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BID CORPORATION LIMITED - Trading statement and update

Release Date: 19/08/2021 17:30
Code(s): BID     PDF:  
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Trading statement and update

Bid Corporation Limited
(Incorporated in the Republic of South Africa)
Registration number: 1995/008615/06
Share Code: BID
ISIN ZAE 000216537
(“Bidcorp” or “group” or “company”)


Shareholders are advised that the Board wishes to update them on Bidcorp’s performance for the year
to June 2021 and current trading conditions ahead of the release of its annual results; and notify the
market of the impacts of the civil unrest in South Africa in July; and an incident of fraud uncovered at
Miumi Hong Kong, a subsidiary of Angliss Greater China, and the actions taken thereon.

Earnings for the year ended June 30 2021
Bidcorp’s Headline Earnings Per Share (HEPS) from continuing operations for the year ended
June 30 2021 will be in the range of 840,0 cents per share (13% higher than HEPS of 741,3 cents per
share in F2020) to 900,0 cents per share (21% higher than HEPS of 741,3 cents per share in F2020),
and Basic Earnings Per Share (EPS) from continuing operations will be in the range of 900,0 cents per
share (94% higher than EPS of 463,5 cents per share in F2020) to 950,0 cents per share (105% higher
than EPS of 463,5 cents per share in F2020).

Our financial position at June 2021 ended very strong with non IFRS 16 net debt reducing substantially
to R503 million, compared to that at June 2020 of R5,6 billion. Working capital management has been
particularly pleasing which has assisted in generating positive free cash flow of R4,8 billion versus
R2,6 billion in the 12 months to June 2020.

Final dividend for the year ended June 30 2021
As previously guided, the Board intends to declare a final dividend for the year ended June 30 2021
in line with the group’s dividend policy of approximately 2,5 times HEPS cover. This final dividend will
be paid in respect of Bidcorp’s full year’s earnings.

Recent trading conditions
Trading in May and June gained strong momentum as the UK and Europe emerged from the COVID
induced winter hibernation and economies were progressively reopened. Constant currency group
sales for July 2021 are at 98% of July 2019 levels, and 120% of July 2020 sales, and this upward trend
has continued in August 2021, notwithstanding some restricted activity in Australasia and parts of Asia
due to further COVID lockdowns, as well as subdued activity in South Africa following the recent civil
unrest. Every business in the group generated trading profits in July 2021 despite COVID-related
restrictions still impacting on the volume recovery in certain segments of the market, particularly
workplace catering and travel related sectors.
2021 Revenue Statistics – March to *August (Comparatives in Constant Currency)

                                                            EMERGING         UNITED
               MONTH          AUSTRALASIA     EUROPE                                        GROUP
                                                             MARKETS        KINGDOM

