The Bidvest Group Limited

The accounting policies applied in these summarised preliminary financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended June 30  2015.

Following the unbundling and separate listing of the Group’s foodservices businesses as Bid Corporation Limited, the Group’s condensed consolidated income statement, condensed consolidated statement of cash flows and condensed segmental analysis have beenre-presented to take account of the effects of the application of IFRS 5 Non-current assets held for sale and discontinued operations. The Group’s condensed consolidated statement of other comprehensive income, condensed consolidated statement of financial position and condensed consolidated statement of changes in equity are not required to be re-presented.

Included in the net assets unbundled were 3 614 487 Bidvest shares (treasury shares) held by Bid Corporation Limited. These shares have been treated as shares issued without a corresponding change in resources, in terms of IAS 33 Earnings per share, and the current and comparative total, weighted average and diluted weighted average number of shares in issue have been restated to include these shares for the basic, diluted basic, headline and diluted headline earnings per share calculations; and the net asset and net tangible assets values per share calculations.

In addition, during the year certain operations were reclassified between segments. The comparative year’s segmental information has been re-presented to reflect these insignificant changes.

On May 16  2016 the shareholders approved the unbundling and separate listing (unbundling) of the Group’s foodservices businesses as Bid Corporation Limited (Bidcorp) via a distribution in specie. This unbundling was undertaken in order to implement a strategic decision to restructure the business operations and management focus of the Group and to provide shareholders with the opportunity to participate directly in the Group’s foodservices operations.

The fair value of Bidcorp was determined with reference to the volume weighted average price of Bidcorp’s trading on the JSE over the first ten days of trading, being 27 818 cents per share.

The contribution of discontinued (Bidcorp) operations included in the Group’s results until the loss of control is detailed below:

The Group acquired 100% of the share capital of Plumblink SA Proprietary Limited (Plumblink) with effect from July 1  2015. Plumblink is a specialist plumbing and bathroom merchant currently operating from 61 branches strategically situated throughout South Africa. The acquisition forms part of the Bidvest Commercial Products segment and will enable the Group to expand its range of complementary products and services provided by Bidvest Commercial Products and, as a consequence, broaden the Group’s base in the market place.

A 100% shareholding in International Capital Investments Proprietary Limited trading as Novel Motor Company and Lenkow Proprietary Limited (Novel) was acquired by the Group with effect July 31  2015. The acquisition forms part of the Bidvest Namibia segment and is in line with this segment’s strategy to diversify its business portfolio. Novel Motor Company is a well-known vehicle dealership in Namibia.

A further 2,5 million Adcock Ingram Holdings Limited (Adcock) ordinary shares were acquired from Adcock’s black economic empowerment (BEE) partners, Blue Falcon Trading 69 Proprietary Limited and the Mpho ea Bophelo Trust for a cash consideration of R52,00 per Adcock ordinary share in July 2015.

At the end of July 2015 the Group supported the new Adcock BEE scheme (Scheme) and sold 15% of its Adcock shareholding toAd-izinyosi, a new broad-based empowerment entity, for a minimum price of R52,00 and a maximum price of R72,00 per Adcock ordinary share, to be settled on the fourth anniversary of the date that the Scheme became operative.

In addition to these transactions, the Group acquired a further 1,2 million shares, on the market, at an average price of R41,08 per share. Following these transactions the Group holds 38,4% of the net ordinary shares in issue in Adcock, but account for 45,0% of its results as a consequence of treating the sale of 15% of its holding in terms of the new Adcock BEE Scheme to Ad-izinyosi, as a deferred sale.

The Group also made a number of less significant acquisitions and disposals during the year. Certain of these acquisitions resulted in insignificant bargain purchase gains.

The acquisitions were funded from its existing cash resources.

The following table summarises the fair value of net assets acquired and liabilities assumed which have been included in these results from the respective acquisition and disposal dates.

The Group funded these acquisitions from existing banking resources.

The acquisition of Plumblink contributed R1 528 million to revenue and R86 million to operating profit. Similarly, the Novel acquisition contributed R778 million to revenue and R45 million to operating profit and would have contributed R855 million to revenue and R51 million to operating profit, had the acquisition been effective July 1  2015.

The Group has entered into a binding agreement to acquire 100% of the shares of and equity loan claims against Brandcorp Holdings Proprietary Limited (Brandcorp). Brandcorp is a holding company of businesses involved in the distribution and reselling of a wide range of niche, high-quality industrial and consumer products in southern Africa. Brandcorp owns well-known brands across its individual businesses, as well as distribution rights (exclusive and otherwise) for leading local and international brands. The board considers the Brandcorp acquisition to present an attractive investment opportunity which is aligned with Bidvest’s proven strategy of expanding its business operations through value accretive acquisitions. Brandcorp will form a part of Bidvest’s Commercial Products division and it is expected that the Group will complement Brandcorp’s offering, and opportunities exist for the Group and Brandcorp to leverage off each other’s client base, expertise, resources and network to significantly grow revenue and earnings. The Brandcorp acquisition is still subject to regulatory and other conditions typical for a transaction of this nature.

The Group’s investments of R2 870 million (2015: R2 551 million) include R89 million (2015: R431 million) recorded at cost, R1 846 million (2015: R1 273 million) recorded and measured at fair value using quoted prices (level 1) and R935 million (2015: R847 million) recorded and measured at fair value using factors not based on observable data (level 3). Level 3 investments are valued using discounted cash flows with a discount rate of 15,3% (2015: 15,3%). Fair value gains recognised in the income statement total R94 million (2015: R118 million) and other reductions of R7 million relate to net sales and net foreign exchange gains of R2 million recognised in the currency translation reserve.

The carrying values all financial assets and liabilities approximate their fair values, with the exception of borrowings of R8 965 million whose carrying value is R8 982 million.

The directors of the Company take full responsibility for the preparation of the condensed consolidated financial statements.

These condensed consolidated financial statements for the year ended June 30 2016 have been reviewed by Deloitte & Touche, our independent auditors, who have expressed an unmodified review conclusion. The external auditors have performed their review in accordance with International Standards on Review Engagements (ISRE) 2410. A copy of the auditor’s review report is available for inspection at the Company’s registered office.

These provisional condensed consolidated financial statements have been prepared under the supervision of HP Meijer (B. Compt. MBL), Group Financial Director, and were approved by the board of directors on August 26 2016.