Message to shareholders


Bidvest is a leading business-to-business services, trading and distribution group, operating through six divisions: Services, Freight, Branded Products, Commercial Products, Financial Services and Automotive. The Group owns a significant Bidvest occupied property portfolio. Bidvest strategically increased its stake in Adcock Ingram (“Adcock”) to 52.3%, resulting in it being consolidated from 1 August 2019 into Branded Products. Bidvest continues to hold non-core investments in, Comair (27.2%) and Mumbai International Airport (6.75%) (MIAL).


Trading profit increased by 19.8% to R4.0 billion, off revenue growth of 9.2%, enhanced by the consolidation of Adcock.

During the six months to December 2019, Bidvest’s domestic operations held their own in a tough trading environment characterised by low business confidence and constrained consumer demand culminating in lower volumes. Offshore service businesses performed well. Our services businesses, comprising the Services, Freight and Financial Services divisions, grew trading profit by 6.5%.

Exceptional cost management and good capital discipline resulted in improved margins. Post working capital, cash generated by operations increased almost three-fold to R3.8 billion.

The balance sheet remains strong. Return on Funds Employed (ROFE) improved from 22.8% to 24.8%. ROIC of 16.3% is well above the Group’s weighted cost of capital.

The impact of accounting for Adcock as an associate for one month and consolidating it from 1 August 2019, was neutral on headline earnings.

In December we announced the acquisition of PHS, the largest hygiene service provider in the UK and Spain, for GBP495 million. This is in line with Bidvest’s strategic intent to expand internationally in niche, asset light annuity businesses that will benefit from Bidvest’s capabilities and expertise.

The Group declared an interim dividend of 282 cents per share, in line with prior year.

Normalised HEPS is a measurement used by management to assess the underlying business performance. The Group delivered a slightly improved result, as reflected in pro forma normalised HEPS(1) of 636.5 cents. The non-cash impact of IFRS 16 (4.1%) and Bidvest’s share of Comair’s impairment of the SAA settlement (5.8%) represents the differential to the reported 10.5% decline in HEPS.

(1) Normalised HEPS, which excludes acquisition costs, amortisation of acquired customer contracts and includes an adjustment for Bidvest’s share of Comair’s SAA impairment, is a measurement management uses to assess the underlying business performance.

Financial overview

Group revenue grew 9.2% to R43.7 billion (H1 2019: R40.0 billion). Adcock was consolidated for five months. On a comparable basis, the bolt-on acquisitions and rate increases more than offset the lower activity and pricing pressures experienced in certain activities.

Gross profit margin increased 120bps to 30.5%, mainly due to mix changes. Continued, strong focus on cost containment limited the growth in expenses to only 2.7% up, excluding the impact of Adcock’s consolidation and IFRS 16.

Trading profit grew by 19.8% and the trading margin increased by 81 basis points to 9.2%. Services’ offshore operations performed very well, and a resilient result was delivered by the South African businesses. Freight handled increased bulk and liquid commodity volumes but this was more than offset by lower agricultural exports, specifically yellow maize, and reduced cargo volumes. Branded Products’ result was good considering the significant challenges in this sector and was bolstered by Adcock’s consolidation. The results from Financial Services and Automotive were pleasing while that of Commercial Products were somewhat disappointing. Properties delivered solid growth in trading profit.

The adoption of IFRS 16 had a modest positive impact on trading profit, however, the resulting higher interest charge of R228.8 million had a net adverse impact of R87.2 million, or 3.9% on attributable income and 4.1% on headline earnings.

Net capital items contributed losses of R300.1 million, relative to a gain of R112.5 million in the prior year. The net negative adjustments to the investment values of Adcock and Comair compared to gains in the prior period. The balance of the charge relates to the losses on the disposal and closure of businesses, in particular The Mansfield Group.

Net finance charges were 7.3% higher at R562.5 million (H1 2019: R524.0 million), excluding the impact of IFRS 16. Additional borrowings were raised to fund acquisitions. The Group’s average cost of funding remained flat at 6.5% pre-tax.

Share of losses from associates resulted from the loss incurred by Comair, compared to a profit in the prior period, as well as the impairment of the full outstanding SAA settlement. Adcock was accounted for as an associate for one month compared to six months previously.

The Group’s effective tax rate, excluding capital items and share of associates, remained broadly flat at 27.9% (H1 2019: 27.7%).

Basic earnings per share decreased by 27.7% to 476.9 cents (H1 2019: 660.0 cents) mainly due to the contraction in the share prices of associates compared to material share price increases in the prior year.

