Financial overview

Turnover grew 19,7% to R183,6 billion (2013: R153,4 billion). Turnover includes R22,0 billion (2013: R20,9 billion) of clearing and forwarding disbursement recoveries, primarily in the clearing and freight forwarding industry. Major increases occurred in Bidvest Asia Pacific (R4,8 billion) and Bidvest Europe (R14,0 billion), principally reflecting organic growth and assistance from currency effects on translation. Acquisitions accounted for R7,2 billion of the revenue growth.

Gross profit increased by 23,1% off a revenue increase of 22,0%. Operating expenses increased by 24,6%. Excluding the movement in the foreign currencies, the increase was 14,9%. Excluding the effects of the material acquisitions, like- for-like costs rose 10,2%. Share-based payment costs rose by R67,5 million, reflecting the increased costs of staff incentivisation and the increase in the Bidvest share price over the past year. Acquisition costs, which are once-off and directly related to the increased investment activity, rose by R59,9 million, equating to approximately 1,1% of HEPS.

The Group grew trading profit by 16,6% to R8,9 billion (2013: R7,7 billion). Gross trading margin dipped to 4,9% (2013: 5,0%), impacted by the dilution from some of the recent acquisitions. The average Rand exchange rate weakened against major currencies in which the Group operates, in particular against the Euro and Sterling.

Net finance charges increased by R283,7 million to R1 048,3 million (2013: R764,5 million), a function of various investments and acquisitions, greater utilisation of working capital throughout the year, a higher interest rate environment in South Africa and the conversion of larger foreign finance charges at higher average exchange rates.

Associate earnings showed significant decline as both Mvelaserve and HoLB became subsidiaries. The performance of Comair Limited showed pleasing improvement.

Headline earnings per share (HEPS) increased by 11,1% to 1 733,9 cents. Basic earnings per share (EPS) fell by 4,2% to 1 462,0 cents, impacted significantly by capital items, the most significant of which was the R1,056 billion impairment of the investment in Adcock Ingram Holdings Limited (Adcock).

The Group’s financial position remains robust. Net debt rose to R7,9 billion (2013: R4,5 billion), largely driven by cash utilised for investments and acquisitions of R5,3 billion. Normalised interest cover (excluding the cost of associate investments) declined to 9,4 times (2013: 10,0 times), but remains comfortably above the Group’s self-imposed targets. Bidvest’s attitude to gearing remains prudent while retaining adequate headroom to accommodate expansion opportunities.

Cash generated by operations before working capital changes rose 16,0% to R10,7 billion (2013: R9,3 billion). The Group absorbed R0,5 billion (2013: R1,9 billion) of working capital, reflecting growth, the impact of the devaluation of the Rand on replacement inventories and strategic stocking in some businesses. Returns on funds employed on a monthly average basis declined from 30,1% in 2013 to 27,6% in 2014 impacted by the investment in Adcock. Net working capital days decreased to a net 11 days (2013: net 12 days), reflecting good cash collections in the latter part of the year.

Fitch Ratings affirmed the Group’s national long-term rating at AA(zaf) in January 2014. Moody’s continue to rate the Group at with a stable outlook.