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THE BIDVEST GROUP LIMITED - Bidvest Trading Update for the ten months to 30 April 2020 and Trading Statement

Release Date: 01/06/2020 12:00
Code(s): BVT     PDF:  
Wrap Text
(?Bidvest? or ?The Group?)
(Incorporated in the Republic of South Africa)
(Registration number 1946/021180/06)
JSE Share code: BVT
ISIN: ZAE000117321

Bidvest shareholders were informed at the time of the release of the Group?s interim results (2 March 2020), that trading conditions were challenging due to low business confidence in South Africa, constrained consumer demand and an overall weak economic environment.
The COVID-19 pandemic has resulted in the economic and social environment becoming more demanding and uncertain, and has created significant operational disruptions, both on the demand and supply side of our economy. The impact on Bidvest?s trading businesses is significant and the services businesses are also being disrupted.
In response to the crisis, South Africa was placed under a complete national lockdown between 27 March 2020 and 30 April 2020 (?Lockdown?) to adequately prepare medical and healthcare facilities, and reduce the spread of the virus. The Lockdown was subsequently extended as part of a risk adjusted, phased approach for a responsible return to economic activity. We support government?s focus on reducing the spread of the pandemic and flattening the curve, however the impact of the Lockdown has resulted in the closure of many South African businesses and placed many others in distressed situations. Partial lockdown arrangements in the United Kingdom and the Republic of Ireland also resulted in reduced activity.
Considering the South African economy was already significantly constrained pre-COVID-19, and remembering that the pandemic impacted mainly the April month, the Group delivered a credible trading profit performance for the ten months, albeit at a much slower growth pace compared to the interim result. The Group?s financial position remains solid, which provides a level of comfort in these challenging and uncertain times. Trading result
Two distinct periods have emerged over this ten-month period: 1) Nine months to 31 March 2020
Pre-Lockdown (to end March), activity in South Africa slowed further from the levels reported on for the first six months of the year.
Within the services related activities, which include the Services, Freight and Financial Services divisions, the offshore operations delivered a strong result, augmented by the maiden contribution from recently acquired, Future Cleaning. The annuity income and take-or-pay businesses reported trading profit growth in line with recent history. In the lead up to the Lockdown, demand for hygiene products and services was very high. Lower cargo volumes, together with no maize shipments, negatively impacted on the rest of the Freight businesses. For some time, and especially since the start of the calendar year, demand has been very weak in hospitality, travel and aviation related services, adversely impacting the relevant businesses in both Services, Financial Services and Automotive. Bidvest Bank?s solid advances and deposits growth continued, but the insurance businesses remained under pressure. The investment income gains made earlier in the financial year reversed into losses due to the poor performance of the equity markets.
The majority of the trading and distribution activities, which include the Commercial Products, Branded Products and Automotive divisions, continued to face very tough trading conditions. In Commercial Products, the Trade as well as the Warehousing clusters traded reasonably well. The DIY/Tool/Workwear cluster reported a particularly strong March month as demand for personal protective equipment increased. Restructuring efforts at Renttech are yielding benefits. Branded Products continued to benefit from the consolidation of Adcock Ingram (?Adcock?). In the lead up to the Lockdown, there was high demand for Adcock OTC
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