BIDCORP Group delivered solid results and substantially cut debt as it navigated the impact on the leisure and catering sectors in particular of Covid-19 restrictions in the countries where it operates, chief executive Bernard Berson said yesterday.
“The excellent free cash flow has been driven by good asset management, some asset realisations, while exceptionally nimble trading has underpinned the pandemic-affected results,” he said. Net debt at R0.5 billion fell from R5.6bn.
Chief financial officer David Cleasby said in a telephone interview that the second and third quarters had been difficult in the northern hemisphere due to second wave Covid-19 restrictions, and following a recovery in these markets in the first quarter. Fortunately, the Australia, New Zealand and China markets had traded well throughout the year, he said.
An improvement in all markets was seen from the fourth quarter as Covid-19 restrictions eased, and this had carried through into the first quarter of the 2022 financial year, with sales at nearly 100 percent of 2019 levels. “This improvement seems to be holding,” he said.
Headline earnings per share (Heps) from continuing operations rose 21.8 percent to 868.4 cents. Currency volatility positively impacted the rand-translated Heps by 8.2 percent.
Operating conditions in hospitality markets fluctuated through the year depending on government interventions to control the pandemic, and South Africa’s hospitality markets continued to be heavily impacted by the lack of tourism and travel, said Cleasby.
Bidcorp’s national customers with exposure to major institutions located in large inner capital cities continued to experience reduced activity levels due to work-from-home requirements, but Cleasby expected that people would return to their offices over time.
In June 2021, Bidcorp uncovered fraud that was being perpetuated in the Miumi division of the Angliss Greater China business.
The fraud had been going on since about 2016 and had involved the manipulation of accounts receivables and prepayments and the misappropriation of inventories, the result of which these balances were progressively overstated over six years.
“The group impaired the full overstated amounts, although there might be some future recoveries from insurance, the perpetrators and other third parties involved,” said Berson.
The quantum of the impairments was HK$374 million (R694m), with losses attributable to the 2021 financial year of HK$60.9m (R121m), HK$47.5m (R95m) in relation to the 2020 financial year, and the balance to the financial years prior to this.
Cleasby said he expected that charges would be laid against the perpetrators once the forensic investigation was complete.
Group trading profit increased 17.7 percent to R4.8bn and the trading profit margin was higher at 4.2 percent from a restated 3.4 percent in 2020.
Free cash flow from continuing operations leapt to R4.7bn from R2.7bn and cash generated by operations before working capital was R7bn, similar to that generated last year.
A final cash dividend of 400c per share was declared.
“Bidcorp remains well-capitalised and retains adequate headroom for further organic and acquisitive growth,” said Berson.
Bidcorp’s problematic businesses in Spain, UK Fresh, and Germany had stabilised following restructuring and were on track for recovery, with all having generated small profits in July and August 2021.
“Most of our businesses have bounced back strongly, particularly in the northern hemisphere. Despite our best efforts, the hospitality industry is not immune to challenges such as staff shortages and supply chain disruptions, currently evident across all our markets,” said Berson.
No significant acquisition opportunities in the food service space were evident and exploring these was difficult, specifically with international travel restrictions.
Several in-country bolt-on opportunities were being pursued. Organic market share gains were being made in all markets despite large segments of the hospitality industry operating well below pre-pandemic levels.
edward.west@inl.co.za
BUSINESS REPORT ONLINE