Financial statements
Directors' report
The directors have pleasure in presenting their report for the year ended June 30 2018.
Nature of business
Bidcorp is an international broadline foodservice group present in all continents other than North America and Antarctica. Bidcorp is focused on growth opportunities: organically in our current markets through attaining the appropriate business mix by selling more products to our existing customers and gaining new customers; via in-territory bolt-on acquisitions to expand our geographic reach and expanding our product ranges; and via larger acquisitions to enter new markets. Despite our appetite for acquisitions, we remain disciplined in our approach.
Bidcorp's entrepreneurial and decentralised business model, depth and experience of management teams and strength of the group's culture has set up the group for sustained growth in the future.
Financial reporting
The directors are required by the Companies Act to produce financial statements, which fairly present the state of affairs of the group and company as at the end of the financial year and the profit or loss for that financial year, in conformity with IFRS and the Companies Act.
The financial statements as set out in this report have been prepared by management in accordance with IFRS and the Companies Act and are based on appropriate accounting policies supported by reasonable prudent judgements and estimates.
The directors are of the opinion that the financial statements fairly present the financial position of the group and of the company as at June 30 2018 and the results of their operations and cash flows for the year then ended.
The directors are satisfied that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.
Stated capital
The company's authorised stated capital is 540 000 000 no par value ordinary shares. There were no issues of no par value ordinary shares during the year and as at June 30 2018 the total issued ordinary no par value shares was 335 404 212.
Acquisitions and disposals
In July 2017, 70% of Pier 7 Foods, a Munich-based foodservice business was acquired. Pier 7 Foods operates from five German locations and one Austrian location. Frustock Foodservice, S.A., a niche Portuguese horeca business was acquired and integrated into Bidfood Iberia. Further bolt-on acquisitions were concluded during the year namely, Festival City Food & Wine (Australia), Goldline Distributors Pty Limited (Australia), Cárnicas Saenz, S.L. (Spain), Jilin Food Service Limited (mainland China), Linson Global Seafood Trading Limited (Hong Kong), D&D S.p.A. (Italy), Van de Mheen Foodservices B.V. (Netherlands), Prepared Produce (New Zealand), Aeroshield (Malaysia), Famous Fresh (Pty) Limited (South Africa) and Efe Dagˇıtım ve Pazarlama A.S,. (Turkey).
These acquisitions form part of the group's strategic expansion plans in the international foodservice industry. Goodwill arose on the acquisitions as the anticipated value of future cash flows that were taken into account in determining the purchase consideration exceeded the net assets or net liabilities acquired at fair value. The acquisitions have enabled the group to expand its range of complementary products and services and, as a consequence, has broadened the group's base in the marketplace.
There were no significant contingent liabilities identified in the businesses acquired.
There were no material disposals of businesses during the year.
Discontinued operation
In December 2017, management committed to a plan to discontinue the UK Contract Distribution (CD) business segment which operates in the United Kingdom. By year-end, we were close to finalising our proposed exit from this non-core segment. Costs associated with this anticipated exit were substantially provided for and any further costs are unlikely to be significant.
Post the year-end, the prospective purchaser of our CD business notified Bidcorp that for its own internal reasons, it has decided not to proceed with the transaction. The CD business remains a non-core activity in respect of Bidcorp's global foodservice operations. Accordingly, Bidcorp is currently considering alternative proposals which were suspended due to the advanced sale process.
Subsequent events
There have been no material subsequent events from the reporting date.
Results of operations
The results of operations are dealt with in the consolidated statement of profit or loss, segmental analysis and commentary.
Dividends
The directors declared an interim gross cash dividend of 280,0 cents (224,0 cents net of dividend withholding tax, where applicable) per ordinary share to those members registered on the record date, being Friday, March 23 2018. The dividend was declared from income reserves.
In line with the group dividend policy, the directors declared a final gross cash dividend of 280,0 cents (224,0 cents net of dividend withholding tax, where applicable) per ordinary share for the year ended June 30 2018 to those members registered on the record date, being Friday, September 21 2018.
| Declaration date | Wednesday, August 22 2018 |
| Last day to trade cum dividend | Tuesday, September 18 2018 |
| First day to trade ex dividend | Wednesday, September 19 2018 |
| Record date | Friday, September 21 2018 |
| Payment date | Tuesday, September 25 2018 |
Share certificates may not be dematerialised or rematerialised between Wednesday, September 19 2018 and Friday, September 21 2018, both days inclusive.