            % OF 2019

                   MARCH          98,6%        59,3%          97,7%           50,4%          72,2%

                     APRIL       101,7%        59,8%          92,6%           63,9%          76,0%

                      MAY        106,5%        76,2%          96,4%           85,9%          88,8%

                      JUNE       107,2%        91,7%          99,7%           87,7%          95,3%

                      JULY        98,9%        101,4%         99,4%           90,4%          97,8%

                 *AUGUST          94,8%        106,6%         105,3%          97,1%         101,4%

            % OF 2020

                   MARCH         112,9%        93,0%          118,2%          73,7%          98,0%

                     APRIL       220,7%        178,8%         171,9%         138,3%         177,2%

                      MAY        155,2%        163,1%         150,3%         147,5%         154,7%

                      JUNE       126,5%        144,8%         135,1%         153,4%         140,0%

                      JULY       108,6%        118,9%         132,9%         126,9%         119,8%

                 *AUGUST         107,1%        115,3%         135,4%         128,0%         118,8%

*NOTE - August sales as of August 15th

Impact of civil unrest in South Africa on Bidcorp’s operations
As a consequence of the civil unrest that occurred in South Africa's KwaZulu-Natal and Gauteng
provinces from July 9th onwards, Bidcorp’s Cornubia site outside Durban housing the Bidfood South
Africa (BFSA), Crown Food Group (CFG), and Chipkins Puratos (CP) distribution facilities were looted
and extensively damaged. Two of CFG’s retail factory marts were also vandalised. Distribution vehicles
parked on site were either damaged, burned, or stolen. Thanks to the concerted efforts of our
management and staff at all three sites, BFSA started trading again on July 25th. CFG and CP started
trading again on July 19th. The total estimated damage from inventory losses, infrastructure damage
and vehicle damage excluding the loss of profits is estimated at R73 million. Bidcorp is adequately
insured with the South African government backed SASRIA programme for assets damage and has a
separate policy in respect of loss of profits. The impact on sales for July in KwaZulu-Natal and Gauteng
has been estimated at R16 million for BFSA and R10 million for CFG as customers were impacted and
did not trade, however the overall impact for F2022 is not likely to be material.

Fraud investigation
In late June 2021, our internal surveillance and control processes uncovered a significant and
sophisticated fraud that was being perpetuated in the Miumi division of our Angliss Greater China
business. This was carried out by our 10% minority shareholders in Miumi, who were also the General
Managers of that business, certain employees within Miumi as well as third party service providers.
All employees involved as well as the minority shareholders have been suspended or their
employment terminated. Ernst & Young (China) Advisory Limited were appointed in early July to
conduct a comprehensive forensic investigation into this fraud. It is apparent that this fraud has been
going on since about 2016 and has involved the manipulation of accounts receivables, prepayments,
and the misappropriation of inventories, the result of which these balances have been progressively
overstated over the past six years.

Miumi operates on a relatively standalone basis specialising in the global procurement of Japanese
style product (mainly seafood, meat, poultry, and dairy) for distribution into Hong Kong and China,
through both the direct HORECA market, as well as through other wholesalers particularly in China. It
was in this wholesaling component that the fraud occurred. New management has been put into
Miumi, the business has been significantly scaled back and all wholesaler activities have ceased.
Management believe that this fraud relates only to Miumi, and that the balance of our Angliss Greater
China business is not impacted and continues to trade profitably and ahead of our expectations,
although COVID challenges are rapidly reappearing in that market.

Bidcorp has taken the prudent view by impairing the full overstated amount of the accounts
receivables, prepayments, and inventory involved, although we remain confident of some future
recoveries from insurance, the perpetrators, and other third parties involved. The quantum of the
impairments effected as a result of this 6-year fraud are approximated at HK$253 million
(R501 million) in respect of receivables and prepayments, HK$102 million (R202 million) in respect of
inventory, and HK$18 million (R36 million) in respect of unrecorded liabilities. The tax deductibility of
these amounts is currently uncertain, so no provision for any tax relief has been accounted for.

Our best estimate is that the loss attributable to the current financial year is approximately
HK$60 million (R119 million), HK$48 million (R95 million) relates to the financial year ended
June 30 2020, and the balance to the financial years prior to this. However, the detailed forensic
investigation will reveal the full detail in due course.

Release of full year results for the year ended June 30 2021
In light of the above information regarding the Miumi fraud, the board has decided to release its full
year results for the year ended June 30 2021 on or about September 29th 2021 to enable further
work, internal, forensic, and audit related to be completed.

Management conference call on Friday August 20th 2021 to discuss the contents of this SENS release
Management will be holding a conference call, open to interested parties, at 8am (SAST) on Friday,
August 20th 2021 to address the issues contained above. Invitations have been circulated and the dial
in details are available on the Bidcorp website

The information contained in this announcement has not been reviewed and reported on by the
group’s auditors.

August 19th 2021

Sponsor:        The Standard Bank of South Africa Limited

Date: 19-08-2021 05:30:00
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