Audited Audited
Rand/Sterling
Closing rate 18,06 16,80
Average rate 17,27 17,29
Rand/Euro
Closing rate 16,00 14,78
Average rate 15,30 14,85
Rand/Australian dollar
Closing rate 10,15 9,93
Average rate 9,94 10,27
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. An unmodified reasonable assurance report has been issued by the
Group's auditor, KPMG Inc. In terms of ISAE 3420 Assurance Engagements to Report on the Compilation of the Pro Forma
Information in a Prospectus, and is available for inspection at the company's registered office. 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 2017 average rand
exchange rates to the 2018 foreign subsidiary income statements and recalculating the reported revenue and the
trading profit of the Group for the year ended June 30 2018.
Illustrative 2018 at 2017
average exchange rates
Actual Actual
2018 2017 Pro forma %
R000s Audited Audited % 2018 change
Continuing operations
Revenue 119 359 635 110 468 151 8,0 119 897 314 8,5
Trading profit 5 959 875 5 484 929 8,7 5 984 417 9,1
Headline earnings 4 279 790 3 915 697 9,3 4 283 510 9,4
Headline earnings per share (cents) 1 286,3 1 179,2 9,1 1 287,4 9,2
Constant currency per segment from continuing operations
Revenue
Australasia 30 030 647 29 440 177 2,0 31 272 699 6,2
United Kingdom 31 419 114 29 529 666 6,4 31 450 950 6,5
Europe 39 234 279 32 217 257 21,8 37 746 188 17,2
Emerging Markets 18 675 595 19 281 051 (3,1) 19 427 477 0,8
119 359 635 110 468 151 8,0 119 897 314 8,5
Trading profit
Australasia 1 967 280 1 951 691 0,8 2 047 900 4,9
United Kingdom 1 424 557 1 311 428 8,6 1 426 000 8,7
Europe 1 618 219 1 175 195 37,7 1 535 200 30,6
Emerging Markets 1 027 723 1 101 715 (6,7) 1 053 129 (4,4)
Corporate office (77 904) (55 100) (77 812)
5 959 875 5 484 929 8,7 5 984 417 9,1
Refer to the average exchange rates above.
22 August 2018
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, Rosebank
South Africa, 2196
Independent auditor
KPMG Inc.
Registration number: 1999/021543/2
KPMG Crescent, 85 Empire Road
Parktown, Johannesburg, 2193
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
Date: 22/08/2018 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,
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