Bidvest continues to maintain a conservative approach to gearing and net debt levels are considered acceptable at R10.0 billion (H1 2019: R8.9 billion). A stable net debt to EBITDA metric at 1.1x (H1 2019: 1.1x) and EBITDA interest cover of 8.2 times (H1 2019: 8.2 times), are both comfortably above the Group’s conservative targets, providing ample capacity for further expansion. Lease liabilities totalling R5.2 billion are excluded from the above. In October 2019, Bidvest successfully raised two long-term bonds, totalling R1.5 billion, which were significantly oversubscribed, at attractive rates.

Cash generated by operations at R3.8 billion, was higher than the R1.1 billion generated in the prior period. The Group absorbed R1.8 billion of working capital in the current period compared to R3.1 billion in the prior period. The main impact, year on year, was from a decrease in trade receivables and deposit growth, in excess of advances in Bidvest Bank.

Corporate action

On 24 December 2019, Bidvest announced the acquisition of PHS Group (“PHS”) for an enterprise value consideration of GBP495 million, approximately R9.1 billion. Bidvest will fully fund the acquisition through committed third-party GBP denominated debt. PHS is the number one hygiene service provider in the United Kingdom (UK) and also holds top positions in the Republic of Ireland (Ireland) and Spain. It offers a comprehensive range of hygiene services as well complementary services such as consumable supplies, laundry and rental of textiles and dust control mats. The acquisition of PHS is in line with Bidvest’s stated strategic intent to expand its presence beyond South Africa in niche, asset light annuity income businesses that will benefit from Bidvest’s capabilities and expertise. The transaction is expected to be completed mid-2020, subject to fulfilment of certain conditions precedent.

Services acquired Future Cleaning, a commercial and office cleaning business in the UK, effective 1 July 2019, and the minorities were bought out in Compendium and Pureau. The acquisition of Eqstra, announced on 15 July 2019, is yet to become effective as we await Prudential Authority approval. The Group’s flagship R1.0 billion liquid petroleum gas (LPG) storage project remains within budget and on time. The disposal of our stake in MIAL is progressing.


The core competencies and drivers of the Bidvest business remain firmly intact. The diverse portfolio of businesses and extensive reach allow the Group to weather challenging times. Our basic-need services and everyday essential product ranges enable the Group to support and add value to all its stakeholders. Innovation to disrupt ourselves, and the industries in which we operate, remains a core focus alongside disciplined asset management and cost control.

We anticipate the economic conditions experienced during the interim period to persist for the remainder of the financial year. Bidvest remains well positioned to participate in pockets of activity and opportunities while creating value for its extensive stakeholder base.

Bidvest will, however, continue to carefully consider strategic investments in South Africa and internationally to generate sustainable profits for the long term, particularly in those sectors where we can capitalise on structural growth drivers including out-of-home hygiene, urbanisation, health and wellness awareness and outsourcing. The announced acquisition of PHS is consistent with this approach.

The Group remains cognisant of making growth decisions for capital investment in long-dated relevant infrastructure assets backed by take-or-pay contracts, such as the LPG storage project in Richards Bay. This thinking has also led to a decision to establish a smaller inland LPG storage terminal, which was recently approved.

The funding for the acquisitions of PHS and Eqstra will utilise a meaningful portion of the financial headroom that exists on the Group’s balance sheet today. The resulting gearing ratio will, however, remain comfortably below bank covenants. Strong cash generation and a robust balance sheet will continue to support the Group’s strategy of growth in its existing markets, as well as continuing to acquire bolt-on businesses. This will also enable Bidvest to pursue expansion internationally in the chosen niche areas of Services and Commercial Products.

Divisional review


Trading profit rose 15.4% to R1.2 billion. Noonan delivered an exceptional result in underlying currency, driven mainly by margin uplift, with the recently acquired Future Cleaning adding scale and capabilities. New business wins are expected to continue over the coming months. The South African operating environment remains very price sensitive and stagnant with a noticeable increase in churn across the portfolio. The Security and Aviation cluster performed very well. Allied Services delivered a good result, bolstered by the Aquazania (purified water supplier) acquisition made last year, while Facilities Management performed admirably despite the loss of the significant Kusile catering contract. The corporate travel businesses performed poorly due to downtrading and very limited rebate deals despite robust cost base management. The leisure travel activities performed well.

Branded Products

The newly named, Branded Products division, which includes Adcock, grew trading profit by 75.7% to R988.9 million. Bidvest’s 52.3% shareholding in Adcock was consolidated into this division for five months during the period under review. Adcock’s interim results reflected a reasonable performance in the difficult trading conditions and constrained consumer environment. Strict cost control and a relentless focus on customer service, resulted in 0.9% and 1.0% revenue and trading profit growth.

Excluding Adcock, trading profit was down 4.1%. The division’s data, print, packaging and office furniture businesses held their own in this demanding environment. The consumer products businesses were more severely affected, and reflected the depressed retail sector. Notable achievements were that comparable overall margins for the division were maintained and expense management was exceptional during the period.


