Basis of presentation of condensed consolidated financial statements

The interim condensed consolidated financial statements have been prepared in accordance with and containing information required by IAS 34: Interim Financial Reporting as well as the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council and the Companies Act of South Africa and the JSE Listings Requirements. The interim report does not include all the notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2021 and any public announcements made by the Group during the interim reporting period (IAS 34 para 6). 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 2021.

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.

Significant accounting policies and judgements

The accounting policies applied in these interim condensed financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ending 30 June 2021. 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 2021. Following a comprehensive business transformation the Group has successfully adapted to the continued lingering effects of the global pandemic, which coupled with a significant easing of social restrictions the Board of Directors has determined that COVID-19 has not had a material impact on the results presented in the current period.

Restatement of comparatives

In the prior period the net life assurance fund was disclosed on the face of the Condensed Consolidated Statement of Financial Position. In the current reporting period the gross life assurance fund asset and the gross reinsurer’s share have been separately disclosed in non-current assets and non-current liabilities respectively, the prior period comparative has been restated accordingly. Interest revenue, disclosed in the Rendering of services category in the prior period, is disclosed as a separate category in the current period. The prior period comparatives have been restated accordingly.

Significant commitments

Bidvest Freight has committed R500 million to an LPG tank farm and terminal project in Isando Gauteng, as at 31 December 2021 R2 million has been spent. The initial commissioning date is towards the end of 2025, however, the project is reliant on efficient rail service commitment.

Bidvest Properties has committed R318 million to various property investments as at 31 December 2021. R10 million has been spent. The estimated completion dates are during the next financial year.

Fair value of financial instruments

The Group’s investments of R3 400 million (1HFY2021: R3 453 million) include R138 million (1HFY2021: R131 million) recorded at amortised cost, R3 145 million (1HFY2021: R2 148 million) recorded and measured at fair values using quoted prices (Level 1) and R117 million (1HFY2021: R1 174 million) recorded and measured at fair value using factors not based on observable data (Level 3). Fair value losses on Level 3 investments recognised in the income statement total R1 million (1HFY2021: R140 million).

Analysis of investments at a fair value not determined by observable market data

   Half-year ended
31 December
Year ended 
30 June 
R000s  2021 
Balance at the beginning of period  119 208  1 276 338  1 276 338 
Purchases, loan advances or transfers from other categories  –  42 412  36 815 
Fair value adjustment recognised directly in equity  –  –  124 
Fair value adjustment arising during the period recognised in the income statement    1 118    (139 505)    (3 040)
Proceeds on disposal, repayment of loans or transfers to other categories  –  (4 364)  (1 050 807)
Profit on disposal of investments  (3 151) –  (140 222)
Exchange rate adjustments  –  (524)  – 
   117 175  1 174 357  119 208 

The carrying values of all financial assets and liabilities approximate their fair values, with the exception of borrowings of R25 171 million whose carrying value is R25 204 million.

Hedge accounting

During the period the Group entered into fixed-for-fixed, USD / GBP pair, cross currency swaps (“CCS”) in order to mitigate and hedge Group currency risk. The designated hedged instrument is a USD-denominated Reg S / 144A senior unsecured five-year bond of USD800 million at a fixed coupon rate of 3.625%, issued by The Bidvest Group (UK) Plc and guaranteed by The Bidvest Group Limited. The primary purpose of the bond is to secure long term funding for the Group’s acquisition of the UK based PHS Group, whose functional currency is GBP. The Board of Directors has concluded that an effective cashflow hedging relationship exists and IFRS 9 hedge accounting has been applied. A R154 million financial asset derivative instrument was recognised at period end and included in trade and other receivables; R34 million was credited to the Condensed Consolidated Income Statement via finance charges; a debit of R198 million was booked to the foreign currency translation reserve and R92 million credited to the hedging reserve net of R22 million deferred taxation through the Condensed Consolidated Statement of Other Comprehensive Income.

Discontinued operations

The comparative period discontinued operations disclosure relates to Bidvest Car Rental (“BCR”), which was disposed of effective 29 June 2021. There are no discontinued operations in the current period.

Business combinations

Net acquisition of businesses, subsidiaries, associates and investments

During September 2021 the Group, via its Automotive division, acquired the assets and liabilities of the Nissan Melrose motor dealership for R70 million. The acquisition complements the four existing Nissan dealerships owned and operated by the Group.

The following table summarises and incorporates the provisional amounts of assets acquired and liabilities assumed which have been included in these results from the respective dates.

R000s  Nissan  Dealership  Melrose Arch  Other  Total 
Property, plant and equipment  2 175  (12) 2 163 
Right-of-use assets  61 544  –  61 544 
Deferred taxation  196  –  196 
Interest in associates and joint ventures  –  (2 291) (2 291)
Investments and advances   –  533 662  533 662 
Inventories  29 619  –  29 619 
Trade and other receivables  2 920  (1 484) 1 436 
Cash and cash equivalents  15 950  (8 975) 6 975 
Borrowings  (22 919) –  (22 919)
Lease liabilities  (61 544) –  (61 544)
Trade and other payables and provisions  (5 049) 7 094  2 045 
Taxation  534  –  534 
   23 426  527 994  551 420 
Goodwill  46 574    46 574 
Net assets acquired (disposed) 70 000  527 994  597 994 
Settled as follows:          
Cash and cash equivalents acquired        (6 975)
Acquisition costs        17 139 
Net profit on disposal of operations        (13 840)
Net settlement of receivable arising on disposal of subsidiaries and associates in prior periods        (5 299)
Net acquisition of businesses, subsidiaries, associates and investments  589 019 
º Includes purchases of R584 million and disposals of R50 million in the Group’s various investment portfolios, primarily those of Bidvest Bank and Bidvest Insurance (“Other” column).

Goodwill arose on the minor acquisitions as the anticipated value of future cash flows that were taken into account in determining the purchase consideration exceeded the net assets acquired at fair value. The acquisition has enabled the Group to expand its range of complementary products and services and, as a consequence, has broadened the Group’s base in the market place.

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 supervision of the Chief Financial Officer, MJ Steyn BCom CA (SA), and were approved by the board of directors on 25 February 2022.