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Send  Print  Share  RSS  Twitter  28 Feb 2011

RESULTS: Bidvest


Johannesburg, Feb 28 (I-Net Bridge) - International services group Bidvest (BVT) posted an 11.3% increase in headline earnings to 1.7 billion rand for the six months ended December 2010.

This resulted in a 9.1% increase in headline earnings per share (HEPS) from 495 cents to 539.8 cents, with diluted HEPS up 9.5% from 491.1 cents to 537.9 cents.

The group recorded a trading profit for the half year of 2.8 billion rand, which was up 8% on the profit for the previous comparable period.

Revenue for the six months grew by 4.2% to 58.5 billion rand, with cash generated by operations up 4.8% at 3.6 billion rand..

The group delivered a distribution per share of 225 cents, which represented an increase of 8.7%.

"Solid results were achieved for the half year ended December 31 in the face of a strong average South African exchange rate and weak economic activity in a number of geographic regions in which the Group operates.

"The average rand exchange rate strengthened versus sterling and the euro with negative impact on the translation of the earnings of foreign operations equivalent to 2.3% of HEPS," the group stated.

Results were also impacted by a 67 million rand increase in the tax charge as a result of the Secondary Tax on Companies paid on the 2010 final dividend - a charge that had not been incurred in the comparative period. This negatively impacted HEPS by 4.4%, according to the group.

"Deflation on food products was evident in a number of regions, with impact on trading margins. Operations continued to make gains as they traded aggressively in competitive markets. Trading conditions in southern Africa have shown some encouraging signs, particularly in certain sectors of the corporate market.

"However, discretionary consumer spending hasn't fully recovered. Businesses exposed to South Africa's infrastructure and construction sectors witnessed continued decline in activity levels. Bidvest Asia Pacific continues to deliver strong results. Overall, Bidvest Europe was weaker as a result of the prevailing economic climate and poor weather conditions," Bidvest said.

"Operational management's back-to-basics approach on asset and cash flow management fostered inventory optimisation while minimising debtor delinquencies. Generating adequate returns on funds employed across all regions remains a core philosophy. Bidvest continued to invest in infrastructure to ensure medium-term growth and sustainability," the group added.

Looking ahead, Bidvest said that economic conditions in most of the geographies in which the group operated had improved, resulting in higher activity levels. However, the European landscape was likely to remain weak.

"The underlying threat of inflation and the potential for rising interest rates present both opportunity and risk for trading operations. Our businesses have adjusted to the new economic reality. Management is acutely aware that innovation and service hold the key to future success.

"Realignment of executive responsibilities caters for succession, renews enthusiasm and provides new opportunities for the Group to achieve the next quantum leap in growth. Bidvest remains committed to its entrepreneurial and decentralised business model as the platform for achieving sustained growth.

"Management are optimistic about future business opportunities, which should enable a step up in growth rates and higher returns. Our balance sheet is well capitalised with ample capacity to fund expansion activities. We retain our appetite and desire for further strategic acquisition opportunities. Working capital management remains a focus area as a means to delivering acceptablereturns from funds employed. Going forward, we remain confident of an improving trading environment," Bidvest added.


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