Freight handled increased bulk and liquid commodity volumes, but lower agricultural exports, specifically yellow maize, and general cargo volumes offset this, culminating in a 9.3% contraction in trading profit to R645.6 million. Bidvest Tank Terminals and Bulk Connections performed well and increased trading profits, but most other businesses reported lower profits than this time last year. The LPG storage facility is on track, with pressure testing of the new storage tanks successfully concluded in January 2020. Full commissioning is scheduled over the coming months. Bidvest Panalpina Logistics (“BPL”) has joined forces with a new international forwarding and clearing partner, EMO Trans, following the acquisition of Panalpina by DSV. Effective 1 January 2020, BPL was rebranded Bidvest International Logistics. UK-based On-Time Automotive is in the process of being sold.

Commercial Products

The division has been restructured and now includes the former Electrical division and King Pie while Home of Living Brands and Cellini were transferred to Branded Products. Revenue grew by 3.0% while trading profit declined 9.7%. The key challenge was margin management which more than neutralised very well managed operating costs. The Trade, Catering, Warehousing and General Industrial clusters performed well, while DIY/Tools/Workwear and Packaging were hampered by very tough operating conditions. Plumblink delivered another excellent result. The speciality electrical businesses benefited from the shift to alternative energy sources and vertical integration while the commodity trading activities were subdued. The business noted pockets of infrastructure and low-cost housing activity. Poor factory recoveries in Academy Brushware and G Fox and margin erosion in Matus resulted in disappointing results.

Financial Services

Bidvest Financial Services’ trading profit increased 13.9% to R276.6 million. This is after investment income, which was significantly higher than last year. Bidvest Bank delivered a slightly improved result, but the insurance businesses remain under pressure. Strong gross written premium growth continued in FMI but the new business strain together with pressure in the short-term insurance market resulted in lower profits. FinGlobal delivered a pleasing result. The Bank’s balance sheet is robust with deposits growing faster than loans and advances. Leasing assets declined on a net basis as the Transnet Heavy Commercial Vehicle contract is slow in rolling out. The Bidvest Bank management team is intently focused on its future growth, which includes expanding the Fleet Finance and maintenance and foreign exchange offerings, whilst continuing a deposit funding model.


The South African automotive market remains depressed and highly competitive across all segments of the sector. An excellent turn-around in Bidvest Car Rental as well as efficiencies and cost control resulted in a pleasing 16.5% growth in trading profit to R379.0 million. Rightsizing of the dealership footprint and continued cost containment has led to marginal gross margin growth in McCarthy, even though there is continued pressure on margins in both the new and used vehicle markets. The Namibian businesses have improved, albeit off a low base. Bidvest Car Rental grew rental days, achieved rate increases and improved fleet utilisation, ending the half year with a significantly higher trading profit.

Bidvest Properties and Corporate

Bidvest Properties delivered another strong result with trading profit up 4.6% to R294.8 million. The portfolio comprises 130 properties across South Africa and Namibia with an estimated market value of about R8.3 billion. The Mansfield Group was sold and discussions are ongoing to dispose of small remaining fishing-related businesses.


In accordance with the section 3.59 of the JSE Listings Requirements, the board of directors of the Group advised shareholders that Ms T Slabbert, Mr NG Payne and Mr AW Dawe retired as non-executive directors of the Group, with effect from 28 November 2019. With effect from 25 October 2019, Ms Z Siyotula and Mr MJD Ruck were appointed as independent non-executive directors.

Mr BF Mohale was appointed chairman of the board and Mr EK Diack reverted to the lead independent director, effective 29 November 2019.

For and on behalf of the board

BF Mohale   LP Ralphs
Chairman   Chief executive


2 March 2020

Dividend declaration

In line with the Group dividend policy, the directors have declared an interim gross cash dividend of 282 cents (225.6 cents net of dividend withholding tax, where applicable) per ordinary share for the six months ended 31 December 2019 to those members registered on the record date, being Friday, 27 March 2020.

The dividend has been declared from income reserves. A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt.

Share code: BVT
ISIN: ZAE000117321
Company registration number: 1946/021180/06
Company tax reference number: 9550162714
Gross cash dividend amount per share: 282
Net dividend amount per share: 225.6000
Issued shares at declaration date: 340 274 346
Declaration date: Monday, 2 March 2020
Last day to trade cum dividend: Tuesday, 24 March 2020
First day to trade ex-dividend: Wednesday, 25 March 2020
Record date: Friday, 27 March 2020
Payment date: Monday, 30 March 2020

Share certificates may not be dematerialised or rematerialised between Wednesday, 25 March 2020, and Friday, 27 March 2020, both days inclusive.

For and on behalf of the board

Ilze Roux
Company Secretary