Headline earnings per share (HEPS) increased by 8,2% to 1 157,4 cents after headline results were impacted by a R132,0 million increase in the tax charge as a result of Secondary Tax on Companies (STC) on the 2010 final and 2011 interim dividends. This charge, which did not apply in the prior year, reduced HEPS by 3,9%.

Currency fluctuations also had an impact on headline results. Rand strength versus sterling and the euro had a negative effect. The rand softened, however, against the Australian dollar. On the translation of our international earnings, the net effect was equivalent to a reduction of 1,3% in HEPS.

Basic earnings per share increased by 4,4% to 1 110,5 cents, impacted by the write-off of capital items and the STC. The most material impairment related to the cancellation of an IT project at 3663 Wholesale in the UK.

Business conditions

Trading conditions were challenging. Economic recovery was hesitant in Bidvest geographies, with the exception of Asia.

At the start of Bidvest’s financial year there was a general expectation that recovery would gradually gain traction. These hopes went largely unrealised as economic conditions in most markets tended to deteriorate in the fourth quarter, notably in South Africa.

In these circumstances, Bidvest businesses continued to maintain their strong focus on asset and cash-flow management. A concerted effort was made to minimise debtor delinquencies. Growth was largely a function of market-share gains in the face of intense competition.

The challenge for our people was to achieve success despite macro-economic factors, rather than on the back of them.

Strategic reinvention

Bidvest maintained its long-term strategy of constantly reinventing the business. Following the successful realignment of our foodservice interests in the prior year, we developed new structures across our South African non-food businesses.

The new structures are designed for sustained growth in uncertain times and soon delivered significant benefits as our people showed their ability to manage change and their talent for reinvention.

Operational overview

Bidvest’s entrepreneurial business model again demonstrated its fitness for purpose across international markets in which trading conditions could differ significantly.

All territories across Asia Pacific made a positive contribution.

The region was affected by a series of natural disasters. But Bidvest people in all the affected markets demonstrated their resilience and ability to cope under pressure.

Floods in Australia had minimal effect on our business and highlighted the benefit of the strategic effort to build a robust national footprint. Strong countrywide representation enabled Bidvest Australia to maintain supply channels to all affected areas.

In New Zealand, earthquakes caused devastation, dislocation and substantial loss of life in Christchurch. Our people responded magnificently, supporting local community initiatives while maintaining strong business momentum. The financial result was impressive; so was the community commitment.

The economies of mainland China, Hong Kong and Singapore remained strong and our local teams optimised the resulting opportunities.

In the UK, economic conditions remained difficult as government austerity measures began to take effect. 3663 Wholesale has adopted a back-to-basics strategy that is well suited to an environment characterised by low levels of confidence and spending. Opportunities for acquisitive growth were not neglected, however.

Most of mainland Europe also experienced low or no growth. The exception was Poland, where our operations maintained good momentum.

Business conditions were also difficult in the Middle East.

The sale of 13,5% of the equity of Mumbai International Airport for a profit of between R300,0 million and R400,0 million was not timeously completed as certain formalities remain outstanding. No accrual has been made for profit in the results.

Trading conditions in South Africa showed some improvement, though challenges intensified as the year drew to a close. Businesses in many sectors were challenged to replace 2010 volumes that were briefly buoyed by World-Cup effects.

Corporate spending has begun to revive, albeit slowly and discretionary consumer spending remained under pressure, though automotive retailing continued to show growth.

Activity levels were weak across businesses exposed to the infrastructure, construction and hospitality sectors. Many consumer-facing businesses and those exposed to the construction industry experienced difficulties, resulting in branch consolidation and stringent expense management.

However, Bidvest continued to invest in infrastructure to ensure medium-term growth and sustainability.

In Namibia, the slow economic upturn created trading challenges, though the continued recovery of fishing resources was highly positive.