The dividend has been declared from income reserves. A dividend withholding tax of 20% will be applicable to all shareholders who are not exempt.
Directorate and attendance
The directors who were in office during the year and the details of board meetings attended by each of the directors are as follows:
| Director | Date of appointment | November 9 2017 |
February 20 2018 |
June 4 2018 |
August 21 2018 |
|||||
| Chairman - appointed March 31 2018 | ||||||||||
| S Koseff | August 16 2017 | ^ | ^ | ^ | ^ | |||||
| Non-executive director | ||||||||||
| B Joffe* | August 17 1995 | ^ | ^ | ^ | ^ | |||||
| Independent non-executive directors | ||||||||||
| PC Baloyi | March 10 2016 | ^ | ^ | ^ | ^ | |||||
| DDB Band | March 10 2016 | ^ | ^ | ^ | ^ | |||||
| DD Mokgatle | October 4 2016 | ^ | ^ | ^ | ^ | |||||
| NG Payne | March 10 2016 | ^ | ^ | ^ | ^ | |||||
| H Wiseman | March 10 2016 | ^ | ^ | ^ | ^ | |||||
| Executive directors | ||||||||||
| BL Berson | March 10 2016 | ^ | ^ | ^ | ^ | |||||
| DE Cleasby | September 12 2007 | ^ | ^ | ^ | ^ |
^ Attended in person, by video-conference or tele-conference.
* B Joffe resigned as non-executive chairman on March 31 2018
Directors' shareholdings
Beneficial
The individual beneficial interests declared by directors in the company's stated capital at June 30 2018 held directly or indirectly were:
| 2018 | 2017 | |||||||
| Number of shares | Number of shares | |||||||
| Direct | Indirect | Direct | Indirect | |||||
| Director | ||||||||
| BL Berson | 8 | 224 211 | 8 | 224 211 | ||||
| DE Cleasby | 144 564 | – | 133 814 | – | ||||
| B Joffe | 21 544 | 20 060 | 21 544 | 20 060 | ||||
| S Koseff | 1 061 | – | * | * | ||||
| Total | 167 177 | 244 271 | 155 366 | 244 271 | ||||
* Not applicable – appointed as a director on August 16 2017.
Non-beneficial
In addition to the aforementioned holdings:
- B Joffe is a trustee and potential beneficiary of a discretionary trust holding 525 107 (2017: 700 107) shares.
- DE Cleasby is a potential beneficiary of a family trust holding 1 050 (2017: 750) shares.
- DE Cleasby is a trustee of The Bidvest Group Limited retirement fund which holds 750 553 (2017: 679 092) shares.
There has been no change in the directors’ interests between June 30 and the issue date of the annual financial statements.
Directors’ remuneration
The remuneration paid to executive directors during the year ended June 30 2018 can be analysed as follows:
| Basic remuneration R’000 |
Other benefits and costs R’000 |
Retirement/ medical benefits R’000 |
Cash incentives R’000 |
Total emoluments R’000 |
||||||
| Director | ||||||||||
| BL Berson | 14 847 | 253 | 249 | 16 240 | 31 589 | |||||
| DE Cleasby | 5 457 | 193 | 441 | 6 642 | 12 733 | |||||
| Total | 20 304 | 446 | 690 | 22 882 | 44 322 |
B Joffe relinquished his role as an executive director of Bidcorp on June 30 2017. His non-executive director and other related fees for the year ended June 30 2018 have been disclosed under non-executive director fees and other services.
