Bidvest buys into strong UK platform
Focus on clients and solutions
SOUTH Africa’s leading diversified trading, distribution and services group Bidvest said it would continue to explore selective acquisitive opportunities in local and international markets to complement the core product and service offerings.
Bidvest acquired 100 percent of Brandcorp, which is a value-added distributor of niche industrial and consumer products for an undisclosed amount during the current financial year and also bought Noonan for €175 million (R2.72 billion) in July. The group said it expected the acquisition of Noonan – an Irish and UK-based integrated facility management services and solutions provider with a 40-year track record – to be effective from this week after getting the approval of the South African Reserve Bank.
Chief executive Lindsay Ralphs said Noonan would give the group a strong platform from which to expand in the UK, and beyond.
“The existing business already has an established footprint and is experiencing tremendous success with its diversified services offering from its base in the Republic of Ireland, and more recently in key areas within the UK.
"Our services division's track record and product offering will complement Noonan exceptionally well, and we are looking forward to the management teams of the two entities delivering strong growth and innovation into the future,” Ralphs said.
The group has also made several divisional bolt-on acquisitions as part of its strategy to grow through organic as well as acquisitive means.
Bidvest operates through seven core divisions: services, freight, automotive, office and print, commercial products, financial services and electrical. It also retains investments in Bidvest Namibia, Bidvest Properties, Adcock Ingram, Comair and Bidcorp.
In the results for the year to end June, Bidvest reported a 4 percent increase in revenue to R71bn, up from R68.2bn, while trading profit grew 4.6 percent to R6bn, up from R5.8bn reported last year. The group said operating expenses were well controlled, increasing by a modest 3.6 percent, with like-for-like expenses increasing by 1.7 percent.
Headline earnings rose 6.2 percent to R37bn and headline earnings per share was up by 5.1 percent to 1 108.2 cents a share. Cash generated by operations at R6.9bn was marginally lower than the R7bn generated in the prior year. The group also generated R773m cash on the disposal of noncore assets.
The results were bolstered by a strong focus on clients and solutions, as well as the acquisition of Brandcorp (effective October 1, 2016) in the commercial products division and smaller bolt-on acquisitions in the electrical and financial services divisions.
“We have delivered a solid trading result in an exacting market, characterised by a lack of economic growth and declining consumer spend.
“We are evolving successfully following last year’s unbundling of the food service businesses,” Ralphs said, adding that benefits of its diversified portfolio and the quality of the underlying businesses were evident in the performance of the trading operations where five of Bidvest’s seven divisions, as well as Bidvest Properties, delivered growth in trading profit.
“We remain committed to infrastructural development spend in South Africa, such as the 22 600 ton liquefied petroleum gas storage facility we are building in Richards Bay,” Ralphs said.
The group declared a final dividend of 264c.
Bidvest shares declined 0.48 percent on the JSE yesterday to close at R174.76.