Bidvest released their consolidated annual financial results for the year ended 30 June 2020 this morning and highlighted an investment revamp that will change the future outlook of the group.
Filled with corporate action, Bidvest’s financial year was a year of strategic review – with acquisitions and disposals overshadowing the material effects of Covid-19. Chief executive Mr Lindsay Ralph opened his report by extending heartfelt condolences to the families and friends of the 35 Bidvest employees that succumbed to Covid-19.
On the performance side, Bidvest’s revenue remained subdued at R76.5bn, a 0.6% increase from the previous year while gross profit margins increased 4% to R23.4bn. There were significant negative movements for both HEPS and BEPS; the former declining 59.5% to 553.2cents per share with the latter tanking from 1133.8cents per share to a mere 49.8cents per share. No dividend was declared by the group, underlining an uncertain economic climate as the reason for the hoard.
A strong focus on the management of working capital and an intense cost containment program saw the group generate R9.2bn cash from operations, a 38.2% increase from FY19. Although R1.5bn of the R2.5bn increase resulted from the adoption of IFRS 16.
Bidvest finalized the acquisition of PHS Group plc for £495m through a GBP dominated bridge facility and consolidated two months of trading to their 30 June 2020 results. PHS Group plc is based in the UK and has over 120 000 clients in over 300 000 locations spread across the UK, Spain and the Republic of Ireland. They service schools, hospitals, restaurants, offices, etc with over 50% of their contracts classified as long term contracts.
Another notable acquisition was the maiden consolidation of a 53.6% controlling interest in Adcock Ingram which has, together with PHS Group plc, strengthened the balance sheet by 46.6% to R90.9bn. Adcock Ingram brought an additional R6.9bn to revenue and R823m to operating income.
The disposal list was rather eye catching, with the following associates; Bidvest Wits, Bidair Services, Bidvest Car Rental, Mumbai International Airport Limited, Glenryck, Mansfield Group, Commuter Handling Services, and Voltex Namibia all getting the chop and costing the group R247.2m in losses in the process. This has largely been offset by the 40% reduction in deductible tax from R1.4bn to R851.6m due to the disposals of these associates.
Chief Executive Lindsay Ralph was also quick to highlight that the 150% rise in net debt EBITDA from R7.8bn to R19.7bn was due to the bridging facility used to acquire PHS Group plc, however, this is only payable in December 2021 and was still within the group’s gearing tolerance.
As at 13h00, JSE:BVT was trading at R149.13 per share.
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