The Bidvest Group Limited

Basis of presentation of condensed consolidated financial statements

 

These interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. They do not include all the information required for a complete set of International Financial Reporting Standards (IFRS) financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding to the changes in the Group’s financial position and performance since the last annual consolidated financial statements as at and for the year ended 30 June 2016.

In preparing these interim condensed consolidated financial statements, management make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2016.

Significant accounting policies

The accounting policies applied in these interim condensed consolidated financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended 30 June 2016.

^#Re-presentation of December 2015 comparative information

Following the unbundling and separate listing of the Group’s foodservice businesses as Bid Corporation Limited, the Group’s condensed consolidated income statement, condensed consolidated statement of cash flows and condensed segmental analysis have been re-presented to take into 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 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 net asset and net tangible asset value per share calculations.

In addition, during the period certain operations were reclassified between segments. The comparative periods’ segmental information have been restated to reflect these insignificant changes.

Net acquisition of businesses, subsidiaries, associates and investments

During the period the Group acquired 100% of the share capital of Brandcorp Holdings Proprietary Limited (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, Rentech, Burncrete, Moto/Leisure Quip and consumer brands, Cellini and MIC Prestige. 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. Although the acquisition has been funded in the interim with a combination of short-term borrowings and existing cash resources the intention is to secure long-term funding before the financial year end.

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. These acquisitions were funded from existing cash resources.

The final accounting for all the acquisitions had not been completed at the time that these condensed consolidated interim financial statements were issued. However the following table summarises the provisional amounts of assets acquired and liabilities assumed which have been included in these results from the respective dates.

	R’000
		Brandcorp	Other	Total
	Property, plant and equipment	219 513	56 262	275 775
	Deferred taxation	24 786	(1 808)	22 978
	Interest in associates	36 457	97 308	133 765
	Investments and advances	–	71 602	71 602
	Inventories	588 961	24 094	613 055
	Trade and other receivables	450 488	19 262	469 750
	Cash and cash equivalents	120 865	48 264	169 129
	Borrowings	(1 980 171)	(20 307)	(2 000 478)
	Trade and other payables and provisions	(361 217)	(49 005)	(410 222)
	Taxation	21 607	(6 052)	15 555
	Intangible assets	15 108	33 731	48 839
		(863 603)	273 351	(590 252)
	Non-controlling interest	–	1 724	1 724
	Realisation of foreign currency translation reserve	–	540	540
	Gain on bargain purchase	–	(11 235)	(11 235)
	Goodwill	863 603	126 875	990 478
	Net assets acquired	–	391 255	391 255
	Settled as follows:
	Cash and cash equivalents acquired			(169 129)
	Acquisition costs			14 546
	Net loss on disposal of operations			2 254
	Net change in vendors for acquisition			(26 365)
	Net acquisition of businesses, subsidiaries, associates and investments			212 561

The acquisition of Brandcorp contributed R535 million to revenue and R71 million to operating profit. Had the Brandcorp acquisition taken place 1 July 2016 the contribution to revenue would have been R1 082 million and R97 million to operating profit.

Subsequent event

The directors are not aware of any other matters or circumstances arising after the reporting period up to the date of this report not otherwise dealt with in this report that require an adjustment to the financial results at reporting date.

Fair value of financial instruments

The Group’s investments of R2 828 million (H1 2016: R2 524 million) include R84 million (H1 2016: R497 million) recorded at cost, R1 908 million (H1 2016: R1 040 million) recorded and measured at fair values using quoted prices (level 1) and R835 million (H1 2016: R987 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% (H1 2016: 15,3%). Fair value losses on level 3 investments recognised in the income statement total R26 million (H1 2016: R60 million gain) and other reductions of R73 million relate to net sales and net foreign exchange losses of R1 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 R11 939 million whose carrying value is R11 959 million.

Unaudited results

These results have not been audited or reviewed by the Group’s auditors. The interim condensed consolidated financial statements have been prepared under the supervision of the Group financial officer, HP Meijer (BCompt, MBL) and were approved by the board of directors on 27 February 2017