Message to shareholders


Bidvest has delivered a solid trading result in an exacting market, characterised by a lack of economic growth and declining consumer spend, as well as significant business and political uncertainty. The benefits of a diversified portfolio and the quality of the underlying businesses are evident in the performance of the South African trading operations where five of Bidvest's seven divisions, as well as Bidvest Properties, delivered growth in trading profit. The Automotive division, while not growing profits, managed to perform ahead of a very challenging market. Exceptional cost discipline and driving down the cost of doing business helped to support growth in most of the businesses that faced deflationary pressure.



Bidvest has delivered a solid trading result in an exacting market, characterised by a lack of economic growth and declining consumer spend, as well as significant business and political uncertainty. The benefits of a diversified portfolio and the quality of the underlying businesses are evident in the performance of the South African trading operations where five of Bidvest's seven divisions, as well as Bidvest Properties, delivered growth in trading profit. The Automotive division, while not growing profits, managed to perform ahead of a very challenging market. Exceptional cost discipline and driving down the cost of doing business helped to support growth in most of the businesses that faced deflationary pressure.

South African operations delivered improved trading results in most divisions, with trading profit increasing by 6,4% against revenue growth of 3,5%. The results were bolstered by a strong focus on clients and solutions, as well as the acquisition of Brandcorp (effective 1 October 2016) in the Commercial Products division and smaller bolt-on acquisitions in the Electrical and Financial Services divisions. Bidvest Namibia continued to be impacted by a lack of fishing quotas and a recessionary macro-economic environment. Bidvest Corporate benefited from mark-to-market fair value adjustments on various investments, an exceptional performance from the property division and reduced losses in the UK.

Strong profitability gains were achieved at Adcock Ingram and Comair, which notably increased Bidvest's share of profits from these associated companies and prompted a reversal of previous impairments, arising from an increase in their respective market values. These financial impacts contributed to a more than doubling of basic earnings per share to 1 430,3 cents (2016: 692,6 cents). Headline earnings per share increased by 5,1% to 1 108,2 cents (2016: 1 054,1 cents).

Financial overview

Group revenue increased 4,0% to R71,0 billion (2016: R68,2 billion), with R1,7 billion of the increase attributable to the contribution from Brandcorp. The disposal of Manica, effective 30 June 2016, reduced revenue in the Freight division by R1,3 billion in the current year. On a comparable basis, revenue (excluding Manica and Brandcorp) increased by 3,5%.

Gross profit margin was fairly stable at 29,1% (2016: 29,2%). The inclusion of the higher margin Brandcorp business served to support the overall margin, against Bidvest Namibia's margins that were decimated by challenging operating conditions and Financial Services' margins which were diluted by low margin trade flow business.

Operating expenses were well controlled, increasing by a modest 3,6%. This result is even more impressive in the context of the distortions from the Manica and Brandcorp transactions. Excluding the effects of these material transactions, like-for-like expenses were well contained and increased by 1,7%.

Commercial Products, Electrical, Financial Services, Freight and Services contributed positively to the growth in the trading profit. Automotive and Office and Print profits were slightly down, while Bidvest Namibia suffered a significant decline.

Income from investments increased by 34,5% to R210,8 million. This outcome was the result of a range of realised and unrealised gains and losses during the year in some of the listed and unlisted investments. The insurance investment portfolio yielded a lower return compared to the prior year.

Trading profit grew 4,6% to R6,0 billion (2016: R5,8 billion), with a trading margin of 8,5% (2016: 8,4%).

Net capital items contributed profits of R1,0 billion in 2017, relative to losses of R1,2 billion in the prior year. The investments in Adcock Ingram and Comair benefited from positive mark-to-market adjustments relative to negative adjustments for the 2016 financial year. Both Adcock Ingram and Comair reported substantially better results in the 2017 financial year.

Net finance charges were 14,9% higher at R1,1 billion (2016: R922 million), driven by an increase in net debt due to the Brandcorp acquisition and an increase in the weighted average interest rate.

Share of profit from associates increased by 152,8%, due to the improved performances in Adcock Ingram and Comair.

Bidvest's headline earnings increased by 6,2% to R3,7 billion (2016: R3,5 billion) and HEPS by 5,1% to 1 108,2 cents per share. The number of weighted average shares in issue increased.