For comparative purposes the remuneration paid to the executive directors during the year ended June 30 2017 can be analysed as follows:
| Basic remuneration R’000 |
Other benefits and costs R’000 |
Retirement/ medical benefits R’000 |
Cash incentives R’000 |
Total emoluments R’000 |
||||||
| Director | ||||||||||
| BL Berson | 14 754 | 262 | 359 | 17 904 | 33 279 | |||||
| DE Cleasby | 4 461 | 278 | 385 | 6 017 | 11 141 | |||||
| B Joffe | 13 032 | 637 | 454 | 16 479 | 30 602 | |||||
| Total | 32 247 | 1 177 | 1 198 | 40 400 | 75 022 |
The remuneration paid to non-executive directors during the year ended June 30 2018 is analysed as follows:
| 2018 | ||||||||
| Director fees R’000 |
Other services R’000 |
Total R’000 |
2017 R’000 |
|||||
| Non-executive director | ||||||||
| PC Baloyi | 564 | – | 564 | 572 | ||||
| DDB Band | 705 | – | 705 | 634 | ||||
| B Joffe* | 2 288 | 4 000 | 6 288 | – | ||||
| S Koseff (appointed August 16 2017) | 924 | – | 924 | – | ||||
| DD Mokgatle (appointed October 4 2016) | 445 | – | 445 | 226 | ||||
| NG Payne | 800 | – | 800 | 771 | ||||
| CWL Phalatse (resigned November 11 2016) | – | – | – | 141 | ||||
| H Wiseman ** | 1 136 | 489 | 1 625 | 1 625 | ||||
| Total | 6 862 | 4 489 | 11 351 | 3 969 | ||||
* B Joffe provided advisory consulting services for the year ended June 30 2018.
** H Wiseman provided services by chairing the quarterly Bidcorp divisional audit and risk committee meetings.
Prescribed officers
Due to the nature and structure of the group the directors have concluded that there are no prescribed officers of the company.
Share-based payment expense per director
| Director | 2018 R’000 |
2017 R’000 |
||
| BL Berson | 12 831 | 7 050 | ||
|---|---|---|---|---|
| DE Cleasby | 4 865 | 2 637 | ||
| B Joffe | 10 149 | 8 486 | ||
| Total | 27 845 | 18 173 |
For the year ended June 30 2018 no cash benefits arose from the CSP awards (2017: nil).
Details of directors' outstanding conditional share plan (CSP)
The executive directors were awarded conditional share awards in terms of the 2016 Bidcorp CSP. These share awards do not carry voting rights attributable to ordinary shareholders. The fair value of services received in return for the conditional share awards has been determined by multiplying the number of conditional share awards expected to vest by the share price at the date of the award less discounted by anticipated future distribution flows.
No CSPs vested or were forfeited in 2018.
CSP awards (including CSP replacement awards)
| Director | Balance at July 1 2017 |
CSP awarded |
Forfeited | Exercised | Closing balance June 30 2018 |
|||||
| BL Berson | 135 000 | 90 000 | – | – | 225 000 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| DE Cleasby | 50 500 | 35 000 | – | – | 85 500 | |||||
| B Joffe | 162 500 | – | – | – | 162 500 | |||||
| 348 000 | 125 000 | – | – | 473 000 |
Directors' service contracts
BL Berson and DE Cleasby
Employment contracts have been concluded with Mr BL Berson and Mr DE Cleasby. Under the terms of the employment agreements, six months' notice is required upon termination of employment or retirement.
No other directors have fixed term contracts.
Directors' and officers' disclosure of interest in contracts
During the year no contracts were entered into in which directors and officers of the company had an interest and which significantly affected the business of the group. The directors had no interest in any third party or company responsible for managing any of the business activities of the group.
Secretary
During the year under review, and in compliance with paragraph 3.84(i) and (j) of the JSE Listings Requirements, the board evaluated Ms AK Biggs, the company secretary, and is satisfied that she is competent, suitably qualified and experienced.
Furthermore, since she is not a director, nor is she related to or connected to any of the directors, thereby negating a potential conflict of interest, it was agreed that she maintains an arm's length relationship with the board.
The business and postal addresses of the secretary, which are also the registered addresses of the company, are 2nd Floor, North Wing, 90 Rivonia Road, Sandton, 2196 and Postnet Suite 136, Private Bag X9976, Sandton, 2146, respectively.
Change in directorate
Mr S Koseff, an independent non-executive director, assumed the role of chairman of the board on March 31 2018. Mr B Joffe remains on the board as a non-executive director.
The board expresses its sincere appreciation to Mr Joffe for his services as chairman, particularly in leading the formation of Bidcorp, as well as its JSE listing on May 30 2016, which were critical development phases for the group.
The board welcomes Mr Koseff to the role of chairman and looks forward to the benefits of his extensive business experience and acknowledged leadership record.