13. DISCONTINUED OPERATIONS
 

In December 2017, management committed to a plan to discontinue the UK Contract Distribution (CD) business segment which operates in the United Kingdom. The CD business segment is a component of the groupís United Kingdom business, the operations and cash flows of which can be clearly distinguished from the rest of the group. By June 30 2018, Bidcorp was close to finalising its proposed exit from this non-core segment. Post-June 30 2018, the prospective purchaser of the 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 Bidcorpís global foodservice operations. Accordingly, Bidcorp pursued alternative exit proposals, and engaged in a formal sale process, managed by independent advisers. The sale process is ongoing at June 30 2019. We are hopeful of being able to announce the details of this transaction within the near future. Any transaction would still be subject to regulatory competition commission approval, which is anticipated to take up to four months to complete.

PCLís (dairy distribution business for Arla) performance for the year was disappointing. Towards the end of 2018, following a dispute with Arla, management committed to exit the PCL business by either selling the PCL transport operations to Arla or to close down the PCL business. At June 30 2019, the PCL transport operations had been sold to Arla and the sales process/exit of the remaining insignificant warehousing and handling components are ongoing at June 30 2019.

The comparative consolidated statement of profit or loss and the consolidated statement of cash flows has been re-presented as a result of classifying the remaining UK logisticsí activity, PCL, as a discontinued operation. The results of the discontinued operations included in the groupís results are detailed below:

  2019 
R’000 
    2018 
R’000 
 
Revenue 19 502 386      19 408 282   
Cost of revenue (16 838 559)     (16 686 301)  
Gross profit 2 663 827      2 721 981   
Operating expenses (3 049 910)     (3 353 932)  
Trading loss (386 083)     (631 951)  
Share-based payment expense (2 414)     (3 110)  
Net capital items (470 514)     (145 545)  
Operating loss (859 011)     (780 606)  
Net finance charges (12 326)     (8 459)  
  Finance income 193      45   
  Finance charges (12 519)     (8 504)  
Loss before taxation (871 337)     (789 065)  
Taxation relief 139 368      126 352   
Loss for the year from discontinued operations (731 969)     (662 713)  

The following adjustments to loss attributable to shareholders were taken into account in the calculation of headline loss:

  2019 
R’000 
    2018 
R’000 
 
Loss attributable to shareholders of the company from discontinued operations  (731 969)     (662 713)  
Impairments  383 907      145 394   
  Intangible assets  465 147      –   
  Property, plant and equipment  –      3 408   
  Goodwill  –      142 137   
  Taxation relief  (81 240)     (151)  
Loss on disposal of intangible assets and property, plant and equipment  4 347      –   
  Intangible assets  3 185      –   
  Property, plant and equipment  2 182      –   
  Taxation relief  (1 020)     –   
Headline loss from discontinued operations  (343 715)     (517 319)  
  Basic loss per share (cents) (219,6)     (199,2)  
  Diluted basic loss per share (cents) (219,2)     (198,6)  
  Headline loss per share (cents) (103,1)     (155,5)  
  Diluted headline loss per share (cents) (103,0)     (155,0)  
Effect of the discontinued operations on the statement of financial position of the group           
Assets classified as held-for-sale  2 944 460      2 590 657   
  Property, plant and equipment  323 355      212 090   
  Intangible assets  5 871      7 437   
  Deferred tax asset  6 952      1 338   
  Investments and loans  434      440   
  Inventories  523 457      428 733   
  Trade and other receivables  1 687 617      1 161 229   
  Taxation  114 368      101 043   
  Cash and cash equivalents  282 406      678 347   
Liabilities classified as held-for-sale  3 116 633      2 613 207   
  Deferred tax liability  11 704      6 476   
  Long-term portion of provisions  128 056      30 013   
  Trade and other payables  2 976 873      2 576 718   
An amount of R375 million (2018: R712 million) has been allocated from continuing operations to discontinued operations in order to fund the normalised working capital of the discontinued operations.           
Cash flows from discontinued operations           
Net operating cash flows from discontinued operations  (582 319)     51 273   
Net investing cash flows from discontinued operations  (50 137)     (16 319)  
Net (decrease) increase in cash and cash equivalents  (632 456)     (34 954)