Bidvest continues to maintain a conservative approach to gearing and net debt levels are acceptable at R5,6 billion (2016: R5,1 billion). Stable net debt to EBITDA stable at 0,7 times and EBITDA interest cover of 7,2 times (2016: 8,0 times), are comfortably above the Group's conservative targets, providing ample capacity for further expansion.

Cash generated by operations at R6,9 billion, was marginally lower than the R7,0 billion generated in the prior year. The Group absorbed R368 million of working capital in the current year compared to a release of R297 million in the prior year. This was mainly due to substantial project deliveries in the fourth quarter of the 2017 financial year.

An amount of R773 million was recognised on the sale of non-core assets including Cargo Carriers, Cullinan, approximately half of the Bidcorp shares and various other listed shares.

Following Moody's Investors Service's downgrade of South Africa's sovereign rating in June 2017, the rating agency also lowered Bidvest's global scale long and short-term counterparty credit ratings to Baa3/P-3 from Baa2/P-2, respectively. The outlook is negative. Bidvest's national scale rating has remained unchanged at


During the year, the Group acquired 100% of Brandcorp with effect from 1 October 2016. Brandcorp is a value-added distributor of niche industrial and consumer products trading under the industrial brands, Matus, Renttech, Burncrete, Moto Quip, Leisure Quip and consumer brands, Cellini and MIC Prestige. The acquisition forms part of the Commercial Products segment and enabled the Group to expand its range of complementary products and services.

Bidvest also announced the acquisition of 100% of Noonan for EUR175 million in July 2017. Noonan is an integrated facility management services and solutions provider with a 40-year track record. Its services range from cleaning and security to building services and facilities management and include soft, technical and ancillary services. Noonan employs more than 13 000 people and operates throughout the Republic of Ireland and in the United Kingdom, with 40% of its revenue derived from the latter. Noonan has deep management experience, supported by strong business technology, and has demonstrated strong client retention over the years. SA Reserve Bank approval has been obtained and the transaction has therefore, become unconditional. The transaction will be effective 1 September 2017.

The acquisition of Noonan is in line with Bidvest's stated strategic intent to expand its presence beyond South Africa in niche, asset light businesses that will benefit from Bidvest's capabilities and expertise.

In addition, the Group made several less significant acquisitions and disposals during the year, as part of its strategy to grow through organic as well as acquisitive means.


Current economic data points to moderately improving economic conditions. This trend is supported by higher commodity prices and improving consumer confidence as evidenced by the latest retail statistics. Accordingly, we expect trading conditions to improve marginally in the coming year.

Against this background, a continued strong focus on expense control and asset management remain essential ingredients to ensure outperformance through the business cycles.

The Group will continue to actively explore selective acquisitive opportunities in local and international markets, to complement existing product and service offerings. Bidvest maintains a sound financial position and a strong balance sheet with adequate headroom to support its aspirations in this regard. The monetisation of the remaining non-core assets will continue.

Divisional review


This is a large and diverse division operating in numerous areas of service. The division continued to perform satisfactorily, increasing its trading profit by 3,0%. The Security and Allied clusters performed well, with Protea Coin again being a star performer. Bidvest Facilities Management achieved good results as it secured several new integrated contracts. The annuity based businesses all performed above expectations. The project-based industrial businesses and the Travel cluster generated disappointing results.


The division performed pleasingly with trading profit up 4,9%. Revenue, after removing Manica from the prior year, was up 6,0%. The financial performance was supported by an uptick in mineral exports, particularly manganese, copper and chrome, and strong liquid volumes. Agricultural volumes fell short of expectations. The commissioning of the new Puma fuel tanks in Richards Bay contributed to the increase in petroleum volumes. Excellent cost control added to profitability.


Bidvest Automotive delivered a satisfactory performance against a new vehicle dealer market that has contracted by 8,2% in the year to June 2017 and new vehicle margins came under extreme pressure. Revenue was flat and trading profit was marginally down at 1,7%. Improved balance has been achieved in the contribution from new vehicles, used vehicles, service and parts, which has been critical to offset the volume declines and margin pressures in new vehicle sales. Used vehicle volumes have stabilised and related activities achieved strong growth. Non-performing dealers and franchises were exited this year. Bidvest Car Rental grew volumes and secured rental rate increases. Fleet utilisation was, however, lower and accident incidents and costs higher.

Office and Print

Revenue declined by 4,0% and trading profit by 6,9%, after being down 14% at half-year. Year-on-year revenue comparisons are distorted by the non-recurrence of the Tanzanian voter registration project and the disposal of Kolok Mozambique. The division's trading profit result was negatively impacted by a decline in volume and pricing pressure at Kolok, together with margin erosion and foreign exchange effects at Konica Minolta. Overall gross margin, however, continued to be well managed and operating expenses were exceptionally well-controlled. Operating cash generation and asset management was excellent. Zonke, Silveray and Packaging performed especially well and Waltons' turnaround strategy is bearing fruit. Three bolt-on acquisitions were concluded in the Paper and Printing areas.

Commercial Products

The division produced good results, delivering a 48,5% increase in trading profit. The results include the acquisition of the Brandcorp group of companies during the year. Excluding the Brandcorp acquisition, revenue and trading profit increased by a commendable 4,0%, in a tough trading environment. A shift in mix towards the higher yielding Brandcorp companies assisted in increasing margins, despite price pressure from customers and price deflation. Excellent results were achieved in Plumblink, Bidvest Materials Handling, Academy Brushware and Home of Living Brands. Yamaha experienced headwinds. Brandcorp performed in line with expectations, with Renttech and Burncrete achieving excellent results.

Financial Services

Bidvest Bank and the Insurance cluster reported a pleasing set of results. Trading profit increased by 7,4%, with a strong contribution from Bidvest Bank. The bank's corporate advances increased by 26,5% and deposits grew by 16,6%. The positive performance was driven further by a 14,6% growth in the leasing business and a notable improvement in the Treasury forex margin of the Trading and Investments business. The bank delivered strong improvements in key banking ratios. In June, Moody's Investor Services upgraded Bidvest Bank's long-term national scale rating by two notches from A1 to Aa2.

Positive operating performance in the Insurance cluster was impacted by declining returns on the investment portfolio. Insurance premiums grew by 97,1% and insurance assets increased by 23,0% to R1,8 billion. Compendium was again the star performer with an 88,0% increase in operating profit year-on-year.


The division has performed well given that the infrastructure development, mining and construction sectors in South Africa remain constrained. The 10,3% increase in trading profit and revenue growth of 5,4% is excellent in this environment. Voltex held its own, with Cabstrut and Electech achieving good growth. The Voltex brand remains strong. The solutions businesses Solid State Power, Versalec Cables and Voltex MVLV Solutions produced impressive results. Eagle Lighting, Technilamp and Mubelo are new diversified businesses in niche markets which will add value going forward.

Other investments

Bidvest Namibia (52% share)

Difficult macro-economic factors in Namibia contributed to a disappointing overall performance, with trading profit declining by 70,9%. For the Bidfish division, limited quota allocations, a significant decline in prices and higher quota buy-in prices affected profitability. All the other divisions experienced pressure on revenue due to the recession in Namibia and, apart from Properties, reported a decline in profitability. The trading conditions are not expected to ease in the short term. Various cost initiatives have been implemented to improve the operating performance.

On 18 August 2017, shareholders were advised that Bidvest Namibia has entered into discussion, which if successfully concluded, may have a material effect on the price of the Company's securities.

Bidvest Corporate

Bidvest Properties performed well with a 16,9% increase in trading profit. A positive mark-to-market adjustment in Bidcorp and an upwards revaluation of the investment in Mumbai International supported the performance of investments. The UK businesses of Mansfield and On Time both showed pleasing improvements over the prior year.


Paul Baloyi resigned from the board in August 2016 and Brian Joffe in August 2017. The board welcomes Nosipho Molope as an independent non-executive director from 2 August 2017.

The board and management of Bidvest wish to thank Brian Joffe, the founder of Bidvest, for his valued leadership since its formation. We wish him well for the future.

Bidvest welcome the launch of the "#BusinessBelieves in South Africa" campaign. As advocates of the campaign, the Group pledges its support of ethical business practices. Bidvest reaffirms its commitment to job creation and economic growth through the expansion of its South African operations.

For and on behalf of the board

CWL Phalatse LP Ralphs
Chairman Chief executive


28 August 2017